How to Write a Business Plan – Part 7 – Funding Request

How to Write a Business Plan – Part 7 – Funding Request

The business plan boot camp will consist of nine parts in total, each tackling a portion of the plan and the basics of how to handle its successful creation as prospective businesses look to secure funding and backing. Put together, these skills will help create a business plan that will wow potential investors.

Part 7. Funding Request

Most business owners — or aspiring business owners — need funding. A select few will find funding without much effort, but for the majority of new business owners will need to find financial support to get off the ground floor. If this sounds like a need you have, then the Funding Request section of your business plan is extremely important. This is the section where you get down to the nitty gritty details and minutia of what it is going to cost to run your business successfully and how you plan to use the funds that you investors are going to entrust you with.

Remember, like every other section in this guide:

  • You want to convince your investors you can be trusted.
  • You want to be as concise and specific as possible.
  • You want to back up all of your statements with research and data.

Your investors should get the sense that you have thought of every detail down to the penny. They should also feel assured that you understand the gravity of responsibility they are giving you by taking a risk and investing in you. If this is the case they are much more willing to take the risk that you will be an investment that will pay dividends.

Regardless of size and stature, every business is a risk. Newer businesses and startups are inherently a huge risk as they lack the customer base and historical data to prove they will in fact be successful. As a result, this section should be compelling. You want to convince your investors that you are a good risk — in fact, the best risk.

You want to include the following key elements in your Funding Request section:

Business Outline

The Business Outline section of the Funding Request should seem familiar. It will serve as a shortened version of elements of previous sections. Here you’ll provide the details of your target market, company structure, leadership structure, board of directors and relevant positive press.

Current Financial Status

This information will be used to show potential investors your financial status. The money situation displayed will include relevant financial details (income/cash flow/balance sheets) and should offer your projected financial information as well. It is important to include what assets you’ll use as collateral and how you’ll pay off the loan if you secure one. If you are only looking for investors, describe what sort of return on investment (ROI) your investors can expect after providing funds.

Funds Request

In the Funds Request you should specify whether you are seeking a loan or investment funds. Outline how much money you need to start your business for one year. Also denote how much you need to fund your business for the next five-to-ten years. Take care in choosing this number. You don’t want to constrain your companies operating budget. You also don’t want to be a kid in a candy store. Be reasonable.

Funds Used

Outline how you will use the investor funds. For example, will the funding be used for acquisitions, working capital, expenditures, retiring debt? Be very specific here. If you’ll be using funds for multiple purposes explain each in depth. It will help you to request money to grow your business rather than to pay off debt.

Financial Plans

Describe financial plans you can foresee in the future. For example, do you think you might sell your business, get bought out, or enter into a debt repayment? Your investors are going to want to know how likely you are to repay the loan they are giving you, so you want to foresee possible financial hiccups for your business.

Be sure as you prepare your funding request that you don’t seem to be sending out a form letter. Tailor each request to the financial source. This is important. Each source will have different priorities. Make sure you hit on each of them. Make them feel like the only source for you.

About author

Michael Barry
Michael Barry 31 posts

Michael Barry is the Editor-In-Chief at AgeOfTheSmallBusiness.com. Currently living in Boston, Massachusetts, he received his B.A. in Financial Economics from St. Anselm College and his MFA in Creative Writing from the Stonecoast Program at the University of Southern Maine.

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