Business development · 17 July 2015

Writing a business plan: How to stand the best chance of the bank manager saying “yes”

A business plan is all about making the proposition as easy to understand as possible

Whatever stage you are in your business, the chances are you will need help with financing. The obvious port of call is going to your bank manager but do you have a business plan?  Here are some top tips for putting a plan together.

(1) Don’t avoid the inevitable – Write the plan

You may have the best idea and your presentation skills may help when you are in front of the bank manager, but you will have to invest some time putting a business plan together if you are looking to get finance from the bank or any other potential lender. Don’t try and cut corners – you may have to spend time researching and liaising with advisers to provide the right details. It will  help the bank manager make an informed decision.

(2) Give the right detail but don’t feel you have to write an essay

A good plan should contain the right detail, but at the same time be succinct. Avoid flowery language and before you put pen to paper, be clear with yourself about the what’s, why’s and how’s of your business and needing extra finance.

(3) Write an executive summary

Although this will be written last once you have written the full business plan, the executive summary goes at the beginning and will need to capture the attention quickly, highlighting the most important points. Like the rest of us, bank managers are time short and some won’t bother reading past the executive summary if they feel there is not going to be the right detail in the plan.

(4) About your business

Give a clear overview of your business and company values. If already trading, provide a brief overview of the history of the business.

(5) Why now?

Whatever the reason be clear in your plan, why are you doing this and why the timing is important. Whatever the reason do spell it out, so you present a compelling case for funding.

(6) Don’t forget to do your research – Look at your competitors

Make sure you list the advantages and disadvantages of all your competitors (i.e. those in the close vicinity). What will make prospective clients or customers come to you? What’s going to be different? Are you going to be offering additional services? How are you going to beat the competition and ensure your business is not vulnerable?

Do a SWOT analysis. Look both internally and externally at the business. What are the internal strengths and weaknesses of the business. But also look externally at the wider market and the opportunities and threats that the market will present.

(7) Your management team

The bank manager will want  to see the team structure of the business. He/she will be interested in the various career credentials of those involved. What have you/your team achieved in the past? Have you won any industry awards? Do you/they have some very loyal clients? Remember to:

  • Define each management role and who will fill it/is already filing it
  • Describe the background and experience of each team member
  • Clarify how you intend to cover the key areas of production, sales, marketing, finance and administration
  • Show how many mentors and other supporters you will/already have access to

(8) Marketing – How are you going to let people know about your business?

Do include a good overview of how you intend to market your business. Will it be by using advertising, PR, direct mail or via email. Do your research and draw up an outline budget for these costs.

(9) Office space or location of a shop

Do factor in details and costs for new premises or office space.  Will you be able to agree a great deal with landlords on the length of tenancy? Perhaps you are looking to buy the property yourself?

(10) Financial information – What should you include?

Do give a realistic sales forecast as this forms the basis for all your other figures.

  • Your cash flow forecast. This  shows how much money you expect to be flowing into and out of your bank account and when. You must show that your business will have access to enough money to survive. Do also show that you understand the key factors affecting cash flow – e.g level and timing of sales revenue, wages. Show when there will be more money coming in than going out (“cash positive”)
  • Your profit and loss (P&L) forecast gives a clear indication of how the business will perform on a monthly basis
  • Your forecast balance sheet showing the assets and liabilities position of the business
  • Define how much finance you require, when and in what forms. For example, you might want a fixed-interest loan and an overdraft facility
  •  State exactly what the finance will be used for

Have a contingency

Even the most enthusiastic, driven and optimistic business owner can come across unexpected events/challenges. Consider a range of what-if scenarios (e.g. what happens to your cash flow if sales are 30 per cent lower or 20 per cent higher than forecast). If there are serious risks:

  • You can arrange contingency funding to cover the finance you may need
  • You may decide that having your own business is too risky and abandon the whole project

Assessing risk will help you minimise problems and help build up your credibility with your bank manager.

Show you mean business and are committed

Above all your bank manager will want to be sure you are 100 per cent committed to the business and this isn’t some knee-jerk response or hare brained idea. Your enthusiasm will go some way but by presenting a well thought out business plan, it may just get you over the finishing line for finance.

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ABOUT THE EXPERT

Bobby Lane is a partner at audit, accountancy, outsourcing and business advisory practice Shelley Stock Hutter, where he has been overseeing business growth since 2003. He’s a regular speaker and expert on professional new business and marketing. Having qualified as a chartered accountant while with BDO, he’s served as a business agony uncle on BBC Radio London and has particular expertise in the media, fashion, leisure and health/beauty sectors.

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