If you are borrowing money from the family, it is still a good idea to create a business plan so these lenders will have some idea as to what the money will be used for.

You will have to supply estimates of how much business you expect to do in the coming year and how much that business will cost you to do.

Be very careful! Over estimates, especially on projected sales figures can be the "rope you hang yourself." If you tell the bank that in March you will make £10,000 sales and, in fact, you only do £6000, the bank will question all the other estimated figures. If it happens on consecutive months, the bank has every right to curtail your arrangement. Banks are not the only source of business finance; families and friends, outside investors, community loan funds, ethnic minority support schemes, geographically located regeneration funds are the main players and it will always help if you have something to throw in the financial pot yourself.

All lenders need a clear picture as to what you will spend the money on, how you will keep track of it, how you will repay it and how much profit will the lender make. Unfortunately, all lending decisions are made based on these simplistic things.

Your Business Plan must be clear and precise, no waffle! When projecting estimated figures, keep them real, the lenders will always spot "fantasy on paper."

It is rare for businesses to be making the same sales figure every month of the year and each month must reflect the natural ebb and flow of sales:

• January is generally quiet trading (post Christmas)
• August is generally quiet trading (holiday time)
• December for manufacturers can be quiet (no deliveries over Christmas)
• February is the quietest retail month of the year
• July is retail Sale Time
• November is retail Sale Time

Selling forward orders or supplying Mail Order companies will have a different "ebb and flow."

Last century the norm was to negotiate an overdraft facility to help fund your business but these days, an overdraft is less likely with a fixed loan being the preferred method of most banks. It is less risky for them!

Seek advice, speak to an Accountant or Business Advisor, even if it is a family friend, objectivity is the key to a good business plan.

You will need someone to poke holes in your plan and ask all the difficult questions that outsiders usually find. Do this before the financial institution or funding programme finds
the holes themselves.

Remember:
Financial Institutions, historically, don't like to support fashion businesses, too much risk for them! Keep this at the back of your mind whilst preparing your plan, your plan must show that "you will make it happen" and that the funders would be passing over a major opportunity if they don't support your application.

Our confidential advice service will help you present your ideas in an appropriate manner.