Of course, Elise had thought about financing for her store. In some ways, money is all she had thought about for days. No solution had yet presented itself. Elise lacked the resources to even begin paying for the store herself. Her coffee shop job was not going to come close and, at nineteen, Elise had no savings. She did not even have any assets to speak of: one battered car (so precarious in function that she never drove it when a convenient friend or bus route would suffice) and a closet overflowing with used and re-constituted clothes. She laid these facts out to her mentor, Dave, honestly fearing that her entrepreneurial dreams were about to be dashed.
“What am I going to do?” Elise pleaded, biting her lip in honest distress.
“I am betting you don’t have any rich relatives,” Dave muses, already knowing the answer.
“My dad is mortgaged to his eyeballs. My aunt rents her house. Grandma lives with dad and I….”
“‘Dad and me’,” Dave corrects, nearly unconsciously. “How about neighbors? Family friends? Even teachers or professors with that ‘mentor’ attitude?”
Elise frowns, mulling over her family’s acquaintances. At one point she gets a mischievous twinkle in her eye and open her mouth to speak.
“Don’t even think about it, kiddo. It’s not that I don’t believe in you, but I just put all my capital and all my credit in to infrastructure for my new web-storefront. I am broke.”
Elise closes her mouth into a pointed pout, but is not, in fact, surprised.
“Look, we can get to who, later. No one besides family will give you a penny until you have a business plan, anyway. We need to put one together.”
Elise had heard quite a bit about business plans in her weeks of state and city sponsored education. They sounded cyclopean, obscure, and just a little scary. She told Dave as much.
“Nonsense. You wrote half of your business plan that first night, laying here on my carpet. A business plan is just your notes, organized into an outline, with financial projections tacked on the end.”
“So…I have to have a business plan before I try to raise any money?”
“A business plan is you trying to raise money. You don’t have a partner, nor are you likely to have employees for a while. That means that the business plan is not for you. Its only function is to convince prospective investors to give you money. Don’t think of it as a plan for your business, think of it as the first step in raising money. It’s your sales pitch, your way of selling your company.”
“How do I write one?”
“I wrote mine in the SBA library. I literally walked into the library in the SBA office, pulled down a half a dozen books entitled thing like “How to Write a Business Plan,” and “Fifty Sample Business Plans” and faked it. I’ll bet the local public library has a similar selection. The only tough part is the financial projections in the back, and we will do those together. The big question is: how much money do you need? Do you even know? If you don’t, it’s going to be awfully hard to get any.”
“Ok,” conceded with a shrug, “How much money do I need?”
“Well, pull out those notebooks we filled up a few weeks ago and let’s go over it.”
And they did.
Next week: how to turn “just notes” into a business plan. And: the dreaded “financials”.
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