- 31 Jan
Producing A Business Plan To Support Your Finance Application
We were just talking about the number of new applications for business finance that we are seeing but commented how suprising it is, the number of companies that apply for facilities of £250K+ or more, without providing any kind of business plan.
We regularly see applications without a business plan, financial projections or forecasts being provided to the finance company that the prospect are expecting to provide facilities.
Producing A Professional Business Plan
A professional business plan seems essential for any company, whether it is a new start or an existing business looking to grow. All businesses should produce some form of business plan in order to support their forecasts.
This is particularly poignant when a company are approaching external lenders, expecting them to provide significant levels of funds. In my previous article about how to make a successful factoring application, there are links to both support regarding the production of cash flow forecasts and our free guide to business planning, which whilst aimed at startups, is equally useful to an established business that does not have a plan.
There is online help on the Government's site about: Producing A Business Plan and there are numerous business consultants that are able to provide support regarding the production of a business plan if you don't have the skills to produce it yourself.
The business plan gives you an opportunity to set out how you going to achieve the level of turnover that you are projecting, and how you are going to attract the volume of potential customers that you anticipate.
It will also give the lender some understanding of the costs associated with your business, and the margins of return that you are likely to achieve. The business plan is your opportunity to show that you have considered the various obstacles that could stand in your way, for example lack of working capital, and put in place measures to overcome any issues.
Building Credibility With Potential Lenders
Of course having a business plan is no guarantee of success, but it adds credibility to your application, and builds professional trust with any potential lender.
Some of the figures within your plan, such as your projected turnover, will be key to the pricing that a funder will offer. Therefore, at least basic financial forecasts and projections showing the level of sales that you can realistically achieve in the first and second six months of trading are very important for new start businesses. It is also important to keep these figures realistic, to build confidence in your business plan.
So, it is a good idea to develop some form of business plan for your company that can be provide to prospective funders, in order to show them exactly what your business is about. See it as an opportunity to showcase your ideas.