3 Things You May Not Know About Bank Business Plans or Information Memorandums

 

There are so many things to think about when creating your Bank Business Plan or information memorandum.  There is a lot of common knowledge around these two documents.  There is also a lot of misconceptions and disinformation.  There may also be some things about them you didn’t know at all.

 

Before we get ahead of ourselves, let’s make sure we cover the basics.  In case you’re new to the world of business planning or business sales, make sure know what a bank business plan or Information Memorandum is and the purpose these documents serve.

Bank business plan – In general, a business plan is a structured outline that covers all the basic foundations of what your business is, what it will sell, and how it will achieve its goals.  It includes key sections like an overview of the broad market, identification of your core or target clients, how you will reach them, who will run the business, and the financials that surround all of this.  The bank business plan is a business plan specifically meant obtain a bank loan or other bank funding.

Information memorandum – Often referred to as a confidential information memorandum (CIM), this document is like a business plan but specifically meant to attract buyers for a business that is for sale.  It is confidential because the information is private and proprietary and is not meant to be shared or disclosed.

So, here’s what you might not know about these documents:

1.      They are rarely read in order – Having a cohesive story throughout your bank business plan or confidential Information Memorandum is important.  But, that doesn’t mean your audience is going to read it in order.  Most readers, regardless if they are loan officers, a potential acquirer, or another type of audience, will skip around to what is most important to them.

For this reason, you need to make sure that your plan is cohesive but, also that each section can stand on its own.  If you’ve been reading business plan samples, you may notice key things are repeated several times in various sections when relevant.  That’s a sure sign it has been written by a professional who understands this.

2.      Big words make you sound less intelligent – When you sit down to write your bank business plan or information memorandum, you may be keen to use big words to come across more intelligent.  However, many studies suggest that this actually has the opposite impact.  It’s okay to use business jargon, especially if you’re dealing with a bank or potential acquirer.  However, you should leave the SATs words out.

3.      It unleashes your potential – This aspect may be more true of the information memorandum but, applies to the bank business plan as well.  Your CIM can directly impact the quality of the acquirers you attract, ultimately increasing the amount you may be offered for your business.  In the case of the Bank Business Plan, it can make or break whether your bank loan is approved.

Sometimes, the most important aspect of a situation is knowing what you don’t know.  This information will hopefully provide you with insight to avoid common mistakes and allow you to approach your business document with confidence.