If you are a start-up or an existing business, getting the money right is the difference between success and failure. One of the main reasons a business fails is due to poor or inadequate funding.
When you go into business, one of your aims is to grow and be a success and getting the right finance in place is all part of that. The first step then is preparing a business plan that the bank will like and get all the relevant information from. Your business plan should map out the direction you intend heading in and how you are going to make it happen.
Most plans should include a summary of your business and have a cv included in it that explains your experience in that particular field. So point one then is a summary of your qualifications and experience. Point two, competition, who they are, what they are doing and how you will fit into this market and make more money than them, or how you will be different from them. Point three is the old marketing plan, and don’t worry it’s not a dirty word, there is lots of information stored on this thing called the internet, which helps you to write a corker of one. You need to list achievable targets, pie in the sky will be seen through and the lenders will stop reading it at this point, and point four, the financials.
Ok, so what in particular do they want to read about money wise. Well if you are a startup it’s a good idea to make your cashflow forecast for a minimum of three years as this shows your commitment to the business and gives them confidence that you believe in yourself. You also need to show that the loan you are seeking, can be repaid and when it can be repaid by. After all, when you lend money to people, you do so on the understanding of when and how you are getting it back. The lender will also like to know about already existing outlays finance wise, ie do you have any other loans personal or otherwise, how much for and how long is left to pay on them. It’s a mistake to think you don’t have to disclose this information, hide something from them and again lenders will switch off from your plan.
You also need to show them how the money will be used and what difference it will make to your company. And don’t forget, the lenders/banks, like to see some commitment from you. After all, if you don’t believe in your business why should they? You need to show that not only do you put time and effort into it, but also your own money. You will score big brownie points if you can do this.
Now the bit that worries some, the disclosure of personal credit history. If you have no issues with it, brilliant, enjoy, but if you have some blots on your record, tell them before they find out. Explain to them what happened and why it happened, better this way than them feeling you are hiding something from them.
So then, in summary, keep it simple, don’t go overboard on the presentation, and most importantly of all, be honest and be realistic.