Making Your Financier Take You Seriously

As a business manager you will always have a clear view of where you would like to see your business go, but the route there is often far from clear - even if you are a particularly innovative leader.

If you are at the helm of a small to medium sized business you will doubtless be aware that the external pitfalls that can throw your business plan off course represent a far greater threat to you than they do to your larger rivals.

Whatever approach your business takes – be it identifying and fulfilling demand for a new product or service, developing a superior product in your business’ current marketplace, or expanding into new markets - it will require a financier to help you grow and expand.

However, a further issue facing managers of smaller businesses is that it can seem a lot harder to convince a financier to take you seriously than larger, established and proven businesses. This becomes more prominent when looking for alternative banks or financiers who don’t yet know you or your business.

But, this should not put you off because when it comes to it, there is no reason why your small or medium sized company can’t act big and persuade a financier that you know your business and where you are going.

The secret to attracting the support of a bank or financier is down to two main things: a solid business plan and, as is the case with many things in business, human relationships.

Developing a relationship with a financier, getting them involved with your planning, asking their advice and sharing your vision with them will ultimately mean that when the time comes for them to review your business plan, they will be on board, understand your thought processes and have a much greater desire to see your company succeed and seek to assist where they can.

Don’t be intimidated by the fact that your company may not appear to have the immediate gravitas and allure of a larger player; you can use the fact that you are smaller to your advantage.

Keep these seven simple points in mind before applying for funding and you will be on course to ensuring all will run smoothly:

1. Involve potential financiers in your planning processes. They will have seen many business plans so make the most of their wealth of experience and get them to buy into your objectives.

2. Be realistic with your cash flow forecast and allow head room for the inevitable late payments!

3. Examine your competition in detail. There are very few markets where there is no competition and your financier will want to know how you plan to combat their strategy with your own.

4. Always have supporting evidence to back up your business plan. If you leave the door open to questions you cannot answer, you will lose credibility.

5. Financiers are far more likely to accept business plans when the previous year’s targets have been met. If targets have been missed, be sure to provide an explanation. Remember to use your business plan to illustrate how you intend to overcome the issues that have caused problems in meeting targets.

6. Send the final version to your financier as soon as possible for them to review. Ask them to review it in line with the facilities they already provide. If additional facilities are required, ensure you know how much extra funding will be required.

7. Finally, don’t underestimate the power of those assets that don’t appear on a balance sheet such as brand loyalty, customer relationships, reputation and management skills. A financier will look at the measurable qualities of your business but be sure they also get a ‘feel’ for the business as a whole which might just shift the favour in your balance.