HomeBusinessStructuring a bankable SME plan

Structuring a bankable SME plan


Starting a business without a business plan is like setting out on a journey from the middle of nowhere with neither map nor supplies to see you through the journey, and hoping to find a specific location that you have never been to.

by Clive Mphambela

You may have an idea of where you want to go, but definitely, without a plan, you will have no idea of which direction to take or what supplies you will need along the way.

How can you possibly hope to get to a place you have never been to without a guiding map?

As a matter of fact, most of us entrepreneurs do exactly that. We set out on a journey in business, without a plan and inevitably we set ourselves up for failure. We have a brilliant idea at the beginning and the courage to go after it, but tragically, that is not enough. There are thousands upon thousands of small businesses that have failed, for the simple reason that they have lacked the ability and /or discipline to lay out the strong foundation of a successful business enterprise, that is the business plan.

What are the key messages of a bankable business plan document?

In order to write the business plan successfully, you must remember that the plan should tell a compelling story. This is important to your investors and your banker, should you later require funding from outside your own resources. Even if you are not going to borrow or attract outside investors, you will still need a business plan to succeed in business.

Your bankable business plan should thus read like a good story book and should answer the following basic questions.

What do you want to do and what do you want to achieve? What is the product or service that you are bringing onto the market?

For whom? Describe the target market? Who is the competition?

Why? What is your motivation? Why do you think the product will be successful? What is your unique value proposition?

How do you want to do it? Through what structures and mechanisms and channels will you deliver the product or service to your chosen market? What resources will be required to achieve all of the above? These will be mostly financial resources, but will also include equipment, people and other resources that you will need to execute the plan.

When? — You must give specific details on the timelines for achieving various elements of the plan.

By whom? — Specify the people who will execute various elements of the business plan so that the laid out objectives are achieved.

What are the key pillars of a bankable business plan?

While there is no single rule about how and in what exact order the above questions should be answered, the general rule is that a business plan should cover three main elements or pillars. The following issues are perhaps the most important that a bankable business plan should bring out. All of them are about making money.

The Value Proposition: The business plan must outline a very clear value proposition. What is your product or service and what are the unique selling points. This will tell the readers and convince yourself as the entrepreneur that this thing will work! The value proposition tells the banker why your business will make money.

The Business Model: How will your product service etc be delivered? How do you envisage the business to work? This is the nuts and bolts of your business. You must demonstrate that you understand your business model because it is the Business Model that will tell the banker HOW you will make money.

The Financial Plan: This is the picture that shows the colour of your money. This pillar deals with how much money will be required for setting up. How this money be acquired. Who will provide what resources? At what cost? What will be the return on invested money? What assets the business will acquire and use to generate business. How much revenue and cashflows will be generated? What will be the costs of doing business and what will be the profitability of the business over the various time periods laid out in the plan? This is where you share the financial analysis of your business, the pro forma profit and loss account, the cashflow projections and the envisaged balance sheet that lists the projected value of assets and liabilities of the business.

Don’t forget the primary purpose of a bankable business plan.

The primary purpose of the business plan is to guide you in successfully setting up and operating your SME business. Preparing a written-down plan will force you to consider all aspects of your business enabling you to confront any problems the plan highlights while your business is still on paper. By actively thinking through the above suggestions, you will be on your way to becoming a successful business owner.

The basic fact is this: Your business plan is literally your roadmap to your success. Any road will take your business somewhere, but only a well-executed business plan will help you take your business exactly where you want it to go.

No matter how small or how large your business, you’ve got to aggressively plan the work — and then aggressively work the plan.
Having covered what a business plan should achieve, next week we will discuss the basic chapters of a bankable business plan proposal.

l Clive Mphambela is a Banker. He writes in his capacity as Advocacy Officer for the Bankers’ Association of Zimbabwe. BAZ expressly invites players in the MSME sector and all other stakeholders to give their valuable comments and feedback related to this article to him on clive@baz.org.zw or on numbers 04-744686, 0772206913

Recent Posts

Stories you will enjoy

Recommended reading