A THOROUGH business plan helped Desmond Galant (pictured above) secure a R1,3 million loan to finance the purchase of his first truck and launch his transport business.
Galant runs DG Logistics and ships fresh produce like fruit and vegetables across the country. A few years ago, with just his financials and the contract that he had at the time with a transport brokerage, the Cape Town-based business owner approached a financier to get a loan to buy a second-hand truck.
But they turned him down. This lead him to approach business consultant David Brien of Retail Dimensions.
Brien questioned Galant extensively on things such as what the running cost to operate the trucks would be - including petrol and tollgate fees - and helped him construct his cashflow projections.
Together they drew up a business plan that explained things such as where the business was and why Galant had decided on entering the transport sector.
Brien’s partner also joined Galant and helped him to present the plan to the bank. He says the banker asked him questions such as what contingency plan he had in place if his truck broke down, who the driver of the truck was and who would be servicing the truck.
Three months after the presentation the loan was approved. He paid just R700 for the business plan as he made use of a business services voucher valued at R12 000 that he obtained from the Umsobomvu Youth Fund.
Galant has five employees and has been operating since 2005. His business plan recently assisted him in securing a second truck. He also uses his business plan to calculate his cashflow projections.
What banks need from applicants
WHAT do banks look for in a business plan? Frank Orchard, head of the specialist support unit at Standard Bank, says business owners often display a lack of connection to their business plan because a third party, like a consultant, drew it up for them.
Says Orchard: “If a business owner can’t convey their link to the document, their passion to it, the document becomes irrelevant”.
He says other errors that business owners make when presenting their business plan to the bank are:
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Not including in their business plan sufficient hard figures, facts or research around the competition and the environment that the business operates in.
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Not listing the competition.
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Too much emphasis on the product or service and the marketing of it and not enough on how the business owner intends to finance the business, who the customers are and the business’s operational capabilities.
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Not explaining the effect that personal finances can have on the business.