Is it accurate to say that you are contemplating approaching a Bank for funds to help your business? If you haven’t yet met with the Manager then you may not realize that the main thing he’ll be asking to see is your Business Plan.
Maybe you’re not convinced that all of the energy and time to put into developing a quality business plan is essential; if so then here are the major advantages of creating a business plan for both you and your business.
1. No matter how great a communicator you happen to be, you will never have the capacity to convey the vision you have for the business as effectively as a flawless Business Plan. It provides an unmistakable understanding with respect to what you need to accomplish, and enables you to express your thoughts in a clearer way.
2. Entrepreneurs often try to verbalize their idea and at the end of the meeting, the Bank the Manager is no wiser than he was at the beginning. I am sure you can accurately guess the result of a large number of those applications!
3. A Business Plan will help persuade both you and the Bank of your business’s workability and practicality. Nothing works better in clearing up the key issues.
4. There’s no doubt that an entrepreneur who’s well prepared appears to be by and large more goal-oriented and more dedicated. A meticulously prepared Business Plan exhibits your vision and that you clearly understand what you need to succeed with your business.
5. With various thoughts skimming around in your brain, the obstacles to success are never that obvious. A mind humming and brimming with thoughts will seldom accomplish lucidity. A Business Plan drives you to express your thoughts in a clear and deliberate way. The outcome of this could be you going in a direction that is totally different from what you originally thought of, or altogether giving up on your idea. Not a charming idea, but which is preferable to you? Losing your hard capital or taking advantage of the opportunity to reconsider your idea?
6. You need to evaluate progress against the goals you have set yourself (we will cover goal setting later). Analysing progress against your Plan will provide the opportunity to determine whether you are moving far from your original vision, and you will recognize what must be put right.
7. Consider that you did not have this check set up; an unnoticed alteration in course or a failure to achieve your goals. This could be fatal to you’re the viability of your business if left uncorrected for too long. Then again, it might be that a move from your original vision could be a more viable alternative. However, recognizing this change enables you to modify your course in an organized and controlled way.
8. Every move you make has a result, and a business plan helps make these outcomes much clearer. Monitoring the conceivable impact of your chosen course enables you to prepare, making you better able to adapt to whatever the world of self-employment can hurl at you. This is one thing that “psychological planning” would not accomplish.
9. A Plan will provide guidance into how much money you’ll require to make your idea a viable one. You may have a rough idea in your mind of how much the business will require, however until you complete a Cash Flow Forecast you may not fully appreciate that an overdraft limit will be needed, in addition to a loan for equipment.
10. A Business Plan will enable you to get financing. One of the principle reasons Banks turn down applications for credit is a lack of meaningful of data to help with making an educated decision.
11. If the bank manager doesn’t have enough information about your idea or your business, he won’t be convinced of its viability, and he won’t feel comfortable enough to support the venture. He needs to fully comprehend the viability of your business before he can say yes. Sooner or later he will need to back up the reasons why he loaned you cash, so he needs as much information to justify his decision. A flawless business plan will make him feel much more comfortable with his decision, thus more ready to say yes.
12. By the time you have wrapped up your Business Plan you will have a strong understanding of your business, strengths and weaknesses, the operating environment, the competition, what could conceivably go awry, and what you can do to guarantee your success. Doing your planning on a piece of paper will never accomplish this.
By now you should realize how important it is to have a business plan; it could make the difference between success and that feared “f” word – failure! You need to understand exactly why it is so important to plan ahead.
Take the time to carefully put down your thoughts on paper in an organized and sensible way. It will pay off, both in getting the Bank to taking you seriously and in securing your business’s future.