Are These 5 Ingredients Missing From Your Business Forecast?
Whether your growing business needs additional financing through a lender or via investors, creating a strong business forecast is critical to securing the funding you need. Before including your business forecast as part of your loan application or investor presentation, review it to make sure you haven't overlooked these five ingredients that lenders and investors want to see.
1. Your Customer Profile
Does your business forecast include a description of the typical buyer you hope to attract? Whether your company is a B2B (business-to-business) or a B2C (business-to-customer) organization, reassure lenders and investors that you have detailed knowledge of your target customer.
Be sure your customer profile includes references to the age, gender, location, income and education level of your target customer. If yours is a B2B business, then include details about the industry, location, size of company, and any quality, technology or price points important to your target business customer.
2. Summary of Your Competition
Potential lenders or investors want to know that you know what you're up against in terms of competition from other businesses in your industry.
Confirm that your business forecast includes a description of your top two or three competitors, including their size, location, market share, typical customers, products and services, and any of their strengths or weaknesses.
3. Your Market Standing
How does your business rank against others in the market? What's your plan for competing against them?
Consider using the U.S. Small Business Administration's (SBA) SizeUp online tool to find out how your business ranks against others. Simply sign in with your email address, and then input your industry and location to see details on the top three competitors in your area based on data in the SBA database.
4. Local Economic Forecast
Your forecast should also illustrate your awareness of the current and future local economy, as this could significantly impact your business's success.
Visit your local SBA office or Chamber of Commerce for economic forecasts or reports for your area. You can also find information online at PNC Economic Reports.
5. Potential Seasonal Factors
Whether your business provides goods or services, supply and demand may ebb and flow through the seasons depending on a variety of factors. What could impact your business? Consider factors like weather, travel patterns and holiday spending.
Although this may not seem like the important aspect of your business forecast, including seasonality shows that you've carefully considered potential factors impacting your success. Adding these details might help lenders decide that yours is a business worth funding.
When you're ready to apply for a business loan or line of credit, consider speaking with the business bankers at PNC Bank.
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PNC is a registered mark of The PNC Financial Services Group, Inc. (“PNC”). This article has been prepared for general information purposes by the author who is solely responsible for its contents. The opinions expressed in these articles are those of the author and do not necessarily reflect the opinions of PNC or any of its affiliates, directors, officers or employees. This article is not intended to provide legal, tax or accounting advice or to suggest that you engage in any specific transaction, including with respect to any securities of PNC, and does not purport to be comprehensive. Under no circumstances should any information contained in the presentation, the webinar or the materials presented be used or considered as an offer or commitment, or a solicitation of an offer or commitment, to participate in any particular transaction or strategy or should it be considered legal or tax advice. Any reliance upon any such information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Neither PNC Bank nor any other subsidiary of The PNC Financial Services Group, Inc., will be responsible for any consequences of reliance upon any opinion or statement contained here, or any omission. Banking and lending products and services, bank deposit products, and Treasury Management products and services for healthcare providers and payers are provided by PNC Bank, National Association, a wholly owned subsidiary of PNC and Member FDIC. Lending and leasing products and services, including card services and merchant services, as well as certain other banking products and services, may require credit approval.