In an age where credit is being released to only the most organised and fiscally buoyant of entrepreneurs, two magic ingredients are elevating business plans to a new level – and convincing banks to lend in the process.
Two leading small business financiers and advisors have highlighted key criteria frequently overlooked by those formulating a business plan.
Rob Warlow, MD at Business Loan Services, believes tailoring your business plan to the needs of its desired reader is vital, and it’s a necessity that many burgeoning entrepreneurs are overlooking.
In conversation with BusinessWings, Warlow urged business buyers to “tailor the content” of their business plans “according to who’s going to read it,” citing the need to disclose your exit strategy to a venture capitalist as a prime example.
The reader of the plan needs to be able to understand the plan enough to be able to make informed decisions without having to read through hundreds of pages
Caroline Marsh, Platinum Partners Group of Companies
Meanwhile, Karen McNulty of BusinessPlanWiz.com placed the notion of exhaustive research at the heart of a business plan’s relative success or failure. “Performing in-depth research before you get started will achieve much better results,” she told BusinessWings, adding, “evidence that you’ve researched your cash flow forecast really helps your case if you are using your business plan to apply for funding.”
The full extent of Rob Warlow and Karen McNulty’s views are detailed below, along with further contributions from Caroline Marsh and Toby Luper.
“Tailor the content of your plan according to who’s going to read it. If you are writing a plan to raise equity investment, venture capitalists will want to know what the exit strategy is and what their eventual rate of return will be. Banks want to be assured that the business can afford the monthly loan repayments as demonstrated via the financial projections.
“Don’t do it alone. Business owners can be tempted to write a plan themselves.
“Done correctly it can take many hours of thought and numerous drafts and rewrites. If the purpose is to raise significant amounts of money consider outsourcing it or at least getting help.
“Follow a framework. Don’t write anything that comes to mind; keep it structured. A framework can be: where you have come from; where you are now; where you intend to be; how you intend to get there.
“Get your presentation right. Your business plan is a reflection on you and your business. A poorly written and badly presented plan sends a clear message to the reader – you just don’t care.
“If you are to attend an interview, with your banker for example, send in a copy of your plan at least three days before. This will give him time to read it, to understand your business and to prepare a list of questions or queries. This will result in a much more productive meeting.”
Rob Warlow, Business Loan Services
“Performing in-depth research before you get started will achieve much better results. Just simply working out how much you expect to sell, what your costs will be and your starting bank balance will make it simpler to prepare a cash flow forecast.
“Evidence that you’ve researched this really helps your case if you are using your business plan to apply for funding. Make sure you include your competitor’s details in the plan also.
“Finally, use the internet to find out as much as you can about the industry or sector that you will be in. Government and support organisations are good for this, also local authority (council) websites. You can usually get some good information from your local library too.”
Karen McNulty, BusinessPlanWiz.com
“Get the numbers right. If you are writing the business plan for an investor then you must tailor the business plan to show how the coming years will look in terms of return for the investor and the investment.
“The drama is in the detail. The trick with any business plan is to convey all the necessary details while remaining to the point. The reader of the plan needs to be able to understand the plan enough to be able to make informed decisions without having to read through hundreds of pages.”
Caroline Marsh, carolinemarsh.com
“Robust preparation and research to continually assess and compare your competitors’ strengths and weaknesses with your own will establish your USP, your pricing structure and your position in the marketplace. With budgeting, always be ultra conservative – increasing and reducing your established overheads and sales figures respectively will allow for any unforeseen contingency.”
Toby Luper, Hemingway
