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.