When it comes to substantiating the importance of a marketing plan when looking for funding, there are some obvious reasons and perhaps some that are not so well known.
Business Viability
First of all, lenders want to see that a business can generate revenue and grow over time. What is the target market, how will the business attract and retain customers? These all paint a picture of business viability.
Financial Projections and Strategic Thinking
When discussing financial projections, a lender may ask how the business can support its revenue forecasts. Where will new customers come from? What is the cost of acquiring a new customer? When will these customers begin to generate income? Basically, there needs to be a story behind the numbers. This will help the lender understand that management is on top of its game, thinks strategically and knows their market inside and out.
Risks and Differentiation
A marketing plan also details risks, which should be tackled head on by providing a competitive analysis, pricing strategy and contingency planning. What differentiates your business from the competition? Why would a customer choose your product or service over another?
Boost Confidence in Loan Repayment Ability
Overall, the idea is to boost lender confidence when it comes to loan repayment. Lenders care deeply about getting their money back. A solid marketing plan will help to reinforce how you’ll generate cash flow, shows how you’ll sustain that flow and reduces perceived risk.