Tag Archives | business plan

Is Your Business Bankable?

Is Your Business Bankable

Businesses call us for many reasons but here are two very common reasons why we get called…

They are growing and want to strengthen the financial function.

OR

They are in financial distress and can’t find a way out.

Why does a business need to be bankable? What does being bankable mean? In this blog, we are going to answer all those questions and advise you how to strengthen your banking relationship (something all businesses need to do).

What metrics are you using to gage your company’s performance? It’s important to identify and track those KPIs. Need help tracking them? Click here to access our KPI Discovery Cheatsheet, and start tracking those KPIs today!

Is Your Business Bankable?

Before we answer the question “is your business bankable?”, what does bankable even mean?

Bankable is a financial jargon that indicates that a business is sufficiently healthy to receive interest from lenders to loan. It’s a basic indicator of a company’s success. If a bank is willing to loan a business cash and/or support a business, then the risk of it failing or not paying is low. A bankable company has significant assets, profits, liquidity (cash), and collateral.

An article from Forbes says it like this, “The bank is your cheapest, but often most difficult, source of capital with which to operate and grow your company.”

So, is your business bankable? There are several things to consider.

Financial health will be the primary focus of determining if your business is bankable. There are other things, such as collateral and the character of the person, behind the loan.

Financial Things to Look for

Financial things to look for:

Non-Financial Things to Look for

Non-financial things to look for include the following:

  • Do you have a strong management team?
  • What does your industry or segment look like (strong, declining, etc.)?
  • Do you have a business plan?
  •  The character of the people behind the company and signing the loan documents
  • Will you provide a personal or corporate guarantee?

If you are unsure, then just ask your banker.

Is Your Business BankableThe Need to be Bankable

We deal with companies that are both highly successful or maybe in a distress situation. If you are successful, then you may want to acquire another company, have a distribution, or invest in CAPEX. In today’s market of relatively cheap access to capital, why would you use your own cash? If you are growing, then you really need to consider a line of credit to help you grow. We see very successful companies in a high growth scenario bleed out of cash and working capital. In those cases, a line of credit would make life so much easier.

 Click here to access our KPI Discovery Cheatsheet, and start tracking your progress to be bankable!

Bankable Business Plan

Now, that you have determined if you are bankable or not bankable, it’s time to put together a bankable business plan. There are several things that banks (and investors) want to see before they invest in your and your company. There are ten sections to a bankable business plan.

(HINT: If you do not have a good banking relationship with your banker, then even the most perfect business plan will not guarantee you will get the capital or line of credit you need/want.)

Value Definition

What ares in your business create value? In a bankable business plan, you need to define your value-generating centers (core-business activities). A successful business will continue to come back to the value that they provide to customers; however, an unsuccessful business will continue to get distracted by other areas of the business that are not generating any or as much value.

Needs Assessment

A Needs Assessment identifies the company’s priorities. It also defines what needs to be accomplished and the steps that need to be taken to achieve the goals. This is a great tool to use to identify what you know and don’t know about your business. Use this process to analyze every part of your business. Score.org provides a Needs Assessment that will gage how well you know your business and your needs.

Differentiation and Competitive Assessment

Porter’s Five Forces of Competition is used in the differentiation and competitive assessment to identify competing products/services and to start the process of differentiating yourself from the competitors. For example, there are 3 companies in Houston that provide the exact same product; however, ABC Co. is working to be bankable. So ABC Co. works to position their product differently and to provide more value than their competitors. Without conducting a differentiation and competitive assessment, ABC Co. risks loosing valuable market share.

Market Analysis

Bankers want to mitigate their risk. Conduct a market analysis to explain exactly that your market is doing. Is it new and expanding? Or is it saturated and declining? This will help explain your company’s growth potential.

Marketing Planning

Put together a marketing plan. Identify how you are going to market your product or service, what your target market is, and how you are going to continue to grow.

Sales and Promotion Strategy

Now, that you have built out your marketing plan, identify your sales and promotion strategy. For example, if a $1 trial for a subscription is critical to your sales strategy, then write that out and explain how it has contributed to your company’s growth.

Organization Design

What does your organization look like? Are you bombarded with too many non-essential personnel or administrative functions? Or is your company designed to optimize all positions to cover both value-adding functions and administrative functions?

Financing Needs

Identify your financing needs. How much do you need to sustain your company? How quickly do you need financing? Answer all this questions

Financial Projections

Next, build out your financial projections. Be sure not to have optimistic projections that are hard to near impossible to accomplish. They need to be realistic, detailed and logical.

Risk Analysis

Finally, what risk does your company have? For example, a company who relies heavily on the oil and gas industry needs to identify what risk they will face if that industry declines.

Conclusion

In conclusion, being bankable is a measurement of success. As previously stated, there are several things you need to watch to remain bankable and profitable. Measure and track those KPIs. Click here to download our free KPI Discovery Cheatsheet.

Is Your Business Bankable
Strategic CFO Lab Member Extra

Access your Flash Report Execution Plan in SCFO Lab. The step-by-step plan to maximize profits.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Is Your Business Bankable

Share this:
0

Marketing Plan

See Also:
Marketing Mix (4 P’s of Marketing)
Marketing Your Company using WikiCFO
Compensation Plan
Strategic Planning Process
Action Plan

Marketing Plan Definition

The marketing plan definition is the plan to cultivate and harvest demand for the products of a business, and it is part of the business plan. A marketing plan outlines answers to the question who, what, where, how, and why will the company market and eventually sell products.

Oftentimes, the CEO comes from a marketing and sales background. It’s your role as a financial leader to be the trusted advisor to your CEO and help them take the marketing plan to an action plan. Click here to read our How to be a Wingman guide.

Marketing Plan Explanation

A marketing plan, explained as the plan which leads to sales in a business, holds a depth of knowledge. Marketing plan assumptions involve 6 parts: establishing a target market, marketing tools used to communicate with this group, the price of the product in respect to the expectations of the customer, where it will be sold, and any incentives applied to the product. Though this is a simplification, actual plans at least answer these questions. Additionally, they establish a marketing plan budget and schedule for execution.

Marketing Plan Format

The marketing plan format is not the same across businesses. Each business will have to create a marketing plan which suits their time, skill, and budgetary constraints. For example, an e-commerce store will use marketing tools specific to the internet. Pay-per-click advertising, search engine optimization, sponsored product reviews, perhaps free webinars, social media websites, and a slew of more traditional tools will fit this business well.

In contrast, a CPA firm will use quite different methods. Informational seminars, direct sales, networking, event sponsorships, print media in specific publications, broadcast media, and a variety of other tools will expand the customer base of this business.

While neither example will probably use billboard advertising, smaller differences are also present. For example, an e-commerce store could be quite successful in offering coupons and other price promotions. On the other hand, how would you feel if your CPA offered discounted services? In comparison, how would you feel if you received a discount on your fees for referring another business owner to your accountant? Even in a single marketing tool, minor differences make a major effect.

Hire Trained Marketers

When thinking about marketing, it is best to hire a trained professional. While many can not afford this, trained professionals know how the industry works far better than an outsider looking in. One will make sure to find a marketing consultant or firm who has an expertise in their industry. With a little research, great success can come from the investment of time and money.


Download The How to be a Wingman Guide


Marketing Plan Example

For example, Eduardo is the owner of a nail salon. Having experienced some growth, Eduardo wants to take his business to the next level. He sees the first step of this to be writing a business plan. He is now on to writing the marketing plan.

Eduardo knows that customers like his products. Now, he needs to answer other questions. Eduardo arranges for a survey to be done in order to find out what customers are willing to pay for his services. Once he has done this, he considers marketing tools. Eduardo comes up with many ideas, the most valuable being to offer his location for networking events. During this, professional women will talk while getting their nails done. Eduardo answers other questions. Am I in the best location? What other tools will I use? Am I currently targeting the correct market? What service expectations does the customer have?

Situational Analysis

Eduardo is able to finish his marketing plan with situational analysis. Months later, Eduardo is experiencing great success. It seems a little planning has gone a long way. Eduardo can not believe that he did not create a marketing plan sooner. Still, he understands that it takes time to achieve greatness. As long as he continues to put in the time, the sky is the limit for his business.


If you want to learn how you can be the best wingman to your CEO, then download our free How to be a Wingman guide!

marketing plan definition, marketing plan

Strategic CFO Lab Member Extra

Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

marketing plan definition, marketing plan

Share this:
2

Business Plan

See Also:
Value Drivers: Building Reliable Systems to Sustain the Growth of the Business
Business Cycle
Business Intelligence and Finance
Make-or-Buy Business Decision
Acquisition Capital
Marketing Plan

Business Plan Definition

The business plan definition is the plan of action for business operations which has the goal of creating and growing sustainable profits. It is necessary for any business venture. A business plan has 3 main purposes: forming a strategic plan for future business initiatives, serving as a retrospective measure of the success of the business and it’s plans for expansion, and an explanation of the business for the purpose of raising capital. Business plans can vary greatly depending on creator, industry, operations, needs, phase in the business cycle, and more. Ultimately, the term business plan is used to describe a myriad of written documents which lay out the plans a business has for the future. Despite this, the goal is the same; creating profits for the shareholders of the venture.

Business Plan Explanation

Business plans are either internally or externally focused. Internally focused plans serve as a document to “rally the troops”; organize the stakeholders, especially employees, of a business and give an overall strategy to each of their regular tasks and actions. This has particular benefit for organization and motivation around the strategic goals that company leaders want to achieve. An internal business plan is the tool used to communicate these goals in a clear, effective, and calculated manner.

External business plans serve the purpose of raising capital. Banks constantly visit with small businesses desiring a loan to finance a new project. Meanwhile, venture capital firms accept roughly 1 out of 1000 companies that contact them for financing. An external business plan serves as a tool to show that the business concept is developed, evaluated, and planned. Investors and lenders want to eliminate as much risk as possible, and an external business plan provides them a way to measure and mitigate these risks. In short, an external business plan is a way for a developing company to stand out from other businesses while showing that goals and aspirations have been considered and documented.

These plans begin by following boilerplate sections and explanations. They then become unique documents. They are customized based on a variety of factors. For example, a web marketing firm has little use for the structure of an operations plan which is common to a manufacturing firm. In a similar fashion, a retail e-commerce store will even have a different business plan from a brick-and-mortar retail store. The factors of success, operations, marketing, risk, and measurement dictate this.

A Living Document

A business plan is often referred to as a “living document”. This is because a these plans are constantly changing. Whenever new developments in competition, marketing tools, the legal factors which relate to an industry, or others change a business plan must be updated so as to keep relevant. In this way a business plan is constantly evolving. A simple business plan is generally 20 pages, where a complicated one should not exceed 40 pages, on average.


Download The 7 Habits of Highly Effective CFOs


Business Plan Format

For a business plan, combine parts to make a whole. These parts, though different for each plan, generally follow common purposes. The standard business plan format is as follows:

1) Executive Summary

2) Business Description

3) Products and/or Services

4) Marketing Plan

5) Operations Plan

6) Management and Organizational Structure

7) Benchmarks and Milestones

8) Legal Entity Structure

9) Capitalization

10)Financial Plan and Projections

11) Appendix

Example

For example, Alejandro has decided to start a micro-lending firm in his native country of Mexico. Combining philanthropy with his enlightened self-interest, Alejandro plans to make a profit while also fostering the entrepreneurial spirit in people who face a difficult future. Alejandro is excited to start his company and therefore, make his impact on the world.

Alejandro knows that he has to create a business plan for his new venture. Despite this, he is a young adult and is not sure where to begin. Determined, Alejandro starts by searching the internet for the term how to write a business plan. He finds some results which begin his thought process. Alejandro picks up a few books from his local bookstore and begins his journey.

Writing the Business Plan

To start the business plan format, Alejandro starts by writing his executive summary. This process is difficult. Alejandro then learns from his research that to write the executive summary after the rest of the business plan. Alejandro stops this section and begins the business explanation.

After writing a rough draft explanation of his business, he begins the competitive analysis. Here, he does as much research as possible into competitors on the market. Alejandro searches the web and personal contacts for this information.

Then, Alejandro assembles industry statistics and information for his industry analysis section of the business plan. He will need to summarize these into a section which serves his purposes.

Alejandro continues and eventually finishes the plan. With a rough draft in his hand, he seeks some advice for what he has made. Alejandro knows that he has a lot to learn, so he prepares himself for a lot of criticism. He finds his local S.C.O.R.E. chapter and prepares to begin the mentoring process.

In conclusion, Alejandro knows that he has a lot to learn. Still, he realizes that anyone who has achieved greatness started somewhere. Alejandro prepares his plan more, parks his ego at the door, and walks into his meeting with a smile.

Template

Find a variety of business plan templates at S.C.O.R.E.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

business plan definition, Business Plan Format

Strategic CFO Lab Member Extra

Access your Flash Report Execution Plan in SCFO Lab. The step-by-step plan to manage your company before your financial statements are prepared.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

business plan definition, Business Plan Format

Share this:
0

Business Driver Example

See Also:
Business Drivers
Planning Your Exit Strategy
Selling Your Business to a Private Equity Group
Leadership Action Plan

Business Driver Example

Look at the following business driver example. Dan is the owner of a startup web development firm. He has done his initial research, written a business plan, and is prepared for the operations of his business. Now, Dan needs to understand the business drivers of software development. Understanding the business drivers can give an owner a better overall understanding of their company. In other words, the more knowledgeable an owner is about the inner workings of his/her company, the more successful his company has the capability to be.

To do this, Dan begins by finding all the reading materials he can. He studies technologies, operations, human resources, and most importantly marketing and sales. Dan is attempting to discover the business drivers for enterprise architecture. He is on the path to achieving this goal.

Meet With Experts

Next, Dan attempts to meet experts in the industry. He starts with those who are close to him: family, friends, and college acquaintances. Then, he begins to find and attend networking events related to his industry. In these places Dan will flush out those who truly know about the business drivers in software development.

Dan has found information as well as experts in both operations and marketing. Now, Dan must find experts in financing his firm. He attends banker’s organizations, venture capital networking events, and his local angel investors conference. Dan, due to the assets he holds, has settled on a bank loan as his method of financing.

Conclusion

In conclusion of this business driver example, Dan’s future seems bright as he paves the way for his success. By constantly studying the business drivers, software development success is only a matter of time. He prepares for the future, resolves to save cash as best he can, and aligns his thoughts for his future.

If you want to find out more about how you could utilize your unit economics to add more value to your organization, then click here to download the Know Your Economics Worksheet.

business driver example

Strategic CFO Lab Member Extra

Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs


business driver example

Share this:
2

Action Plan

See Also:
Write an Action Plan
Business Plan
Exit Planning
Pension Plans
Keogh Plan

Action Plan Definition

An action plan, defined as a plan which explains the action to take place in full detail, is a personal plan as much as it is a business tool. In any action plan, there are 3 main factors: what must be done, what tools are needed to do this, and when it will be finished. In this way an action plan format is universal: every action plan answers 3 main questions.

Action Plan Explanation

The action plan explanation is the what, how, and when of achieving a goal. It is also an essential business document. Because the action plan establishes exactly what needs to be done to achieve a goal, it is so important. Whether the goal is to open a business, complete a project, or organize the paperclips on a desk, the action plan is the path to thorough completion of the task. Though the tasks differ for each action plan, medical staffing and pizza delivery as an example, the structure of the plan remains the same.

They often become a part of a larger action plan outline. In business, you combine specific action plans to finally create a master action plan. This is the business plan. For example, we even created a plan of action to write this article. Though the project was set back for unexplained reasons, the action plan was finally completed, with the article written on software and published to the internet. For it, a writer was needed as well as a computer, internet access, and a subject matter. In this way, every goal will have an action plan if it is to be achieved.

Example

For example, Vito is the owner of an Italian restaurant. Coming from his motherland to a new home in the United States, he is an expert in authentic cuisine from southern Italy. Vito loves his food, his work, and his business.

Main Goal

Vito has created an action plan to create a pizza. First, the goal is to have a pizza ready for the customer in a maximum of 30 minutes. This is the main goal of the plan.

Tools

Next, the action plan establishes the tools to make a pizza. Vito needs dough, cheese, miscellaneous toppings, and the tomato sauce with the secret recipe from his grandmother. Vito assembles these tools every day.

Timeline

Then, he creates a timeline. In the first minute, you must knead the dough. After that, it takes 5 minutes to add all of the toppings. Vito knows it takes an additional 20 minutes of oven time to make the pizza. This leaves 4 minutes for accidents, distractions, and other time extensions.

Conclusion

Following his method, Vito is able to make his company a great success. His pizzas are delicious and customers love the secret sauce. Vito even created an action plan, marketing for his business, which focused mainly on finding a good location and creation an eye-catching sign. Vito loves his work, so he creates an action plan for achieving goals each part of it. This way he can achieve his tasks and come home happy that he has done valuable work.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

action plan, Action Plan Definition, Action Plan Explanation

Strategic CFO Lab Member Extra

Access your Flash Report Execution Plan in SCFO Lab. The step-by-step plan to manage your company before your financial statements are prepared.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

action plan, Action Plan Definition, Action Plan Explanation

Share this:
0

LEARN THE ART OF THE CFO