Bear the above in mind in presenting the plan to your

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Unformatted text preview: quire the borrower to provide adequate security. Bear the above in mind in presenting the plan to your chosen financiers. The cash flow forecast is a vital part of the business plan. It will identify the amount of cash required on a day-to-day basis and, therefore, highlight the operating needs of the business for additional finance. It will help identification of how much should be: equity - to finance the risk element medium to long-term debt - for core borrowing and fixed assets short-term - for working capital. To help you prepare cash flows, you should seek help from your professional adviser. Be realistic rather than optimistic especially with the figures in the business plan. An enthusiastic, positive approach is important by all means present the strong points but don't ignore the weaknesses. Sensitivity analysis is essential in evaluating key assumptions in the business plan, for example by testing the effect on profits of varying the rate of interest payable. Your financial requirements are obviously an important part of your business plan. However, resist the temptation to give too much detail in the plan. You should indicate the amount you require and its intended uses along with any other relevant pieces of information. Anticipate the questions that the financier is likely to ask: Why has no-one else thought of it? Why will it sell? Who will it sell to? What price will it sell at? How much will it cost to produce? The business plan must be yours, not your professional adviser's. You must be fully familiar with its contents and although your financial adviser will be closely involved in its preparation the business plan should not be bought 'off the shelf'. It is probably true that people have to be trained to be good managers. An entrepreneur tends to be a dealer rather than a manager. Most financiers will be looking for a good management team combining both entrepreneurial and good management skills. It is also true that the easiest time to raise finance is when it is least needed. A wellmanaged business always thinks ahead. How Should You Present Your Case? Once you have done all the preliminary work and prepared your business plan it is time to present your case to financiers. It is best to approach a limited number of providers of finance in the first instance, say about three bankers or venture capitalists. This gives you the opportunity to revise the plan in the light of their comments and have another attempt if it is poorly received. You could harm your chances by distributing a poor plan widely among financiers. Follow four basic steps: Sell the idea on paper. Convey what it is that makes the project exciting in the minimum number of words and ensure it is "eye catching" Consult professional advisers with knowledge of the financiers. Good contacts and working relationships are important Follow up with a telephone call and arrange a meeting at which you, the management, can sell the idea and prove your ability After the meeting, the detailed plan can be amended to take account of the financier's comments, particularly in respect of changes to financial as...
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This note was uploaded on 02/27/2013 for the course GBMT 300 taught by Professor Javierwujie during the Summer '12 term at University of Wisconsin.

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