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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