A Good vs "good enough" Business Plan: How Quality Affects Your Funding Chances

Jul 23

A business loan is the most direct path to getting a business off the ground for many business owners. Many start-ups need a few hundred thousand to purchase needed equipment, leasehold improvements and other start-up costs. Growing companies often lack the cash to purchase equipment or land to grow their business to the next level.

So demand for financing isn’t going anywhere.

Bank Loans Are Competitive With Strict Requirements - Given today’s competitive business environment, banks receive a large volume of business loan applications each quarter and a surprisingly high percentage are rejected (see example rejection letter below). People are rejected for a number of reasons.

Typical Reasons for Being Rejected

Don’t Qualify for the Loan - The first step is that you qualify financially as an individual for a business loan. Business plan or not, you must have sufficient assets such as a home mortgage, and be able to invest cash into the business to supplement the loan in order to qualify. You additionally may be disqualified in the case you are requesting financing for a high risk business venture or industry not compatible with typical bank financing.
Weak Business Plan - When applying for a business loan, meeting the basic requirements is just the starting point. The most critical factor that determines whether you will get funded is the strength of your business plan, as banks use it to thoroughly judge and assess your application. A comprehensive business plan is essential because it not only outlines your business operations but also provides a detailed roadmap. Banks need this level of detail to justify releasing funds.

*Example of bank loan rejection letter due to a poor business plan submission.*

The Consequences of a Weak Business Plan

A weak or general business plan can lead to immediate rejection from the bank, making it significantly more challenging to secure funding later. Resending a revised business plan after an initial rejection is far more difficult than getting it right the first time. A client came to us after they were rejected from their bank for a loan. Here is the real email response from their bank illustrating this point:

“It seemed to me that the (business plan) was done for the sake that there has to be one.”

This response highlights the importance of a well-prepared business plan. It's much more efficient to invest in a high-quality, well-written business plan from the start.OK, so we know that your business is a document that can make or break your application, where weak plans get rejected. However, you may be asking yourself, what level of quality business plan is really necessary to secure funding? Perhaps you could some save time and money at this stage to allocate somewhere else in your business.

What Does a Stronger Business Plan Look Like?

Let's consider an example of a food truck startup owner seeking funding. In addition to your menu and management description, a comprehensive food truck business plan should include:

Market Analysis - In addition to market research on food truck industry performance, the plan should include detailed research on the local market: a map of where you expect to draw customers from, customer spending statistics, what industry trends are happening in your space, demonstrate a demand for your menu. Competitor analysis showing where there is a gap for your food truck.
Financial Projections - Monthly and annual revenue streams, cost analysis, cash flow projections, balance sheet and profitability forecasts. Show how you expect your customer volume to increase over time. Provide a break-even analysis.
Growth Strategy - Clear plans for scaling the business, including potential new locations, services offered, and marketing strategies. Paint a clear picture of where the business will be over the next 12-36 months.
Regulatory Compliance - Information on meeting municipal and provincial regulations for food truck operations, including licensing and safety standards.
Risk Analysis - Show all internal and external risks that your business faces, and provide a contingency plan for each risk. Demonstrate your ability to foresee potential problems on the horizon, and a plan to face them.

When You Should Spend More on Your Business Plan

For a Higher Loan Size Target - Banks operate under strict regulatory requirements, and the larger the loan size, the more comprehensive your business plan needs to be. For instance, a small business loan might require basic financial projections, while a larger loan would necessitate detailed market analysis, growth strategies, and robust financial projections. For example,

Don’t Want to Risk Rejection - Yes, you can submit a mediocre business plan and get successfully funded, but you do run the risk. Most business owners underestimate bank scrutiny and requirements, even for smaller loan sizes. Bank loan rejection is time consuming, as banks are usually far less skeptical when reviewing a “repaired” business plan, compared to a strong positive first impression. Additionally, there can be further time delay if you are required to resubmit your business plan with a different financial institution.

The Value of Hiring Business Plan Writing Services

If you don’t have the time or expertise to create your own strong business plan, you may benefit from hiring professional business plan writing services. By hiring a specialist, you ensure that your business plan is not only well-written but also tailored to meet the specific requirements of lenders and completed within a fast, defined timeframe.

When selecting a business plan writer, it's crucial to find someone who is highly experienced in writing business plans over many years, and has successfully helped clients navigate the business loan process for multiple financial institutions. They should also know Canada’s financial institution’s requirements, to ensure your business plan meets all requirements. It is also important to ensure you receive full support after you receive your completed business plan. You may need them to make any necessary revisions quickly to meet the bank's requests or requirements.

We Offer Business Plan Writing Services

Since 2011, we have worked with clients successfully navigate business loans and secure funding with BDC and all Canadian banks. Our professional business plan writing service offer top quality writing, research, attention to detail and adherence to all Canadian banking requirements to support your loan application. Approximately 95% of are clients are successfully funded.

Expertise - Our team has extensive experience in crafting business plans that meet the stringent requirements of banks and investors.
Customization - We tailor each business plan to the unique needs of your business and the expectations of potential lenders or investors.
Full Support - We provide ongoing support to ensure that any revisions required by the bank are handled promptly and efficiently.
High Success Rate - With a proven track record, we help you navigate the complexities of the funding process, significantly increasing your chances of success.
Top Quality Results - We provide ourselves in offering some of the highest quality business plan writing services you can find in Canada. We fuse quality into every element of your business plan, including: writing quality, detailed targeted market research, comprehensive financial analysis and projections and professional design.

Conclusion

In conclusion, the difference between a good business plan and a "good enough" business plan can be the deciding factor in securing funding. A comprehensive, well-written business plan is essential, especially for larger loans. Investing in a professional business plan expert can save you time, effort, and increase your chances of success. No matter your industry sector, our services ensure that you present a strong, compelling case to lenders and investors.

Gregory Newton