Free Web Development Business Plan for Loans
Obtaining Business Financing
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.
Business Loan Terms
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.
The Web Development Industry
In addition to providing your business loan officer with an understanding of the general economy, it is important that you showcase that you have an equal understanding of the industry in which you are operating within. As such, you will need to provide you business loan institution of a brief overview of your industry and any potential changes that may affect the way that your company does business. An example of how an industry overview is as follows:
In the United States, there are approximately 100,000 companies and individual providers that are able to provide web development services to the general public. Aggregately, these businesses generate more than $50 billion per year while providing gross payrolls exceeding $20 billion. The industry outlook is strong for the web development industry as every business now wants to have a presence on the internet.
Target Market
In this section of the business loan application and business plan analysis, you should focus on the demographics of your localized market (or national market if applicable). This section should discuss how many people live in your area, the anticipated number of people that would require the use of Web Development Services, the median household income of people living in the area, poverty line statistics, and any applicable laws that would apply to your operation of Web Development Companies.
Competition
Many people that are developing new businesses or expanding existing businesses often feel that their business does not have any competition or limited competition at best. However, this is almost never the case. Unless you have re-invented the wheel
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