Yes, You Need a Business Plan to Get a Business Loan!
If your dream is to expand a business or even start a new one, there’s something that you need to hear: you have to have money. Now, that shouldn’t stop you from dreaming of building a company. You can bootstrap your way into a business, but that takes a lot of time. When you know that you want to build the best foundation possible for your business, you will need to make sure that you actually get your affairs in order.
What do we mean by this? Well, you can’t just walk into a bank and demand thousands of dollars to run a business. Think about it from the banks’ perspective. They have to make sure that this isn’t just a thin excuse to get a lot of money that will never be paid back. If you’re getting a business loan, then there is the expectation that the business will be profitable in time for the bank or other lending company to collect their money on time. If you can’t promise them that, then you will not be able to get a business loan.
Now, there are times where you can get a small business loan simply through having good credit as an individual. However, if you really want to get money in a way that really shows that you’re into building a company for the long run, then you will need to make sure that you get the right steps in place to get the money that you deserve.
If you really want to get a solid business loan for enough money to really operate a business properly, then you will need to have a business plan. A lot of people think that a business plan has to be complicated, but that’s really not the case at all.
First and foremost, a business plan is just that — a plan that covers exactly how you will run a business, as well as how that business will turn a profit. A business plan can help you really understand what you’re getting into. You’re asking for a lot of money to create something that can bring you a lot of money, and also provide jobs for the community around you. That’s a serious thing, and it needs to be taken seriously — especially if you’re thinking about hiring employees. Those are people that will be trusting you to pay them enough for them to take care of their families. If you aren’t thinking about building something stable, then you have no business hiring anyone to work for you — unless they know that they’re only there for the moment. Temporary work isn’t a bad thing, but not when it’s temporary work dressed in permanent work’s clothing.
A formal business plan helps you stay focused, and they’re not difficult to write. They do take time, so it’s important to make sure that you construct one properly.
The way to begin is to start with the executive summary. This is a high-level overview of the document that the person will be reading. An executive summary is super important, but you will need to make sure that you save it for last. Even though it’s going to go first, it take so much time to piece together that you really do want to make sure that it’s the last thing you write.
From there, you will need to describe the company. What type of company are you trying to build?
Then comes more information on the products or services that you want to offer to the market. Be sure that you include how your products and services compare to other people in your marketplace. This ties in well to market analysis, which is a description of the market at large, the role your company will play, and the type of demand for the product or service — which can be supported by documentation.
Notes about marketing and sales strategies will need to be in the business plan, because marketing is absolutely critical. Having a solid sales process in place is equally important.
Don’t forget to mention the financial side. This includes the type of structure that your business will have, whether that’s going to be a sole proprietorship (highly unrecommended) or a formal corporate structure (highly recommended). The raw financial data includes the balance sheet at large, the breakeven analysis, the income statement, and even a statement of cash flow. As you might imagine, when you’re asking for a business loan the bank is going to want to know the intimate financial life of the company.
This is a pretty large document, and it’s going to expand for a lot of pages. Make sure that you’re ready for that. Now, if you don’t have the writing and research skills to prepare your own business plan, you might want to invest in hiring a business plan writer to take care of it for you. Instead of trying to turn in something that isn’t polished, you can let the other person handle the business plan from start to finish. Do this when there’s a large amount of money to be borrowed — after all, business plan writers worth their salt are going to be a bit expensive. If you follow the steps in this guide there’s no reason why you can’t get everything that you want in virtually no time at all!