How do I raise finance with my business plan?

Raising finance for a business can be a very time-consuming affair, but it need not be complicated.

The first thing you need to do is to give yourself plenty of time before you need the money. It may take you a month or two to create the business plan itself, and it is likely to take three-six further months before the new finance reaches the business especially in the form of equity. Leaving a business in a position where it has only a matter of weeks before cash dries up can be a fatal or very expensive mistake.

'Finance' covers a huge spectrum of different fields: factoring, invoice discounting, asset finance/leasing, overdraft, term loans, Small Firms Loan Guarantee Scheme, mezzanine finance, equity and grants.

Consider carefully which finance is most appropriate and likely to be available. Providers of each of these forms of finance have different requirements, and the specific differing needs of debt and equity providers have been explored in other articles.

The essential element of the business plan for any finance provider is that you understand their requirements, so ask them what they are looking for (and any templates that they offer) when you first approach them, but in all cases you need to set out the following as clearly as possible:

• How much money do you need?
• What form of finance do you need? Is there any security to support the finance?
• What will the money be spent on and when?
• When will you be able to repay the money?
• Milestones and action plan
• Risks

Ideally, all of this can be captured in the plan’s 'Executive Summary' with further details in later sections, and of course the numbers need to reflect the words. These numbers should be packaged as interlinked Profit & Loss, Balance Sheet and Cashflow forecasts. Generally the first year’s figures should be monthly and subsequent (2-4) years’ figures quarterly. Any sensitivity analysis should reflect the key drivers of the business.

Armed with these facts and figures, you will have given yourself the best possible chance of raising finance.