Tuesday 1 November 2011

Accessing finance - The importance of writing a business plan

Written by Connect Yorkshire’s Sponsor – Knowles Warwick

Everyone knows that real life can’t be planned down to the last detail, but achieving your dreams and ambitions can be very difficult without realising what those goals are and working out what steps you need to take to make them happen. As the well known proverb says, failing to plan is the same as planning to fail and this is particularly true in business, where a lack of preparation could even affect whether or not you are still operating a few months down the line.

Writing a business plan will make you think about what projects you need funding for, how much money you will need to make your dreams a reality and what an investor can expect in return for lending you their money. It will also show potential investors that you are serious about achieving your ambitions, which is more likely to encourage them to invest in you.

The main sections of a business plan are as follows:

· Executive summary: explain the key points of your plan as briefly as possible

· Information about your business:

  • What does your business do?

  • How many people work with/for you and what do they do?

  • Give details about your premises, production facilities, IT systems etc.

· Marketing strategy and plan: how are you going to let people know about your business?

· Financial forecasts: profit and loss, cashflow, balance sheets, how a loan would be paid back and the timescales involved

If your application for finance fails, it could be because you have not carried out enough research into what investors might be looking for, or some aspect of your business plan might be unrealistic or inaccurate. Investors will always want to minimise the risk of lending their money to you, so any mistakes that you make in your application could make them feel less confident about you and your ability to make things happen as planned.

You also need to show that you have confidence in your business, because if an investor thinks you don’t believe in yourself, they will wonder why. If you have invested any of your own money into the business, or if you have already been given some funding from other external investors, you should say so, because this will strengthen your case and make you look more trustworthy.

When writing your business plan, try to put yourself in the investor’s shoes and think about the type of information they would need to help them make a decision. Make sure that you sound confident and that your ideas are fully explained and backed up with evidence. Present your application as professionally as possible and consider asking a business advisor or accountant to help you. It is also a good idea to check that the funding you are applying for still exists and that you are eligible for it before you start!