I have spent had many years looking at Business Plans some excellent and some poor. As
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.