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Financing Your Small Business – Steps to Success – Maine SBDC

Financing Your Small Business – Steps to Success – Maine SBDC


Business Planning, Financing, Marketing, and
Financial Analysis. What entrepreneurs need to know to start or
grow their business. This is Steps to Success, from the Maine Small
Business Development Centers. 2008 was a tough year for Mike and Nichole
Brasslett of Quality Saw & Supplies in West Enfield, and for their four employees. Sawmills in Maine, New Hampshire, and Vermont
were closing. Sales were down, bills were piling up, and
there wasn’t enough cash. We knew we had to reinvent ourselves, but
we just didn’t know how to do it. Mike’s banker sent him to me, and working
together, here’s what we did. Mike and Nichole needed to transform their
business from a service shop to a service and sales shop. Plus, they needed to learn to sell more effectively,
draw up proper financial statements, and manage employees, so they could get financial backing. I showed them that the lenders are concerned
with four C’s. Cash in. How much cash are you investing? It’s usually 10% to 20% that lenders find
necessary. Cash Out. Will you be making enough cash to pay back
the bank? Collateral. What do you own that the bank could take if
you don’t pay the loan? Your Credit Score. A rating of how well you’ve paid past bills,
and how likely you are to repay future bills. Next, we went to work on Mike’s business plan,
the blueprint of your business that shows the bank how they’ll be repaid. Your business plan explains exactly what your
business does, projects sales, expenses, and cash flow. It specifies how you determined your sales
estimates and precisely how you’ll execute your sale and marketing plan. Convincing the banker you can obtain your
projected sales is critical, because without sales, lenders can’t be paid. Then, we helped guide Mike on just how much
money he wanted to borrow. Preparing for the lender. How much money he wanted to borrow, and a
detailed list of what he’d be using it for. Finally, we impressed on Mike and Nichole,
they needed to be prepared. Lenders want to see that you have everything
ready in advance. You don’t want to continue returning with
changes and revisions to you business plan. You need to have everything prepared for that
critical first impression. So what happened when Mike and Nichole went
to the bank? The lender was so impressed with their progress,
that the lender not only supplied the working capital they needed, and the money for inventory,
but the lender also gave them a loan to buy the building that they had been leasing. And that’s not all. We continued working with Mike and Nichole
to help them plan and secure financing. They opened two additional businesses, and the Brassletts have received over a million dollars in finance. So today, we own 3 businesses. We’ve saved 6 jobs, and we’ve created 13 more. Every day, we’re excited to help business
owners and entrepreneurs plan, prepare, and achieve their goals. Maine Small Business Development Centers, helping small businesses like yours succeed. Professional. Confidential. Free. Online at www.MaineSBDC.org

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