Are you planning to approach your bank for a finance to kick start your growth plans? Before you start reaching for the phone your first task is to write a Business Plan.
I am great fan of a one-page Business Plan; a simple, focused document which gets straight to the point of where you need to be over the next 12 months and how you are going to get there.
However, when it comes to raising finance that’s not going to cut it; you need something with more substance.
Writing a Business Plan can be a daunting task but committing time to writing an effective Plan can help improve your chances of success of getting that all too elusive ‘yes’ from the bank.
Here are 7 tips on writing a Business Plan that rocks.
Tip #1: Understand Why the Bank Wants a Plan
Trying to get your head around what a business is, how it operates and what it wants to achieve is not easy if it is presented verbally. The bank ideally wants to see all it needs to know about your business in one document instead of having to gather information from a plethora of sources.
The creation of your plan is about setting out a clear strategy and detailing long term objectives. With clarity of what your future looks like you are more likely to make the right decisions along the way and this is what the bank wants comfort on.
The benefits of presenting a well crafted Business Plan cannot be underestimated when it comes to raising business finance.
Tip #2: Don’t Go It Alone, Ask For Help
Picture this. You've never written a Business Plan before; you sit down and end up staring at a blank screen for 3 hours! However, in order to help you put a plan together there are a variety of sources of help you can tap into:
Internet and books
Never be afraid (or to proud) to ask for help.
Tip #3: Follow a Framework
Having a framework or outline to follow can make the task of writing a Business Plan so much easier. The 4 parts to your Plan are:
Where you have come from
Where you are now
Where you want to be
How you are going to get there
This is the framework which will guide both you and the reader through your business and your idea.
Where You Have Come From
In the first section lay out your back story; how your idea came out; the gap you were looking to fill or the problem you wanted to solve; and finish with a brief overview of how you got started.
Where You Are Now
In the next section you paint a picture of where your business is now.
Location and premises
Your product or service
Equipment and other physical resources the business utilises
Overview of your past financial performance
Where You Want to Be
Having described your business, the next step is to outline to the bank what you want the business to look like in say three or five years. The main points to cover are:
Your objectives and goals. Be specific to demonstrate you have thought this through
State what you want from the bank for example, a loan or overdraft how much you are looking for
Explain why you need the finance and what it will be used for
How You Are Going To Get There
It’s all very well describing your business and promoting your idea but the important point to get across are the actions you will take to get you there. The key points to cover include:
Additional resources needed to meet your objectives and goals
Your contribution in terms of cash or equipment
Security you can offer to support the facility
Profit and loss and cash flow forecast to show that you plan to make money and that you can pay back the loan
Tip #4: Provide Supporting Information
Your Plan will contain a lot of information, so it would be helpful to include supporting documentation to provide more background. Placing these additional items as an appendix ensures that the flow of the Plan has not been affected by additional information.
Letter of support from your Accountant
Confirmation of pending orders from customers
If you are purchasing a property, you could include the sales particulars
Independent industry surveys showing that your sector is doing well
If you are buying machinery, include quotations
If your business’ main asset is you, include your CV
Tip #5: Ask Someone to Review It
When you are totally immersed in a task you can easily miss obvious mistakes. Ask someone to review your Plan to ensure there are no spelling or grammatical errors. Does it all make sense? Have you been logical in your arguments? Have you answered the key question “Why we are safe to lend to”?
Tip #6: Get the Presentation Right
After having spent a lot of time and effort on the content you don’t want to kill it dead with poor presentation.
Avoid technical terms and industry jargon
Break the text up to make it easier to read
Use pictures and colour to bring the Plan to life
Tip #7: Deliver Your Plan to the Bank in Advance
Once you are satisfied that your Plan is a good representation of your business submit it at least three days prior to your meeting so the Manager has time to read it. This will give them time to collate questions and to identify areas that need clarification.
Follow these steps and you will be in a much stronger position to get the bank on board with your plans.
Rob Warlow is the MD of Business Loan Services which helps business owners raise commercial finance. He is the author of ‘Loan Sharp: Get the Business Finance You Deserve’ which is available via Amazon. For more information check out www.businessloanservices.co.uk
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