Tuesday, 19 June 2012

3 Es banks look out for in a Business Plan

7 years ago when I learnt how to prepare a professional business plan, I considered it a major key to business success especially for start-ups. Today, having helped a lot of people prepare one, and having failed in business before even with my ‘wonderful’ business plan, I now have a new perspective about business plan and why banks may not give you credit as a starter.
1.      Evidence:
They want prove that what you are bringing to the table works, they don’t want to experiment with their money.
2.      Expansion:
Most banks want to give you money to expand i.e. build on an existing business not to start up. For a business that has not been tested, you will need to convince them beyond reasonable doubt that it will work.
3.      Experience:
They want to make sure you have the required experience to compete favorably in the market. They would like at least 6 months experience before they can part with their money.
Fund providers prefer you starting up first before coming up with a business plan.
So before you design a formal business plan, start and see how far you can go. Even top entrepreneurs in the developed world never had a written business plan at start up. Try managing the business for at least 1 – 3 months before approaching banks for a loan.

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