May 31, 2016
It’s a Matter of Asking The Right Questions And Finding The Answers
Most successful independent businesses plan carefully for their future. Those that need financing also have to write business plans for their bankers. The better the plan, the better the chance of getting the financing you need and giving your business a good head start. The following questions are the kind that every entrepreneur should be able to answer before going into business.
Your business profile
What kind of business will you set up? Sole proprietorship or partnership, registered or incorporated?
What product or service will you provide?
Who are your major competitors?
Who are your major suppliers? What kind of payment terms will you have with them?
Who are your primary customers? Why will they prefer your product or service over that of your competitors?
Will you grant credit and, if so, how will you collect payment?
How big is your market? What will be your share of that market?
How will economic, political, social, technological and environmental factors affect your business?
What are your business strengths and weaknesses?
Why do you think your business will succeed?
Your Financing Needs
How much do you need to borrow? What kind of financing do you require?
What will your loans be used?
How will you repay your loan( s)?
What major business purchases will you be making?
How do you plan to fund your business to support future growth?
Your Business Financial Statements
What will be your current and fixed assets – cash, inventory, land, buildings, equipment?
What will be your intangible assets such as goodwill and patents?
What will be your liabilities – debts, loans, taxes?
What are your future income projections based on estimated sales and expenses for each quarter of the next year?
What kind of cash flow will you have for the next 12 months?
Your Personal Financial Statement
What are your assets – cash, savings, investments, life insurance, pension plan, property, etc.?
What are your liabilities – loans, taxes, mortgages, credit card balances, etc.?
What is your net worth?
What is your employment history?
When you have answered these questions, you will have transformed your idea for a business into a more concrete concept. And, if your answers satisfy your banker, you’ll be another step closer to making your business a reality.
This article adapted from the TD Business Planner, a publication in print and on available on disk free of charge from the Toronto Dominion