smallbusiness.co.uk: Helping your business think big

Here three successful entrepreneurs tell us how they first managed to secure funding through formulating a winning business plan.

Brett Raynes, managing director of IT company Backup Direct, had to grapple with his balance sheet before getting funding.

There is an element of having to play the game with business plans. Anyone can mess around with spreadsheets to forecast profitability and growth.

But you do need to know the numbers to convince investors. They have to be confident that you have a grasp of them. If you don’t know them, it shows a lack of credibility.

On my first business plan, the balance sheet didn’t add up. The investors scoffed at me and dragged me over hot coals.

However, I managed to pull it off, as the people investing knew me and had worked with me before. Investors are also backing the person, so they will want to know that you know your subject and have a track record.

The biggest piece of advice I can give is grasp your subject and the words will follow.

Andrew Pearce, managing director of conference call company Powwownow, perfected his business plan over several pitches.
 
When we first wrote a business plan to get investment, we had no idea of the kinds of questions we would get asked. It was very much a trial and error process. So we started by pitching to angels that we didn’t think would invest anyway as guinea pigs.

Before we got funding we pitched to about seven different investors. Each time we tweaked the business plan accordingly and by the fifth and sixth pitch we weren’t changing much anymore.

Mark Payne, owner of The Coffee Lounge, used a chartered accountant to secure funding through the government’s Enterprise Finance Guarantee (EFG) scheme.

It took seven months for us to get the EFG and I honestly didn’t think it would go through. We used CBHC chartered accountants to put the plan together and without professional help, I don’t think we’d have done it.

I’ve been in business for more than 20 years and I’d never had to produce a business plan before. Instead I used things like overdraft facilities as funding.

These days if you want a loan a business plan is something you have to have. I think the key is to have a good accountant, know the market and when it comes to securing the EFG, you really need your bank manager on side. Ours knew the area and the market so put forward a really good case for us. If it had just been left up to head office, it wouldn’t have gone through.

Further reading:
Writing a business plan: the basics