Technique #1: Use clever, hidden psychology
Be clear about what your business is offering. For example, if you want to run a bar you might think you’re selling beer – but that’s not really what makes a bar or club a success. After all, ALL clubs sell beer, so you’re not going to excite anyone with that idea. Instead, think deeper. What’s your venture really about? In this example, it’s about entertainment… People go to bars to satisfy a social need, not simply to booze. They could do that at home for a third of the cost. So sell the idea of what will make people go to your bar rather than the one up the road.
Technique #2: Expenses are more important than profits!
Don’t be afraid to show expenses. In fact, flag them up loud and clear. Show one-off set-up costs, show a marketing budget (you’ll DEFINITELY need to advertise), show the direct costs of your product… If you show the costs, you’ll show you understand your market and what’s needed to break it. So don’t go in with wild claims that you can turn R10 of their backing into R1 million overnight. That’s as crap as a get-rich-quick scheme and you wouldn’t buy into one of them, would you?
Technique #3: Wow them with your ROI
Try to tie your costs into return on investment (ROI). Banks like clear figures that show that if R10,000 is invested then it will lead to R100,000 of income, for example. The tighter the link between the investment from the bank and the return – the better this will read to your prospective investor – your bank. Include goals and milestones in your plan that demonstrate how you will be measuring your success along the way…This shows to your bank that you intend keeping “on the case”, and they know from dealing with many new businesses that monitoring progress is a key factor in business success.
Technique #4: Use the power of innovation
Demonstrate how innovative you and your business can be… Banks like to see creativity and even if your business concept or product does not set the world on fire with excitement, the way that you run your business can. So, introduce new and interesting ways of promoting your business. For example, targeted ads for women-only car insurance now appear on the back of cubicle doors in the ladies toilets of many highway service stations! An idea like that’s enough to make even a fairly dull business idea sound interesting!
Technique #5: Get rich slow – not quick!
Impress your bank by showing them you’ve a well thought out strategy for future growth – and that you want them to work with you at every stage. Show your bank a short, medium and longterm plan such as your initial set-up, three years and five years. Your bank manager will see that you have thought your way through the issues and how your business is likely to grow long term. And, if you talk about this long-term plan with confidence, the bank manager will actually start to picture your business being around for five years, 10 years and longer. Which leads me to:
Technique #6: Use realistic optimism
At all stages show your bank you’re optimistic about your success, but realistic about the constraints along the way. All businesses have ups and downs and to suggest otherwise would show a level of over-optimism that would make your bank distinctly nervous. So, introduce a healthy dose of realism into your plan and show that you are ready to face the challenge!
Technique #7: Show them ‘Plan B’
Managing risk can be the make or break in any venture – and yours will be no different… If you want to make the big bucks, you’re going to have to take some chances. And you need to show the bank what you’ll do when things go wrong. And they will. Of course, your “rights” should heavily outweigh your “wrongs”. But banks will want to see you have a Plan B in the event that one of your ideas flops. Identify the major risks to your business in your plan and then show how they’ll be overcome by creativity, monitoring and good management. In other words, you should answer the difficult questions before they ask them!
Use the seven points we’ve run through here and you’ll have a persuasive package that your bank manager simply can’t refuse.