by Neil Mathieson, CPA, FICB
In a former life I was a banker with the Bank of Montreal for over seven years. Entrepreneurs would come in looking for seed money to start a new business, but many of them were woefully prepared.
If you feel the itch to go into business on your own here, are some helpful tips.
- Start with the plan. A short summary of who you are, experience, nature of the business you want to start and the structure you envision.
- Try to keep it to one page.
- Discuss your market and what you know about your competitors. Where would you fit in?
- Discuss your service or product lines you intend to market. What do you see as your competitive advantage?
- Will you require copyrights or trademarks?
- Have you checked out it they are available?
- Necessary planning includes your business structure, IT and sales strategies.
- Talk to your accounting connection and work up a three year projection, which will include an income statement and balance sheet at least quarterly, if not monthly.
It is in this area that financial ratios, which must be realistic and achievable, should be drawn or capable to be calculated by the lender.
Such things as the Current Ratio, Net profit coverage, and Debt Service coverage must be understood by you in order to discuss with the lender.
Finally at the beginning, my experience is most lenders want collateral security, assurance that funds will be available if the business does not perform as you project.
A complete, well thought out business plan will go a long way toward success.
As the old adage states, If you fail to plan, you are planning to fail.
If you still want to go ahead, jot down your minimum thoughts and ideas, contact me and we will prepare the necessary plan to open the door to your new entrepreneurial life.
Neil Mathieson, CPA, FICB