Characteristics of Business Plans that Get Funding
I was speaking with a bank manager who told me that many of the business plans and proposals they receive requesting business funding usually end up in the trash. I was curious to know why this is so because this was happening on a day when I went to his office with a proposal to request funding for a project too!
Some of the insider information he shared with me are quite insightful and many of them are the basis for some of the critical points I will be sharing with you in this article on the characteristics of business plans that get funding. If you are thinking of accessing funds, loans, or grants with your business plan, such a plan is not to be written anyhow – there are guidelines to follow and I am here to spell out for you the characteristics of business plans that get funding.
Writing a business plan to access funding for your business, be it for a loan or to woo an investor, can seem like one of the most difficult tasks for a business owner. This is especially true if you’re doing it for the first time, or you consider yourself to be an inexperienced writer. Writing a business plan for funding your company may appear to be more difficult than it really is. Whichever way you look at it, there are a few things to bear in mind. Your prospective business funders want to see specific details about your business (or, if you’re just starting up, what you expect your business to be). So long as you cover these details, know your financials by heart, and can write convincingly about why your business plan and funding requirements make sense, you can take a deep breath and relax – while trusting God, of course.
Why do you need a business plan to seek funding for your business?
The rationale behind drafting a business plan for funding a business is simple: Would-be investors and lenders want to know what they are getting themselves into. Just as you would want to know the specifics of a mutual fund or stock portfolio before you put down money, your investors and creditors want to know if funding your business is a good idea.
When your venture is totally new, it’s not quite easy for early investors or lenders to measure a company’s performance. There isn’t any financial history available about new businesses, which means that you have to provide much more information about your vision and projected revenue to help them get a full view of what you’re doing.
Furthermore, if you are getting a loan, most financial institutions make it a compulsory criterion that your business plan must be submitted alongside other documents before your application can be received. So, once you know why you are writing a business plan for funding, whether to attract investments or to seek for loans, all you need to do is to ensure that prospective investors or lenders have all the details they need as much as possible. Being aware of the characteristics of business plans that get funding will help you to pattern your writing to reflect those characteristics.
What should be included in business plans that get funding?
These characteristics of business plans that get funding should simply answer the question “What should you include when writing a business plan for funding?” and that is what we will be looking at in this section.
Now that you know why writing a business plan for funding is essential, the next step in the process is knowing what and what you need to cover in the plan that satisfies the most pertinent questions on the mind of any investor or lender. Thankfully, the topics covered in your business plan for funding are pretty much the ones you are already most likely familiar with. Investors know what to expect from the typical business plan, and if you get the points right, you will most likely satisfy the expectations of most investors or lenders, provided that you write them in a satisfactory manner. Here are the core components of a successful business plan for funding. If you’re drafting a plan for lenders, make sure you include the following:
- Loan amount
- Loan purpose
- Personal credit score
- Business credit score
- How long you have been in business
- Your industry
- Type of business entity
- Business licenses and permits
- Proof of collateral
- Annual business revenue and profit
- Bank statements
- Balance sheet
- Personal and business tax returns
- A copy of your commercial lease
- Disclosure of other debt (if any)
- Unpaid invoices and bills (if any)
- Ownership structure
- Legal contracts and agreements
Note that each lender may ask for some of these materials, and others may ask for even more than what we have listed here. Be sure about the exact requirements for each process/institution before submitting your application to forestall any delays during the loan review process.
What are the characteristics of business plans that get funding?
- Keep It Brief
One of the things that the bank manager we had mentioned earlier told me is that many people use too many words in their proposals and business plans, thinking they will get approval because of many words they use. The truth is, many of the people who are saddled with loan application reviews in financial institutions are busy executives who don’t even have time that’s required for the job. This also applies to big time investors who have the capacity to solve your business’s money problem within 5 minutes. These people probably don’t have the time to read through plenty stuffs – and you need to write your business plan with their convenience in mind.
- Keep it simple
When writing your business plan for funding, use easily understood languages, small sentences and paragraphs, and do not assume that your audience knows your business as well as you do. This is not the place to impress prospective funders by using a lot of big words when a few small words could get your message across.
- Be realistic
Now take a pause and ask yourself, “How easily can anyone implement these ideas I am presenting?” The second measure of good or bad in a business plan is realism. You don’t get points for ideas that can’t be implemented. For example, a brilliantly written, beautifully formatted, and excellently researched business plan for a product that can’t be built is not a good business plan. A business plan that’s requesting for investment funds in millions but doesn’t have a management team with convincing credentials that spell out the ability of the business to manage the funds, if and when granted, is not a good plan. A business plan that is not clear about how the business will make the money back if the loan is granted is not a good plan. A business plan that ignores such fatal flaws is not a good plan by any standard – and such business plan will always get a “No!” for an answer at every application.
- Be specific
Every business plan ought to include tasks, deadlines, dates, forecasts, budgets, and metrics. When a plan lacks such details, it is not measurable and will definitely not get any good response from investors and lending institutions. Ask yourself, as you evaluate your business plan: “How will I track actual results and compare them against the plan?” “How will I know when the business begins to deviate from the plan?” If you can’t figure out all these from your business plan, it means the plan lack the most basic metrics that investors and lending institutions are usually concerned about.
While professional use of words and terminologies are great if you can use them, good planning depends more on what, when, who, and how much. Answering those questions in your plan is what makes it specific and measurable.
If you need a service of a Professional Business plan writers in Nigeria, then Dayo Adetiloye Business Hub is the place to go Call or WhatsApp us now on 081 0563 6015, 080 7635 9735, 08113205312 or send an email to firstname.lastname@example.org and we will solve any of your business plan problems.
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