The most important condition for getting funding for your business is preparation.
An essential part in this is writing a professional business plan.
This plan has to meet requirements. I'll talk about these requirements
with Angèle Margré, business advisor at Netherlands Chamber of Commerce.
Geert Gladdines, policy advisor corporate service
at the Dutch Banking Association.
And Gerhard Nagel, co-owner Ter Marsch & Co.
Welcome, good that you're here.
Angèle, you've seen a lot of business plans in your career.
Can you tell us which components should be in a business plan?
It's a bit of a triangle. You start with your personal belongings
and your personal skills being an entrepreneur.
Who are you as an entrepreneur? What are your skills, education and experience?
And why do you want to start a business. The second chapter is marketing.
The marketing strategy. Why do you want to start this kind of business?
With these activities. Who are your clients?
What are their needs?
And why are you starting this marketing strategy and your purpose?
And the third part, it's the most difficult part, is the financial plan.
And that required your revenues, your investments, your financial plan
your loans and your return on investments.
In order to improve your understanding of the importance of a business plan
please watch the following video.
You have a brilliant idea, a gap in the market, an amazing product.
An indispensable app. You're enthusiastic about this.
You see opportunities, but can you get it done?
You are motivated and just want to go, go, go.
Stop, that's not smart. Your idea deserves better.
Would you just start pouring concrete if you want to build a house?
Of course not. You're the architect of your own success.
And just like an architect, you build better, easier and faster with a blueprint.
And do you know how you can be successful in business?
By having a business plan as your blueprint.
It provides insight in the feasibility of your idea.
And at the same time, it's a step-by-step plan.
It gives you control during hard times.
It's an exploration of the future during the building process.
It forces you to describe the foundation
and which walls are going to support the success.
It teaches you what is necessary to shape your visionary idea.
In your business plan, you'll list your own plans.
You'll answer questions like: What do I want to do exactly?
Where am I going to establish myself? Which legal form am I going to choose?
Is there a market for my product? How do I find customers?
How much money do I need to get my plans off the ground?
Often the design will change a bit during this process.
You discover what is and isn't possible.
By asking feedback from friends, family and experts
you'll discover construction faults and how to prevent them.
In the end, you know how beautiful your success can be
and how you can achieve that with as much purpose as passion.
And as much motivation as inspiration.
The business plan, the foundations of business success and financing your ideas.
Angèle, how do I fill out the financial part
knowing that entrepreneurs find this the most difficult part of a business plan?
Most entrepreneurs find it the most difficult part.
I think it's the most boring part for the financial plan.
At first, you make four budgets. The first one is the investment budget.
And that's all the stuff and articles you need to start up your company.
Put it on the left side of your sheet, it'll be your dream.
So, it's going to be the inventory, the machinery, the transport.
All the stuff you need to start your company.
On the right side is going to be your worst nightmare.
So, you ask yourself: Where do I get the money from?
There are several possibilities. First is bringing in your own money.
Like your own savings or subordinated loan from family or friends.
And the other possibility to get a loan or credit from outside capital
like a bank or crowdfunding, but also an informal investor.
So those two financial budgets are your opening sheet
your opening balance so they must be equal.
The third one is the budget most entrepreneurs forget to make
because it's your private budget. -You have to put that in too?
Yes, because how much money do you need to earn for your own living?
For your own fixed costs or expenses, yes?
So that's a difficult one. The fourth one is the operating budget.
That's the most budget the banks like
because that's the budget how you, for instance, determine your hourly rate
your purchase and that's also your revenues.
So the bank will know how much will you earn
to pay us back and to get your return on investment.
So, and you make three. For the one, is the realistic one.
The second one of for the future and the third one is to grow with your company.
Okay. Gerhard, when you started your business
did you know how to make a business plan?
I did and I like Angèle saying the number part is the most boring part.
I'm a finance professional, I like the numbers part.
But that's why I wrote my business plan with my commercial partner.
He also finds it more boring.
So it's very important that the commercial story is in line
tangoes with the numbers. It should be one story.
So, don't write it on your own. Team up.
And make it perfect towards the bank. -I like that, a tango.
It makes it less boring, at least, yes.
So, what are the most components of a business plan?
The most important components.
Well, if I might start? -Yes.
It starts with the idea, with a passionate idea.
You translate it into the first numbers.
In our case, in the Ter Marsch burger restaurant:
How many burgers are we going to sell on a Monday, Tuesday, a Saturday?
You have a profit & loss account. You put a balance sheet.
You make a capex, a capital expenditure list, of what you need.
The kitchen, the tables. How much money are you going to create?
Will you be able to pay back the financing agencies, the banks?
As you said. -Yes.
But the most important chapter of the business plan
is the entrepreneur itself.
Because the entrepreneur is someone with the motivation
with the passion to start a company. We say: You can make or break the company.
So when there is confidence without the outside capital from the bank
or an informal investor the owner, the entrepreneur
is the only one who makes it grow and sustainable.
I confirm that. When we went to the bank, they didn't jump on the numbers.
They didn't jump on the stories. They said: Who are you?
How do you get on with each other? How do you complement each other?
Will you still be friends in five years' time? What a risk if it breaks up.
Realistic question, yes. That's good to know as well.
Banks want guarantees.
How can you show that you are a safe bet in the business plan?
To have a good idea.
To know what kind of niche you want to act in.
Because almost all branches are really done here in Holland.
So you must find something unique
to cooperate or to work in.
And you almost bring your own capital
and that must be your own bank account or savings
but also you must look if there is a possibility
to do the bootstrapping of your own company.
Today: I'm also in risk, not only the outside capital.
But I want to invest also for my own company
and I'll take some risk to invest in the company.
Do you agree with this Geert?
Yes, I think entrepreneurs like naturally they are optimistic.
And banks are naturally looking at the risk side of the business.
And I think you should meet each other in the middle.
Because there is the financial plan that is also helping the entrepreneur
structure the business in the way the business is going to run.
The bank really wants to know: you want this amount of money
as a loan from me. How are you going to use it?
Are you going to use it for building, are you going to use it for a car, for an oven?
Are you going to use it for the salary payments of your employees?
And the more you can provide insights on how exactly are you going to spend the money
also the better overview you'll have as an entrepreneur yourself
on the way your business will run.
And maybe to add on the risk side of the business
the bank will ask for guarantees on the loan.
So they want collateral, that can be a house that you
or a house you have yourself or the building that you bought as a business.
And if, what nobody hopes, of course, but it happens, the company goes bankrupt
you can put that house or building up as collateral for the loan
that you initially got from the bank.
Geert mentioned something very important. He said:
the entrepreneur is very optimistic, the bank is more pessimistic.
When I go to the bank, I have both scenarios with me.
I have a realistic positive scenario: what could possibly go wrong?
I also have a very down to earth scenario: how much buffer is there?
That's the worst nightmare you mentioned? -Yes, and when we see
the business plan with the financial plan
we usually kept the cost and the expenses the same
but decrease the turnover about for 50 per cent.
And then we look, is it useful to start a company
and how was your return on investment? Do you get the revenues
and will you be able to pay the bank back from the loan you rented?
I much agree. Like the fixed costs that you have, they remain the same.
It's always the same amount that you spend on your building, on your staff
on your income and the interest to the bank.
The turnover you're making, that's where you actually make the profits.
And usually when you sell some services
your hourly rate will be about 100 euros
but you only work the half of the hours you can work every year.
So the rate must be very high and must be really calculated
to earn the money, yes, yes.
To cover all the costs, all those and insurances.
Gerhard, what was the most difficult part?
Well, I hear that the numbers are the most difficult part for people.
As a finance guy, the numbers are not the most difficult part for me.
Easy for you? -The most difficult part is:
don't underestimate the paperwork. It is a lot of paperwork.
It starts with the story with the compassionate story
commercial story, market research and the numbers have to complement it.
And be prepared or get someone into the team
to follow up on the paperwork
on setting up, establishing your company, the paperwork for the banks.
And many other things before, in our case, before we sell the first hamburger.
There is a lot of red tape involved, of course.
Red tape? Can you explain that? -Red tape, a lot of paperwork.
Can you explain certain rules maybe you had to think of with that paperwork?
The business plan itself, we talked about it
I think has a very, nearly rigid structure
and a minimum set of requirements for the bank
or anyone else who reads business plans would look for.
And the rest is very specific to the business.
In our case, setting up a restaurant you've got permits.
You've got to get a liquor license. -Yes.
You've got very clear rules if you have a terrace.
Where to put the chairs and what is the space to be able to walk through?
And that's all got to go in the request for that permit.
And there is many more things to consider. -Yes, lots of work.
You applied for a banking loan. Did you consider any other type of financing?
Yes, we did. As we discussed before
the bank financing is the cheapest form.
If you manage to convince the bank you have a viable business plan
it's the best way in terms of cost.
If you go to crowdfunding or any of the other mentioned ones
your cost will increase. So I think the bank is your first stop
for possible financing of your business.
I just heard that there is another viewer's question. It's for you, Gerhard.
What should everybody know when applying for finance?
What should everybody know?
That, well, it's a rigid process
that you have to follow. It's a process where you can get support
online, as we've heard, from many institutions.
And it's a story you have to develop
together with your commercial business partner.
It's a kind of you dance a tango.
It's a commercial number-tango, they both have to support each other.
One is not enough without the other. -What's your view on this, Geert?
I mean, for me it's do your homework. So make sure you have the right plan.
Another tip I'd like to give to entrepreneurs
is take the outside perspective.
Would I invest in this business if it was not my own business?
And because as an entrepreneur, you are in love with the company you're founding
or that you started and you're growing, but make sure that...
Think like a bank or as an outside investor and would you still put in your money
that you're asking somebody else? -Put in your own money.
As well. -Angèle, what I'd like to know:
Is a business plan obligatory?
No, you're not obliged to make a business plan.
But when you're searching for a loan then you're obliged to make a business plan
because the bank looks for all the chapters within the company.
So, yes, then it's obliged, but it's easy to make a business plan for yourself.
It'll give you, you can look to the purpose you make, the focus
and it makes transparency for the company.
And when it's out of your mind and it's on paper it give you also
a relax to start up the company. -Yes, I can imagine that.
It's not static, it moves on with you.
It's a good process to go through, writing your business plan.
It makes you focus on all these aspects
and you'll probably find out things that you would have forgotten maybe
if you wouldn't have gone through this process.
It gives you some structure as well. -Exactly.
Where can people find information on writing their business plan?
You can write on a beermat, that's also possible.
It's a bit small.
But when it's a very good idea like a burger
it combines with the beermat.
There are also some templates.
I think every Dutch bank has a template for making a business plan.
But there are also other organisations like Qredits for microfinancing.
They have also a template to make a business plan.
Do you have any tips?
In this sense, like what I said: Make sure you do your homework.
Seek advice.
So, if you're insecure about parts of your business plan
if you're not the best at marketing or not the best at the financial plan
make sure that you ask your bookkeeper or an external financial planner, advisor
to help you with it. Still make sure that you understand it yourself
because you're the entrepreneur. You have to run the business.
So you have to understand your finances and seek help from other entrepreneurs.
Go to people in the same business or a totally different business
who basically went through what you're going through.
And make sure that you keep their advice in mind.
Anything to add to that, Gerhard? -Just before you go pitch it to the bank
indeed, pitch it to other people. You get feedback
and you'll be much more secure and good in presenting to the bank then.
It's also possible to pitch at the Chamber of Commerce. We don't lend money
but we want to help you to go further with your company.
Okay. For more information please have a look on the website business.gov.nl.
I'd like to thank all of you, Angèle, Gerhard and Geert.
Thank you for sharing your expertise and experiences.
You're welcome.