Go back to original definition. Once a business is trading, it is possible to focus plan on single aspect eg sales and marketing
Avoid hype, spell out what makes you different (better, cheaper, value for money, premium, fashion, quicker) Words and figures match – UK manufacturer going for cost-leadership will have high capital and low labour costs. Is it a new market? Or a mature market? Mature markets offer great opportunities – Mars Bar. Boston Consulting Group grid. New markets are not for the faint-hearted and competition needs to be locked out. Brands are very powerful – Virgin (wasn’t it originally records). Talk about Clearcut. Explain the problem that you are going to solve. Benchmark ??? Compare what is important against competition – right first time/ price/
Don’t lose sight of the fact that you have to live. Get buy-in from spouse or partner. Beware of university. Don’t become exposed – refer to the planning wheel. Make sure that you consider income protection, private medical insurance, life cover. Make sure that you select your proper trading vehicle – sole/partnership/limited company. You need to show that you realise that profit doesn’t immediately appear in your bank. There is a lag – working capital. So first 12 months accounts might show 12 months sales as income but only 10 months have been paid for. Businesses have found it difficult to obtain funds so they now rely on stretched payments terms and it only takes one part of the chain to affect everyone. Risks – show what happens if sales 10% lower, prices 10% lower, costs 10% higher. Then plan to minimise risk. What if the sales pipeline is longer than planned. How are sales and purchases concentrated? Keep an eye on trading trends – Riskdisc. Watch out for competitor reaction. Legislation changes. Take advantage of new flexibility offered by commercial landlords. New economy – be allergic to commitments (Evans Easyspace). Try to be quick – identify and reduce work in progress. Spoken before about working capital. Hotspots – spikes in cashflow, contract renewals.
What would you do if someone showed you a piece of paper and asked you to lent him £50,000. Offer the lender a regular review. Explain the MIS that will be used. Look for break clauses. Understand your break—even point. Explain how you will nurture key relationships – customers and suppliers Funding: Loan, overdraft, factoring, asset-finance, grants, business angels, friends and family, personal borrowing. Enterprise Finance Guarantee, Growth Capital Fund.
Know what your lender wants, ask for feedback, be prepared to try again. They are investing in you
Fictional example. Needs £59,000 funding. Good sales growth and good third year profit