Jim McAuley, Regional Director, Yorkshire & North East, Royal Bank of Scotland
Jim McAuley Royal Bank of Scotland shares his thoughts on issues affecting the SME sector.
QUESTION: What do I need to consider when writing a business plan and applying for funding?
A detailed and robust business plan can be a strong asset when approaching your bank for funding. Here are some points to consider:
1. Be realistic A sensible business plan provides evidence of financial control and forecasting and a business strategy that banks can challenge. You must underline the bottom line – just because an opportunity looks great, it doesn’t mean that it will make money. Emphasise your main sources of income, and takes into account the costs. The reader must believe your business idea is a financially sound one from start to finish and demonstrate a clear understanding and appreciation of sector trends on income.
2. Work carefully on the content of your business plan Every business plan should have a title page, with your name, the business name, date, and details of circulation and confidentiality. You will also need a contents page, the main body of the plan, and any appropriate appendices, such as diagrams, statistics and spreadsheets.
3. Executive summary Many business plans are judged solely on this page and it is the sales pitch for your business. It must summarise the key points of your plan, showing the highlights from each section and focusing on your competitive advantage, profit forecasts, how much money you need and prospects for investors.
4. Team and skills Here you can promote your experience and that of company members to demonstrate your strengths and expertise. Highlight your past employment and business record, and those of your staff. Identify the strengths of your management team and how you plan to tackle any weaknesses.
5. Products and services Outline what your business does and how you make money. Detail the type of business and what sector it is in, when you plan to start trading, what is your Unique Selling Point (USP), how products will be developed, and any patents, trademarks or design rights you hold.
6. Market Many businesses fail when strong products are not sufficiently marketed, promoted, or correctly positioned to prospective customers. It is important to understand your market and demonstrate this. Include any market research and competitor analysis you have done, as well as plans for how you would react to changes in the market.
7. Selling The nitty-gritty on how you will sell your product or service. Detail the pricing, margins, promotion and positioning of your product, how you will reach your customers, and your chosen sales method.
8. Operations Provide practical details about your location and premises, suppliers, production facilities, required equipment, management-information and IT systems.
9. Finances Your plan must demonstrate what capital you need and how you plan to repay any borrowings. Include details of any security you can offer lenders (often business or personal assets) as well as sources of revenue and income and what the prospects are for investors or lenders. In addition to this, you’ll need cash flow, profit and loss, and sales forecasts for the next three or five years.
10. Talk to your bank The above information forms the essence of a smart business plan. At RBS we recognise that the economic downturn presents opportunities as well as obstacles, with tough trading conditions providing the potential for growth when conditions improve. We are committed to supporting commercially viable business ideas and by working in partnership can help you achieve the goals laid out in your business plan. We can provide simple and transparent banking facilities but also offer our expertise to help you turn your business goals into a reality. It doesn’t stop there, we will continue to support you as your business trades in the short, medium and long-term.
For further information on how RBS can help your business contact 0800 073 0797 (Typetalk 18001 0800 073 0797), visit www.rbs.co.uk/business or speak to your Relationship manager. Calls may be recorded.
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