We’ve already discussed the elements that you will have to include when developing a business plan. We’ve slightly mentioned one of its purpose-to look for investors and capture the trust of the lenders. However, it could be easier said than done. You need to have excellent attention to detail and ensure that it is well-crafted. Understand that some investors may not be familiar with your industry. Therefore, you will need to make it as detailed as possible.
Information Needed When Developing a Business Plan
A lot of businesspeople will be developing a business plan that lacks attention to detail. Therefore, it is not surprising why investors and lenders often reject them. It is not a simple task. However, it boosts the possibility of securing the finance you need to jumpstart your business. Let us enumerate some of the information that lenders want to find in your business plan.
Your Business Operation
Lenders and investors are curious about how you operate your business. They need to be aware of your strategy. Your business operation creates a persona for your business. It also helps you differentiate your company from the competitors.
- Executive Summary– In a single sentence, you should be able to accurately and clearly tell the purpose of your business. You should also highlight your target audience. Tell them what kind of problems you will address.
- Market Share, Competitive Analysis, and Services or Product- Provide a complete detail of your offerings. Describe the unique features and the benefits it offers. It should include your unique proposition. Add details about patents and copyrights. You should also mention your competitors as well as their strengths and weaknesses. Have an illustration of the total market share, including the shares of the market you will focus on.
- Investment and Accomplishments- Define the origin of the business and the resources you’ve invested. If you are in partnership with other investors, you should also mention them and their invested amount.
- Marketing/Sales Plan– They should understand how you are planning to attract customers. Mention the distribution channels that you will utilize. Pay attention to this when developing a business plan for lenders.
The lenders will also want to know if you are armed with competent and ambitious people that will implement the strategy.
- Management Team and the Board– There’s a higher chance of getting approved if you have a skilled management team. Identify the people that make up the board and the management, their experience, and their accomplishments.
- Financial Standing– They should also be completely aware of your financial standing. Also, if an investor owns 20% of the business, you should include that when developing a business plan.
Lenders will also perform their SWOT analysis. They want to make sure that you present a lower risk by analyzing your finance. They will also do this to understand how their investment will play a key role in your business.
- Assets and Liabilities– The lenders, should have a clear perspective on your assets. They will also pay attention to your net worth. If you have collateral, reserves, mention that in your business plan.
- Pricing/Projections– What are the prices of your services or products? Tell them the reason why you decided to set the price that way. How will it affect your marketing and profitability? Developing a business plan should have a detailed financial projection in 3-5 years.
- Net Income, Personal Revenue, and Company Revenue– Lenders should be able to tell your capacity to repay the loan. Therefore, make sure that your net income and company revenue are added to your business plan. They should also know whether you can pay the loan individually should the situation go awry. Be sure to include your personal revenue.
- Fund– Your business plan must also include the amount you need and how you plan to spend them. Write a short statement that will convince them that they will get the return on investment.
At this point, you will have to prove the legitimacy of your business. Tell them about how long you have been operating in the industry. State valid reasons that will help them confirm the veracity of your company when developing a business plan for investors.
- Registration– While the requirements are stringent in applying for business loans, you will be surprised at how common it is. Before applying for a loan, be sure that you already have your company registered and you have the paperwork and documents to prove it.
- Years in the Business– They need to know if you are a sole proprietorship, partnership, company, or corporation. If you are limited liability, is it guaranteed or limited by share. If you have been doing business for years, there’s a greater chance that your loan will be approved.
- Location and Contact Information– Make sure that you have a dedicated phone number for your company. It must be different from your home phone number. Building a well-designed webpage would be a strong indication that you are serious about offering your business. Do not think for a second that your lender or investor will not pay attention to your website.
Developing a Business Plan: What If I Lack the Knowledge?
We understand that not everyone will have the skills to build a well-crafted business plan. However, you should not fret since you still have a few options. Some people offer their professional service for a very affordable fee.
- Freelancer– You can ask a freelancer to help you in developing a business plan for lenders. This has got to be the more affordable option. You can find all kinds of people online, such as business consultants, professional writers, accountants, etc.
- Business Development Centers– It is another good alternative for businesspeople who lacks the skills required. They are armed with people who will assist you in the development phase of your business. Best of all, you don’t have to create a separate internal team just for this.
- Software and Programs– This option would be suitable for those who have little knowledge. You input the information, and the software will automate the development of your business plan. However, be careful since some cheaper applications will be filled with grammar mistakes and may sound robotic.
Whether you have a small or a big business, you should never ignore the importance of developing a business plan. It will help you acquire the fund that you need. Moreover, it also serves as a guide for business owners. It enables you to figure out if you are in the right direction toward your goal.