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  • Writer's pictureDel Chatterson

A Business Plan is not enough

Asking for more information is often just another way of postponing the inevitable "no".

I've learned this is often the way potential investors or bankers manage to turn off the entrepreneur without ever being so direct as saying "No, I'm not interested." It would be even more helpful if they continued with "because ...". But they usually don't offer much explanation (or the real reason) and the entrepreneurs doesn't ask.

The first question investors and lenders do ask is, "Can I see your Business Plan?" And that often leads to work for me to help with the strategizing, documentation and financial analysis, but I always ask the entrepreneurs if the Business Plan is the only thing left to satisfy the lender or investor. Too often, after we have spent time and effort and cash to prepare a solid business plan that confirms the prospect of a viable business and the potential returns to investors and lenders, we then discover that the owners cannot put up the equity or the collateral that is required. We should have known that from the start.

It may come out during the planning process and the analysis of cash requirements, but it would be helpful to know the guidelines in advance. If you need $500,000 then the banker or investor probably wants your investment and guarantees to be a lot more than the $25,000 you've arranged.

All lenders and investors have a checklist. Be sure you are aware of the whole list and whether you can meet all the requirements, beyond a good Business Plan.

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