Opening a Business Account - Questions asked

[Mode1]

Guys,

A brief background before I pose my question. I have setup a limited company. My company website is 90% complete. The next step was to open a business account. I went along to the Halifax which is my bank and asked to setup a business account.

They directed me to Lloyds as they don't do business accounts anymore. Went to visit Lloyds, the lady at the counter asked me a couple of questions,

1. Do you have a limited company ( I said yes)
2. She then asked me what is the companies purpose

I told her I am offering adventure holidays in Bosnia. Where clients can book online for a 4 day package which includes accomodation, activity etc etc.

The next question caught me out. She asked me what is the expected turnover is it 100, 000 ? how many many packages do you expect to sell in a year.

Now the thing is since this is very new I couldnt answer the last two questions. Its a very small company comprised of just myself and a contact in Bosnia. I cant predict exactly how many holiday packages I will sell each month. I havent completed the website or advertised yet.

I want to be prepared the next time I go to a bank and request a business account has anyone else been asked these questions and not been able to give a clear answer ?.

Thanks

 

[CSBob]

You really need to sit down and draw up a realistic business plan. There are many examples on the net for the format to follow.

During this process you will need to come up with some figures for precisely the sort of thing the bank asked you, and much more. These should be genuine expectations, and based on whatever research you can manage to do.

The same process will also identify your anticipated running costs. Expected turnover minus expected running costs = anticipated profit.

Banks and potential lenders aside, creating a proper Business Plan will help you to clarify your own thoughts and (done properly) maybe even demonstrate whether it would even be a profitable business.

 

[Mode1]

Thanks mate. Can you recommend a good source of information on how to do this ?

Many thanks

 

[GetSet for Business]

Very much agree with CSBob - you really need a business plan, not just to answer the bank's questions, but also to ensure it's a viable business idea. If you need to sell 10 packages a day to cover your costs, its probably not but 10 a yr and it may be easy! Put together a 12 month (at least) cashflow forecast. Put all your costs in first then work backwards. So for instance, you may calculate you overheads to be £2000 a month. If a package costs £1000, then you know you need to sell 2. It gives you confidence too when you work on this document - as long as the business idea is viable. Good luck!

 

[CSBob]

Thanks mate. Can you recommend a good source of information on how to do this ?

Many thanks

Google 'Business Link'. The organisation itself may be less useful than they once were but they still have an excellent, very informative site. Indeed, if you're completely new to business then an hour or two spent on their website will be well worth your time.

 

[luap6363]

Guys,


The next question caught me out. She asked me what is the expected turnover is it 100, 000 ? how many many packages do you expect to sell in a year.


Thanks

Although Its important to have a business plan in general for your business, its an absolute myth that you need this to open a business account.

These questions are most common and she need to categorize you and screen you before they process you.
They might also ask you how many staff you are going to employ in the UK, if you say more than 5 then she will bore you with various insurance products.

They ask these questions to cross sell other products as well. Lets face it, they are never going to give a loan, so be confident, have a rough forecast, a viable business concept and go back. Try HSBC they offer 18th free banking.

 

[GIBD-Team]

I agree with luap6363. Especially when you are a business start-up you need to focus on getting things started fast, and don't have too much time to "prepare" things. Don't get me wrong, a business plan is certainly a good thing, but maybe sitting down with your wife/friend/partner over the weekend does the job. My experience with business plans for over 10 years now is that this is an ONGOING task. I have never seen it working creating a business plan once, and then magically the success will come. You need to update and even change the plan if necessary, to be able to accommodate to all the needs of your business.

So simply said, get an idea what you try to achieve, and write it down so it is not just in your mind. And then get busy to build your business and change/update while you find out how things work. And don't focus too much on banks or other institutions, because I have never really seen that they are very helpful in making you successful. But this is not a critic, it just shows that they are in the business of "money" and not in consulting your business or even taking care about your success.

Best, Ralf
Gerhardt Internet Business Development

 

[ballista]

As a new business we needed to complete a business plan prior to approaching a bank as we were looking for a small business loan and this was a requirement. After an initial visit to a bank we were directed by them to a local small business start up advisor who gave us the necessary advice and tools to begin formulating a full business plan with all the relevant financial data which would be expected. I imagine it is possible to get a business account without a business plan but unlikely for a new start up business. Plenty of useful websites out there, we used several , startupdonut for example plus this forum is a mine of information and good source of business contacts.

 

[Talay]

As a new business we needed to complete a business plan prior to approaching a bank as we were looking for a small business loan and this was a requirement. After an initial visit to a bank we were directed by them to a local small business start up advisor who gave us the necessary advice and tools to begin formulating a full business plan with all the relevant financial data which would be expected. I imagine it is possible to get a business account without a business plan but unlikely for a new start up business. Plenty of useful websites out there, we used several , startupdonut for example plus this forum is a mine of information and good source of business contacts.

If you do not require any borrowing, opening a business bank account requires nothing more than a couple of signatures on their paperwork after filling out a couple of forms. No business plan, no accountants predictions, no barometric pressure readings etc.

KISS and gloss over any bumpf spouted by the staff. In fact, never go near any of their staff in the first place and do it all online and via the post.

 

[Jimmy Lawrence]

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