When properly used, borrowing is the most powerful tool to build capital and grow a business.
Make your actual financial statements for your business. Prepare the cash flow, profit and lost statement and balance sheet as of the end of the latest month. Any prospective lender will require the information from you before they start evaluating your loan application. Having this enables you to understand the real condition and the true net worth of your business. Seek a professional to make these financial statements for you.
Think of your business plan in detail. What market will you cater to? What product and/or service will you sell? How much will it cost you to produce and deliver these products and services? The most important projection is your cash flow, which provides the true and total amount of cash required to sustain the profitability of your business.
Make your monthly projection for the next few years. This must be based on your most realistic set of assumptions pertaining to all aspects of the business requiring cash or producing cash. Make as many projections as you want using different assumptions for each item. These include all the cash that you receive and all expenses you need to spend for.
For each item, use different assumption. On one sheet, you can have optimistic assumption. On another sheet, you can use the pessimistic assumptions. Choose the most realistic and came out with a working financial plan, which will be a combination of all the scenarios you make. Some items can change monthly and others can remain constant. Put some thought to each amount use.
As the business grow and successful enough, might as use different methods to continue profitably such as Business process management (bpm). It will promote your business effectiveness and efficiency while striving for innovation, flexibility and integration with technology.
