As a provider, I hope that we can approve every loan application that hit our table, but unfortunately not possible. We accept most very small businesses seeking small loans, usually less than $ 250,000. Ready to inexperienced owners of new businesses is one of the most dangerous arena for agency loans. However, we can keep our losses to a minimum. The amazing thing about these murderers business plan is that they rarely travel alone, almost always appear in groups. Here are the top ten causes of death, business plan and what you can do to avoid or correct them:

1. Dreadful Personal Financial Profile

What is the probability that someone who demonstrates financial disaster in his personal affairs miraculously become an effective manager of finance for a business? It is highly unlikely. It ‘much more likely that the practices of evil in their personal circumstances are simply made in the company. The main difference is that in the company of a much wider range of people and organizations usually get burned in the wake of corporate finances mismanaged. The red flags appear in business plans in the form of funding to high credit card, garage full of toys (trucks, watercraft, snowmobiles, motorcycles, boats), funded at 90%, history of poor credit and no savings.

A strategy to clean up their personal finances, before seeking a commercial loan. Repay loans, cleanup of bad loans, collect some business-related equipment and save money.

2. Inadequate or nonexistent, or guarantee for the owner of capital

Business Business is always risky, but new one is infinitely more. Lenders want to see personally “invested” in your company. Part of the company that is personally called your capital. Another way to describe the capital is the amount of money or equipment you invested in the company. A creditor wants to see that you are invested, so it will not be inclined to walk when things go wrong. As equity is enough? The amount varies from lender to lender, but less than 10% is to invite consideration while 20% or more will make your proposal more attractive. Any creditor will be informed insist on seeing that you have invested in so far as the financial complications arising in you, not requiring them to sleep with an emphasis on how to pay the bills. Security is the capital surly sister. Your loan application will be stronger if you make a sort of resource for the table, such as security. Lenders will be more attracted to goods of a resale value of debt over equity. The inventory is generally less desirable because it tends to grow legs and disappear when things get rough.

Second strategy: to create some equity to bring to the table. Save money, buy toys, borrow money from affection, or have a second job for a while ‘.

3. Insufficient market research

Market research appears inadequate in various gruesome ways. It can surface in the business plan as an interesting business case. Can occur as secondary data too (other sources) and not enough primary market research (which you collect). Lack of market research can lead to a business plan that is too generic – not specific enough. Perhaps one of the most common indicators and disconcerting is that the contractor has not talked and listened to potential customers. The lender will want to see that it is “turned on all the rocks” in search of knowledge about your business. After reading your business plan, if I can find out more about your business than you, I will not be inspired to approve the loan.

Third strategy: Prove your business case for you and your reader. Persevere in your efforts to market research to become the ‘expert’ for his activities. You will feel more secure and easier to convince your readers that you know what you do.

4. Transmission and reception is not

And ‘your responsibility to find that delicate balance between the bull’s head was enough to shave the road to success, yet sensitive enough to receive critical information. Your ability to listen to your customers is the key to success in business. Falling in love with your business idea by the high cost of closing your ears to the voice will not help you obtain a loan. Business analysts, bankers and customers vote with their money. They do not need to shout at you to get their points across. It ‘important to listen carefully when talking to normal volume.

Four strategies: to listen and learn. Listen to those who agree with you and those who do not. Listen to all that make holes in your business idea, they may simply be pointing to success. When you think you’ve heard it all, listen harder!

5. Dishonesty, gaps, inconsistencies One sure way to be wrong for a loan is intended to give the impression, intentionally or accidentally, you are nothing less than the sunlight. Any form of dishonesty in your business plan, or in your dealings with staff focused agency loan, is a sure way to get your application rejected. Counter-truths are more evident flagrant offense, but communication cunning is entirely possible in other ways. For example, information is missing or incorrect raises questions and sends the wrong message. Ideally leaving some of the most obvious, not flattering financial data (such as property taxes are not paid late) is a recipe for a “NO”.

Strategy Five: Be honest, complete and accurate.

6. Do not respond to key business issues identified

The business plan is a tool to communicate with others. What is your product or service? Who are your customers? How will you market and distribute your product or service to your customers? Want to earn money? Your company is able to repay the loan? Your plan to communicate clearly these things?

Strategy Six: Answer the questions on core activities. Who, what, where, why, when, how. There are many systems of corporate planning (even if not exceed the road!) That will provide a framework to keep you on track. An adequate system of corporate planning will provide a framework in which to place the set of information they collect. Choose a system and use it.

7. Poor Presentation

You can make the best market research on the planet, but if it is unable to communicate clearly and pack professional business plan, the public can not even read.

Seven strategies: to provide a professional presentation. Ask a friend or someone to pay for the test, ask someone to punch the plan, if you need it, but do a professional job. Prove that you love and you will increase your chances with the lender.

8. Pie-In-The-Sky

Inflated sales projections or the optimistic forecasts of cash flows will derail your loan request from time to time. Future too light will blind the fear of lenders and loan.

Eight strategy: be realistic in your expectations, even if you think you are floating on a sea of money in a few months. No matter how noble your financial aspirations may be, to know that companies are generally not profitable for the first time. Estimate sales and expenses carefully a bit ‘more than we think they will. Keep it realistic cash flow and make sure to include all the costs.

9. Fish-Out-Of-Water Syndrome

This is what happens when someone tries to enter into a business they know nothing. Becomes evident when the owner of merit that the applicant has no previous experience in the field of expertise is the main objective of the company. For example, a truck mechanic could groped to start a small restaurant. Not an impossible jump, risky.

Strategy Nine: Know your business. It ‘so important to have a basic understanding about your experience, activities and, if possible. Many successful businesses come from disgruntled employees or displaced persons who feel they can do as well or better than their employer. Improve this experience with market research firm, Internet courses, books, tapes and magazines. Know your company can increase your confidence and to increase opportunities for recruitment.

10. Too Little Too Late

It refers to existing businesses looking for financial help, after things have already gone to the side. Too often we see the application when the credit accounts is out of control or main suppliers have been dragged for too long, frightening sums of money. Other aspects of this condition are the tax collectors on the trail and long-term maturity. It ‘really hard to get excited to lend money to pay the bills that should have been paid.

Ten strategy is essential to your business falls in choppy financial waters. Take the tough decisions early and then act on them quickly. If your loan recovery plan, which are much stronger to come to the table first with a well thought out, only later by a plea for help to pay taxes.

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