One thing’s for sure—without a business plan, there won’t be any backing from most banks. “A business plan is like a blueprint for your home,” explains Wellington Holbrook, ATB’s chief transformation officer.
“You would never give money to a builder who couldn’t tell you the equipment, materials and cost required to make a house functional. We generally don’t want to give money to an entrepreneur who doesn’t know what they want to build and how they’re going to do it.”
So, what exactly is a bank looking for in a business plan? We’re glad you asked! Here are a few essentials that will convince the bank that your business deserves their backing.
Tell us about yourself
Whether you’re starting your own business or buying an existing one, make sure your plan highlights what makes you and your team the right fit for this business. We bank on the people that run a business as much as the business itself.
Do your market research
Once you’ve identified your market, you should explain why your business will thrive within that market. If you have a new product or service, how does it meet the needs of consumers? These details are the secrets to your success.
Summarize the risks or potential obstacles to your success
No business venture is a sure thing, and many small businesses fail within the first five years. If you prove that you understand their risks and are prepared to face them, your banker will feel much more confident about your chances of success. A SWOT analysis is a simple way to do this.
Summarize a sales forecast
A good sales forecast predicts how much revenue a business will earn each day, week, month, and year.
We know you don’t have a crystal ball—we don’t either. But making a few educated guesses and extrapolating the results can be indispensable for developing a marketing and sales plan.
Banks tend to like conservative numbers. You may find it useful to define the best- and worst-case scenarios—and make sure you can service your debt in either situation.
Think about your exit strategy
We know, we know—you haven’t even started your business yet. But we still want to hear about your exit strategy. What will you do if it doesn’t take off like you hope? Careful planning and a reserve of savings help a ton in these circumstances.
Are you looking for a little more help to write your business plan? We’ve got a little something for you. Our Business Plan Template guides you through what to include, along with space for you to fill in the blanks.