As a business coach to a lot flourishing companies, I have frequently pondered why banks insist that you write a long detailed business plan before they are going to consider lending money for a brand new business.
If I were to work with you to double your business, we would make a business plan that fits onto just a single page. So why is it that banks insist on these great long tomes that end up sitting on shelves for evermore truly a distant fantasy compared against what they might be.
So I made up my mind to ask Denise, my local bank’s business manager, to get her opinion about what makes the long form business plan so handy to her when judging a business.
The truth, it seems, is perfect common sense and has real value. By writing a business
Additionally it also demonstrates that you have the facility to cope with some documentation, too. Managing a company is not all striking deals and selling. It is also about the nitty-gritty of looking after your cashflow, finding the right people and keeping things moving in a constantly positive direction.
Within your business plan you will also include some fiscal projections for your business. While these may well be kind of a fantasy when it comes time to make things happen, it does make you take into account the full costs of running your business before you even start.
This foresight into your costs could be a life-saver. For example, one business I know took out a lease on a high-street property at the very top of the economy in 2006. Four or 5 years later, he was regretting agreeing to a deal that locked him into a high lease that may only be reviewed upwards and that has no break-clause to get him out if the business failed to prosper.
It’s because of this example that I would always counsel that you do an upbeat forecast and a gloomy forecast with your sales planning, then use the poorer to lead all of your contract discussions before you find yourself stuck.
Lee Duncan is a writer from the FT Prentice Hall publishing list. His clients call him the double your business coach as he helps them to implement little-known strategies that increase profit and make their firms grow.
