It is worrying that we are opposed to a business plan, but sometimes it is the best choice for all involved. As a volunteer for a loan committee, I wish we could each loan application to approve the hit our table, unfortunately it is not possible. The Committee meets as-needed to validate business plans and decide whether or not to fund the applicants. We deal with everything very small businesses seeking small loans, usually under $ 250,000. Loans to inexperienced, new entrepreneurs is athe risky arenas for a lending agency. Despite this fact, we manage to keep our losses to a minimum. Over a period of more than a dozen years, I have observed emergence of certain challenges and over again. The amazing thing about this business plan is a murderer, that they seldom travel alone - they almost always occur in groups. Here are the Top Ten Business Plan murderer and what you can do is to avoid or correct them:
1. Dreadful Personal FinancialProfile
What is the probability that someone who shows abysmal financial management in his or her personal affairs will miraculously become an effective manager of finance for a business? It is very unlikely. It is much more likely that poor practices are carried out in the personal situation simply in the business. The main difference is that in the economy a much broader range of people and organizations normally receive as a result of poorly managed companies burned finances. Red flagsPop-up in business plans in the form of high credit card financing, garages full of toys (trucks, Seadoos, skidoos, bicycles, boats) 90% financing, bad credit history and no savings. Strategy One: Tidy up your personal finances before loan to a company. Pay down loans, bad for removing any claims to collect some business equipment and save money.
2. Inadequate or non-existent or Owner Equity Security
The business is always risky,But new business is infinitely more. Creditors want you to be personally "invested in your company. The part of the business you own is your personal equity. Another way to describe the shares, the amount of cash or equipment that you brought into the business. A lender wants to see that you are up to the point that you will not be inclined to invest on foot when the hard requirements. How much equity is the owner enough? The amount varies from lender to lender, butless than 10% loading control, while 20% or more to make your message more attractive. Every savvy lenders will insist on seeing you invested to the extent that any financial complications that you do not, accented with awake at night about how to pay the bills. Safety is the surly sister of equity. Your loan application will be stronger if you get any kind of assets to the table as collateral. Lenders are attracted to other assets with a clear resale value morethe loan. Inventory is usually less desirable because it tends to grow legs and disappear when the going rough. Strategy Two: Create some stock to bring to the table. Save up to sell money, some toys, some love to borrow money, or a second job for a while.
3. Inadequate research
Inadequate research manifests itself in various gruesome ways. It may be in the business plan surface as unconvincing business case. It can revealin the form of too much secondary information (from other sources) and not enough primary market research (what you) even collect. Lack of research can lead to a business plan that is too general - not specific enough. Perhaps one of the most common and troubling indicators is that the entrepreneur does not spoke or listened to potential customers. A lender want to see that "all the stones are" on the search for knowledge about your business. AfterRead your business plan if I feel I know more about your company than you would do that, could I not be thrilled to approve your loan. Strategy Three: Prove your business by yourself and your readers. Persist in your market research efforts, until you get to "experts" for your company. You will feel safer and are easier to convince it that you know your readers what you do.
4. Send and receive no
It's yourResponsibility to find that difficult balance between the stubborn enough to ignore, make your way to success, yet sensitive enough to obtain critical information. Your ability to listen to your customers is the key to your success in business. Falling in love with your business idea with the high cost of closing ears to input will not help you acquire a loan. Business analysts, bankers and customers vote with their money. You do not need it to make you cry to communicate their views. It isimportant to listen carefully when they talk at normal volumes. Learning Strategy Four: Listen. Listen to those who agree with you and who do not. Listen to all those who shoot holes in your business idea, they should just be able to, you will succeed. If you think you've heard everything, harder to hear!
5. Dishonesty, discrepancies, inconsistencies
A safe way to cheat yourself of a loan to the look, give the intent orchance that you nothing less than overboard. Any form of dishonesty in your business plan, or your dealings with the targeted lending agency staff, is a sure way to have rejected your application. Blatant untruths, the more significant crime, but it is quite possible to communicate perfidy in other ways. For example, incorrect or missing information, and invites questions sends the wrong message. Conveniently, some of the less obvious,not flattering financial information (such as unpaid overdue taxes) is a sure way to create a "NO". Strategy Five: Be honest, thorough and accurate.
6. Not answering the questions clearly Key Business
The business plan is a tool for communicating with others. What is your product or service? Who are your customers? How will you market and sell your product or service for your customers? Do you want to make money? Is your company in a position to repay,Loan? Does your plan to share these things clear? Strategy Six: Answer the basic questions for the company. Who, what, where, why, when, how. There are many companies planning systems (even if none of the "roadmap outperform" to!), That create a framework to get you on the right track. A proper system of corporate planning will give you a framework in which the selection of information that you collect instead. Select your system and use.
7. Shoddy presentation
You can implement the best research on the planet, but if you can not not communicate clearly and professionally package your business plan, you could not even read your audience. Strategy Seven: Give a professional presentation. Ask a friend or pay someone to prove to anyone Keypunch on the plan when it is necessary, but a professional job. , Evidence that you care and you are your chances with the lender to increase.
8.Pie-In-The-Sky
Inflated is overly optimistic sales projections or cash flow projections to the failure of your loan application at any time. A bright future is blind, lenders fear and terror they put on the loan. Strategy Eight: Be realistic in your expectations, even if you think that floats on a sea of money within a few months. No matter what your financial goals may be, know that the companies are generally not profitable for the first time. Estimate yourConservative revenue and your costs a little higher than you think they will. Keep that cash flow is realistic, and be sure to include all costs.
9. Fish-Out-Of-Water Syndrome
This is what happens when someone in a business that tries to get to know. It is clear that the owner background shows that the applicant has no prior experience in the field of expertise, is to focus the company has. Could, for example, a heavy duty mechanictry to start a small restaurant. Not impossible, a leap, so risky. Strategy Nine: Know your business. It is so important to a base of knowledge about your company and your experience, are where possible. Many successful businesses caused by disgruntled employees or displaced persons who think they can do as good as or better than their employers. Improve this background of experience with market research firm, Internet courses, books, cassettes, and literature. You knowthe company to increase your confidence and improve your credit options.
10. Too Little Too Late
This point relates to existing businesses looking for financial support, after things have gone sideways. Too often we have the application if the claims is out of control or large providers are already seeing a long hung on massive sums of money. Other aspects of this condition are collector on the trail and long overdue taxes. It isreally hard on the loan of money for bills, should already have been paid. Ten Strategy: to be upset with pay-critical if your company should appear in rough financial waters. Make the tough decisions early on and then they act quickly. If your recovery plan is a loan, you are much stronger on the table, come early with a plan well, rather than later, with the request for assistance intended to pay back taxes.