Originally published in Entrepreneur
By Mark Abell
In my experience in banking, more than three-quarters of business plans that come with projection-based applications fall short in one or more key areas. Many of the plans I see consist of a few pages of hastily produced bullet points, falling well short of the detail and color about the business that banks need to make a credit decision.
Business plans are critically important for startups, high-growth companies or buyers seeking to finance the purchase of a business. In fact, they are a useful planning tool for any business, but especially for startups since they have no financial track record for a bank to examine.
Established companies that are planning for accelerated growth often need working capital, equipment or real estate financing to keep growing, and they need a solid business plan that identifies what will drive the planned growth and shows that their plan will result in adequate cash flow to assure repayment of the requested loan.
Businesses seeking loans to acquire other businesses (or individuals looking to buy a business) will need a thorough plan to describe the new ownership, and how they’ll successfully manage the firm, and what they see as their market opportunities and key clients.