Business plan

[Aaron Ochsner 14]

I was wondering if anyone has a business plan that has been used to successfully aquire finances with? If so, would you be willing to share it with me? Right now we have a nearly completed first draft, and I would like to compare ours with someone else's who again, has had success in closing on a business loan with it. Luckily I do have a 99% go ahead because my friend is our loan officer, but we really want to make sure our bases are covered completely, and professionally. We have used parts of the biz plan at the Delco website as a basis for building ours(Thanks Delco!!). Again I am willing to share ours with anyone who shares theirs.

Happy New Year,

aarOn

[Paul B. 523]

I would recommend that you have your loan officer friend take a look at YOUR business plan before you submit it for the loan. He/she should be able to guide you as to what their financial institution uses as the most critical criteria or at least be able to tell you where you may have weaknesses.

I say this because not all financial institutions are the same - some will approve you, where others may not approve you with the same plan. Your friend should have a lot of insight so try to use it to your advantage.

P.S.: It helps if you have good credit history and have also used the same institution for car loans and other personal and business finances.

[Aaron Ochsner 14]

Yes, we have a lunch meeting with our loan officer on Friday to review the plan. We are going to have him look at it, and see if there is anything he wants us to change before going into the office for the real deal. He is a specialty corporate loan officer, and has essentially pre-approved us. I have zero credit....nada....zip.....zilch....He knows this already, and we have had long discussions in the past about his ability to approve and close a loan for us. My question about looking at someone else's bplan was purely out of curiosity and comparison, as far as depth, and detail. We would never ask a bank for a loan because the interest rates are WAY too high. The loan we are going after, is a fixed rate(2.85%) over 10 years, with no penalty of early repayment, and SBA guaranteed. Anyways, thanks for the response Big Papa :) Hope the new year treats you well.

Cheers,

Aaron

:yoda:

[Brian Keating 14]

With that kind of rate is it a home equity loan? That would be another way to go and you can write off the interest on your taxes. That is if you get denied for the business loan and own a home.

[Scott Stone 604]

You can write a business loan off on your taxes, as well. In fact, if you are incorporated, s-corp, etc. You can write anything off that is related to your business off of your taxes.

Scott Stone

[Rick G 14]

Have you given thought to starting small, or part time, or rent the equipment? I tend to think old school when it comes to dept. My personal feeling is that there are business that definitely need large capital to start, a dry cleaners, lube garage, most retail shops etc. I personally don’t feel that someone has to put the cart before the horse to get a pressure cleaning business going. Could someone go drop $20, 30, 40 grand or more to start a cleaning business? Sure, give me the money and Ill have it spent in an hour but does that make me a legit business? No. Think carefully before you leverage yourself. Remember 90% don’t make it but that same 90% still owes the money they borrowed! Be creative. Utilize your friends, family, rentals, put a little aside or on you credit card (Pay that off immediately) make a deal with someone that needs your services to invest in you and you can pay them back in ‘sweat equity’. After being in pressure cleaning now for four years I would NEVER recommend to anyone to take a loan to get into this. Don’t let ego or pride tell you that you must have the biggest and best to go make money. I still loose bids to guys with beat up old trucks with ‘big box’ washers. Others will disagree but that what makes this board great. You can get five different opinions and use them to make your own.

Good luck. Let me know if I can help you.

P.S. If you don’t already know how, learn to sell before you do anything.

Rick G

[Aaron Ochsner 14]

Hi Rick, I most certainly agree that noone should drop mad amounts of money as a start-up business. This will be my second season in business, and the reality is I need more capital to function on the right level. I invested minimal last season, and had a great return. I don't really do powerwashing persay, but it is a part of the wood care my company and I provide. We might get into doing house washing, and flat surface work if the demand is there, but as of now the focus is wood care, and exterior painting. Even as I say this I laugh because right now I am picking up interior painting jobs here and there, which is nice, but not my focus. I see a great need to expand the size of my business, which is why we are opting for a loan. If I wanted to stay a 2 man crew I wouldn't need much more, but I will employing roughly 10 people this season, and 1 home depot powerwasher doesn't cut the mustard for the operation. I appreciate all the replies everyone. Happy New Year~~!!!!!

Aaron

:yoda:

[newlook 265]

Aaron -

I agree with Rick ~ try to get as much equipment that you need to promote/expand your business with a "frugal" perspective. Going from 2 to 10 employees is a big jump and trust that you researched the "negative" impact your company will have if you were to lose 25%, 35% or 45% of its contracts. Nobody likes to lose contracts but it happens in our business for one reason or another. The loan officer may inquire what your contigency plan would be if you were to loose ~ say 27% of your business! Be ready with a direct and thought out response (reduction in workforce, increased marketing ideas, expanded services such as cleaning houses, flat work, fleet wash, govt. contracts and etc.)

Some people may disagree, but a "complete" business plan should include a contigency plan that addresses what you would do if your company were ever faced with serious cuts in your contracts. Loans are great when everything is going great but they can be a liability when your services take a "dip". The loan officer wants to feel comfortable financing you ~ even during the "bad times". Show him/her that you care enough about your business that you considered all angles. Good luck

Quote - "You can't think your way into good living...you need to live your way into good thinking"

[Mike Cappa 14]

Aaron, there is a market. You just have to know where to look.

[James 625]

AAron, the amont of time it takes to wash a house for painting prep Doesn't justify a large lay out of cash. You can prep 3 houses in 2 days with one machine and have your guys their for 2 weeks painting . The painter's I know that run two crews have a small investment in pressure cleaners . The big issue is what direction to go in. Now you have one year behind you. For the next 5 years that will change with what kind of work you do and what kind of reputation you gain.

Sounds like you need a line of credit to pay monthly bills and payroll. Until you get paid ?

[Aaron Ochsner 14]

Hi everyone,

Thanks for all your replies. :p Certainly I am trying to be as frugal as possible with equipment purchases, and vehicle purchases, but I still want quality. Our contingency plan is the duration of the loan, and the minimal amount our payment each month is. We are looking to have the loan paid off within 2 years, but have alotted ourselves 10 years just in case. Our monthly payments will be under $900.00(1-2 deck jobs). Our business plan is solely to gain access to financing for upgrades in equipment, 2 mobile offices, and product inventory. We are privately labeling sealer this year which requires us to buy a certain amount up front. We are considering this with chemicals as well. By doing this we also need our own product brochures, with color charts and so on, which costs more than I like to admit.

Jim there is the possibility that we will have to dip into our cash flow for payroll, but we don't see this as a recurring situation. I suppose last year I was lucky in the sense that I got paid right at the completion of every job, and paid my donkey cash(hee-haw). I know somewhere down the line some jag is going to give me guff about paying me, and I may have to sue him. Hopefully that won't be the case, and hopefully our sales will have generated enough money to cover payroll in that case. The loan we are taking out is well under 6 digits.,We already have 4 commercial accounts interested in our services just from a phone call to each. They are all cedar shake roof/siding and 2 are roughly 35,000 sq ft , another is about 50,000, and one is over 100,000sq ft(huge complex). Per say we get one of those jobs, we have already covered our loan payments for the year. Then if said client accepts our maintenace program offer, we will generate another 2/3 the cost in 5 years. We are luckily situated and surrounded by the right demographic to support our higher prices. In a nutshell, we need 45 cedar roof jobs to pay back our loan, or 115 decks, or 20-25 larger residential painting jobs. Over ten years , I don't think it's out of line to think we'll get that amount of work.

Cheers,

Aaron

:yoda: