Topics: Venture capital, Balance sheet, Generally Accepted Accounting Principles Pages: 17 (2217 words) Published: April 6, 2014
Creating a
financial proposal
B u s i n e s s

• resenting your
• argeting your
•  aking the

Co a c h

s e r i e s

B u s i n e ss

Co a c h

s e r i e s

serious money

A financial proposal contains the details on how
you intend to achieve your business plan:
the amount of money you need
how that money will be used

The situation
When your company requires a
significant infusion of capital — through
debt financing or the sale of equity —
the people providing the money will
ask to see something in writing —
a financial proposal.
The solution
At BMO Bank of Montreal®, we are
committed to helping Canadian
businesses develop and succeed. The
purpose of this Business Coach is to help
you prepare a financial proposal that
places you and your company in the best
light possible as you seek to attract debt
or equity capital.

what returns can be expected
what security will be provided
Apart from being essential to raising capital,
the preparation of a financial proposal can be
extremely beneficial to the operation of your
business. As a fundamental management tool,
your proposal:
 orces you to write down facts clearly and
 elps you to identify and clearly define
products, markets and suppliers
 rovides you with a guideline against which to
measure results
 onveys a lasting impression of you and your
company, and allows others to assess your
chances of success
It should be noted that your financial proposal
will be based on your business plan, which is
basically a written summary of:
 hat your business is
 here you intend to take it
how you plan to get there
It may be useful if you also have Developing Your
Business Plan, a companion booklet from the
Business Coach Series available online from our
resource page at

STEP 1 Outline of the proposal
Whether you’re seeking money from a bank, a
venture capital firm, a government program or
any other source, you will be expected to provide
a document that contains most or all of the

 over page: company name, address,
telephone number, email and internet address,
and key contacts

Table of contents: referenced by page numbers
Summary: one page

on who will receive the proposal and for what
purpose. The summary should state briefly:
 hat the company is and does
 ts history
where its future lies
 hat the company needs to get there
(i.e., the amount and sources of money)
Keep it simple and honest, and you’re halfway
there. Look at these examples:

Example 1

 ndustry overview: overview of your business
highlighting key dates and facts

 anagement structure: background,
qualifications and responsibilities

The product/service
 he market: production/supply, financial
performance — past and future

 inancing outline: emphasizing application
of funds

 asic information: bank, accountants, lawyers,

The ABC Co. is a British Columbia firm (30
employees) that manufactures auto parts such as
brake discs, drums and linings in one owned plant.
Sales are to Original Equipment Manufacturers
(OEMs). Volume peaked three years ago at $4 million
(pre-tax profits $200,000) and there have been
two subsequent loss years (year-end September
30). Book value of the company is $750,000, and
approximately $300,000 is required in a combination
of debt/equity to replenish working capital.

incorporation, board of directors, shareholders

 ppendices: including detailed management
biographies, product literature, valuations
of assets, financial statements (preferably
audited), detailed projections — profit and loss,
cash flow, major contracts

STEP 2 Making a strong first

The one-page summary following the table of
contents can make...
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