Impress the Banks with Your Preparation
Should we need to borrow money from a bank or financial institution to fund our business as a start-up, then we will need to get our bank manager on board with our business ideas and how we intend to make money. It is, after all, our ability and those we intend to employ, to generate money in the shorter or longer-term that will mean that we can comfortably repay the loan. It is not all about having collateral in case things should go wrong, we have to prove that we can generate an income.
When it comes to impressing the bank, it is all about having prepared for the interview so that we have the information and documentary evidence to prove that our business can be viable. So, let us consider just what we should prepare as documents and in our mind to take with us to that bank interview. In other words, what do we need in our business plan as a minimum?
To give a bank, perhaps a bank you have dealt with before on a personal rather than business level, a good idea of where your business is heading financially when it is a start-up business with no track record, you will need to prepare projections for at least three years. These are estimations of the profits or losses that you think you will produce over this time. These will show income and expenditure and how near you will be from breaking even each year, and hopefully making a profit as soon as possible. It is expected that we may not necessarily run into profit in the first year or two because of start-up costs and the extra costs of launch promotion incurred from the first year, but there must be some indication in your figures that the situation will change in the right direction long term. Your financial projections will be a reflection of why you need the bank loan, with growth and profitability resulting from your use of the money.
A package such as Microsoft’s Excel can be used and a spreadsheet printed out to show something that looks professional. The software will also do much of the work for you when it comes to calculating and recalculating totals. It pays to know about how formulas can be used to achieve the calculations as well as to know how extra rows and columns can be inserted when you have afterthoughts and miss something out you had not originally thought of. It is better to spot it before you arrive at the bank.
Do your homework when it comes to knowing your markets. It will help convince a bank that you not only know what you are talking about when it comes to business but be something that will support the figures that you are presenting them with.
A marketing strategy should provide a profile of who your customers are, where they are, and how likely they are to return in respect of repeat business. It can also include additional data like service providers whom you have approached to make your marketing strategies a success (see this website here for reference). This data is found out through market research that you will need to carry out. It will be as useful to you as the bank. It checks that your business idea is financially viable and that you have a business that can support the figures you are claiming. Your ideas should have already been modified if things do not add up.
For some market research tips, you should search for similar businesses online to see what they are doing. Ask people face-to-face and through social media platforms about the kinds of products they like and the services they use, and where they prefer to go to obtain them. Know how your customers think and how you can reach them through advertising to alert them to your presence. Websites can, for instance, benefit from SEO and PPC digital marketing approaches so that they appear higher up in the rankings in terms of search results.
Write down in bullet points the skills that you have that would transfer to business. Educational qualifications are a way of proving computer, business, and accounting skills, where they have been gained through courses. A previous job might have given you experience in a certain area of business. Better still, in areas, you are planning for your go-it-alone business. Not that you will be entirely alone when you have the expertise of others within arm’s reach.
Be prepared to say where you know your skills are lacking rather than be found out. Everyone has to bring in hired help for something. Nobody can be skilled in every area. It is about knowing the team that you need around you as much as having the skills yourself that will prove important.
In conclusion, if you are planning on impressing a bank, which will ultimately secure you the loan that you need for your business, then you ought to have worked out your projected figures for the next three years, know your markets, and be able to demonstrate that you either have the skills yourself or know who you can call upon for them. You will, of course, have to demonstrate a certain amount of entrepreneurial savvy yourself as the likely leader of your workforce. It is very competitive out there and banks will know that many businesses fail early on. Do not be one of these businesses. Prepare properly for the bank and for the times ahead.