Before you Approach a Lender

(first published May 2010)

When you are approaching a lender or potential partner for start-up funding or a loan to fuel business expansion, there are important issues of feasibility to consider. Of course, lenders always look at the current financial health of your business utilizing your business credit rating, net worth and various accounting ratios that give clues to the stability of your business (or personal financial stability, in the case of a start-up.)

If the window of opportunity is open right now, and there isn’t time to prepare a full business plan, below is a checklist of what to put into a mini-plan to ensure your readiness.

Your launch/expansion proposal must:

1. Clearly and concisely communicate the vision for the business as well as its keys to success
2. Describe a marketable idea – and explain the marketing strategy
3. Describe how the product offers customers a long-term benefit
4. Target a clearly defined market, with enough size & purchasing power to generate robust sales
5. Describe a competitive edge, which will lure customers away from your competitors to you
6. Show the company’s ability to control production, delivery & quality
7. Show that owners & employees have the required skills & experience to make this a success
8. Show that owners have made a personal investment (and therefore, commitment)
9. Lay out a clear, sensible, workable strategy with a timeline for getting the business/expansion off the ground
10. Contain realistic financial projections, covering not only the most-likely but also pessimistic and optimistic scenarios
11. Show good profit potential
12. Demonstrate an idea that is not overly complex

A full business plan is always best for eliminating as much risk as possible when entering into a new venture, but even this abbreviated feasibility checklist will put a foundation under your business concept that will be a key factor in the success of your launch/expansion.