For start up businesses or those making a significant change in direction, it is usual for banks and financiers to ask to see a business plan. The business owner has normally done most of the required research – sometimes without realising it is a business plan. In other cases, it is necessary to go away and prepare one.
This is adapted from an article published in Open Air Business magazine.
A common trap is to use the plan to "sell" your business to a third party – either with pages of fanciful prose or wildly optimistic, unsubstantiated assumptions. A good business plan can be brief and concise.
As a personal note, I’d suggest that starting with a cash flow projection is a fantastic way to encompass all aspects of the business.
Many banks and accountants offer free templates. Alternatively, there are lots online – they are useful, but don’t be limited by their titles or feel the need to fill in each section for the sake of it.
It’s not an exact science, but the first thing most lenders will do is to look for evidence and research around key assumptions. They will also closely question what the money will be used for. In the asset finance arena, we look very much for income-creating of mission-critical purchases.
This is adapted from an article published in Open Air Business magazine.
What and why?
The business plan, as the name suggests, is a plan of how you will run your business. The value to you, the business owner, lies in the research and the detail behind the assumptions. In presenting your advisors, partners or colleagues with a plan, you help to focus their input and create constructive, relevant feedback.A common trap is to use the plan to "sell" your business to a third party – either with pages of fanciful prose or wildly optimistic, unsubstantiated assumptions. A good business plan can be brief and concise.
Business plan content
There are five key components of a business plan:- Executive summary (overview of key points)
- Operations (people, systems, logistics, technology, timelines etc.)
- Marketing (market research, demographic, competitor analysis, SWOT, political & social environments etc)
- Financial (P&L projections, opening balance sheet, capital requirements/sources etc)
- Appendices (back up information that supports content but doesn’t belong in the body of the plan, this part is infinitely adaptable to suit a specific audience)
As a personal note, I’d suggest that starting with a cash flow projection is a fantastic way to encompass all aspects of the business.
Many banks and accountants offer free templates. Alternatively, there are lots online – they are useful, but don’t be limited by their titles or feel the need to fill in each section for the sake of it.
Lenders and business plans
There are many amusing myths around how lenders treat business plans. In reality what they want is the same as you – to see how well researched the plan is, why you want to borrow and whether you are likely to be able to service debt.It’s not an exact science, but the first thing most lenders will do is to look for evidence and research around key assumptions. They will also closely question what the money will be used for. In the asset finance arena, we look very much for income-creating of mission-critical purchases.
