a lender, however, I want to know how long it is going to be before I get my money back
and what is the margin of safety (“the what if factor”).
Don’t kid yourself that banks are interested in taking risks. They are not; they want to be
secured. Banks are not in business to take risks they are in business to get a good return
for their shareholders. Bad debts decimate a bank’s profit and loss account very quickly.
Look at the current credit crunch and what is happening to bank’s shares!
I don’t wish to appear jaundiced; however, the business plan has to be very good and
more importantly your personal financial commitment to the venture has to be there to
be seen by all.
DON’T BE PUT OFF! KEEP IT SIMPLE AND FOLLOW SOME EASY RULES PROVIDED BELOW;
This is a template which covers what a lender/investor would like to see. I have
deliberately kept the content brief and in note form;
1. Introduction / Executive Summary
_ Name of company.
_ Nature of the business; what do you intend to do.
_ Brief details of the management; what skills they provide the business.
_ Amount of funding required and the purpose of the funding.
2. The Business Environment
_ What is the business environment like for launching your new product/service? It
would be unlikely to be suitable for an organisation to aim for expansion in a
period of contracting markets.
_ A SWOT analysis would be useful here to provide an overview of the Business
Environment because the analysis will show you have truly thought about how
much risk there is for your product/service.
_ How likely are the plans to work in the future? Primarily does the organisation
have sufficient resources to carry out particular plans? Will the organisation be
able to sustain the level of sales required?
_ Will the organisation be able to deal with the increased level of competition it will
attract and will it be able to meet the required market share?
The following questions need to be answered;
Why will people buy your product?(what market research have you
Who will buy your product?(market research again)
How much will your customers pay?
Who are your competitors?
What will your market share be?
When will your customers buy?
What price will consumers be willing to pay?
Is the market growing or contracting
4. Management Team
_ CV’s to be provided in the appendices by all executives and key managers.
_ Here a bank is particularly interested in the track record of the Directors.
What is the evidence of past success?
What are the key skills that each executive brings to the table?
Still early, however, what succession planning has been undertaken
As lenders Banks are extremely interested in the strength of the
Management Team. This value should never be under estimated.
5. The Product or Service
_ An in depth study around the definition of your product or service - what EXACTLY
do you do?
_ Cross reference 3 above (under feasibility)
_ If you are an existing business then let’s see what you have achieved to date.
_ If you are buying a business let’s see the Profit and Loss and the Balance sheets
for the business you are buying (at least three years of consecutive figures).
Should you have any question or comment post below.
Who is a lender? Well virtually almost every business needs a lender. Simply put; a lender is one who gives out or loan money. So in business we say a lender could be an individual, institution, government, corporate bodies etc
Business establishments could obtain capital in form of loans, debentures, capital market etc.
Some times before your business can obtain any kind of financial help from the lender it will require a good business plan. These we shall be looking at in our next discuss.
Below here are some recipes for getting the lender to say yes to the financial assistance your business need.
Five Simple Steps to get
Your Lender to say “Yes”!
FIVE simple steps to get a lender to say YES! To your proposals and get the cash you need
Bank Managers are only human although it could be argued some are more human
1. Make sure you have sound financial information accompanied with a
commentary prepared by you.
2. Try and hold the meeting at your premises if you can; this will immediately give
your Manager the opportunity to see your business at work and psychologically
your Bank Manager will focus more on your business.
3. Offer a cup of coffee/ tea and make him/her welcome.
4. Ensure that in any request for cash your business has put in a reasonable stake.
Banks don’t like to take risks and certainly don’t want to do unsecured lending.
The greater the stake the higher the chances of success.
5. Make sure the Financial Role in your business is clearly defined be it you or a
dedicated Financial Controller/ Director- this area is crucial for your success.
I hope this article provides you with a glimpse into the way a Bank Manager or Lender will
be thinking when you ask them to borrow.
Five Rules for Financial Health in your first 12 months of trading...
Once you have opened for business on Day One there is one thing that must always
be uppermost in your mind - CASH. You diligently prepared budgets for your business
- monitor performance against them, believe me a budget never happens, a budget
has to be redrawn many times during the journey in your business.
So for cash do the following;
Ø Get Online Banking. Most Banks will include it initially free as part of their
package for new-start businesses. USE it!
Ø Check your cash flow forecast daily.
Ø Contact any debtor immediately if you think there is a problem - there probably
Ø Keep close to your customers, not only will this help keep a handle on cash but
also will help with cross selling opportunities.
Ø Make sure the surplus funds earn you money. Always be prepared to negotiate
with your Bank for free banking or a reduction in tariff.
2. TALK TO YOUR CUSTOMER
Make sure you speak to your customer at least once a month, should you have fewer
customers then make this more regular. Your customers will in general welcome your
call and this provides you with a great opportunity to get to know their business and
be able to add value - it shows you care.
3. LOOK AFTER YOUR BANK
In the following ways;
Ø Keep in touch with them.
Ø Send them any information you promised to send.
Ø Send them a commentary of how well things are going/not going.
Ø Respect all bank facilities - it builds up your credibility.
Ø Be prepared to help your Bank where you can by offering testimonials about how
good they are this builds the relationship for longer term.
4. SALES! SALES! SALES!
Your business needs to sell something make sure you use your sales plan.
Ø Don’t forget your organic sales, the best sales opportunity is to the customer you
Ø Ask your customer to recommend you where appropriate to others.
Ø Sell to a need where possible. This will ensure the sale is for long term and will
provide further opportunity and create goodwill.
5. THE WORKFORCE
The most underrated asset of your business but the most valuable.
Ø Keep them informed of progress.
Ø Offer incentives.
Ø Make sure that the working conditions are spot on for them.
Ø Make time for them.