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Tag Archive | "Business Plan"

Plan today to generate profits tomorrow


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A business plan is an indispensable management and operating tool for using your time, capital and energy the most effectively. This plan of action for building a successful small business examines the environment in which you expect your business to operate, including potential problems, cyclical trends and opportunities.

If you plan to see financing, it is all but certain that a lender will require a business plan as part of the loan application. Putting your objectives in writing as you build a business plan also forces you to think realistically about sales, expenses, and short and long term goals. The more specific and measurable they are, the better. A complete business plan should identify target customers and how you will attract them; timelines for adding staff and infrastructure; approaches to differentiating your products and services from competitors’; and a host of other considerations. Ideally, it will show anyone who sees it that you’ve done your industry research, too.

Every business plan starts with a cover page containing your contact information (vital to loan officers and any other financial backers) and a warning that the document contains private information. The sections that follow include:

  •     Table of contents
  •     Executive summary
  •     Description of the company and its strategy
  •     Overview of the market
  •     Specifics of the product or service
  •     Plan for sales and promotion
  •     Financial issues and projections
  •      Appendix

A business plan benefits startup businesses as well as established enterprises that need to reassess their goals and strategies. SCORE counselors provide free, confidential counseling to help you develop, prepare, and improve a winning business plan.

SCORE’s counselors are ready to help you with any other aspect of your business, whether it is still a dream or has become your livelihood. For the SCORE chapter nearest you or to find a counselor online visit www.scoregr.org.

Get free and confidential counseling with SCORE, 111 Pearl Street NW, Grand Rapids, MI 49503. Call (616) 771-0305. Visit our website at www.scoregr.org or email us at score@grandrapids.org.

Posted in ASK SCORE, BusinessComments (0)

ASK SCORE


Banking for a new business

Submitted by Dick McKenzie, SCORE Counselor

 

What does a “Lender” look for when considering a business loan to a new business?

There are four (4) basic questions a “Lender” needs to answer in making his or her decision.

1. What is the loan to be used for?

2. How much is the loan for?

3. How does the loan get repaid?

4. If repayment is not as planned, how does the “Lender” get repaid?

To answer the first two questions, the “Lender” is looking for a Business Plan. The key elements of the plan to include: type of business, the organization, a marketing plan, their competition and why the business will be successful; what is its niche or advantage over other types of businesses in the same market?

To answer the 3rd and 4th questions the “Lender” will want to review the financial information, which should include: 1) the borrower’s investment in the business, 2) a 24 month income and cash flow projection prepared by month and the assumptions used to determine the projections, 3) a pro-forma business balance sheet, 4) personal financial statement and 5) personal income tax returns for the past 3 years (including all schedules).The key elements that the “Lender” is trying to determine is the client’s ability to provide the necessary equity investment to start the business and necessary funds (personal and business) to operate the business until cash flow is sufficient to maintain its operation.

To cover the initial risk the “Lender” will be looking for collateral support to cover any potential shortfall. In addition to the business assets, support will normally be in the form of a personal guaranty supported by personal assets which may include a 2nd mortgage on their home, savings, CSV life insurance an/or marketable securities.

When meeting with the “Lender”, the “Borrower” should treat the meeting with the “Lender” as a job interview. He or she should have a short well rehearsed oral presentation answering the four basic questions. The “Borrower” should have copies of the information outlined above to give to the “Lender”. The professionalism in both the presentation and the information will have an impact on the time and effort the “Lender “will put into making a decision. The easier it is to review and understand the information, the easier it is for the “Lender” to make a decision.

As the “Lender” is not going to review the information at this initial meeting, volunteer to answer any questions either by phone or in person he or she may have after their review. Also ask for a time when you could expect to hear back from them. Prior to meeting with a “Lender”, you should obtain a copy of your personal credit report. If there is derogatory information; be able to address the reasons for its occurrence.

Many of the loans will relate to the SBA (Small Business Administration) ask for information and the requirements for guaranteed loans and direct loans. If your loan request is denied, make sure that you are provided a letter detailing the reason for the turn down.

For free business counseling, contact SCORE at (616) 771-0305 or email score@grandrapids.org. Visit their website at www.scoregr.org

 

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