Banking Business Plan

Banking business plan is an outline of your business goals, along with a detailed explanation of how to attain them. A business plan is beneficial for clarifying objectives through research and analysis, requesting financing from investors and banks and revealing possible risks. Every business starts with an idea. No matter what that idea is, a well thought out banking business plan will helps turn that idea into a reality. The Big Idea is designed banking business plan that will guide you through the steps of developing and fine-tuning your business.

It is a common misconception that banking business plans are written for the sole purpose of obtaining financing. The most important reason for writing a banking business plan should be that it is an important tool for you. A good banking business plan will:

• Draw a clear picture of your business objectives and give you goals to shoot for

• Give you a better understanding of the industry and business you are getting into.

• Show the potential strengths and weaknesses of your business

• Give prospective investors the means to determine whether your company is a suitable investment

• Give you a chronology of events and financial milestones against which you can compare your actual results

The simple truth is that -- The person you should write your business plan for is you, not your banker. A standard banking business plan written for banks is no more than 20 pages but a plan to put a company through an IPO might be 100-200 pagesBanks use their own objective criteria to make money-lending decisions. Of course, the fact that you have a business plan will definitely count in your favour.You’ll be better prepared with a business plan. Writing it forces you to think through basic questions and lets you fine-tune your ideas.

How to write a Business Plan

1. Introduction

2. The Team

3. Business Environment

4. Marketing Plan

5. Operations

6. Finance

7. Risks and Conclusions

The Introduction

• Introductory Letter : briefly states why you are submitting/creating your plan and highlights important information for the receiver

• Cover Page: apart from the words " Business Plan", your banking business plan cover page should clearly identify who you are, your company name and how you can be contacted. To make it stand out use images of your product/service in action.

• Table of Contents: A reader may often use the table of contents to skip to the part of your plan they are most interested in. Therefore your table of contents should clearly outline the core sections and subsections of your plan. Wait until your business plan is complete to add page numbers.

• Executive Summary: This section should touch on all of the key elements of your plan, including a description of your business or product, target market, management strategy, financial projections and needs

The Team

• Management Team Profiles & Ownership Structure: It is important to think through and identify all management categories, necessary skill sets and possible job titles. You should identify the people who are capable of assuming roles when necessary. Provide a current copy of everyone's résumé in addition to including profiles of each member of your management team that demonstrates his or her unique skills. Describe how each person will add to the team's success.

• Advisors: No matter the size of your company, creating a board of advisors for your company is an excellent way to benefit from the skills and expertise of people you may not yet be able to afford to employ. By outlining your Advisor's credentials, you can help to enhance the credibility of your management team. It is very essential to include a section of your board of advisors in your banking business plan.

• Professional Services: Another important aspect of your banking business plan should be a section that lists all the professional support services - such as your lawyer, accountant, banker and consultants - which your company will use. If you haven't already investigated professional services, consider asking others in your industry for recommendations of support services and read trade magazines to find possible contacts.

• Human Resources Requirements: Once you have defined your management team, you need to include details on the other employees your business may or may not need and what their function(s) will be. In the beginning it may be just you and a selection of freelance, contract or part-time help. You will need to think ahead and consider all the options you may be faced with

Business Environment

• Business Summary & History: This section should describe the overall picture, from the time the business was started (if started before writing your business plan) to what stage your business is at presently. This is where you should outline the work you have done so far and any sales (if any) you have made to date.

• Industry Overview: It is important to give some background on the industry you will be working in. Provide a detailed description of how your business is related to the industry in which it operates. Include details on any major progress that the company has made, such as adding new product lines or significant increases in market share.Present an industry analysis, which will include research on economic, social, technical and regulatory trends. Describe the performance of major competitors. Include expected market share, sales and profits.

• Position in the Industry: Most new businesses that succeed do so because they find a small part of an industry that they can call their own - commonly call a "niche". You must describe what product or service you will be selling, what makes it unique and how you will carve out a place within the existing industry

Marketing Plan

This is often the weakest part of a banking business plan so it is important you spend enough time to get all of the research you need to complete it successfully. Your Marketing Plan will include both your strategies for growing sales as well as the tactics you will employ to get there along with an overview of the competition in your market. The Marketing Plan section of a business plan is made up of five subsections:

• Target Market: You need to have an understanding of the size of the target market for your product and the niche you are trying to carve out for your business. Explain the type of person or business that is likely to buy your product or service and how large this market is. Be sure to describe your direct competition, but don't forget your indirect competition. Your indirect competitors are the businesses that sell a product that is not the same as yours but could be used as an alternative by your customer.

• Services/ Products: Your marketing strategy should communicate what makes your product or service unique. It is important to describe both the features and the benefits of your product or service. . The benefits describe what good things the customer will enjoy by using your product or service (e.g. save time, save money, feel better etc.).

• Pricing Strategy: The most important part of your strategy is to determine how you will price your product or service. The secret here is to establish a reasonable base price that will enable you to make a fair profit. You may believe the easiest route is simply to set your prices in accordance with those of your competitors. Before you set a base price, you have to look at your own objectives and special considerations.

• Sales/ Distribution Plan: This should contain the details of how the transaction between you and your customer will take place, and also the type of distribution channels available to you (sales people, Internet, account representatives, delivery services etc) It should include a discussion about how you plan on selling your product or service and it should outline all of the different people and companies involved in getting your product into the hands of your customer.

• Advertising and Promotions Plan: Your Advertising and Promotions Plan must show how you are going to communicate to your customers and prospects. There are numerous ways by which your business may communicate including advertising, public relations, brochures, a Website, trade shows, etc

Operations

• Stage of Development: You need to identify what stage your business is at. In other words, are you still in the thinking or idea stages, or are you already manufacturing your product or developing your service? This part of your plan simply outlines the steps you have taken toward developing your business and what remains to be done.

• Production Process: Regardless of your type of business, you need to walk through the process of creating your product or delivering your service. This part of your business plan allows you to show an understanding of the process of manufacturing your product or delivering your service

Finance

To create your financial plan you'll first need to determine the type and amount of expenses your business will incur. This information will help you create the core financial statements for your business.

• Income Statement: An income statement shows your profit or loss for a particular period of time, detailing all revenues, expenses and other costs. It should be prepared on a monthly or quarterly basis to allow for proactive management of any changes. The income statement is predominantly an accounting tool used to measure a business' performance.

• Cash Flow Statement: A cash flow statement is a reflection of how much money your business has at a particular point in time. A cash flow statement is used to monitor a business' cash position. If your cash inflows (collected revenue) exceed your cash outflows (disbursements), your cash flow is positive. If your cash outflows (disbursements) exceed your cash inflows (collected revenue), your cash flow is negative.

• Balance Sheet: A balance sheet is a snapshot of the financial state of your business at a particular point in time. It outlines your assets, liabilities and equity and helps you know the net worth of your business

Risks

Describe any risks associated with your venture. This can include weaknesses in operations, sales, or management or threats in the external environment, such as economic, technical or regulatory trends. Explain how your business will overcome the risks.

Conclusions

If the purpose of your banking business plan is to get financing from your bank state the amount required and what it will be used for. Your conclusion section should be concise, clear and leave a positive impression.

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