“It happens to business owners all the time,” says independent consultant Zev Siegl. “The owner of a growing $500,000 business sees an opportunity to quickly become a $1 million company, but doesn’t have the resources to get there.”
What usually happens next, according to Siegl, is the owner figures out how much money she’s going to need in order to double sales … and asks her bank for a loan.
Banks are usually interested, but the lender wants to see a formal business plan and a financial forecast so he can understand more about how the company’s rapid growth is going to work. Apparently bankers don’t believe in “Just Go for It”.
That sets up a Catch-22, says Siegl. “Most owners of $500,000 companies are up to their eyeballs in work and have no time to write a well-organized plan. And the three-year forecast is even more impossible. But all lenders insist on both.”
There are three ways that business owners deal with this.
a. Bite the bullet and do the plan and the forecast themselves.
b. Get help from SCORE or from the SBDC and then do it themselves.
c. Hire a consultant to write the plan and do the forecast.
Siegl knows his a, b and c. As an entrepreneur in the 70s, 80s and 90s, he wrote plans that became real-live start-up companies, including Peerless Pie, Starbucks Coffee and Quartermaine Coffee Roasters.
As a full-time advisor for the SBDC network 2004-2012, he worked with 500 entrepreneurs and 100 of these wrote plans and did financial forecasts under his guidance.
Today, Siegl has a part-time private practice helping established and start-up companies with plans and forecasts. Among them are a meat processor, a fashion retailer, an $800,000/year software company and an ice cream manufacturer.
Note: The plan and the forecast are even harder to do if the business wants to sell stock to investors. It’s usually necessary to follow the rules for a Regulation D private equity offering exemption as spelled out by the Securities and Exchange Commission and by the Washington State Department of Securities.
Siegl clearly sees that there are two sides that don’t understand each other. “Entrepreneurs are busy people with too much to deal with and planning is way, way down their to-do list. Lenders and investors don’t buy that. They want the plan and they want the forecast. Without ’em, there is no progress and no funding.”
Whether a business is seeking a loan from a bank or private lenders, Siegl can help the business owner keep on track with getting the documentation in order to secure funding. To contact Siegl, go to http://www.zevsiegl.com/contact-seattle-business-consultant-zev-siegl/.