Q Is it true that 50 percent of new businesses fail in
the first two years?
A According to the Small Business Administration, 50
percent of small businesses fail in the first year and 75 percent
fail in the first four or five years.
Q Why do they fail?
A They’re under capitalized. They didn’t do a business
plan. Without doing a business plan, you don’t know how much money
you actually need to start a business. If they turn a profit in
month three, it’s not a big deal. But if its month nine or month 12
when they first start showing a profit, the need a lot of working
capital, which they may not have budgeted for. They usually need
more money than they think they do.
Q You’ve helped businesses get loans from $20,000 to $1.3
million. How many have you worked with?
A In the last two years, about three dozen. About 50
percent are startups. Twenty-five percent are expansions, like
restaurants opening second location, and 25 percent are businesses
that need a refinance-type debt consolidation loan. In some cases,
we don’t need to do the full-blown business plan.
Q What percentage of your clients have gone on to get
A All of them so far.
Q Has everyone stayed in business?
A There is one folding up shop.
Q What percentage of people come in for a consultation and
realize their idea isn’t going to work?
A Probably 25 percent of the people I meet with don’t end
up doing what they came to see me about or they need more time to
save some more money.
Q Do a lot of people come in with rose-colored glasses?
A It’s about 50/50. Some people are very well prepared and
they just need help putting the business plan in a format that the
banks like to see it in.
Q Are you charging by the hour or a flat fee?
A By the hour, but our first meeting is free. For a
full-blown business plan, on average it takes about 50 to 60 hours
of our time. I bill at $120 an hour and Amy charges $80 an hour. If
clients qualify for the early planning grant through the Wisconsin
Department of Commerce, it covers 75 percent, up to $3,000.
Q Have you said to people, “I can’t help you”?
A Yeah. There’s just no way I can get them a loan if their
personal credit is so bad or they have no collateral to support it.
I’m not going to waste their time. Probably 25 percent of the people
I meet with actually become clients.
Q Is money loosening up?
A In the last two years it’s been rather tight.
Unfortunately, banks are pretty conservative and they’re the last
ones to come around. The economy is starting to loosen up a little,
but it’s gradual. Everyone’s still a little gun shy. It’s not like
the dot-com days where people were throwing money at every Internet
business. That won’t happen again.
Q How many people do what you do in the Fox Cities?
A Not a lot. Pretty much every accounting firm has the
ability to do what I do, but they just don’t. We’ve averaged two
business plans a month, where most accounting firms might do two in
a year. They tend to not like them because they’re very time
consuming. My specialties are knowing how to put business plans in a
format that lenders like to see and knowing what deals I can take in
the quickest amount of time. All lenders are different. Nobody likes
bars or restaurants. They have a much higher rate of failure than
other business. Probably 80 percent in the first two years.
Q How are you different from SCORE?
A Places like SCORE, the Small Business Development
Center, Urban Hope and E-seed are very good, but they don’t do what
we do. We actually put together the business plan, the projections
and the write up.
Q What are the main mistakes people make in writing a
A They don’t look at the cash flow.
Q Any other cardinal sins?
A Underestimating how difficult it is to generate sales.
What’s key is that you’re conservative with projections. You’re not
saying that first month you’re going to have $20,000 worth of sales
for a small gift shop in downtown Kaukauna. That’s not realistic. It
is realistic that you’ll sell $1,000.
Q Are you tired of people saying, “Show me the money?”
A No. I love helping people get money for their
businesses. The lending process is complicated and overwhelming at
first. I take over that overwhelmingness and make it easy for them.