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Business Plans (Part 1) – When do I need a business plan?

banner-planningbusinessplanEvery business is different -therefore every business plan should be different. There is no one size fits all formula. A plan may be needed for a start-up to gain funding, help an established business expand or assist business owners give guidance and structure to its management team. Whatever the reason, your business plan should be tailored to requirement.

Borrowing from the bank

A business plan to help raise funds needs to have risk as its number one consideration. Banks lending money expect to be repaid within a certain time frame. Their overriding concern when reviewing your plan and making a decision to lend will be risk, risk that if they lend, they may lose their money. To counter this banks often require a personal guarantee or some form of security. Despite this the plan still needs to be water tight and show a clear vision of your idea and how the loan will be repaid.

Finance from investors

Generally investors take a longer term view and maybe more willing to take risk, looking for a better return when they sell their shares at a later date. If the aim of a plan is to issue new shares and raise finance the plan must convince potential investors that your business goals are viable. The world of investing in small to medium sized business has changed dramatically in recent years with the rise of crowdfunding and peer to peer lending. There are also attractive tax breaks for investors such as EIS and SEIS.

Government grants

A plan for grant funding must show you have a viable idea and will bring benefits to the area you will use the grant in. Most grant funding depends on meeting specific criteria, for example, if your business must generate new jobs in a deprived area then your plan should focus on how this will be done, the timescale and the benefits it will create. Once again it is crucial that your plan is tailored to its requirement.

However you intend to raise money for your business a good business plan is essential. Often you only get one chance to impress and gain the funding needed so make sure your plan is the best it can be.

In our next blog we will cover the content of a successful business plan. If you need a business plan contact Stephen Hill Partnership today. We are specialist business planners with a wealth of experience in this area. Download our App here.

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