Arguably, the toughest aspect of creating a business loan profile is not discussing your strategy of convincing your banker; it is actually deciding how much money that you will need. However, it is during this process that many of your other business processes, such as operational and administrative processes, will come into clear view for you.
Below are a few ways that you can determine for yourself how much money you need in your business loan.
One – Lock down how much you will be spending in hardware operations.
The hardware that you will need in order to do business is likely the most concrete cost that you will be able to determine. Take into account the depreciation of your hardware, especially if you are dealing with computers or other types of technology that depreciate at an accelerated rate.
Two – Take a look at how much your competitors are spending on marketing.
You often will not be able to determine your marketing costs by looking at your business. Often, promotional costs are much more a factor of the market itself. Get estimates of how much your competition spins in order to “stay in the ballgame” to determine how much you will need in order to do the same thing.
Three – Do not overload yourself with work to avoid paying people.
If your loan looks incredibly good because you do not have any costs, yet you have overloaded yourself with work that you cannot possibly accomplish, the business will fail and you will have an entirely new set of problems to deal with. Do not worry about making your loan figures look good – keep in mind that bankers understand scale.
Four- Don’t forget any aspects of your business plan
Take your entire business plan into account, just because you don’t have any products orders yet, doesn’t mean you will not get them in the near future. Calculate the costs of manufacturing your product and the cost of air freight in Houston. You need to know these costs so that it doesn’t creep up on you when you get your first order.
Five – Look at other startups that are near to what you are trying to do.
In order to gain a feel for the overall amount of money you will need, you can have discussions with other bankers for financial professionals outside of the bankers whom you wish to target directly. Find out from them what kind of businesses are getting what kinds of loans in the current market.
If you follow the tips above, you should be able to determine enough of an estimate of the money that you will need to create a good profile for your banker. Although nothing can be priced out specifically until it is concrete, organizing the numbers will go a long way in helping you actually get the business of the bank.