Finance

Why Business Plans Aren’t Funded

If a man fails to understand the formula for success, he will fail. I know this from personal experience. It is possible to be sure that there is a method for success in all areas of life. We all have something in common, even if we are different in our successes and fail in others. This same principle holds true when it comes to funding. An expert will help you to learn the secrets to raising funds successfully. You don’t want to be like the rest who are incompetent and run to investors and banks with poorly written business plans, only to face failure. This article will give you an overview of how to write a business plan to raise funding. It is easy to do and it can be done quickly. To raise funds successfully, your business must be “Investment Ready”. If you don’t have the green light on all of these areas that I will shortly be discussing in this article, your business will face many challenges and may not be able raise funds.

The secret for raising finance successfully for business growth was revealed to me whilst working for many years with financial institutions awarding funding to businesses, in my role as a Financial Advisor & Appraisal Manager, spending 50% of my time reviewing and analysing business plans for funding and the remaining 50% managing clients’ relationships post funding to ensure they comply with financial covenants. You will find that many of those businesses that consistently raised funding used the same tried-and-true systems. Many of those who faced difficulties often used multiple systems and didn’t understand why they failed, sometimes making petty claims to back up their ignorance. This article will help you avoid falling into this category.

These are five main reasons why funding will not be granted to a business proposal:

1. The business’s marketing strategy shows that it is unlikely to succeed.

2. Management teams are not well-equipped and lack the skills required to succeed in business.

3. The funder may lose their capital if the business strategy is not clear.

4. Financial projections are made on optimistic assumptions that, when stressed-tested, show that the business would fail if the worst outcomes in the market occur.

You will fail to get funds if your business doesn’t have a plan for addressing all of the above issues. It is because funders use the business plans as a management tool when evaluating businesses that require funding. Funders have many tools they can use to evaluate the viability and financial stability of a business. Unfortunately, many small businesses don’t know how to do this. Many businesses are not ready to invest when they approach a funder. They are often shocked at how much time and money it took to create a business plan. Small businesses must understand how they are assessed for funding. This will increase the likelihood of small businesses not being able to raise funds for growth, even with the availability of government-backed loans.

You are strongly advised to read this article before you approach investors or lenders as a business manager. Expert help is better than trying to figure out the details of business planning on your own and risking rejections.

I wish you much success in your business funding endeavors. Please continue reading my articles on this topic and management issues in general.

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We are a team of professionals with each having two decades of experience in start-ups, sales, marketing, finance, HR, large scale project and profit centre management and running mature cross functional operations. At Molw.net we are big believers that knowledge transfer is critical to our industry’s evolution. We love to share our experiences and learnings through our online resources.

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