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How to get Your Business Funded Writing A great Business Plan

It is not uncommon for small businesses with limited resources to be challenged at the very thought of facing their bank manager to apply for business funding. Associated with simple; regardless how long you have been with your bank, you will still have to comply with formalities when it comes to funding your business start-up or business growth. Fundamentally, you will be asked to write a business plan for funding which must be presented gestor de obras with the job form. You may wonder for you to present a business arrange to lenders or investors. Let’s think about why banks want you to prepare a business plan and then you will completely understand why investors ask for this precious document that will cost you some time and money to put together, but ultimately, if done well, will help you improve the much needed finance.

Some reasons why Banks Have to have a Business Plan

  1. Banks are taking a risk for you and your business and they need to understand that risk and compare it with expected reward from your business. Have you ever thought about how banks make their money for their shareholders? Well, they do so investing their capital (money – usually investors’ funds and borrowed funds) in your business with full expectations of earning higher returns than the costs they must pay for borrowing or raising their own capital. If you fail to deliver the returns on their investment from your business, they can become being a victim of your problems which will cost them their business. In short, your risk of business failure becomes their risk too.
  2. They want to gain a better understanding of your management team that will be responsible for managing the funds purchased your business. This is a concept many small businesses and start-ups, don’t grasp fully. They may think their business ideas or wonderful products are sufficient ingredients for business success. Nothing can be further from the truth. A business is an organisation of integrated functional activities designed to accomplish a desired objective. These integrated activities must be managed skillfully by folks inside or beyond your organisation for successful results to be accomplished. The bank manager reviewing the job must be satisfied that your team possesses abilities both at the level of technical knowledge and correct attitude – the critical ingredients for success when present and vice versa. A business that is improperly managed will fail irrespective of the grade of its products and benefits offered to its target market. With this in mind, you must be aware that when you apply for funding from a bank (or any other types of funders), your management team’s quality will have to be judged based on past performance. They also want to know if your management team possesses industry, business and market knowledge. Of course, if you are a one man business, you need to ensure you applied a team, virtual or physical that brings the balance of expertise critical to give assurance to the bank that your business will not expose them to unmeasured risks.
  3. They want absolute assurance that your enterprize model is robust. That you have thought about the pros and cons of each option and have a viable business task that’s not without requiring reality. This will be tested with questions in areas where gaps are detected and you will be expected to give answers that are reliable to ensure their funds are not exposed. Banks want to see positive returns on their investment in your business, they won’t make any compromise on your own short-comings and the earlier you address the flaws in your business plan the faster you will be able to improve funding for your business.

Taken together, irrespective of whom you wish to raise funding from, if you want to successfully fund for your business as a start-up or a preexisting business seeking growth, you must address all the four areas mentioned above in your business plan. I have merely summarised some of the key points for you to bear in mind and you can find more of my articles to learn about the subject thoroughly. In my experience of writing and reviewing hundreds of business plans for funding, a clearly written brief 10-15 pages business plan is sufficient. This should include 3-4 pages of financial information and may I also caution you to stress-test your financial plan for variation in assumptions underpinning cash-flow projections to ensure you have plans to mitigate risks revealed by the tests, as the bank will do so as part of their own homework test. This is referred to as level of responsiveness analysis.

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