Free Donut Shop Business Plan
Obtaining Business Financing
When obtaining a business loan
for a donut shop business, it is imperative that you have a properly structured
business plan that will assist you in showcasing how you intend to operate your
Donut Shop, how the business will operate, how you intend to market the
business, the anticipated financial results of your company, and how you intend
to repay your debt obligations. This sample loan business plan will provide you
with the framework that you need in order to acquire a business loan for
starting or expanding this type of business.
When obtaining a business loan
for a donut shop, it is imperative that your business plan has a clear and
concise executive summary that provides an outline of what are seeking to
accomplish, how much capital you are seeking to raise, the management biography
of the business owner, and an overview of the anticipated profit and loss
statements of the business. Here is an example of how the title paragraph should
Donut Shop, Inc.
(“the Company”) is seeking a business loan of $100,000 in order to launch the
operations of a donut shop business that will be based in
California. The Company was founded in (Insert Year).
The business was founded by Mr. John Doe.
In the next segment
of the business loan and business planning document, you should showcase the
products and services that you will be providing to the general public. For
As stated above,
Donut Shop, Inc. will specialize in the retail sale of donuts, pastries, and
beverages that are commonly found among retail locations that specialize in
these products. The business will produce its donuts and pastries on site so
that customers are provided with only the freshest products on a daily basis.
The third section of
the business plan will further discuss the operations and products offered by
the Donut Shop.
Business Loan Terms
Now it is time to
discuss the anticipated terms of the business plan that you are seeking. An
example paragraph of how this is stated:
At this time, Mr.
Doe is seeking a conventional business loan in the amount of $100,000. The
interest rate, loan terms, and loan covenants are to be determined during
negotiation. However, this business plan assumes that the business will receive
a seven year business loan with a seven percent interest rate due on the
outstanding principal balance.
Now that the
summary of the business has been provided, it is time to provide a brief
overview of the owner of the business. An example paragraph summing up the owner
is as follows:
Mr. Doe is a highly
experienced business person that has years of experience regarding the direct
ownership and management of business. He will be able to effectively bring the
operations of the Donut Shop to profitability while ensuring that the business
loan’s payments and its covenants are met at all times.
The most important
thing to your lender when applying for a business loan is how you intend to
repay the bank. In this section of the business plan, you should provide an
overview of the finance’s of the business discussing the anticipated revenues,
expenses, and profits/losses. You can also discuss the applicable collateral
within the business plan that will be used to secure your business financing.
One of the most important
aspects of your business plan is how you intend to expand the business over a
three to five year period. Banks and finance companies always want to see that
the business will experience a moderate to strong level of growth. This is
especially true in business lending because as your business grows the cash flow
that secures your business loan will decrease proportionality against your
monthly credit obligations. An example of how this is stated is as follows:
The Donut Shop will
continue to expand through organic means including increasing the Company’s
advertising budget via the reinvestment into the after tax cash flows of the
business. Additionally, if the business is highly successful then the Company
may seek to establish additional Donut Shop locations after the third year of
Use of Business Loan Proceeds
In this section of the business
plan you should focus on how the proceeds of the business loan will be used. An
example of this would be as follows:
Establishment - $50,000
Equipment and Opening Inventory - $10,000
capital - $40,000
In this section of the business
plan you should discuss the percentage ownership of the business among the
owners of the business. For example:
Mr. Doe will own
100% of the Donut Shop.
Board of Directors
When applying for business
financing, the bank will also want to know who serves as the board of directors.
For small businesses, usually the owner serves as the director of the business.
An example of how this is worded:
Mr. Doe will be the
sole director of Donut Shop, Inc.
Any bank or financing company
is also going to want to know what you intend to do with the business over a set
period of time. Many business owners will develop and expand a business with the
intent to sell the company to a third party at a later time. When drafting this
part of the business plan you should focus on what you intentions are in regards
to potentially selling the business. This is often worded as:
Mr. Doe would most
likely sell the Donut Shop to a third party for a significant earnings multiple.
Donut Shops usually sell for approximately one to three times earnings given the
financial strength of the business. In this event, the business would be sold by
a business broker and the business loan sought in this plan would be repaid
according to the covenants of the business loan agreement.
Products and Services
When developing a business plan
that is appropriate for obtaining a business loan or other business credit
facility you need to clearly showcase the services or products that you will be
offering to the general public. An example of how this section is worded goes as
The Donut Shop will
pride itself on only providing the freshest donuts to the general public of
San Francisco. The business will sell a wide variety of
donuts, pastries, and beverages (including coffee and teas) that will generate
substantial gross margins for the business. As stated in the executive summary,
all donut and pastry products will be produced on a daily basis directly within
the Company’s location.
Industry and Market Analysis
State of the Economy
It is important to let your
financial institution know that you are well apprised of the financial situation
of the general economy when you are applying for a business loan. This is
especially true in today’s environment where lending has become more difficult
and will remain more difficult in the foreseeable future. Specifically, you
should gear this section of the business plan analysis towards the industry that
you are operating within. For example:
The current economy
has remained difficult over the past few years. However, Donut Shops tend to
operate with a strong degree of economic stability as the low pricing point of
the Company’s products coupled with the fact that many people need a quick sugar
fix will allow the business to remain profitable and cash flow positive at all
times despite the difficulties in the economy.
The Donut Shop Industry
In addition to providing your
business loan officer with an understanding of the general economy, it is
important that you showcase that you have an equal understanding of the industry
in which you are operating within. As such, you will need to provide you
business loan institution of a brief overview of your industry and any potential
changes that may affect the way that your company does business. An example of
how an industry overview is as follows:
Around the country,
there are more than 8,000 businesses that specialize in the sale of pastries and
donuts that operate one or more retail locations within the
United States. This is a mature industry and
the expected growth rate is expected to remain on par with that of the general
economy. In each of the last five years, the industry has generated more than
$3.5 billion dollars while providing employment to more than 80,000 people.
In this section of the business
loan application and business plan analysis, you should focus on the
demographics of your localized market (or national market if applicable). This
section should discuss how many people live in your area, the anticipated number
of people that would require the use of Donut Shops, the median household income
of people living in the area, poverty line statistics, and any applicable laws
that would apply to your operation of Donut Shops.
Many people that are developing
new businesses or expanding existing businesses often feel that their business
does not have any competition or limited competition at best. However, this is
almost never the case. Unless you have re-invented the wheel – you will have
competition. When applying for a business loan, you should clearly showcase your
competition in your business plan. This is especially important to your banker
as they will be able to gauge your ability to be successful in your targeted
market. Many business loan underwriters will aggressively confirm that
competitive nature of your local market and your local industry.
When drafting this section of
the plan you should heavily discuss the competitive advantages that you intend
to have over your competition.
In addition to all of the above
information that we have covered, your business loan officer is also going to
want to know how you intend to market your business to the general public. Most
people do not quite understand how to effectively market their business outside
of prominent signage or flyer distribution. When applying for a business loan
(again in this difficult lending climate), your banker is going to want to see
that you have a clear methodology of how you intend to market your services or
products to the general public. In this section of the business plan – we will
overview how to showcase your services/products to the general public.
Marketing Overview Example
- The Donut
Shop will place prominent signage on the facility to draw a significant amount
of foot traffic.
- The business
will maintain listings in the Yellow Books.
- The Donut
Shop will also maintain an internet website that showcases the Company’s
operations, hours of operation, and relevant contact information.
Marketing Strategies Overview
Additionally, you will be
required to further drill down (in your business plan) how you intend to
implement your strategies when you launch or expand your business’s operations.
In this section of the business loan and business plan documents, you should
amplify the bullet points from the section above. For instance:
The Donut Shop intends to use a number of strategies that
will create instant traffic and customer flow to the Company’s location. These
strategies include not only using prominent facility and road signage, but also
distributing flyers to people that fall into he Company’s targeted demographics.
The business will also regularly take out advertisements in localized newspapers
that showcase the Company’s hours of operations, the donuts and pastries offered
by the business, and specials that are occurring within the store on a regular
The business will
also maintain a highly informative website that showcases the Donut Shop, its
hours of operation, product listing information, and other relevant information
in regards to the Company’s pastry and donut products. This website will be
listed on major search engines such as Google as many people now use the
internet to locate local businesses. The business will also develop ongoing
relationships with caterers and local offices for regular delivery of donuts,
pastries, and coffee to their locations.
The Financial Plan
Beyond any other part of your
business loan application or business plan, the financials section of these
documents are what matters most when applying for a business loan or any other
type of credit facility. Ultimately, this section of the business plan showcases
not only what your anticipated profitability will be, but also how you intend to
repay the funds that you have borrowed through your business financing facility.
An example of how this section is structure is as follows:
- Donut Shop,
Inc. will have an average annual growth rate of 10% per year.
- Mr. Doe will
acquire $100,000 through a business loan in order to launch the operations of
Proforma Financials for a
Now it is time to showcase how
you intend to repay your loan, generate a profit, and increase the book value of
your business over a three to five year period. BusinessPlansForLoan.com has
developed an easy to use financial model that you can use when drafting out the
financial model for your business plan and business loan application. Through
your business loan application, you will be required to have the following:
- Profit and
Loss Statement for your Donut Shop
- Cash Flow
Analysis for the Donut Shop
- Balance Sheet
for the Donut Shop
- Business Loan
Please see images below