SME Conference Financing Proposal

On January 18, 2012, the NOVA Committee of the Chamber will host its biennial business conference at the Trinidad Hilton. NOVA works towards the development of our local SME sector through knowledge-exchange, strategic networking and issue advocacy. This year’s conference has been modeled around the action statement “Make It Happen: Success In Any Environment” and will deliver on all three focus areas.

Participants will interact with an eclectic group of industry specialists on issues specifically geared to improve their business such as effective human resource management, application of new media & software for improved efficiency and successful regional exporting. In addition, they will hear personal stories from keynote speaker Mario Sabga-Aboud, Chairman of the Pizza Boys Group of Companies, Claudia Pegus, renowned fashion designer and Neysha Soodeen, the force behind the internationally acclaimed MACO magazine; three individuals who have indeed made success happen.

The final session of the day will be facilitated by two experts on credit risk and venture capital who will provide helpful tips on the Dos & Don’ts for effective oral and written presentations when seeking debt or equity funding.

We hope to see you there but if not, this article gives a sneak-peek into one aspect of the conference session on “Plans, Pitches, Proposals & Presentations: The How To Guide”.

Your financing proposal is the document which lenders and investors use to decide whether to give you more of their time. The proposal alone will not get you their money, but if done right; it will tell them all the reasons why the business is viable and assure them that the people behind it are serious professionals, well-prepared to engage in discussions which could lead to financing.

When drafting your proposal, slip into the role of the prospective banker or venture capitalist. This requires first that you set aside all the love you have for your business idea and become coldly critical of your every statement. The financier has one pot of money and many grasping hands (yours included). This is not a person who will be impressed by the statement, “This is the first time this will ever be done in Trinidad and Tobago. I have no competition.”

You can find many templates for financing proposals online and it is worth your while to use one as the base for your own proposal, but be sure to remove all the generic elements and references to inapplicable things such as ‘federal law’. At its essence, your proposal should include answers to all the questions you would ask someone else if they had come to you asking for money for a business venture.

The Summary

This is the section where you magically say it all while keeping it concise. What does your business do or what is it going to do; how much money does it need to do it; how long will it take for you to return the money; and what interest can you afford to give the lender or what return can the investor expect.

The Business Proposal

Here, you tell the financier about your products and services and specifically the product or service that is at the root of your current financing request. Though in drafting the proposal you should be critical of your own great idea to ensure you anticipate the hard-hitting questions from a tight-fisted financier, don’t lose the belief that you have in the worth of your business plans. This is a good time to let your confidence about the competitive advantage of your idea shine through because soon someone will be crunching the numbers and this is done in a time and space devoid of all emotion.

Management

After explaining what your business does, this section introduces the people who execute it. The financier does not care whether or not your Production Manager has three kids and a loving wife so keep the information in these profiles to the point. What is the experience (both academic & practical) of your management team; what successes have they had already; how long have they worked in the business. Show the financier that the business is being run by people who know what they’re doing.

Market & Marketing Plan

This section includes the research on your market and competition which you’ve used to reinforce the financial assumptions. As with every aspect of your proposal, dispose of anything that is too generic. Even though Trinidad and Tobago has a “population of approximately 1.3 million according to a 2009 World Bank report”, this is not the level of market detail the financier will be looking for.

Unfortunately, Trinidad does not have the breadth of peer data that is accessible in countries with more developed business sectors so you should show that even in the absence of this, you were able to do your own leg-work. If you’d previously been selling widgets nationwide and now want to add gizmos to your product line, which companies out there already sell gizmos? Which sell both widgets and gizmos? How many branches do they have or what is the production capacity of their factory?

You would have explained earlier why your widgets and gizmos will be hot-sellers but your marketing plan should state how precisely you plan to close the sales.

The Numbers

Everything you’ve written must circle back to your financial data points and every line item should have a logical basis behind it that you can explain if asked. The financier may not reject your proposal outright if, for example, your debt service ratio exceeds their maximum; but rejection will likely come if you’re asked to explain that spike in revenue you projected in Year 3 and you’re clueless because you got your accountant to make the numbers look pretty. It’s imperative that you know the reasons behind the numbers, even if you haven’t prepared them yourself.

Always remember that the financier needs assurance that out of its normal operations, your business will repay a loan or allow for an exit. The financier’s Plan B will centre on the assurance that the business or the business owners have sufficient assets which can be used as collateral in the event of default. Your balance sheet, your profit & loss statement, your cash flows – these all provide the numbers which can lead to the above two assurances but they’re most effective when paired with extensive narrative justifications.

In Person

At some stage, you will come face to face with your prospective financier. All the professionalism found in your proposal document should be imbued in you. Arrive on time and be clear, concise but still passionate. Show understanding of perceived weaknesses in your plan but counter these negatives with strong reasons why they can be discounted. Be willing to work your numbers and return with a proposal more suited to the financier. In short, project success and then realise it.

To find out more about the conference agenda, the speakers and facilitators, read our blog at http://makeithappen-conference.blogspot.com or find us on Facebook at “Chamber SME Business Conference – Make Success Happen”.

To register for the conference, email or call Ms. Cheryl Lyn Kurban at ckurban@chamber.org.tt, 637-6966 ext 228