In this quick video I walk through one of the biggest parts of a business plan – the 5 steps you need to take in order to accurately tell a bank how you will be using the funds that you are requesting. This is the 2nd step in my Fast Access to Working Capital Formula, and it's a big one.
So, here’s a quick 4-minute video on how to craft your best business case and show a bank that their funds will not be mismanaged…
Hi, this is Pete Kremer with the Fast Access to Working Capital Formula. Today in this very quick video I'm going to be going through my second step in the formula – Using Funds. Now this is very important to provide the best business case to a bank and show them exactly how you'll be using the funds that you’ve requested.
These are the exact same steps that I use when I write business plans for my clients. My clients have gone on to raise $200,000 to $2.5 million dollars in bank loans, and up to $3.5 million dollars in private investment. So these steps do work in order to provide a clear use of funds for a potential investor or bank.
As you're probably aware, investors and banks are in the business of making money, not giving it away. So you need to show them that their funding will not be mismanaged. According to a recent Intuit study, 61% of small businesses worldwide report struggling with cash flow. This means that you have to show a bank exactly how you will be using the funds that they are giving you.
In order to do this, there are five major steps that you need to conquer in order to write your best business case for using the funds. The very first step, it's very top-level, but you have to answer the question of ‘why you need the funding?’. For some business, it might be hiring new staff. For others, it's purchasing new equipment or purchasing real estate, but you have to answer that question of why you need funding.
The second step is research. You have to go and research the exact costs of what you're telling a bank you need the funding for. The third step is defining your one-time expenses. Now that you know what you need the funding for and you've research the cost, you have to clearly define in a chart what those new one-time expenses will be. The fourth step is defining your on-going expenses. For existing businesses this is fairly easy because you should have profit and loss statements with your expenses, but you also have to be clear on what new on-going expenses will be once you receive that funding.
And this leads to step five is to account for growth and rising expenses. Once you get funding, your business... I mean you should expect your business to grow. So you have to account for all the new expenses that are going to be on your profit and loss statements. As simple as this step may seem, I put it second in my Fast Access to Working Capital Formula because it's super important that you get this step right. This formula is a proven method that will greatly increase your chances of accessing working capital through an SBA guaranteed loan or from a traditional lender.
If you want to get crystal clear on the one thing you should be doing right now to get fast access to working capital, go to my website petekremer.com/calendar and book a free strategy session. This is a 30 minute call that I offer for free just to help you get crystal clear on how you can gain access to up to 5.5 millions dollars in working capital. Hope to see you on the other side. Cheers.