It is imperative that your start-up gets the funds it needs to launch itself for maximum growth. The application for funds depends on the type and amount of start-up funding you seek. This guide will examine the steps that you will need to follow to ensure that funds are secured in the form of a start-up loan.
The application process for securing a start-up loan involves the following steps:
Step 1 – Write a Solid Business Plan
A good business plan is normally one that has a solid foundation based on extensive research and good business acumen. The first step in the application for a loan is to ensure that you have a well written business plan. It is advised that you detail the market growth and demand for the product or service that you plan to launch backed up with industry specific research and statistics. Also include a competitor analysis detailing the market specific dynamics that you plan to enter. Remember that the essence of a business plan is to highlight that your business idea is viable and prove that it can be profitable given the right financial backing.
Step 2 – Prepare Sales and Profit Forecasts
If you have already started running your start-up business then you will have numbers of sales made or contracts that are already in the pipeline. This will help you secure funding from the start and will strengthen your position. You need to demonstrate your sales numbers and sales forecasts as well showing that you are well versed in your business and the industry’s growth prospects.
Step 3 – Ensure that your forecasts match your actual business plan
Ensure that the sales forecast that you submit in your business plan matches your cash flow in realistic terms. The numbers that you present need to match up. You may predict a huge sales figure but if you do not have the correct amount of cash flow to run your start-up business and fulfill all your sales orders than you will have business problems. You need to demonstrate that your start-up business can fulfill orders and grow hence demonstrating a viable and sound business plan.
Step 4 – Detail Costs and Expenses
When writing your business plan and applying for a loan, you will need to present a statement of costs and expenses that your start-up business would need to cover to ensure that business can operate on a daily basis. These include rent, bills, staff etc. By stating all these expenses, you will be able to show how much you need to run your start-up. Also include all the costs that are encountered from acquiring/making the product or service to delivering it to your customer.
Step 5 – Be prepared for the Interview
Once you have complied an accurate and solid business plan you will need to ensure that you are well prepared for the interview. Learn all the facts and figures that you have included in your business plan and work through a series of questions that you may have to answer at the interview. By practicing for the interview, you will be ready to present a professional and well detailed business plan that could secure you funding for your start-up. It is important to note that you may only get this one shot to persuade the fund providers that you are indeed a good business partner.
Shoaib Aslam is the co-founder of Pearl Chartered Accountants, a UK-based chartered accountancy firm that has multiple locations across London. They are experts in helping startups and established businesses with all aspects of growth, strategy, scaling up, accounting and tax planning.