As a business coach to a great many terrific businesses, I have frequently wondered why banks insist that you write a long detailed business plan before they will consider lending money for a start-up business.
If I were to help to double your business, we would create a business plan that fits onto just a single page. So why is it that banks insist strongly upon these great long books that finish up sitting on shelves for good actually a distant fantasy compared to what they might be.
So I chose to ask Denise, my local bank's business manager, to get her opinion on what makes the long form business plan so useful to her when judging a business.
The truth, it seems, is perfect common sense and has real value. By writing a detailed plan that stretches over 15 or even more pages, she explained, you show that you have carefully considered all aspects of your business idea, considered the positive things and the negatives, and are still prepared to go through with it.
In addition it also demonstrates that you've got the ability to cope with some paperwork, too. Managing a company isn't all striking deals and selling. It is also about the nitty-gritty of handling your cashflow, finding the right people and keeping things moving in a consistently positive direction.
Within your business plan you have to also include some finance projections for your business. While these may well be kind of a fantasy when it is time to make things happen, it does compel you to take into account the full costs of running your business before you even get started.
This foresight into your costs might just be your life-saver. As an example, one business I know took out a lease on a high-street property at the very top of the economy in 2006. 4 or five years after, he was regretting agreeing to a deal that locked him into a high rent that will only be reviewed upwards and that has no break-clause to get him out if the business didn't flourish.
It is due to the fact of this example that I would always advise that you do a hopeful forecast and a gloomy forecast with your income planning, then use the pessimistic one to lead your contract discussions before you find that you are stuck.
If I were to help to double your business, we would create a business plan that fits onto just a single page. So why is it that banks insist strongly upon these great long books that finish up sitting on shelves for good actually a distant fantasy compared to what they might be.
So I chose to ask Denise, my local bank's business manager, to get her opinion on what makes the long form business plan so useful to her when judging a business.
The truth, it seems, is perfect common sense and has real value. By writing a detailed plan that stretches over 15 or even more pages, she explained, you show that you have carefully considered all aspects of your business idea, considered the positive things and the negatives, and are still prepared to go through with it.
In addition it also demonstrates that you've got the ability to cope with some paperwork, too. Managing a company isn't all striking deals and selling. It is also about the nitty-gritty of handling your cashflow, finding the right people and keeping things moving in a consistently positive direction.
Within your business plan you have to also include some finance projections for your business. While these may well be kind of a fantasy when it is time to make things happen, it does compel you to take into account the full costs of running your business before you even get started.
This foresight into your costs might just be your life-saver. As an example, one business I know took out a lease on a high-street property at the very top of the economy in 2006. 4 or five years after, he was regretting agreeing to a deal that locked him into a high rent that will only be reviewed upwards and that has no break-clause to get him out if the business didn't flourish.
It is due to the fact of this example that I would always advise that you do a hopeful forecast and a gloomy forecast with your income planning, then use the pessimistic one to lead your contract discussions before you find that you are stuck.
About the Author:
Lee Duncan is an author from the FT Prentice Hall publishing list. His clients call him the double your business coach as he helps them to exploit little-known tactics that increase profit and make their firms grow.
0 comments:
Post a Comment