For Raising Capital
For Bankers
Bankers want assurance of orderly repayment. If you intend using this plan to present to lenders, include:
Amount of loan
How the funds will be used
What will this accomplish (how will it make the business stronger?)
Requested repayment terms (number of years to repay). You will probably not have much negotiating room on interest rate, but may be able to negotiate a longer repayment term, which will help cash flow.
Collateral offered, and list of all existing liens against collateral
For Investors
Investors have a different perspective. They are looking for dramatic growth, and they expect to share in the rewards.
Funds needed short term
Funds needed in 2 to 5 years
How company will use funds, and what this will accomplish for growth.
Estimated return on investment
Exit strategy for investors (buyback, sale, or IPO)
Percent of ownership you will give up to investors
Milestones or conditions you will accept
Financial reporting to be provided
Involvement of investors on the Board or in management
Service businesses sell intangible products. They are usually more flexible than other types of business, but they also have higher labour costs and generally very little in fixed assets.
Prices
Methods used to set prices
System of production management
Quality control procedures
Standard or accepted industry quality standards
How is labor productivity measured?
What percent of total available hours are actually billed to customers?
Breakeven billable hours
Percent of work subcontracted to other firms
Profit on subcontracting?
Credit, payment, and collections policies and procedures
Strategy for keeping client base
Strategy for attracting new clients
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