Are you prepared to approach lenders for a business loan? One of the first things a potential lender will ask to see is your business plan. In fact, it will be impossible to secure most loans without one. Community Business Finance has touted the importance of a business plan before, but it is not just another hoop to jump through on the road to funding. It is a living document that shows investors, advisors and lenders the you are serious about making your business successful. In fact, it is successful entrepreneurs that are most likely to have written a business plan, as they realize that planning never stops.
According to David Nilssen at Entrepreneur magazine, "The first thing a great business plan does is open doors to secure small-business financing." Your business plan should be complete, but not overwhelming to read. Be careful not to sell yourself short, either. Keep your plan positive but realistic. Provide clear, meaningful information and let it speak for itself. A solid business plan should generally include a description of the business, financial history, financial projections, and the management plan. This outline includes features that will answer the questions any lender is likely to ask. A more detailed description of the components can be found in our 504 School.
Features of a Business Plan
- Cover sheet
- Table of Contents
- Executive Summary
- Business Information
- Company Description
- Market Analysis
- Funding Request
- Financial Information
- Historical Data
- Prospective Data
- Supporting Documents
According to a survey by Palo Alto Software, a business is twice as likely to grow or achieve funding if there is a business plan in place. This means companies are better off with a business plan than without one. A study by Cranfield University revealed that businesses that plan and track grow 30 percent faster because they are able to make rational adjustments in response to changing business conditions.
As you can see, a business plan is crucial to a company's overall success, and not just a tool to secure funding. Read more about business plans in How to Create a Business Plan for an SBA Loan. Get more tips with Stop Selling Yourself Short to Lenders.
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