Displaying items by tag: creditors
Monday, 05 December 2011 04:37
When writing a business plan show your interest to your readers and they in their turn will be more interested in you and your project. Perhaps you do not need to make significant adjustments for each type of readers, but being attentive to your readers can make you read your plan from their point of view and can help you to anticipate possible questions and problems. Investors, creditors and partners are the three main groups you write your plan for. Investors Investors will provide a company with cash in return for its shares. If your firm does not have investors (such as your family and friends) who fund your company and don't have a material interest in it, then investors are primarily interested in pure monetary return, the project payback period and dividends. Great investment return forecast in the coming years is not enough for investors, though perhaps it may be useful at the initial stage (when raising funds). Imagine the following situation: the company has decided to pay out dividends early. Dividends paid are scant, the company has reduced funds intended for its growth and development, while most investors will still be interested in company's value increase, its stability and the anticipated sales volume or faster investment turnover. Thus you need to choose whether you'll spend money on dividend paying or on your company's development and growth. Decide for yourself what type of investor your company needs: one who supports your company's growth objectives or one who is only interested in high ROI. Creditors Creditors will also be interested in the financial plan, but above all they will require an accounting balance sheet and cash flow statement. The balance sheet will show them the company's assets in the future, which the lender can use as collateral and sell if the company can't pay off debt. Your cash flow statement will prove them that you will have positive cash flow quite soon after the project launch, so you can start to pay your loan. To meet this requirement, you must present a detailed cash flow statement in your business plan. The business plan itself must be persuasive, well-reasoned and include considered marketing strategy, while the company management should be able to achieve their goals. Partners Individuals and other companies are potential partners of your business. If you are looking for real support for your project, it is absolutely necessary to show a business plan to your potential partners to prove your intentions and a certain research made beforehand. They will be interested in information about the operational and marketing techniques that you are going to use as well as in your products and services to decide whether your services and products will benefit their products or services or whether they are incompatible or even market competitors.
Published in Research