Loan program helps jumpstart new businesses
IN THE CITY
by Ken Arndt
Our community administers a fairly large, local revolving loan fund in the order of $1.87 million which has accrued over a period of 30 years since it has been in existence.
This loan program, called the “Presque Isle Development Funds” is not a stand-alone fund, but must be combined with other funding sources, including a local bank loan. I mention this loan program because the city believes and wants to encourage economic “growth from within” our community. Very often, city residents have the knowledge, interest, skills and capacity to start a new business, but don’t know where to turn for assistance.
From our perspective, the Business Plan is the place to start and this should be developed months prior to an entrepreneur’s requests for financing, as it needs to be accurate and convincing. Of particular note should be the prospect’s direct experience in the business proposed for development. Nothing is more important than having previous experience in a similar business!
The business plan must consist of a descriptive narrative of the proposed business and several financial worksheets. The real value of creating a business plan is not in having the finished product in hand; rather, the value lies in the process of researching and thinking about the proposed business in a systematic way. The very act of planning ahead helps a business owner to think things through more thoroughly, talk to others about their ideas and do more research particularly if they are not sure of the facts and then step back and look for outside advice from a trusted resource to evaluate their ideas even more critically. They may have what they think is a good idea, but it will be considered by their financing partners on whether or not the numbers work! Does it make economic sense?
The business plan writing takes time, but time spent now helps candidates avoid costly and perhaps disastrous mistakes later. Oftentimes, they will be asked to personally guarantee the debt and they will likely also be asked to place their personal home up as collateral in the financing process. This forces them to think about their business critically … it is serious business.
Fine tune the business plan proposal, so that it is an effective presentation to prospective investors or bankers. If this is why they are creating their plan, they should pay particular attention to their writing style. The prospect and their business plan will be judged by the quality and appearance of their work, as well as their proposed exciting ideas or business strategy.
The entire process will take weeks, if not month, to research and prepare a good business plan. Most of the time is spent in researching and re-thinking the candidate’s ideas and assumptions. But then, that’s the value of the process. So they should take the time to do the job properly. Those hours spent preparing the business plan will not be regretted.
Finally, business prospects should be sure to keep detailed notes on their information sources and on the assumptions underlying their financial data. There are excellent advisers out there to help get the process started, so those with business ideas should seek them out and get started!
Ken Arndt is Presque Isle’s director of planning and development. He can be reached at 760-2727 or via e-mail at karndt@presqueisleme.us.
