How Do You Structure a 3-Year Business Plan?

Q: Why write a business plan?

A business plan keeps you organized and focused when you’re growing your company. The process allows you to set goals and milestones, along with providing plans for actually reaching them. It’s also an essential part of any type of small business financing application, which can help build your business credit.

Q: What should you include in a 3-year business plan?

There are five core components to include in your 3-year business plan: business description; goals; market analysis; marketing strategy; and cost and revenue estimate.

Q: How do I describe my business?

Start by defining what your business plans to sell, whether it’s a product or a service. Also directly state what makes your business stand out from the competition.

Q: How do I write an executive summary?

An executive summary is the description of your company and your products and services. It also includes high-level information on your target audience and financials. Positioned at the beginning of your three-year business plan, your executive summary is meant to encourage the reader to learn more and keep reading about your business.

How Do You Structure A 3-Year Business Plan?; Not sure how to write a 3-year business plan? Here are some ideas and examples to help you out.

Lauren WardUpdated April 25, 2023

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

A business plan is a must-have for any company, no matter how long it has been around. A three-year business plan gives you a healthy timeframe to work with when you’re writing up a plan. It’s long enough to let you develop robust strategies and revenue estimates. But it’s not so far out that your projections aren’t based on quality data.Learn how to create a business plan structure that is easy to craft while also able to serve as a compelling resource for anyone interested in your company’s overall strategy — especially lenders and investors.

Why Should You Write a Business Plan?

Writing a business plan offers you several benefits, both in terms of operating the company and seeking out small business loans.Taking the time to write a thoughtful business plan can help you have a firm understanding of where you’re taking the company and how you’re going to get there. Without a plan, it can be easy to be pulled in many directions, especially if you’re a new small business. Use your business plan as a reference for how to prioritize in order to best meet your goals.Using a three-year business plan template can make it easier to get started since you're focusing on the near-term. It’s simpler to create milestones in a shorter time frame compared to making the projections required by a five-year business plan — or an even longer one.Finally, a solid 3-year business plan could help you secure external financing. Both lenders and investors typically want to see a business plan as part of the vetting process. Having one on hand lets you be more flexible in seeking financing exactly when you need it. This 3-year project business plan is especially helpful for startups who need capital to launch to the next level. Recommended: How to Write a 5-Year Business Plan

What to Include in a 3-Year Business Plan

Here are the key things to make sure you do in your three-year business plan.

Describe Your Business

This section is often called an executive summary. It should outline the goods or services you plan to provide. This is also where you should state where and how you plan to sell your product, whether it’s online or in a brick-and-mortar store. Another important component of this section is your differentiator. Are you marketing to a specific audience? Are you selling a product that’s new to market? Investors and lenders want to know how you plan to outperform your competition. This is also where you can talk about where your company is today and where you plan to be in the next few years. Recommended: Finding Investors for Your Business

Define Your Goals

Once you outline the structure of your business, it’s time to set goals for the next three years. Revenue is a frequently used metric here. Provide a year-by-year estimate of expected revenue growth based on your specific company and the broader industry. Gross margin is another important goal to consider, especially since your expenses may grow as your revenue increases. All of this information helps you figure out how to calculate cash flow and prepare for any upcoming financing needs to meet these goals. Depending on your business structure, here are some other goals that might make sense to include in your 3-year business plan:

Number of new and repeat customers
Net profit
Net income
EBITDA
Locations
Product line revenue
Sales closing ratios
Market share

Recommended: EBITDA vs Net Income: Differences and Relationship

Analyze Your Potential Market

In order for your new small business to be competitive, you need to understand the market you’re entering. Or if you have a more established business, a market analysis helps you figure out where you currently stand. In this section, you can explain the size of your industry, as well as growth projections and current trends. Also, research your target audience to determine its size and buying habits. You should also perform an in-depth analysis of your competition to identify their strengths and weaknesses.Finally, explain the challenges and opportunities for your business specifically, based on all this information.

Explain Your Marketing Plan

Your three-year business plan outline should include a clear strategy for your marketing efforts. Describe any advertising or promotions you plan to do, whether it’s through online, print, TV, or radio media. Also include the costs involved and the reach you expect to gain with your target audience.A key part of your marketing strategy should be a calendar outlining your campaign schedule. Creating that calendar gives you the chance to think about the upcoming seasonal flow of your business. It’s also helpful for lenders to see that you’re thinking ahead, in case you need to get a business loan in the future. Recommended: Marketing Budget for Small Business

Estimate Costs and Revenues

As you nail down the details of your business operations and marketing strategy, it’s also important to estimate your costs and revenues. Figure out your business’s current amount of capital, whether from a business loan, investor capital, early earnings, or your own personal money. Then calculate the costs of business activities you outlined in the sections above. Find a conservative balance between inventory and customer demand. Or, if you’re a service-based business, figure out how quickly you can scale your workforce size to meet your customers’ needs. Lenders and investors also want to see your customer acquisition cost, which accounts for the expenses involved in your marketing strategy. Recommended: Cash Flow vs Profit Compared

Example of a 3-Year Business Plan

Start your business plan by covering each of the previous sections under its own heading. Then you can write your strategy in narrative form and input graphs and tables as appropriate. You can also create a timeline using this three-year business plan template example:

Year 1	Year 2	Year 3
Goal:	Goal:	Goal:
Strategy:	Strategy:	Strategy:
Quarterly Target	Quarterly Target	Quarterly Target
Q1:	Q1:	Q1:
Q2:	Q2:	Q2:
Q3:	Q3:	Q3:
Q4:	Q4:	Q4:

The Takeaway

A three-year business plan will require some effort. But thinking it through can give you some clarity on what you want from your small business and how you can best achieve it. And it can help your company in several ways, from giving you clear objectives to work toward to attracting external funding.If you’re ready to scale your business up, you can use Lantern by SoFi’s fast online search to get a personalized small business loan option in minutes.

Frequently Asked Questions

Why write a business plan?

What should you include in a 3-year business plan?

How do I describe my business?

How do I write an executive summary?

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About the Author

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.

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