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What Investors & Bankers Want to See in a Business Plan


Hoping to get a loan? As I said in a previous article, “Is Your Loan Package Ready for the Spotlight ,” lenders only fund loans when they’re comfortable that you’ll be able to pay them back. Having an excellent loan package is critical for convincing them that you’re credit-worthy, and one of the key elements of a successful loan package is the business plan. Your business plan shows where your company has been and where it is going in terms of sales growth, business opportunities and more. Here’s what that plan needs to include:

• Business description – A few paragraphs that explain what you do, including a brief description of your key products and services, an overview of your industry, and a sentence or two about each of the key members of your management team.

• Historical financials – Three years of historical financials (Profit & Loss Statement, Balance Sheet and Statement of Cash Flow).

• High-level sales/marketing plan – This needs to include a detailed 3- to 5-year sales forecast by major product lines that shows projected sales units, average sales price, average costs, and average gross profit per unit sold...and narrative that explains how you’ll make it happen.

How does your projected growth compare to your industry’s projected growth? How will you achieve your projected sales growth? For example, do you plan to introduce new products, find new markets for existing products, implement new processes that will improve profitability, or what?

What actions will you take to support the projected sales volume? How will this sales volume impact your working capital requirements, staffing, production capacity, vendor relationships and other infrastructure issues?

Projected financials – Three to five years (depending on the desired loan length) of projected financials based on this sales/marketing plan, all presented on a quarterly basis for each year. In addition to the Profit & Loss Statement and Balance Sheet, this includes:

• Operating expenses with labor build-ups by department. If you’re saying that you’ll have four years of 8% year-over-year growth, they’ll want to see what type of staffing you’ll need to support it.

• Debt and debt payments needed to support this growth.

• Capital expense budget outlining projected capital expenditures by year.

• Statement of Cash Flow that ties all of this together.

Need help putting together a business plan that includes everything investors and bankers want to see? Give me a call! As your part-time CFO this is one of the many services I provide.

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