Table of Contents
A business plan is a must-have for any company, no matter how long it has existed.
A three-year business plan gives you a healthy timeframe to work with. 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’s straightforward to craft while also able to serve as a compelling resource for anyone interested in your company’s overall strategy — especially lenders and investors.
Key Points
• A business plan serves as a strategic roadmap for achieving your business goals, guiding decision making, securing funding, and measuring progress over time.
• Components of a three-year business plan include a description of your business, your business goals, an analysis of your potential or ideal market, a marketing plan, and an estimate of your costs and revenues.
• Most lenders will want to see a business plan, so if you intend to apply for a small business loan now or in the future, a business plan is a necessity.
• A business plan helps founders identify potential risks and challenges early by requiring a structured review of the market, operations, and financial assumptions before launching or scaling.
• Writing a business plan encourages more realistic financial forecasting by requiring businesses to justify assumptions about revenue, expenses, and growth using data and research rather than estimates alone.
Why Should You Write a Business Plan?
Taking the time to write a thoughtful business plan can help you get a better 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. You can use your business plan as a reference for how to prioritize in order to best meet your goals.
Measure Progress and Goals
A business plan serves as a roadmap that outlines your business’s objectives, strategies, and timelines, providing clear benchmarks to measure progress toward your goals. By setting specific, measurable targets, such as revenue milestones, customer acquisition numbers, or market expansion timelines, you can track your progress regularly.
Recommended: How to Write a Business Plan
What to Include in a 3-Year Business Plan
Here are the key things you should do in your three-year plan.
Describe Your Business
The first 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 or service and whether you’ll have an online or 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.
Additionally in this section, you can talk about where your company is today and where you plan to be in the next few years.
Define Your Goals
Once you outline the structure of your business, it’s time to set goals for the next three years.
Annual revenue is a frequently used metric here. This is the section where you’d typically 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 you might need to meet these goals.
Depending on your business structure, here are some other goals that might make sense to include in your three-year business plan:
• Number of new and repeat customers
• Net profit
• Net income
• EBITDA
• Locations
• Product line revenue
• Sales closing ratios
• Market share
Analyze Your Potential Market
In order for your new small business to be competitive, you need to understand the market you’re entering. If you have a more established business, a market analysis helps you figure out where it currently stands.
In this section of your three-year plan for your business, you can explain the size of your industry as well as growth projections and current trends.
Additionally, 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.
Explain Your Marketing Plan
The outline of your three-year plan for your business should include a clear strategy for your marketing efforts.
Describe any advertising or promotions you’re planning, whether through online, print, TV, or radio media. 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.
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 to provide realistic financial projections.
Figure out your business’s current amount of capital, whether from some type of 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 usually want to see your customer acquisition cost, too, which accounts for the expenses involved in your marketing strategy.
Recommended: Creating and Managing a Small Business Budget
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 to follow through the stages of business growth using the following 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: |
Year 1 Plan
Describe your business. Launch a new e-commerce platform specializing in eco-friendly home products. The business will cater to environmentally conscious consumers looking for sustainable alternatives.
Define your goals. Establish a solid online presence, acquire the first 1,000 customers, and achieve break-even by the end of the year.
Analyze your potential market. The target market includes individuals aged 25-45 who prioritize sustainability. Market research indicates growing demand for eco-friendly products, with a potential market size of $50 million in the initial region.
Explain your marketing plan. Use digital marketing strategies, including social media campaigns, influencer partnerships, and content marketing focused on sustainability. Launch a blog and share it on social media platforms to educate and attract eco-conscious customers.
Estimate costs and revenues. Initial setup costs are estimated at $100,000, including website development, inventory, and marketing. Projected Year 1 revenue is $200,000, with a break-even point expected by month 10.
Year 2 Plan
Describe your business. Expand the product line to include eco-friendly personal care items. Begin exploring international shipping options to reach a broader audience.
Define your goals. Double the customer base to 2,000, increase revenue by 150%, and enter at least one new international market.
Analyze your potential market. The expanded market includes a broader demographic, with a potential size of $100 million in targeted regions. Market research supports growing international interest in sustainable living products.
Explain your marketing plan. Enhance digital marketing efforts, introduce targeted ads for international customers, and collaborate with international influencers. Launch email campaigns promoting the expanded product line.
Estimate costs and revenues. The estimated costs for expansion and marketing are $150,000. Projected Year 2 revenue is $500,000, with a significant increase in profit margins due to economies of scale.
Year 3 Plan
Describe your business. Solidify market position as a leading provider of eco-friendly products with a diverse product range and global customer base.
Define your goals. Achieve market leadership in the niche, triple the customer base to 6,000, and reach $1 million in revenue.
Analyze your potential market. The global market for eco-friendly products is rapidly growing, with an estimated market size of more than $361 billion. The business will focus on maintaining a competitive edge through innovation and customer loyalty.
Explain your marketing plan. Expand marketing to include global campaigns, partnerships with major eco-friendly brands, and participation in international trade shows. Continue to invest in content marketing and customer engagement.
Estimate costs and revenues. Estimated costs: $200,000 for global marketing and operational scaling. Projected Year 3 revenue is $1 million, with substantial profitability and strong financial stability for future growth.
Recommended: Business Growth Strategies
3-Year Business Plan vs 5-Year Business Plan
Many businesses use a five-year business plan. While either can be useful, the difference in timeframe does create some differences. Here are some of the significant distinctions between the two kinds of business plan.
| 3-Year Business Plan | 5-Year Business Plan |
|---|---|
| Mid-term length | Long-term length |
| May be more useful and realistic in quickly-evolving industries | May be more appealing to outside investors and lenders |
| Helps the company stay agile and responsive | Provides longer-term guidance to keep a company on course |
| Focus on the near future may hinder seeing longer-term opportunities | Plans can be upended by changes in the industry or financial environment |
Recommended: 5-Year Business Plan
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 once you’ve completed it, the plan can help your company in several ways, from giving you clear objectives to attracting external funding.
Ready to grow your business? SoFi Small Business Loans can give you fast access to the capital you need. Check your eligibility in minutes.
FAQ
Why write a business plan?
A business plan can keep 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 applications for any type of small business financing, which can help build your business credit.
What should you include in a three-year business plan?
There are five core components to include in your three-year business plan. These include your business description, goals, market analysis, marketing strategy, and cost and revenue estimates.
How do I describe my business?
Start by defining what your business plans to sell, whether it’s a product or a service. Then state directly what makes your business stand out from the competition.
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 often should I update my three-year business plan?
Reviewing and updating your business plan at least once a year can help you assess your progress and revise goals as needed. But there may also be other times it makes sense to review your plan, such as when you want to expand, you have new competitors, or there’s a significant shift in your industry, to name just a few.
Photo credit: iStock/cagkansayin
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