A well prepared and researched business plan is a valuable asset to any business. It sets out the business vision, goals and the model by which the business goals will be achieved in one document, together with financial projections. Former banker Carrie offers tips on what banks look for in a plan.
“A business plan is the evidence for the chances of the business succeeding and thriving, and is the go-to document for bankers for any business seeking financial support.
Even if you are not seeking funding, discussing your business plan with your bank can help identify the best banking products and services to support your business aspirations. This can also provide a valuable source of feedback on your plans and the assumptions made about them.
When assessing a business plan, bankers will look for the following information:
- Your expertise and experience in the market your business will operate in, including the track record and experience of any staff you bring into the business
- Credible statistics and facts about the market your business will operate in, including the size of the market, the predicted growth of the market, your competitive advantage and how you will reach prospects and convert them to customers
- Detailed revenue projections and clear, realistic assumptions about how revenue will be generated
- Detailed cost projections
- How much finance you are looking for and for how long
- What difference the finance requested will make to business revenue and whether it is a short-term investment or a longer term more strategic investment
- If any other sources of finance are being used
- The affordability of repaying the finance for the business and detailed cashflow projections to evidence the affordability
Banks generally do not lend to pre-trading businesses and seldom lend to early stage start-up businesses due to the lack of a trading track record. Once a trading record has been established, banks can evidence the business ability to manage costs, generate revenue and repay finance. When making a lending decision, banks will also consider the prospects of the market or industry sector your business is operating in. It is critical that your business plan presents credible research and statistics on sectoral growth and your business competitive advantage, evidencing the positive growth prospects for your business and its future viability and sustainability.”