First and foremost your Bank will want to know how you will be able to pay the loan back in the allotted amount of time. You will need to be able to clearly answer the question: "What's your plan to pay us back"? Your business plan might have most of the information to answer that properly. That's why I am hoping that everyone that reads this article had a plan in place before they began their business journey. It is such a good way to keep yourself on track of what needs to be done on a daily, monthly and even yearly basis. In my opinion it is the better way to track your goals. You begin with a great idea. The Plan helps guide you on that journey to take your idea from zero to one-hundred and then from one-hundred to one-thousand. It isn't that hard, and if you are having trouble there are professionals that will guide you through the process. Get it done!
- Describe your company: your goals: your objectives:your strengths; your industry and it's future.
- Products / Services. What gives you a competitive advantage? What are the margins and how will you price yourself to maintain them?
- Marketing Plan: facts about the industry: size of the market; describe the products / services as your customer sees them: location: competition: who are your customers? Sales forecast: promotional budget: How will you track results?
- Operational Plan: daily: people: processes: inventory: suppliers: manage accounts: payables.
- Management and Organization: Do you have a board: attorney: accountant: insurance agent: consultants and mentors, corporation: partners?
- Personal Financial Statement? Financial plan? 12 month profit and loss projections: cash flow projection determines if you have enough capital to grow? Collateral?
Let me give you an example of what I am talking about. Take the inventory category. What kind of inventory will you keep? What raw materials will be needed? What is the cost of each? What is your total inventory investment? What is your rate of inventory turnover and how does it compare to industry averages? Will there be seasonal buildups? (Very important to cash flow projections). Lead time for ordering? Credit and delivery policies of suppliers?
Your loan will most likely be approved because they feel comfortable about your ability to repay the loan and repay it on time. Congratulations will soon be in order.
Just follow this outline, start writing, start your research and you will be on your way to success!