How to write a good business plan to get a loan
Organisations such as the Start-Up Loan Company are designed to help people who are at the very early stages of launching their business. By their very nature, these people tend to be less experienced, and to have more gaps in the knowledge. You may be an excellent kitchen fitter, or a world class lawyer, but that does not necessarily mean you have all the skills to run a business from day one.
In this situation, a good business plan fills two needs. Firstly, it gives the business owner a space to write down their aims for the business, as well as the tactics and strategies they will employ to get there. This process will help to identify the gaps in their knowledge and experience, and to plan how they will fill those gaps. Secondly, it gives the lender reassurance that the business owner has thought about this, and is not being complacent.
What needs to be in my business plan?
The business overview covers what the business will do. This section should explain why you think there is a gap in the market for you and your product.
Objectives will describe how you and the business define success? These could be financial or sales targets, or could be related to customer feedback. However, the objectives should always be SMART (specific, measurable, achievable, relevant and time bound).
Defining the people in your business will help a lender to decide whether or not to take a risk on you. As well as your idea, you have to convince them that the people in the business are worth investing in. You should include detail on the management’s relevant experience and skills.
Products and services will explain what you are selling. Whether it is a product or a service, every business needs something to sell. The more specific you are here, the better. Perhaps you could include a price list and how your prices compare with your competition.
Define your market and who you are selling it to. This is crucial. The most innovative product in the world will not sustain a business if nobody knows about it! Who are your customers? How will you market to them? Some businesses create a separate marketing plan, but certainly a substantial marketing section within the business plan is a must.
What will be your location? It is important to define whether you will have premises for the business or will you be working from home? Are the premises appropriate for the business, and have you taken costs in to account?
Set out your financial information, as loan companies will often ask you to provide a 12-month cash flow forecast. However, plugging numbers in to the spreadsheet is only half the job. Those numbers have to be credible. You should be able to justify the figures in some detail.
You might have estimated footfall in your shop, then you can estimate a conversion rate – what percentage of those people will buy? Then you can estimate an average spend per customer, and thus calculate the total sales forecast. Of course, not every business is a retail outlet, but there should always be some level of thought behind your forecasts, rather than just plucking a figure out of the air.
If you are a brand new business applying for a start-up loan through organisations like the Start-Up Loan Company, they are unlikely to expect the same detail in your plan that a bank would expect from a multi-million pound business. However, they do expect you to have given this some thought, and the business plan is your way of collecting those thoughts in one place and showing the lender that you are serious.
Talking Net Zero: Why does the accuracy of words matter to your business?
Do you understand the key climate change terms every business should know? Get to grips with net zero terminology and learn how you can use it to your advantage with our free resources.
Connecting businesses to support in Harrogate
Businesses in Harrogate have welcomed free drop-in days which are connecting them to support and friendly, local business advice specialists.
Successful female entrepreneurs prepare to pitch on International Women's Day
Six entrepreneurs, two angel investors, two chances to win up to £1000. That's the equation facing our successfully selected female founders on Wednesday 8th March at York Marriot Hotel.
28th April 20239:00 am - 10:00 amFREE
28 Apr - How to make your Social Enterprise survive risks: the art of Horizon Scanning
Join Professor Jeff Gold online to find out why Horizon Scanning is an important tool to master for your Social Enterprise, and how it can improve your resilience and prepare you for future changes.
22nd May 20233:30 pm - 5:30 pmFREE
22 May - Social & private partnership development networking
This networking event will bring together private and social organisations so they can find out more about each organisation's needs and work together to solve some of our social and economic issues.
18th April 20239:00 am - 5:00 pmFREE
18 Apr - Harrogate Co-Lab: Business Support Drop-In Session
This free drop-in service based in Harrogate can help answer your questions and direct you to relevant business support, resources and programmes.
Glossary of Climate Change Terms for Businesses
A free digital glossary defining the key climate change terms relevant to businesses, to help you understand and engage with sustainability resources and support.
2022 Seminar Recordings
We have recently hosted a programme of in-person seminars and other events, some of which were professionally recorded and can now be viewed on our website.
Seminar Recording : Access to finance: Funding growth
This workshop will provide guidance on cost based pricing, calculating your costs before deciding an appropriate margin, as well as covering market based pricing asking questions such as: What value do you add? What are you worth? How do you position yourself?