Writing a bankable business plan has been a challenge for many entrepreneurs. If you are one of those nursing plans to raise finance for your dream business, a number of questions such as: What exactly do bankers want to see? How optimistic should I be with my figures? will probably be playing on your mind.
Here are 3 ways to attract funding with your business plan:
Present a product or service which satisfies a need
Your business idea should have been researched and proven to yield a product or service which will be required by the group of customers you wish to serve (also known as target audience) and will therefore be sought after. What this really means is that your product or service should be the magic pill that cures a headache or the peanut butter on a slice of bread. Whether you are an upper-class creche serving a population of high-flying new mothers or a neighbourhood bakery dishing out pastries for virtually all the schools in the area, let your business plan show that you are one they cannot do without. You get my drift?
Show evidence of a sound management team
A start-up often reflects the personality and capability of the entrepreneur. You must show evidence of a management team with the right technical skills, knowledge through various avenues of education, the right networks, understanding of the industry and more. It also helps to parade some well-known members of the industry as members of your board of directors or advisers. Do well to mention some of the achievements of your team, their pedigree and the skills they would be bringing to the table. This should give investors some level of comfort that their money is in safe hands.
Know your numbers
Financial assumptions, revenues, projected profit and loss, amount required, payback period, percentage equity offered, cashflow plan and then the financial ratios. Hmmm…, seems a tad daunting? Not really, it’s just about knowing your numbers inside out and being able to explain the rationale for the picture they paint, the song they sing and sometimes the issues they reveal. This is a real make or break area and you must be on top of your game.
Your business plan will contain a minimum of 3 important financial statements namely; Income statement, Statement of financial affairs (Balance Sheet) and the Cash Flow Plan. They will help you reveal how your business will evolve and grow over the first few years. Factoring in the loan repayments and interest payable will show potential investors and other financiers that you are accountable. You really need to secure their confidence with your confidence! Lol. Faint heart never won fair lady, remember?
Investible funds are other people’s money (OPM, you know me). Even if you intend to apply for a grant, the institution would still need to ensure that your business plan supports judicious use as many others may be denied the funds because of you.
In conclusion, I would advise you to weave a thread of integrity through the statements, concepts and numbers in your business plan. Let’s say you indicated sales of 50 loaves of bread in the first month, revenue figures in the cash flow plan must be in line with this, everything must match.
Wow, has it been like an obstacle race? Well, accessing funds is no walk in the park! But is it worth it? YES! Getting the much-needed funds to launch your dream business expansion or new product line (diversification) from paper to the world is so fulfilling and rewarding if done right by preparing a bankable business plan.
If you need some guidance in populating your business plan and ensuring it contains the information financiers are looking for, why not drop a comment in the box below. I believe in your success!!