Hi Scott, Just a couple of questions about business financing. I have set up a new business,understandably things are a little quiet at the moment but the jobs we are doing even though they are few and far between are high profit. We have very little working capital at the moment and are wondering if we can drum up some business funding even though we are in that position.
Best wishes,
VM
Hi VM,
Congratulations on your new business and the high profit, even if it is only from a few clients now. Since I’m not familiar with your business, my answers (and questions) here will be fairly general. The first question is, “how few and far between are your clients” and then, “just how much profit are we talking?” I’m assuming you’re looking for capital to increase advertising and promotion to drum up some more leads and increase your client count. If this is the case, a business loan seems to be the best route. A lender will need to see that the gap between clients isn’t so large as to make your operation appear to be a “part-time” endeavor, and that the profits from these clients are enough to cover operating expenses between projects.
If this is the case, I would start by putting together a current financial statement of your company. Then put together a 3-year, monthly cash flow forecast including the new loan/investment amount, the new projected ad expenses, and the increased projected revenue. Of course, this should only be one piece of a full business plan presented to the lender, but it will be your focus. You can get a pre-made spreadsheet for this, as well as a complete business plan-writing guide at our site (http://www.bizplansonline.com).
Since the bank is only interested in if/how they’ll get their money back, you only need to show, logically, that further expenditures into the company will produce exponentially greater revenues. The lender will be looking closely at how previous profits were reinvested (if at all) and what return they brought. Highlight statistics in your business plan that show how previous investments (even if your own) produced an increase in business.
I hope this information is useful. Best of luck with your new business!
Sincerely,
Scott Karch
President, BizPro
Scott Karch, author of BizPros plan writing manual, is a six-year veteran of writing successful business plans and finding capital for new businesses. He currently serves as BizPros President and as a loan officer for Main Street Mortgage, which provides both residential and commercial financing. As an Honorary Co-Chairman to the National Small Business Advisory Council, Scott was recently named the Kentucky Businessman of the Year. You may contact Scott at scott@1bizpro.com or by visiting the BizPro website at http://www.bizplansonline.com.
