by Bob Koncerak
A well-known mattress manufacturer has long heralded that an educated consumer is their best customer. This motto rings true on several levels: knowing what you want is not the same as knowing how to get it – especially when it comes to borrowing money for your business.
Entrepreneurs by nature are sales-oriented. Their expertise lies in pursuing business and then doggedly pursuing opportunities to a close. After all, the number one rule of business is to get the money, right? Well, when it comes to business financing, getting to number one lies in knowing how organize, present and project your business to prospective lenders.
A business acquaintance of mine recently approached a bank I”ve been working with and inquired about an expansion loan.# He”s a commercial painter; the guy is a first-rate salesman and really understands his business.# He had kept his checking and payroll accounts at this bank for several years, and now that he had an opportunity to expand, he felt that he”d earned consideration as a borrowing customer.
My friend knew how much he wanted, how he planned to deploy the funds, and what the expected returns would be. Problem was, when it came to presenting financial statements and showing the bank projections, he was totally unequipped. After discussing his needs with the loan officer, he left the office frustrated – and intimidated. Sound familiar?
Despite his moxie as the owner of a 55-employee painting contractor, my friend had never learned how to build a forecast, read financial statements or even organize a basic business plan. He knew how to close a sale and collect cash.# He did it over and over, he was good at it – and that was it. As long as there was cash in his checking account, the business rolled along.# But what happens when a significant customer suddenly can”t pay? Or, when a terrific opportunity comes along that requires up-front cash? Hundreds of small business owners reading this article are beginning to squirm – because I”m describing their situation to an uncomfortable degree.