February 9, 2015

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Forty under 40

Each year, Utah Business magazine honors 40 of the state’s most tale...Read More

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Let’s Put Our Money Where Our Mouths Are


Blueprint for Success

A Strong Business Plan Can Help Secure Early Funding

By John Coon

February 9, 2015

Generating a million-dollar business idea doesn’t mean much without the right blueprint. That’s why creating a strong business plan is a vital first step if you want to start and grow your own business. But what do you need to do to make your business plan look more attractive to financial institutions and secure a loan or funding? Learn some tips from the experts here:

Be Realistic

A solid business plan starts with grounding your plan in realistic numbers and projections.

“There’s a great line I love: ‘Any fool can plan, but it takes a genius to go from crisis to crisis,’” says Mike Pazzi, executive vice president and regional business banking manager at Wells Fargo. “It shows they are a planner. They’ve thought something through and they’ve thought it through in a way that says, ‘I know what I’m making, I know what kind of service I’m providing, I know what freight I want to charge and I know that if I have this infrastructure, I’m going to make money.’”

A business owner should count on showing they are comfortable with numbers in their business plan. When loan officers from a bank or credit union examine the plan, they want to see that the business owner has thought through a multitude of scenarios to arrive at their budget projections.

Have a Few Back-up Plans

Contingency plans are an essential element. Business owners need to tell the financial institution how they will anticipate situations like changes or interruptions in the revenue or expenses that may be volatile to price increases. Their revenue projections and anticipated expenses have to match up with economic realities.

In other words, shooting from the hip with numbers never works. That’s a hard lesson some new business owners don’t learn until it’s too late. “It just takes longer than we think,” says Blake Weathers, vice president of business services at America First Credit Union. “It’s a long-term prospect in the life cycle of a business. Those who get enough working capital to begin with, and have plans that are realistic and meet common sense, do better than those who don’t have a plan.”

Understand the Numbers

Weathers says understanding how the numbers relate to what you are looking for in the future is critical in a business plan. You need to know where you will use cash, understand where the capital will go and how it will get returned. In the end it helps a business owner determine where their true cash needs are and where capital is best applied once they obtain it.

“If you are talking about somebody who’s just starting a business, what they will want to have is a business plan that’s realistic,” Weathers says. “Not pie in the sky, but a realistic business plan—especially during the first few start-up months. As much as we would all like to take our product or services where we want to go, it really does take a little while to get the program up and running.”

Seek Help from Professionals

Business owners who are not experienced in financial affairs should get financial professionals to take a look at what’s in their business plan. A financial expert like a CPA can help them understand what they need to do to set and meet realistic financial goals for their business.

It can be helpful for an entrepreneur to get someone to challenge their plan and offer feedback that will lay groundwork for financial success. Many businesses fail within the first year or two because the owner does not understand the numbers enough to correctly anticipate what needs will arise.

Networking with the right financial professionals can help reduce the risk of failure down the road. A small business owner will be better prepared with the right answers if they probe all of the important financial questions ahead of time.

“Most of the people in the small business area are classic entrepreneurs,” Pazzi says. “They’re people that have a vision. They see a need they want to fill. They’re idea people. Probably the best thing they can do for themselves is get some professional help on the financial side.”

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