By : Mark Burns
When you are applying for finance you need to provide a history of your business. A similar statement is true if you are trying to sell your business. Potential buyers will require a history of your business performance and sales before there is generally any discussion or negotiation of purchase.
Potential buyers will require information on your business history such your current existing customer base and the history showing the increase in your customers and therefore the increase in your business. They should request details of your current employees if any and how long they have been with the business as well as whether they would be willing to stay in the company. They should also be requesting information regarding your current suppliers and the services they provide and terms and conditions regarding purchase of items required for continued operation of the business.
Purchasers will also require financial information such as credit history and business sales history. They should also request to review financial statements for the business going back for a period of years this depends of course on how long the business has been in operation. You want to present this business history in a way that shows the potential buyer that the business is thriving or at least growing and that you have not exhausted all avenues for increased profit and expansion in any particular field. A buyer will also factor in location of the business and relative business assets to ensure they know exactly what they are getting if they do decide to purchase your business.
A bank will consider many factors when you are applying for financial assistance and the business itself will be assessed for past performance and history of sales and financial status often going back a period of years. Of course you wouldn’t be applying for a business loan if you had the money already so generally if you can show that your business history is good then your chances of actually getting your financing requirements are much greater.
A financial institution will check your credit history this will relate to the business and to the directors of the business themselves. The credit history of your business and your own personal finance history are major factors in consideration of any loans by lending institutions. They will generally check with your suppliers etc to ensure that a good credit standing is in place.
Financial institutions will look into factors such as the type of business you have. They will require information such as how long your business has been in operation and detail of how your business has evolved over the period of operation. Such factors, depending on the type of business you have will be addressed for example your sales or service record. A history of how many sales per financial period or a history of income for services provided again for a period of years. It goes without saying that when you can prove a profitable increase in sales and service your chances are of course much higher than if you are running your business at a loss. When you are already giving this information to the financial institution on request for your loan they are more quickly able to give you an idea of the chances for said loan.
You will need to provide a detailed list of all credit information both personal and financial. You should also provide them with your business plan and of course reasons for the required funding. When you have this information readily available requesting a loan will speed up the time frame for consideration and approval or decline of your loan. You also need to ensure you are providing details clearly showing your improved profit and cash flow as well as your current financial situation.
Whether you are wishing to sell or wishing to obtain finance you will find the above is a brief outline of the things you will need to give to potential lenders or purchasers. With sale of your business there are also of course emotional factors involved from the buyer however with a financial institution they will not have any emotional attachment to your request for finance. So make sure your business history is showing that they will obtain a return on the funds you are requesting.
Author Resource:- Michiel Van Kets writes a variety of articles for Abso-Bloody-Lutely, a Business History Directory. As well as writing he runs his own Search Engine Optimization business specializing in directory submissions and article submission services. Writing is not just a favorite pastime for Michiel he also enjoys the results he can obtain for himself.