Before You Can Secure Financing, You Need a Strong Business Plan
You are planning to start a business or expand your existing business, but you are missing one key ingredient: financing. There are plenty of funding options out there, such as an SBA Loan, but they are all going to want to see your business plan before handing over the money. Business plans can make or break your shot at getting approved for a loan or attracting investors, so a strong plan is your most important tool in ensuring your business gets the financing it needs.
The Power of the Executive Summary
Strong business plans start with strong executive summaries. While this will be the first section lenders read, it will most likely be the last section that you write. The executive summary needs to read like a stand-alone introduction to your business, outlining what you do, financial highlights and what exactly you’re looking for in terms of funding and/or resources. You want to keep this section short and to the point, no more than two pages long.
If you are wondering exactly what to include in your executive summary, you need to take into consideration that for some large lending companies and financial institutions, this might be the only part of your business plan they read. Many large lenders use this section to weed through the stacks of business plans they receive every day to decide if it’s worth reading further. So ask yourself, if you were a lender, would you give your business a loan based on the information highlighted in the executive summary?
Facts and Figures May Be the Key to Success
You’ve peaked their interest with the executive summary and filled the rest of the business plan with detailed information on what your company does, how you will market your products, what your organizational structure will be and who you will employ to manage the business. Now, at the end, it’s time to prove to your lender that you have done your research and your plan is financially sound.
The financial plan is one of the hardest sections to write, as it involves thorough research into the realities of your business, market trends, vendor costs and industry predictions. It may seem like there is a lot of guesswork involved, but a solid financial plan will be based in facts and examine all the variables involved in starting and running your company. This is where you prove to lenders that what you outlined in previous sections is financially feasible and prove your company’s potential for success.
Related article: Survive Your First Year of Business With These Steps
Presenting a strong business plan will let lenders know that you take your business seriously. Once you’ve shown them that you have thoroughly analyzed every aspect of your company, they can feel confident in approving your loan.
