Will a Business Plan Help Me Obtain Financing?
If you’re looking for credit from a vendor or service provider, probably not. But, and it’s a huge but, if you’re looking for a bank loan, absolutely yes.
Bankers can be nervous little critters and need to be assured of two things:
1. Your company is stable and has enough cash flow to pay back the loan with interest.
2. The owners of the company, that’s you, has the intention to pay back the loan.
A business plan demonstrates that the company has the assets in place to secure the loan if all else fails. It also shows that you, as the owner, has the foresight to plan ahead. The business plan gives the banker just about everything they need to know about your company.
What should be included in a business plan? It’s not a complicated document to put together. You’ll need an executive summary which should be about two pages long and is just, as the title says, a summary of your plan. Also included should be an overview of the history of your company, its industry, the market, competitors, the products, and marketing strategies. The business plan doesn’t have to be 300 pages long. As long as all the required information is included it can be 10 to 15 pages in addition to the financial statements.
The business plan also includes the historical financials for the last three years and projected profit and loss statements, balance sheet and cash flow projections for the next three years. If the historical statements can be put together by your account so much the better.
Have the plan copies on good paper. You can print on both sides of the page if the paper is heavy enough in weight to stop the bleed through to the other side. It’s not necessary to use a gold embossed leather binder, but do use a new binder.