A business plan is a decision tool before it is a document for a lender. Writing one forces you to test whether the idea earns enough, what it needs to start and where the risks are. Banks, Saccos and investors read many plans and decide quickly. The ones that stand out are short, specific and backed by numbers that make sense. This guide shows what to include and how to make the figures credible.

Keep it to what the reader needs

For a small business, ten to fifteen pages is enough. The reader wants to know: what do you sell, to whom, why will they buy from you, how much money do you need and how will you pay it back. Everything else is detail.

1. Executive summary

One page, written last. State the business, the customer, the amount requested, what it will be used for, the expected revenue and profit in year one and the repayment plan.

2. The business and the owners

Describe the legal structure (see sole trader or limited company), where you operate, the licences you hold or need (business licences and permits) and the experience of the owners and key staff. Lenders back people as much as ideas.

3. The market

Show you understand the customers: who they are, how many, what they pay now and what problem you solve. Use real facts: a count of foot traffic, quotes from suppliers, prices of competitors and examples of orders. Name three competitors and say how you differ. Avoid statements like "everyone needs our product".

4. Operations and people

Explain how the business runs each day: location, equipment, suppliers, staff and the steps from order to payment. Include a staffing plan and the cost, using the staff cost and headcount budget, and note statutory costs, as set out in the employer obligations checklist.

5. Marketing and sales

Say how you will find customers and what it costs: signage, social media, referrals, WhatsApp catalogues and promotions. Give targets, such as customers per week, and the price. Link them to your pricing logic from how to price your products and services.

6. The financial plan

This is where plans win or fail. Include:

  1. Start-up costs and what the loan will buy: the start-up costs and funding calculator.
  2. Sales forecast by month for the first year, with assumptions on price and volume.
  3. Profit and loss by month: revenue, cost of sales, expenses, tax.
  4. Cash flow forecast showing when money comes in and goes out, which matters more to a lender than profit. See cash flow forecast for a small business and the 12-month cash flow forecast.
  5. Break-even point: the sales you need to cover costs. See the break-even and pricing calculator.
  6. Taxes: include VAT if you are registered, and income tax or turnover tax. Use the turnover tax calculator and the corporation tax calculator so that profit is shown after tax.
  7. Loan repayment schedule, from the loan repayment and amortisation schedule.

For a fuller model with three years of figures, see the three-year business plan financial model.

7. Risks and how you will handle them

List the real risks, such as slow sales, price rises, a key person leaving or payment delays, and a practical response for each. A plan with no risks looks naive.

What lenders check

Banks look at the character of the borrower, the capacity to repay from cash flow, the capital you are putting in, the collateral and the conditions of the market. Show your own contribution, bank statements, KRA compliance and any security. Read borrowing for your business: loans and tax for how interest is treated for tax.

Common mistakes

  • Growth figures with no basis
  • Ignoring tax, deposits and seasonal slumps
  • Forgetting working capital: stock and customers who pay late
  • Mixing personal and business money (separating business and personal money)
  • Copying a plan from the internet without changing the numbers

Frequently asked questions

How long should a business plan be? For a small loan, five to fifteen pages with the financial tables is typical. Longer plans are not better.

Do I need audited accounts? Not for a start-up. Existing businesses should bring bank statements, management accounts and tax compliance documents.

Can I get funding with no collateral? Some lenders offer group, asset or cash-flow based loans. A clear plan and a good record improve your chances.

Should the plan include tax compliance? Yes. Lenders ask for a tax compliance certificate, and showing tax in the forecast makes the numbers realistic.