Business Plans for Start-Ups and Existing Operations
What’s required to get a loan?
CEDF requires a business plan from most loan applicants, although the level of detail we request may vary based on circumstances. Start-ups and businesses with less than three years of financial history should expect to prepare a more elaborate plan. Established operations and existing CEDF clients may be able to abbreviate their submission. Discuss this with one of our loan officers.
What goes in to a business plan?
Business plans have multiple purposes. Many who are inexperienced view a business plan like a dreaded school term paper that has to be completed to satisfy a lender’s desire for paperwork. This is an entirely wrong view. Fundamentally, a business plan should be a map for the owner to establish and chart the course as he or she navigates from inception to the growth stages of operation. The business plan should be maintained current (especially the financial projections) so it can serve as a guide to judge progress and make crucial adjustments to the concept.
Yes, lenders want to see well-constructed business plans. From our perspective, this is your opportunity to communicate what you intend to accomplish with the borrowed funds and make a persuasive case that you have considered the challenges and opportunities thoughtfully, and that your plans are realistic and attainable.
Can I get help writing a business plan?
Not everyone feels confident expressing thoughts in writing, so it is common for an applicant to seek outside help in creating their business plan. But, we caution that you must have a thorough understanding of your plan and all of the elements you are attempting to communicate, including the financial projections. It is transparently obvious to our loan officers when an applicant has had outside help but has paid little attention to the details submitted and cannot answer basic questions interpreting the information presented in the plan.
If you are not confident in your command of basic small business finance terminology and reports, we suggest you take our free Financial Fundamentals course at WeTeachSuccess.org. You can complete this five-part course in a few hours of study spread over small snips of time as necessary. Learning this material will leave you much more comfortable with the language of bookkeeping, accounting and the compliance requirements for operating a small business.
Who can help me with my plan?
As a lender, we can’t coach you on the specific contents of your plan. That would conflict with our responsibility to make a fair and prudent evaluation of what your application presents. But there is plenty of help available.
Begin by writing your plan to the best of your ability as many entrepreneurs and business owners do. If you feel you need assistance, we recommend you contact one of the organizations below. They have experienced counselors who can review your plan, offer their assistance, guidance and suggestions to get you ready to apply for financing.
Here are two outstanding resources for getting experienced reviews and guidance as you create your plan. These organizations provide free consulting to small business owners but the advisors and mentors will not write your plan for you. Use these services to be sure what you have created makes sense to someone with significant business experience.
The CT Small Business Development Center (SBDC) has full-time paid advisors dedicated to helping small business owners start and grow successfully.
SCORE chapters across Connecticut are staffed by volunteers, typically with years of corporate experience in particular industries.
What about the format?
The format, layout and exact length are not particularly important. You should concentrate on just clearly communicating your intentions for the business and showing how you will overcome the obstacles that every operation faces. We want to see three years of financial projections for new businesses, broken down by month in the first year. Be sure your spreadsheets account for not only all of the projected expenses, but also other outflows of cash that will occur like repayment of debt, purchase of assets, and disbursements to owners.
Here’s an example template that you might find useful to get started.
Another great resource about business planning is the U.S. Small Business Administration (SBA).
Here’s an excellent online course from the Connecticut Small Business Development Center.
A number of applicants have used an online software platform called LivePlan that helps speed up development of business plans by automating certain aspects of the layout, graphical presentation and spreadsheet, and prompting a business owner to supply the most relevant information to explain their ideas.
CEDF has arranged with the software developer to provide a discount for their software subscription. We receive no compensation for these referrals.