ChApter 10 | SELLING YOUR BUSINESS PLAN | 177
Here are a few things to emphasize
when talking to bankers:
• Your other bank business. If you don’t
already patronize the bank in question,
make sure the lending officer knows
you plan to do so if you get the loan.
• Security. Remember that the banker
wants to lend money, not invest it. Tell
the banker how sure he is to get his
money back with interest. If you can
offer collateral for the loan, emphasize
it. (See the discussion of bank loans in
Chapter 4.)
• Be realistic. Your banker wants to be
assured about your knowledge and
enthusiasm about your business. But
he also needs to know that you have
your feet on the ground. If you puff
too hard, the banker is almost sure to
be turned off.
• Be persistent. There are lots of
banks. People who work with small
businesses in your area can probably
suggest the banks that are most likely
to lend to your type of business. If you
are turned down by one bank, make
sure you understand why you were
rejected. If it’s realistic, change the
items in your proposal that caused this
rejection. Pay extra attention to aspects
of your plan that continue to receive
negative comments.Equity Investors
(Venture Capitalists)
I use the term “venture capitalist” a bit
loosely to include people who invest
relatively small amounts of equity financing.
These may be relatives, acquaintances, or
anyone else with money to invest in what
looks to be a profitable business.
As you should know from reading
the discussion in Chapter 4, the primary
distinction between a venture capitalist
and a lender involves risk, security, and
amount of return. The venture capitalist
is traditionally willing to take more risk
in exchange for a chance to make a large
profit. Here are some suggestions:
• Prepare a summary of what you are
offering. In addition to the business
plan you have already designed, you
need to tell the equity investor both
what you are offering (partnership,
limited partnership, shares in a
corporation, etc.) and what the
projected return is.
• Do not promise a certain return.
Especially if your potential investor
is unsophisticated, emphasize in
writing that there is always some risk
associated with a high potential return.
Make certain the investor knows your
projections are just that—projections.
In short, never guarantee a return that
you may not be able to deliver. The
person putting up the money should