The success of any small business in Australia can be attributed to the right business plan that serves as the roadmap that outlines the goals, strategies, and operations. Not only that, but a well-written plan can also help businesses secure much-needed funding and attract potential investors and customers in the long run. With that being said, there will come a time when you, as a business owner, find yourself in need of a loan to finance your growth and keep up with operations. All it takes is producing a business plan to ensure that you get that loan approval.
Do you agree that 'failure to prepare' is 'preparing to fail'? It's quite shocking to know that the Australian Bureau of Statistics found out in their 2019 survey that only 47% of small businesses had a written business plan. Furthermore, those with a written plan are more likely to have higher levels of innovation, profitability, and business growth. Moreover, the Australian Securities and Investments Commission (ASIC) pointed out in their research that those who plan are 50% more likely to succeed than those who don't.
In another study by the University of Oregon, businesses that create proper business plans have a 63% higher revenue growth rate and are 2.5 times more likely to get loans or investment capital as compared to those without a plan at all.
In this article, we will provide ten useful tips for creating a perfect business plan for a sure loan request approval.
Tip #1 - Start with an Executive Summary
In any business plan, the executive summary is the first thing that any prospective lender or investor would read or browse through. That brief rundown of information is enough to provide a clear overview of your business and the goals you want to accomplish. That means a business plan should be compelling and concise to the point so that it grabs the reader's attention and convinces them to put their money and resources into your business.
The executive summary should briefly cover these key elements:
✅ Introduction: Briefly introduce your business, its history, and its goals.
✅Products or services: Describe how are you going to meet the needs of your target customers.
✅Market research: Show an overview of what you know about your target customers, competitors, and market trends.
✅Marketing plan: Explain how you intend to market and promote your products or services to attract potential customers.
✅ Financial projections: Include a summary of your revenue, expenses, and profitability.
Here are some helpful tips for crafting a compelling executive summary:
👍 Your executive summary should be no longer than two pages.
👍 Make sure that the language is clear and easy to understand by avoiding using technical jargon or legalese language.
👍 Always highlight the benefits of your products or services by focusing on how they solve your customers' problems.
👍 Use storytelling techniques to make your executive summary more engaging and memorable.
👍 We all know that first impressions last so make sure that your executive summary is well-written and free of errors.
Tip #2 - Outline Your Products or Services
Another key aspect of your business plan is all about describing your products or services in greater detail. This means highlighting what makes them special and unique. More importantly, you have to justify how they meet the needs of your target market and why it's the better option than the rest of your competitors.
It's more than just providing a clear description of your products and services, you also have to focus on these key elements:
✅ Attracting customers: It's all about getting the attention of your prospective customers by helping them understand the benefits of what you offer.
✅ Unique selling point: It's all about positioning the unique features and benefits of your product or services so that just a little nudge will help your target audience make that buying decision.
✅ Pricing: at the end of the day, price matters to everyone. Make sure that it justifies the benefits and unique selling points on offer.
Here are some helpful tips for outlining your products or services effectively:
👍 Provide a brief overview of your business and the products or services you offer by outlining their unique qualities, functions, and benefits.
👍 Explain how your products or services solve a problem or meet the needs of your target customers.
👍 Consider including images or graphics to enhance your product or service description and make it more engaging.
👍 Provide information about the pricing of your products or services, including any discounts or promotions.
👍 Show market demand for your product or service by including information about market trends, customer needs, and feedback.
Tip #3 - Create a Section on Your Business
Creating a section on your business in your business plan is a critical step in developing a comprehensive and successful plan. This section provides potential investors and lenders with a detailed understanding of your business, its operations, and its potential for success.
Here are the key elements to include in this section:
✅ Business description: Provide an overview of your business's legal structure, history, and management team.
✅ Industry analysis: Describe the industry in which your business operates, including market trends, growth opportunities, and challenges.
✅ Organizational structure: Describe the organisational structure of the business from the management to the rank and file while also highlighting key personnel so that potential investors and lenders can understand how your business operates.
✅ Marketing strategy: Showcase the marketing campaign with a clear understanding of the target market, marketing channels, and promotional strategies.
We got some simple tips for crafting an effective section on your business:
👍 Keep the section concise and focused on the most important information.
👍 Highlight the key achievements, such as sales milestones or awards, that can help demonstrate the potential for success.
👍 Demonstrate your expertise in your industry to help build trust with potential investors and lenders.
👍 Use visuals to help illustrate key points and make the section more engaging.
👍 Be honest and realistic about the challenges and risks involved in your business, as well as your plans for addressing them.
Tip #4 - Develop a Marketing Plan
Having a marketing plan is a crucial step in creating a comprehensive business plan as it outlines the strategies and tactics that your business will use to promote the products or services to your target customers. An effective marketing plan will help reduce risks, ensure better allocation of resources, and ultimately lead to increased sales and revenue.
Here are the key elements of the marketing plan:
✅ Target market: Identify the specific market segments that your business is targeting, including demographics, behaviour patterns, and needs.
✅ Marketing mix: Focus on the product, price, place, and promotion strategies that will be used to market the product or service.
✅ Unique selling proposition: Highlight the unique advantage or benefit that your business has to offer to your customers.
✅ Marketing budget: Outline the budget that will be allocated to marketing activities.
✅ Metrics: Identify the metrics that will be used to track the effectiveness of the marketing activities.
Focus on these useful tips for crafting an effective marketing plan:
👍 Develop an effective marketing plan by conducting thorough market research to understand the needs, preferences, and behaviour of your target market.
👍 Make sure to define your target market to ensure that your marketing efforts are focused on the right audience.
👍 Highlight your unique selling proposition so that it sets your product or service apart from the competition.
👍 Develop a comprehensive marketing mix that includes product, price, place, and promotion strategies.
👍 Set realistic goals for your marketing activities and identify the metrics that will be used to measure their effectiveness.
Tip #5 - Conduct Market Research
Market research is essential to understanding your target audience and identifying growth opportunities. It can help you identify the current and future needs of your customers, analyze market trends, and identify potential competitors. It also provides valuable insights into the market, enabling businesses to make informed decisions, and develop effective strategies.
Here are key elements to include in a market analysis:
✅ Market trends: Understand the size of the market, the growth rate, and the potential for future growth.
✅ Target customers: Identify the characteristics of the target customers such as demographics, needs, and behaviour patterns.
✅ Competition: Analyse the strengths and weaknesses of competitors, including their market share, pricing strategy, product offerings, and marketing tactics.
✅ Market segmentation: Identify the different market segments and assess their potential profitability.
✅ Barriers to entry: Identify the barriers to entry in the market, such as regulations, patents, and technology.
Take note of these tips for conducting effective market research:
👍 Use a combination of primary and secondary sources to gather information, such as surveys, interviews, industry reports, and government data.
👍 Get feedback directly from the target customers to understand their needs and preferences.
👍 Keep an eye on the competition regularly to stay up-to-date with their product offerings, marketing tactics, and pricing strategies.
👍 Always be updated with the latest market trends and developments.
👍 Make sure to use the data to draw meaningful conclusions and develop actionable insights.
Tip #6 - Identify Potential Customers
When you prepare your business plan, you must understand your potential customers and find out how your products and services will address their needs. You also must figure out how you reach them by making sure that you're targeting the right market, demographics, purchasing behaviour, and preferences.
Here are the things you must consider when identifying your customers:
✅ Customer demographics: Identify the specific demographics, needs, and behaviour patterns of your target audience.
✅ Market research: Gather information about your target audience, such as their buying habits, preferences, and challenges through surveys, focus groups, and other research methods.
We got some tips to help you identify your potential customers:
👍 Analyse how the competition is targeting their customers so you can gain insights into the potential customer base for your business.
👍 Use social media platforms to identify potential customers and engage with them.
👍 Attend events related to your industry to meet potential customers and learn more about their needs and preferences.
👍 Leverage existing networks such as friends, family, and professional contacts to reach potential customers and gather feedback on your products or services.
Tip #7 - Provide Financial Projections
The success of your business plan can be tied up with your financial projections as it shows how your business will generate revenue and profitability over time. All the key financial indicators will be used to evaluate your overall business performance, financial viability, and potential risks. It will also serve as a basis for securing funding from investors or lenders.
Include the following key figures in your financial projections:
✅ Sales forecast: Estimate future sales based on market research, industry trends, and the business's marketing and sales strategy.
✅ Expense forecast: Estimate the costs of running the business, including operating expenses such as rent, utilities, salaries, and marketing expenses.
✅ Cash flow projection: Estimate the amount of cash coming in and going out of the business over a specific period.
✅ Profit and loss statement: Estimate the revenue, expenses, and profits or losses the business will make over a specific period.
✅ Balance sheet: Estimate the business's assets, liabilities, and equity at a specific point in time.
Follow these tips for creating realistic financial projections:
👍 Use market research and historical financial data to make projections that are based on data and not just assumptions.
👍 It's better to underestimate revenue and overestimate expenses to ensure that the business has a realistic financial outlook.
👍 Review and update your financial projections regularly to reflect changes in the business, market, and economic conditions.
👍 Always seek advice from financial professionals to ensure that financial projections are realistic and accurate.
Tip #8 - Address your Financial Situation
Addressing your financial situation is an essential element of a successful business plan. This section should describe your current financial situation, including your credit score and outstanding debts. Highlight your plans for managing your finances and how you will use the loan proceeds.
Here are some reasons why addressing your financial situation in your business plan is important:
✅ Understand your financial position: Gain a better understanding of your cash flow, debt levels, and profitability.
✅ Make informed decisions: Properly manage your business such as whether to seek funding, invest in new products or services, or cut expenses.
✅Secure funding: Investors and lenders will want to see that you have a clear understanding of your financial situation and have a plan in place to manage your finances effectively.
Here are tips for addressing your financial situation effectively:
👍 Develop a budget to track your income and expenses and ensure that you are living within your means.
👍 Monitor your cash flow closely and ensure that you have enough cash on hand to meet your obligations.
👍 Manage debt effectively by consolidating high-interest debt, negotiating lower interest rates, or paying off debt aggressively.
Tip #9 - Appeal to Potential Investors
Addressing your financial situation is essential when it comes to creating your business plan. This includes your current financial state, any outstanding debts or financial obligations, and your long-term financial goals for the business. By addressing these factors, you can provide a clear picture of your financial situation to potential investors or lenders, which can increase the likelihood of securing funding for your business.
Aside from having a good executive summary, market analysis, and financial projections, there are some key elements to include in your business plan to appeal to potential investors are:
✅ Competitive advantage: Investors want to see that your business has a unique selling point or competitive advantage that sets it apart from others in the market.
✅ Management team: A strong management team with relevant experience and expertise is important to investors as they want to see that the business is in capable hands.
✅ Scalability: Investors are looking for businesses that have the potential to scale and grow rapidly.
✅ Exit strategy: Investors want to know how they can exit their investment and what returns they can expect in the long run.
Here are some tips for addressing your financial situation effectively:
👍 Be honest and transparent about your current financial situation as it shows potential investors or lenders that you are taking steps to address any past financial issues.
👍 Provide a clear picture of your current finances so it can help potential investors or lenders make informed decisions about whether to invest in your business or not.
👍 Discuss your long-term financial goals for the business so you can demonstrate that you have a clear plan for achieving financial success in the future.
👍 Consider using credit cards or personal loans to finance your business. If you do choose to use these types of financing options, be sure to discuss your plans for repayment in your business plan.
👍 Be realistic with your financial projections so you can demonstrate that you have a solid understanding of your business finances.
Tip #10 - Keep It Concise
Keeping your business plan concise is important as potential investors or lenders don't have a lot of time to review lengthy documents. A concise business plan shows that you have a clear understanding of your business and have focused on the most important information.
Here are some tips for keeping your business plan concise:
👍 Include information that is necessary to convey your business concept and strategy.
👍 Use bullet points and headings to highlight key points and draw attention to important information.
👍 Focus on the most important aspects that are most likely to be of interest to investors or lenders.
👍 Keep your language simple and avoid using technical jargon that might confuse or overwhelm your audience.
👍 Use graphs, charts, and other visuals to convey information quickly and effectively.
Conclusion
Creating a perfect business plan for sure loan request approval requires a significant amount of time and effort. By following the tips outlined in this article, you can increase your chances of securing a loan approval and creating a successful business. Remember to highlight the unique aspects of your business, showcase your understanding of your target market, and demonstrate how the loan proceeds will be used to achieve your business's objectives.
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