Free Web Development Business
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.
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:
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
California. The Company was founded in (Insert Year).
The business was founded by Mr. John Doe.
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
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.
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.
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.
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.
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:
Development Office Establishment - $50,000
- Servers and
Technology Equipment - $10,000
capital - $40,000
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.
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
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
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:
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.
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.
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 – you will have
competition. When applying for a business loan, you should clearly showcase your
competition in your business plan. This is especially important to your banker
as they will be able to gauge your ability to be successful in your targeted
market. Many business loan underwriters will aggressively confirm that
competitive nature of your local market and your local industry.
When drafting this section of
the plan you should heavily discuss the competitive advantages that you intend
to have over your competition.
In addition to all of the above
information that we have covered, your business loan officer is also going to
want to know how you intend to market your business to the general public. Most
people do not quite understand how to effectively market their business outside
of prominent signage or flyer distribution. When applying for a business loan
(again in this difficult lending climate), your banker is going to want to see
that you have a clear methodology of how you intend to market your services or
products to the general public. In this section of the business plan – we will
overview how to showcase your services/products to the general public.
Marketing Overview Example
- The Web
Development will place prominent signage on the facility to draw a significant
amount of foot traffic in its local location in
- The business
will maintain listings in the Yellow Books.
- The Web
Development business will also maintain an internet website that showcases the
Company’s operations, hours of operation, and relevant contact information.
Marketing Strategies Overview
Additionally, you will be
required to further drill down (in your business plan) how you intend to
implement your strategies when you launch or expand your business’s operations.
In this section of the business loan and business plan documents, you should
amplify the bullet points from the section above. For instance:
The Web Development intends to use a number of strategies
that will create instant traffic and customer flow to the Company’s location.
These strategies include not only using prominent facility and road signage, but
also distributing flyers to people that fall into he Company’s targeted
demographics. The business will also regularly take out advertisements in
localized newspapers that showcase the Company’s hours of operations, web
development and web application development services, and specials that are
occurring with the on a regular basis.
The business will
also maintain a highly informative website that showcases the Web Development
company’s services, its hours of operation, service information, and other
relevant information in regards to the Company’s services. This website will be
listed on major search engines such as Google as many people now use the
internet to locate web development businesses.
The Financial Plan
Beyond any other part of your
business loan application or business plan, the financials section of these
documents are what matters most when applying for a business loan or any other
type of credit facility. Ultimately, this section of the business plan showcases
not only what your anticipated profitability will be, but also how you intend to
repay the funds that you have borrowed through your business financing facility.
An example of how this section is structure is as follows:
Development, Inc. will have an average annual growth rate of 10% per year.
- Mr. Doe will
acquire $100,000 through a business loan in order to launch the operations of
Proforma Financials for a
Now it is time to showcase how
you intend to repay your loan, generate a profit, and increase the book value of
your business over a three to five year period. BusinessPlansForLoan.com has
developed an easy to use financial model that you can use when drafting out the
financial model for your business plan and business loan application. Through
your business loan application, you will be required to have the following:
- Profit and
Loss Statement for your Web Development Business
- Cash Flow
Analysis for the Web Development Business
- Balance Sheet
for the Web Development
- Business Loan
Please see images below