Grant programs usually get hundreds of applications each month for funding. Typically, when the business plans are reviewed funding committee members will look at all of the sections in the business plan. But there are a few that they really focus on in making their final decisions. This is what you really want to concentrate to make sure you are as successful as possible with funding:
- The Executive Summary – It’s one of the first pages in the business plan, but the past page to be written. The executive summary is a synopsis or summary of everything else in the plan. It’s like the back page of a paperback book at your local bookstore. Let’s just say you were browsing thorough paperbacks because you wanted to buy something to spend the weekend reading. Most people would look at the back cover to get an idea what the book is about, and if they want to curl up and spend their weekend reading it. The description on that back cover should draw you in and hook your attention, so you want to spend more time with it. Similarly, that executive summary should grab the reader’s attention and get them interested in your business and what you’re doing.
- The Marketing Plan – You can have the best business in the world, but if nobody knows about it then you will not be successful. People have great ideas on their product or service, but can fall flat when it comes to marketing. How are you going to tell people about your business? Have you calculated your customer acquisition cost? For example, if you’re making an average of $12 profit on each sale, yet it costs you on average $11 to get that customer, you have problems. But if you’re spending $1.20 to make that same $12.00 then you could be on to something. How are you going to get them in the door and what’s it going to cost you?
- The Financials – A frequent question here is how to show lenders financial statements when the business hasn’t even started yet or earned a single dollar in revenue. And the answer is actually quite simple: your financials are done on a pro forma basis, which is a fancy Latin word that just means projections. You’re making up the numbers. What it comes down to is the first section of the financials, which is the assumptions. This is where you tell the reader how you came up with these numbers and why you think they are realistic estimates. As long as everything looks realistic and achievable for the business then you’re fine.
Another common question is how to come up with the projections. You want to literally walk backwards. Let’s just say you have a restaurant with 15 seats. You’re open from 3 pm until your last sitting at 11 pm (eight hours). You turn tables, or serve new customers, once every hour. That’s 120 covers in restaurant lingo or customers per day.
If you average $30.00 profit per customer in your restaurant, that means you’re making $3,600 per night. But you won’t be totally booked ever hour of the day, every night of the week, especially when you first open. But at least this gives you a starting point. For more on calculating the financials and other business plan tips, click here.