More of you will be starting a new business or project in an attempt to spread the risk of the recession and provide more income. You know you have to write a business plan. Many good ideas, however, fail to get off the ground simply because the plan is fundamentally flawed. When you write a business plan you must consider whom you are writing it for; one size definitely does not fit all, which is why many formulaic template-based plans will not get you the outcome you need.
Bankers on the high street have not closed their doors to lending to small businesses. Indeed for them it is very much business as usual. The apparent disparity in perception is simply that people are coming to them with ill conceived and badly presented propositions.
Bankers fundamentally need to be shown that you can repay their lending within a reasonable amount of time (up to two years would be ideal), and meet their interest payments and all your other bills at the same time. They need to be shown that you have enough business acumen not only to drive your business but also to keep tight management control on your accounts. BANKERS HATE RISK. They need to be shown that you have a plan B to deal with any risks that you have already identified. If your bank highlights a potential risk that you have not, their confidence will drop and a positive outcome is unlikely.
Business Angels on the other hand absolutely do not want to see the cautious approach. They need to see the fire and passion in your idea and plans and see a massive growth potential. A business angel would like to see at least a ten fold increase in their investment, ideally within three years.
They are unlikely to fully understand you business idea so they need to have confidence in you and your team’s drive and need to succeed. ANGELS LOVE RISK. More risk taking is expected in a business plan to seduce a business angel as it means their potential rewards are greater, so make sure you put it there.
They are unlikely to fully understand you business idea so they need to have confidence in you and your team’s drive and need to succeed. ANGELS LOVE RISK. More risk taking is expected in a business plan to seduce a business angel as it means their potential rewards are greater, so make sure you put it there.
So, do you still think you need a business plan? Or, in fact, do you need three?
If you want to build a house you would employ an architect to make sure you have the best plans to submit for planning permission. Your architect will know what your local council requirements are and so tailor your plans to maximize the chances of it fitting “scheme” and getting approval.
Likewise if you are at all uncertain make sure you take professional advice on writing your business plan to make sure your project gets the start it deserves.