Investment Recovery Is Often The Responsibility Of The Finance Manager Why Business Plans Don’t Get Funded

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Why Business Plans Don’t Get Funded

Failure is guaranteed if humans do not understand the formula for success and apply it correctly. I say this without hesitation and I speak from experience in this area. You can be sure that there is a formula for success in any endeavor of life and ignorance of the law is no excuse. The fact that some of us are wise in the areas of our success and foolish in others where we have failed shows that we all have something to offer one another. The same principle applies to secure funding. If you don’t know what the secret to raising finances is successfully, then you need to get an expert to help you learn and master the techniques to gain grounded knowledge for future success. One thing is for sure, you don’t want to be like the masses who are unknowingly incompetent at this, often running to banks and investors with a poorly prepared business plan only to face failure. In this article, I will now give you an insight into the world of writing an effective business plan for funding to help you grow your finances successfully and do it very fast. The key to increasing finance successfully is that your business must be ‘Investment Ready’. Unless you have green traffic lights in all of these areas which I will cover shortly in this article, you will encounter a lot of challenges and not be able to raise funds.

The secret to successfully raising finance for business growth was revealed to me while working for years with financial institutions providing funding to businesses, in my roles as Financial Advisor & Appraisal Manager, spending 50% of my time reviewing and analyzing business plans for funding and the remaining 50% manage post-funding client relationships to ensure they comply with financial agreements. I can honestly tell you that many businesses that consistently raise funds, use the same tried and tested systems. Those who are often challenged using many different systems and can hardly understand why they are not successful often resort to petty claims to back up their ignorance. You are being warned not to fall into the latter category and, reading this article will put you one step ahead of it.

These are the top five reasons why a business plan will be rejected for funding:

1. Marketing strategy indicates the business does not have a competitive advantage in its industry or the business does not have a strong marketing strategy and is likely to fail.

2. The management team is inadequate and in some cases lacks the competencies required for business success.

3. Unclear business strategy with the risk that the funder’s capital suffers a loss.

4. The financial projections are based on a somewhat optimistic assumption, which when stress tested indicates that the business will fail if the most probable outcome in the market is realized.

Unless your business has a plan in place to address all of the above issues should they arise in your business, you are guaranteed to fail in your attempts to raise funds. The reason is simple; A business plan is a management tool funders use to do their due diligence on businesses that need their hard-earned money. Funders have a variety of tools they use to assess a business’s eligibility for funding and unfortunately many small businesses know nothing about these evaluation techniques for funding decisions. This means that many businesses are not ready to invest when they approach a funder and are surprised to find their time and money producing a business plan has been wasted. Unless small businesses understand how they are evaluated for funding, the risk of businesses not being able to raise financing for growth even with a proliferation of government-backed loans will continue to increase.

In conclusion, before you as a business owner or manager approaches a lender or investor for funding, you are advised to ensure that you take the points that I have shared in this article with you very seriously. If you are challenged with the technical details of business planning, by all means, seek professional assistance from experts, as you are much more likely to get the funding you need, with the right business support solutions than trying to do it yourself and be faced with rejection.

I wish you great success with your business funding journey and keep reading my articles on this subject area and management issues in general.

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