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.
They want prove that what you are bringing to the table works, they don’t want to experiment with their money.
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.
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.