Business Plan Financing
Financing is the most common goal pursued with a professional business plan. And it does not matter whether it is a business startup, a company succession, a company acquisition or a company expansion.
Anyone who wants to implement his business idea needs a plan. In practice, the business plan has been the central planning document for economic analysis. Convince the potential sponsor with a professional business plan and a realistic financial plan. This shows the company’s development in figures and lists in detail which investments are necessary and where the money comes from.
There are various types of financing to cover capital requirements. Whether the classic bank loan, financing or shareholding is appropriate for your project, you have to decide in advance (see further business plan objectives). Find out more about the different financing options. Pay attention to the commercial side. You will not get financing for nothing. This involves costs that will be incurred sooner or later. To ensure that you do not experience any “bad” surprises, consider them in a separate financing plan so that you have an eye on the company’s ability to pay. Let us look more closely at the possible forms of financing.
Types of financing – credit, participation, subsidies or startup funding?
There are plenty of financing opportunities on the capital market. Get an overview of the financing types, the corresponding conditions and access requirements. Or, let yourself be helped by an experienced consultant.
Principal bank loan
Bank credit is the classic option for financing an entrepreneurial project. This is awarded by principal and savings banks on the basis of a credit agreement. A business plan is required by banks in order to apply. The bank will scrutinize the creditworthiness of the business plan, especially the figures. You must convince the bank consultant of your entrepreneurial and professional suitability. Depending on the risk classification and the amount of capital requirement, the costs for credit are calculated in the form of repayment rates and interest. These are absolutely essential in the financing planning, so that the liquidity of the company is properly managed and there is no lack of payment.
Credit comparison via a credit calculator
The comparison is worthwhile. Banks offer loans on different terms. So look at them closely. The comparison portals on the Internet provide a good overview of market interest rates. You are therefore well prepared for the bank interview.
Depending on the company phase, various investors are eligible. In the early stage or seed phase, equity capital often comes from business angels. In the growth phase, venture capital providers emerge. All in all, you have an investment in your company. Money for shares is the trusted exchange method. The amount of investment can vary. From 25,000 euros to several million euros, everything is possible. The earlier your investor enters into equity, the higher your risk is due to the uncertain market assessment. Accordingly, the risk will be paid in the form of more shares. An investor has the objective of selling his shares as profitably as possible. Rapid increase in the company’s value is in their interest. A business plan for investors is the basis for the acquisition of equity.
The Business Plan for Financing
Financial planning is the central chapter if you want to finance your business plan. Begin with calculation of startup costs and expenditure on investments. You then create sales and cost planning as well as the liquidity plan. As part of the liquidity plan, please refer to the financing plan for how you want to finance the initial investment. Finally, develop the profitability planning to determine the profitability of the business plan.
No matter for whom you write the business plan. Financial planning is at the heart of the providers. The providers unite a common goal: They want to earn money with their investment.
This is included in the professional finance business plan – the main points
- Capital requirements plan
- Financing plan
- Sales plan
- Costs plan
- Profit plan
- Liquidity plan
If you want to apply for financing with your business plan, you should primarily show that your business model has good prospects for success and that you are able to sustainably build up the company.
A key parameter in your business plan for financing is your liquidity. This should be apparent from a professional liquidity plan, which should at least cover the two future business years. It should be clearly ensured that, in the event of expected sales (and typically also in a worst-case scenario), the borrower is able to meet repayment and interest claims.
In addition to liquidity, the financiers are also interested in where exactly the money flows. This is shown in the business plan on the basis of an investment or capital requirement plan. All investments must be stated at fair value. Naturally, a sponsor is interested in investing primarily in things that can be sold at a reasonable value in the event of a failure of the company. The acquisition of a company vehicle is thus, for example, a lesser risk than the production of individual advertising media (e.g., home page, business papers, etc.) since these could not be sold in the event of insolvency.
Successfully applied for financing after submitting a professional business plan
Another important aspect is the representation of the founder. The business plan must show that the founder has the training and experience to successfully implement the announced business startup. The better the training, the less creditors see a default risk of the financing, since a well-educated founder would be able to pay interest and repayment from any subsequent employment, even in the event of the failure of the company.
In addition to these points, your business plan should consider a few other key success factors. In each case, however, the following points should be presented:
- Realistic calculation of the cost of living
- Detailed investment plan / capital requirement plan
- Financing planning and financing model
- Interest and repayment plan
- Sales and operating costs planning
- Viability plan
- Minimum sales calculation
- Liquidity planning
Equity financing is required in financing planning. As a rule of thumb, you can get a share of about 20 percent. Use this preferably for costs incurred in connection with fixed and current assets. Equity providers expect their own contributions from the founders. This signals faith and the will to achieve successful company development.
The mixture makes it. In order to finance long-term investments from fixed assets, you are typically using leverage which you conclude for the useful life of the purchased asset. Short and medium-term investments in working capital are best financed with borrowed capital. You determine the amount of the borrowed capital by deducting the equity ratio from the capital requirement.
By means of profitability planning, you calculate operating profit before taxes for the next three years. To do this, you create a profit and loss account that represents the planned sales revenue against the costs. The profitability plan gives you an indicator as to whether the project is worthwhile at all. Profitability should be positive within the first three years. In the case of the startup grant, the Federal Agency for Labor expects a positive development in the first year.
If you would like to use our support in the creation of your business plan, simply contact us and let us make an individualized offer.
This is how a banker reads the business plan
You need to understand how bankers scan your documents and for this how to write a business plan: In the first step, the banker examines the one interested in the startup as a person and their professional background as well as the basic business idea with the underlying concept. Next they look at the presented figures, which must have reliable resilience. The economic environment is also important. As bankers are often experts in some sectors and their market development, honest statements on this topic are essential. As a summary of a maximum of 1.5 pages, this information is the first part of the business plan, the design and content of which should be highly professional.
As is the case with all parts of the business plan: The language must be easy to understand and deliberate explanations as complicated specialist components deliberately discourage future entrepreneurs. Only if this first summary is convincing will a banker become devoted to the rest of the business plan. Many startups already fail at this point, as there is already a lack of conviction or professional competence.
The next step is to look at the submitted figures, which are thoroughly examined and must be conclusive.
This counts directly in relation to the entrepreneur
- the private creditworthiness of the founder,
- existing liabilities,
- the amount of existing capital as well as
- private living expenses.
For a young company, realistic sales planning and detailed explanations for all investments is essential for the bank. This also applies to the in-depth expertise of the company’s founder with regard to professional competencies in the financial sector. The ability to estimate all costs such as taxes, insurance, personnel costs and all other incidental and operational costs is only one of several criteria for lending. For estimation of the future, a banker presupposes a minimum medium-term financial planning for three years. Again, the consistency of numbers and concept is indispensable and all future sales and investments are supported by comprehensible arguments in order to assure the company’s lasting profitability.
Last but not least, a banker is interested in planned marketing measures. These must be consistent with the business idea, the overall concept and the target group. Depending on the industry, the target group and the area of entry, a wide range of measures are to be set.
This is how an investor reads the business plan
The investor will have little time, as he gets numerous business plans every day. The first impression is therefore important. This is communicated to the potential investor through the executive summary and a professional form. The introduction has to summarize the key factors of the business plan in short, understandable sentences. After reading, the investor should be convinced that a detailed look is worthwhile. In addition, offer a summary of the business idea in a few sentences to facilitate entry and make decisions as to whether this concept fits into their portfolio.
In the next step, the investor will focus on the founder or founder team. Due to the difficult market situation, a first-class team is more important than the idea. If the entrepreneurial, professional and personal qualities are outstanding, the business idea can still be second-rate. You must therefore consider the suitability of each team member. Do not conceal any weaknesses either. Just explain how to address them.
Market potential also plays an important role. The investor looks closely at sales and cost planning. After all, the company’s value should rise rapidly, so that the investor can carry out an exit in the medium term and sell their shares profitably. You can safely point to successful exits in your industry and that is their business. Therefore, the chosen legal form is important to them. On the basis of these, the forms of participation are decided for them.
More than other addressees, the investor watches the opportunities. He will therefore consider the SWOT analysis in order to estimate the chances for the highest possible return. Unlike a bank consultant or public funding institution, an investor is open to the vision of the founder. Explain the specifics of your business model in detail in the business plan. Take advantage of the advantages, customer benefits and added value for your customers. Anything that is a delimitation to the competition is particularly emphasized as an adjustment feature.
Support by a business plan specialist – our experts are happy to help
The preparation of a business plan for submission to a bank requires complex knowledge on the topics of market analysis, finance or presentation of a business idea. Reasons why the formulation of a meaningful business plan, including robust arguments, is extremely time-consuming and often difficult to achieve. At the same time, the view of one’s own idea is not always objective, and there is a strong tendency toward subjectively colored information. This also applies to the lack of practicality, which is often replaced by an emotional argument. These problems are easy to overcome when the business plan is created together with a specialist looking at the whole concept from a natural distance. We number among these experienced business plan experts who support you in compiling your individualized business plan with competence and expertise in many areas.
The business plan is an investment in the future. Often the urgently needed financing of the project fails due to incorrect content or insufficiently formulated and convincing arguments. The support of a professional team helps to prevent this and secures the future of a company. As a specialized team accredited to the most important funding institutions, we work together with you to create a business plan tailored to your concept and individual requirements (for market and regional aspects of a business plan see our advisor).
The Businessplan.org core competency is the creation of professional business plans for companies of all sizes and all sectors. Each member of the team has a sound business education and several years of experience as a company consultant, and annually produces a variety of different business plans for young entrepreneurs and existing companies.
If you want to have your business plan created, simply submit a request for a quote without obligation. We look forward to hearing from you!
Evaluation criteria for the selection of a business plan specialist
When selecting a suitable expert and partner for your business plan creation, you should consider the following criteria for a business plan expert as mentioned in our checklist: