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Preparing Your Business Plan
To Prepare your Business Plan for a Financial Institution you will need to follow a standard format. It should be presented to the financial institution as document. And it should include the following:
¨ Table of Contents
¨ Executive Summary
o 2 pages preferably in bullet format
¨ Company Summary
o Company history (how long have you been in business? etc)
o Company goals & objectives (How does this energy project fit in to core operation?)
o Amount of financing required (Include overview project budget, etc)
¨ Management (detailed contact information to be included where applicable)
o Organization Charts
o Qualifications of key executive
o Description why there is the expertise to meet objectives
o Management compensation/ownership
o Board of Directors
o Consultants/advisors
¨ Marketing Proposal
(This will vary according to the project type and the goals of the marketing plan. Are you marketing to Ontario Power Corp, Other Farms to form a co-op, etc)
o Product concepts/descriptions & pricing
o Description of promotion/advertising & distribution details including costs
o Detail targeted client (s)
o Description on how product or service fills an unmet marketplace need
o Details on the competition’s strengths & weaknesses
o How to develop & penetrate a large and growing market
¨ Financing Proposal
o Explanation of uses of financing if it is provided
¨ Sources of finances – equity vs. debt (where is other financing coming from?)
¨ Financial Statements
o 3 years or pro forma
o Profit & loss & balance sheet
o Cash flows
¨ Also include:
o Capital equipment list
o Inventory list
o Suppliers list
o Itemized working capital components
o Breakeven analysis -- including demonstrated repayment proposal incorporating projected sales against fixed and variable costs
o A description of potential collateral or security
¨ Operational plans & data
o Legal status of business
o How business will operate
o Manufacturing plans, if applicable
¨ Conclusion
o The goals & objectives of the plan
o Summary of the financial projections
o Summary of why financing is required
o Summary of any potential exit strategies
¨ Appendices
o All supporting documentation including:
- Resumes
- Financials
- Advertising samples
- Contracts
- Insurance policies
- Zoning regulations (if applicable) and approvals
Financial Institutions / Lenders Perspective
As you are preparing your business plan, you might find it useful to have some insights into how Financial Institutions / Lenders determine whether or not to provide you with capital. Financial Institutions / Lenders use a variety of tools to evaluate a business plan. They normally begin by looking at your credit worthiness, and they often use what is called the 4Ms:
¨ Management – skills, experience, balance, team
¨ Money – equity, unencumbered personal funds,
¨ Market – saturated, fad, competition
¨ Materials – equipment, resources, etc
They also evaluate your Credit Worthiness using the 5 Cs:
¨ Character – how well do they know you
¨ Credit – do you have a good credit history
¨ Collateral – equity or security to support credit
¨ Capacity – ability to repay/service debt
¨ Capital – How much is client putting up and reasonable
As your key contact is submitting reports to support your application, he or she will likely be completing Ratio Analysis sheets similar to this:
¨ Liquidity
¨ Leverage
¨ Profitability
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