When obtaining a business loan for a website development
business, it is imperative that you have a properly structured business plan
that will assist you in showcasing how you intend to operate your Web
Development business, how the business will operate, how you intend to market
the business, the anticipated financial results of your company, and how you
intend to repay your debt obligations. This sample loan business plan will
provide you with the framework that you need in order to acquire a business
loan for starting or expanding this type of business.
Executive Summary
Introduction
When obtaining a business loan for a web development
business, it is imperative that your business plan has a clear and concise
executive summary that provides an outline of what are seeking to accomplish,
how much capital you are seeking to raise, the management biography of the
business owner, and an overview of the anticipated profit and loss statements
of the business. Here is an example of how the title paragraph should be
written:
Web Development, Inc. ("the Company") is seeking a
business loan of $100,000 in order to launch the operations of a web
development business that will be based in San Francisco, California. The
Company was founded in (Insert Year). The business was founded by Mr. John Doe.
Products and Services
In the next segment of the business loan and business
planning document, you should showcase the products and services that you will
be providing to the general public. For instance:
Web Development, Inc. will provide customers with a broad
range of web development services including website development, web
application development, e-commerce site development, and web hosting. The
business will earn substantial revenues from the website development services
coupled with recurring streams of revenue from the web hosting revenues that
will be generated on a monthly basis.
Now it is time to discuss the anticipated terms of the
business plan that you are seeking. An example paragraph of how this is stated:
At this time, Mr. Doe is seeking a conventional business
loan in the amount of $100,000. The interest rate, loan terms, and loan
covenants are to be determined during negotiation. However, this business plan
assumes that the business will receive a seven year business loan with a seven
percent interest rate due on the outstanding principal balance.
Management Biography
Now that the summary of the business has been provided, it
is time to provide a brief overview of the owner of the business. An example
paragraph summing up the owner is as follows:
Mr. Doe is a highly experienced business person that has
years of experience regarding the direct ownership and management of business.
He will be able to effectively bring the operations of the Web Development
business to profitability while ensuring that the business loan's payments and
its covenants are met at all times.
Financial Statements
The most important thing to your lender when applying for a
business loan is how you intend to repay the bank. In this section of the
business plan, you should provide an overview of the finance's of the business
discussing the anticipated revenues, expenses, and profits/losses. You can also
discuss the applicable collateral within the business plan that will be used to
secure your business financing.
Expansion Plans
One of the most important aspects of your business plan is
how you intend to expand the business over a three to five year period. Banks
and finance companies always want to see that the business will experience a
moderate to strong level of growth. This is especially true in business lending
because as your business grows the cash flow that secures your business loan
will decrease proportionality against your monthly credit obligations. An
example of how this is stated is as follows:
The Web Development business will continue to expand through
organic means including increasing the Company's advertising budget via the
reinvestment into the after tax cash flows of the business.
The Financing
Use of Business Loan Proceeds
In this section of the business plan you should focus on how
the proceeds of the business loan will be used. An example of this would be as
follows:
Web Development Office Establishment - $50,000
Servers and Technology Equipment - $10,000
Working capital - $40,000
Management Equity
In this section of the business plan you should discuss the
percentage ownership of the business among the owners of the business. For
example:
Mr. Doe will own 100% of the Web Development, Inc.
Board of Directors
When applying for business financing, the bank will also
want to know who serves as the board of directors. For small businesses,
usually the owner serves as the director of the business. An example of how
this is worded:
Mr. Doe will be the sole director of Web Development, Inc.
Exit Strategy
Any bank or financing company is also going to want to know
what you intend to do with the business over a set period of time. Many
business owners will develop and expand a business with the intent to sell the
company to a third party at a later time. When drafting this part of the
business plan you should focus on what you intentions are in regards to
potentially selling the business. This is often worded as:
Mr. Doe would most likely sell the Web Development
businesses to a third party for a significant earnings multiple. Website
Development businesses usually sell for approximately one to three times
earnings given the financial strength of the business. In this event, the
business would be sold by a business broker and the business loan sought in this
plan would be repaid according to the covenants of the business loan agreement.
Products and Services
When developing a business plan that is appropriate for
obtaining a business loan or other business credit facility you need to clearly
showcase the services or products that you will be offering to the general
public. An example of how this section is worded goes as follows:
As stated in the executive summary, Web Development, Inc.
will specialize in the ongoing development of website development, web
applications, and hosting services to the general public on a nationwide basis.
The business intends to hire a number of independent contractors that will work
on the Company's behalf when developing websites for the Company's clients. The
business will also generate highly recurring streams of revenues from the
ongoing sale of hosting services for people that do not own their own website
hosting servers.
Industry and Market Analysis
The Current State of the Economy
It is important to let your financial institution know that
you are well apprised of the financial situation of the general economy when
you are applying for a business loan. This is especially true in today's
environment where lending has become more difficult and will remain more
difficult in the foreseeable future. Specifically, you should gear this section
of the business plan analysis towards the industry that you are operating
within. For example:
The current economy has remained difficult over the past few
years. However, Web Development businesses tend to operate with a strong degree
of economic stability as these businesses are able to generate highly recurring
streams of revenue from the fees associated with hosting services. As such, the
business will be able to remain profitable and cash flow positive in any
economic climate despite the current deleterious conditions in the general
economy.
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