Category Archives: financing

This article is from Chapter 5 of Uncle Ralph's, "Don’t Do It the Hard Way”.  Read the book.

That was easy, let’s do it again!

board-mtgWe all tried hard to arrive early for the e2eForum meetings because it gave us time to chat informally with the other members and exchange comments on our businesses and other issues that were not on the day’s agenda.

Unfortunately, an accident on the expressway this morning had kept me from arriving early enough to review the agenda with Stan, who was chairing the meeting this week.

The discussion had already started and this was on the flipchart.

Discussion points: Serial Entrepreneurship

  • Another Start-up?
  • Or the next Screw- up?

What I heard was Paul was talking about the gourmet hamburger franchise he was considering investing in, “It looks like a safe investment and my son has some experience in the restaurant business. I’ve got the initial $60,000 and bank financing is easy because they love franchises.”

“Sorry, Paul,” said Dave, “but experience flipping burgers doesn’t mean your son knows how to run a burger joint. Even if the franchisor delivers all the management tools and support, do you really want to manage minimum wage staff and deal with unhappy customers complaining that your burgers suck? Your experience is all about managing highly qualified machinists and selling precision parts to multinational manufacturing businesses.”

“Yes, but I built a successful business in that industry, and this should be much easier. I have the time and the money and I need a new challenge to keep me interested. I don’t want to spend every day in retirement watching my money ride the stock market roller coaster.”

“It sounds like your entrepreneurial juices are percolating, Paul,” I said, “Maybe you should go back to the start-up criteria we talked about a few months ago. Look for an opportunity that really leverages your unique skills, knowledge, experience and contacts. Isn’t that what worked for you the first time?”

“True enough. All I bring to this business is a long history of eating hamburgers!” Paul was laughing at himself and it looked like he would leave his money in the bank, for now.

I was remembering what I have said to other successful businessmen: Making money doesn’t make you smart.What I said out loud was, “Before you throw your energy and money into a new venture, ask yourself a few important questions.”

“I hear another checklist coming!” chirped Larry.

“Thanks Larry, now I’ll have to give it a name. Let’s call it the Encore Performance Checklist. If you are determined to boast that you are a serial entrepreneur, not just a successful entrepreneur; then ask yourself these questions before you get started on your next venture:

  • What was it that made you succeed in your first business?
  • Did you build your business on your unique management ability, a new product idea, a preferred customer or supplier relationship? Which of these will apply to the new business?
  • What mistakes have you avoided in the past? Are you about to make them now? What new risks are you encountering for the first time?
  • Is now a good time to start something new? Are there no challenges left in your current business?
  • How much will a new initiative impact your current business and the demands on your time and resources?
  • Is your past success really transferable to the new business?”

“Many successful entrepreneurs have made the mistake of jumping into a new venture – merger, acquisition, restaurant franchise or real estate investment – and blown away the equity value they built in their original business. It’s another costly mistake to avoid.”

Brian shared his conclusion with us, “I’m now convinced that the next venture is something to set aside until I’m at the exit stage like Paul. When my current business is running itself and I have the time and money to very carefully select the next opportunity. I just don’t want to wait until I’m that old, sorry Paul. I’m thinking I’ll be ready for the next one at age 35.”

Stan added, “Too late for me, I’m already 39, but I’d like to accelerate the plan to get to that stage soon too. Then I can start the next one before I get bored and screw up the one I’ve got.”

I said, “I have seen that happen. Entrepreneurs who started to dabble in something more exciting, thinking their business was on cruise control and it headed into a crash landing instead.”

“So let’s avoid the unhappy ending of exit by default. Put it on the agenda for a future meeting – Preparing for Exit.”

We all agreed that was a good topic for a future meeting and concluded the e2eForum with our regular Roundtable update from each of the members before heading out for the day.

Your Uncle Ralph, Del Chatterson

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Click Here to check out Uncle Ralph’s books, "Don't Do It the Hard Way" and "The Complete Do-It-Yourself Guide to Business Plans" Both are available online or at your favourite bookstore in hard cover, paperback or e-book.

Question-Exec-SummaryThis Real Life Story is an extract from Uncle Ralph's, "The Complete Do-It-Yourself Guide to Business Plans".  Read the book.

Real Life Story: “Things not to say out loud.”

When you are finally sitting down at the bank and reviewing your impressive and irresistible business plan, please be careful what you say. These people are not your new best friends, regardless of how friendly and helpful they all seem.

Remember: Their interest is to avoid any risk of losing their funds and to make money on you. And avoiding risk is more important than chasing a new account.
Your objective is to build their confidence in the plan and your ability to deliver. In my experience, some clients will blurt out admissions that do not help their cause with bankers, investors or potential strategic partners.
Some real life examples:
“We don’t have any more money to put into the business, our mortgage and personal loans are already at the maximum.”
“I don’t really want to do this, but I lost my job and had a nervous breakdown. So it’s hard to find anything else.”
“The prototype is not yet working, but I’m sure we’ll get our first order soon.”
“This is obviously a multi-billion dollar market, so we only need 0.002 percent market share to meet our sales projections. And the product sells itself.”
“I don’t know where those numbers came from.”
Please try to be more discrete when you’re forced to admit some of the negatives in your plan.  (However, if any of those admissions apply to you, then you are NOT ready to launch a business or request financing. Come up with better answers first.)
Honesty and full disclosure are good, but a confession of all your flaws is not required.
Whoever is listening to your pitch already knows that it is mostly fiction, that it will never go according to plan, and that they have a responsibility to protect their interests by asking the right questions and negotiating a good deal.
You should be equally professional about presenting your plan and defending your interests.
(Note: In all these Real life Stories, the actual names and business details have not been disclosed.)

Your Uncle Ralph, Del Chatterson

Read more at: Learning Entrepreneurship Blogs. 

Join our mailing list for more ideas, information and inspiration for entrepreneurs.

Click Here to check out Uncle Ralph’s books, "Don't Do It the Hard Way" and "The Complete Do-It-Yourself Guide to Business Plans" Both are available online or at your favourite bookstore in hard cover, paperback or e-book.




Real Life Story: “The answer is still No

Saying-noThis is my true story and I’m sorry, it’s not very encouraging. In spite of everything I have just said about preparing a great Business Plan, you still may not get the financing you want.

In the early 2000’s during the infamous Dotcom bubble, my partner and I decided to launch an e-commerce venture that was essentially a virtual distribution business for computer products. We consolidated product information from various sources in a database and then developed an online catalogue application for computer retailers with all the products showing comparative pricing available from alternative sources. We also offered the retailers a customized storefront where they could present the same products to their customers at marked-up prices.

It may sound pretty boring now, but this was in the early days of e-commerce and online shopping. We got rave reviews from the computer distributors and retailers, “Wow! How did you do that?” Lots of users and sponsors signed up. But it was going to be costly to develop and support and we were not generating much revenue – so it was time to prepare a Business Plan and get the million dollar financing we needed to conquer the world.

We did the research and prepared the documents and financial projections to support a multi-million dollar valuation and started knocking on doors. Again we got rave reviews. “Great product, great Business Plan, etc., etc.”

Everything looked good for us: two experienced entrepreneurs with prior business success in the same industry; a proven business model with early customers in place; a realistic plan to build and grow the business; and reasonable projections to deliver a very high return on investment.

But the answer was still – “NO!”

Everyone had a different reason not to invest in us, but they all concluded with “Good luck and goodbye”. So we finally concluded ourselves that it was time to let it go and cut our losses. Like many other Dotcoms we went back to pursuing other career and business options.

It may happen to you. Don’t be discouraged.

It’s just time to listen to the lessons learned and come up with a new plan. You may not have to change your goals, just the route for getting there.

(Note: In all these Real life Stories, the names and business details have been changed to protect the actual subjects of each story.)

Your Uncle Ralph, Del Chatterson

Read more at: Learning Entrepreneurship Blogs


Join our mailing list for more ideas, information and inspiration for entrepreneurs.

Click Here to check out Uncle Ralph’s books, "Don't Do It the Hard Way" and "The Complete Do-It-Yourself Guide to Business Plans" Both are available online or at your favourite bookstore in hard cover, paperback or e-book.


Finally we're writing the all important Executive Summary to the Business Plan. And, of course, it has to be concise.

(Most advice also says to write it last, but I think it's a good starting point as an outline of all the points you will cover in more detail - so I recommend that you do a draft Executive Summary first.)

But the final objective is prepare a brief (1 - 3 page) summary of the key points in your Business Plan, which might be a 20-page document or more, plus all the supporting data in appendices.

An excellent guide to the Executive Summary is available at Garage Technology Ventures ( They emphasize that aside from being concise and still answering all the important questions the Executive Summary is primarily a selling tool for your Business Plan. It allows potential lenders, investors or strategic partners to quickly decide if they are interested in participating in your plan.
And even more important than the executive summary is that one sentence or paragraph in your cover letter or e-mail (or elevator pitch) that convinces them you may be onto something that could be a viable business.

The most common reason for preparing a business plan is because the bank asked for one before evaluating a request for financing.

We've already discussed that a well prepared business plan document may still not be enough when it's finally delivered. Next comes the negotiating phase. The lesson that was recently confirmed was not to be deterred by questions and requests for more information, but do not be persuaded to go back and revise the Business Plan document. That will only cause the bankers to recycle through the process of internal review, look for the answers and revisions and probably come up with more questions. It may be a good stalling strategy to avoid the "no", but the entrepreneur wants to move forward to a clear "yes", or "no".

So we agreed to respond to the specific questions in a short follow-up note using the approach of "Thank you for reviewing our plan. Here are the answers to your questions and we now look forward to a favourable reply to our request for funds". It worked.

And I got that very pleasant consulting feedback of: "Hey Del, they really liked the Business Plan and our answers to their questions. We're getting the financing!"

A good lesson in effective use of the Business Plan as a negotiating tool. I hope it works for you.