Hard factors relate directly to your business and the basis upon which you plan to build it.
What do financiers look for?įinanciers look at both 'hard' and 'soft' factors when they analyse a credit application.
#Keep it simple security free
SME financing institution Qredits has free tools, including templates for a business plan and financial plan. This allows you to work out your minimum turnover to make ends meet. This involves calculating how much money you will need for you and your family, how much you will have to pay in tax and what your operational costs will be. One option is to determine how much personal capital you have and then base your financial plan on your personal situation. This will highlight when you will have surplus cash and when you will need extra funds. Your cash flow forecast should include all income and expenditure over a given period, e.g. Income and expenditure can fluctuate greatly over a year. Combining these, you can determine whether you will make a profit or a loss. You can then analyse the costs to keep your business running. This will allow you to estimate your turnover. Your operating budget should show that your business is profitable. from a bank (borrowed capital), or even a combination of the two. Options include personal capital (equity capital) or loans, e.g. Your financial budget should detail how you intend to finance your investment budget. This is an indicator of the minimum amount of money you will need to get started. Your investment budget should include a list of the investments you will need to start your business and those that can wait until a later stage. Answering all these questions in your business plan is the key to your success. What turnover do you expect to generate? And will your business be profitable, or not? It also forces you to examine cash flow and whether you will have enough money each month. This allows you to determine whether your business idea is viable. What should a financial plan include?Ī financial plan consists of five budgets that detail the minimum requirements for starting your business, the investments you will need to make and how you plan to finance them. Discussing it with an expert, such as your accountant, can also help you prepare for the next step – approaching financiers or investors for money. It is important that you work out as much of your financial plan as possible yourself. These will help you create a solid basis for your figures. Targeted market research and a sound marketing plan should be part of your business plan. Base it on your business plan and keep it simple. And it is useful for convincing financiers to lend you money, and therefore forms the basis for your financial pitch.Ĭreating a financial plan does not have to be complicated. It will demonstrate the costs and what is needed to finance them. A financial plan is a useful tool for determining whether your business idea is viable.
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