Need A Small Business Loan? Get A Plan

Apr 1 2014, 4:33pm CDT | by

Not too long ago I attended a meeting of one of the local tech networking groups to see a presentation from one of my acquaintances at the New York Times. Part of his presentation included time for some of the local businesses to share their elevator pitch so he could help them understand what editors are looking for when they pitch their story to the media.

I was surprised at how many of them were unable to clearly articulate what their companies did.

With this in mind, I couldn’t help but think about how it seems whenever I talk to lenders about small business lending, they invariably comment about the same thing. When small business owners can’t successfully articulate what it is they do, what their vision is, and how the loan they’re looking for will help them achieve their objectives, it forces the lender to look strictly at the numbers. A small business owner who wants lenders to look at something more than the balance sheet, needs to give them a reason to look for more.

Over the years I’ve learned an exercise that will help almost any business owner fine tune how he or she describes their business. Like everything else worthwhile, it takes some effort—but it will pay off in the end.

It All Starts With the Page

Start with a fresh Word doc and describe what your business does. Although you’ll want to confine it to a single page, describe your vision, the market problem you solve, and how you solve it.

Don’t be afraid to include some detail. This is a document that might never be shared with your customers, but it could. Nevertheless, it’s a document that you’ll refer to time and again. Before you call it complete, take the time to review it to make sure you’ve captured everything. Whether or not you share this document with your customers, don’t take shortcuts. Make sure it is as well-written as possible and is something you won’t be ashamed if a customer or investor were to see it.

The Next Step—The Paragraph

Once the page is created, the next step is to coalesce the content on the page down to a paragraph of 200-300 words. This will likely be more challenging. Mark Twain famously once said, “I didn’t have time to write a short letter, so I wrote a long one instead.”

To create the paragraph, you’ll likely be making more decisions about what to leave out than what needs to be included. You’ll want to keep the gems—those things that make your small business special. Although you may have thought about these things, this part of the exercise compels you to articulate in a bite-sized chunk exactly what you do.

You’ll find numerous opportunities to use the paragraph in marketing materials, trade show programs, award nominations, content on your website (you’ll also be able to pull things from your page description too), and other promotional literature just to name a few of the possibilities. In my opinion, these are some of the most important words you’ll ever write. Don’t be discouraged if it’s difficult (it likely will be).

The Last Step—The Sentence

You’ll likely find this to be the most difficult step. If writing the paragraph helped you condense what you do down to the core, writing the sentence will likely feel like you’re taking a butcher’s knife to it, but you should really think of it as a scalpel.

The sentence will help you pare your description down to the very essence of your value proposition. This is what some people call the elevator pitch. If someone asks you what you do standing in an elevator, how would you answer them?

The paragraph will likely be part of the documents you use to demonstrate to the lender what you do, but this is what you’ll otherwise use. It’s also handy for networking meetings, Chamber of Commerce luncheons, and in your sales literature. Between the paragraph and the sentence, you’ll have the two documents you’ll use the most when putting together sales materials, writing a press release, creating marketing materials, or otherwise describing what you do.

Although they take a lot of work to put together, don’t expect that you’ll be able to do it once and never revisit them. They should be considered living documents you’d revisit on a regular basis to make sure they are still relevant. At least once a year—if not more frequently—pull them out and make sure they accurately articulate what you do and clearly identify the value your company brings to the market.

Although the page, the paragraph, and the sentence aren’t directly related to your finances or your credit score, they are critical documents that will help you articulate what your business does within the context of a business plan. Small business owners who want to give lenders a reason to look deeper than the numbers must master the ability to succinctly articulate exactly what they do.

Source: Forbes Business

 
 

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