Finding financial backing for your established business

As an established business, your capital needs are probably $1 million or less, and finding financial assistance from the right lender should be part of your initial strategy.

Here are some of the key components of a solid business plan, which you'll need to persuade lenders to back you:

Start with a cover sheet — the name and contact information for your business and its owners, and details about the building you want to rent or own. Next is a one-page synopsis of the business plan, which should include details such as the company's products or services and market size, along with your rationale for the business. A brief overview of any existing financial data should be included as well if available.

What follows are details about key elements, including:
• The business: Explain in more detail your specific goals and unique qualities, as well as who your competition is. And explain your financial need, and the expected benefits of getting funding.

• Management and organization: Who are the key managers? Include their résumés and salaries. Explain how many people you intend to hire and how they'll be compensated, and outline your total payroll expenses. Describe the company's decision-making process and management philosophy.

• Market analysis: Identify your customers and your strategy for reaching them. List any existing contracts and any products or services you plan to stress in marketing.
You'll also want to set some revenue targets and explain in detail your product-pricing model and how it compares with competitors.

• Financial data: Provide three years' worth of tax returns and financial statements (if available), along with current financial reports such as a balance sheet and income statement. Show your projected financials for the next three years. List your capital equipment, manufacturing/shipping plans, and details about your funding sources and spending plan. Work closely with your financial advisers, and try to do as much of the data collection as possible, so you'll fully understand it.

Once your business plan is ready, identify short-term and long-term capital needs. And consider how much risk you're willing to accept. Lenders like it if you're committing your own money as opposed to expecting the lender to provide all the funding.

A good starting point for small businesses is the Small Business Administration, which offers a federal guaranty on loans with low down payments. Or, go to a bank that handles your current accounts or loans. Bankers there will have a history with you that could help. Make sure you work with someone who specializes in small-business loans.

The SBA sponsors a group called the Service Corps of Retired Executives (SCORE), which helps potential and existing entrepreneurs with business-related challenges. Log on to the organization's Web site at www.score.org. Learn more about the SBA at www.sba.gov.