It is a well known fact that many new businesses fail within the first 18 months, and after six years, struggle because of failure of family members wanting to continue the enterprise.

Evidence has shown many struggles with ego and pride. But the worst offender is where there’s no defined written business plan in place.

The entrepreneur says, I’ve got this handled, I know what I’m doing, I’ve done this for 20 years, don’t tell me what to do. This attitude comes to a screeching halt when they begin investigating acquiring funding for the business. The first words out of the banker’s mouth are; may I see your business plan. But then the dialogue starts, but I’m good for my money, don’t you trust me, we’ve done business together for years. That used to work in smaller communities especially in agriculture areas, but not anymore.

There is a large disconnect between you and those actually reviewing and creating the loan documents. In this day of long distance technology you never see the processor. You plan is your story book, brief and to the point. This is on purpose; they want the numbers to tell the story and not emotionalism. You can be as passionate as you want about your business and that’s okay, but numbers don’t lie. They want to know what risks are involved, and they want to understand it. What have you done with your plan to protect against loss? They want to know the cold hard facts. What is your experience in running a business, what is your education level, and your resume of experience. They want to know your financial stability and how you pay your bills. The most of all they want to know what your collateral for the loan is, can you pay it back.

The collateral damage that can happen when a business fails is astounding. Bankruptcy, unpaid bills, employee’s lawsuits. The list gets quite lengthy, all starting from a simple problem of no plan. Now we have to admit that even with some businesses with a plan there is some failure but they are very rare.

In short: Everything that is successful starts with a plan.


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