The Dos and Don'ts of Business Plans

• Jo Thornley

Graham Small is a senior partner at national law firm. He is often approached for advice by the owners of growing businesses seeking funding from their bank. Here are his top tips for drawing up the perfect business plan.

I have seen countless business plans drawn up by business people seeking financial assistance, in one form or another, from their bank.

Many are poorly prepared and don't make sense. This may sound harsh but it's true.

Give the preparation of your business plan careful thought and follow a few simple guidelines. It is essential that you succinctly provide the right type of information to enable your would-be lender to make an informed decision with ease. Here are my top tips:

1. Don't assume that the banker will know everything about the specific kind of business you're in. They may, they may not. There are thousands of types of business from airlines to zoos. A banker can't possibly have a detailed knowledge and understanding of them all. Remember they are a generalist.

Describe what your business does and how it makes a profit. Use straightforward language as far as possible. Tell the banker what market you're in - who your customers are, who your competitors are. If possible, give reliable, impartial information about your market - local, national, worldwide.

2. Do organise your business plan into sections so it's easy to refer to the information. Use headings and sub-headings. No one likes ploughing through pages of print, trying to find the relevant parts.

3. Do support your request for funding with solid facts and figures. You should supply previous year's audited/certified accounts, up-to-date management accounts and forward projections. Projections must make sense and be achievable and, ideally, backed by firm orders.

4. Do be precise and concise. If your funder likes reading fiction, they'll know where to buy a good book!

Stick to a clear, reasoned outline of your objectives and the exact purpose of the funding. Vague phrases like 'contribution to the expense of the marketing effort' are likely to switch him off. Make the plan as short, compressed and readable as possible.

5. Don't forget to include how you see the borrowing being repaid. The banker likes to know as it helps them to sleep at night!

6. Do include a section on the management of the business. The people involved in the business are more important than anything else.

In a nutshell, put yourself in your banker's shoes. Imagine that YOU are considering the business plan.

The ones which stand out from the crowd are those that are accurate, focused, realistic and above all, make sense. If the plan makes sense, you should be able to borrow what you require from your bank.

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