Re: Think like a bank
Ok, good suggestions. What I was thinking was that since most of the participants on this forum are new to business and just starting to learn, I'd try to get everyone thinking about what specific things make a business successful. I thought that I could do this by trying to get everyone to imagine the types of things that they might look for in a startup if someone asked them for the money. Obviously this didn't work. I'll respond to some of your ideas below.
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spex, you should probably clarify what sort of business you are talking about.
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Yeah, I considered that but intentionally decided not to specify. That is because I wanted the thread to have a wide appeal and I know that forum has a diverse range of business interests. But maybe you're right.
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Bank loans aren't really a reasonable way to fund a startup. They're just not in the business of investing in equity and startups don't make any sense as entities to force structured payments upon. You're going to severely limit the upside potential in almost all cases and you're going to increase the failure rate at the same time.
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yes yes, I understand all this. Of course you are right. BUT, the intention of the post was to get the forum thinking theoretically about what it would take to analyze businesses. The (intended) post is really only partly about financing businesses. It is also about analyzing your business ideas and plans objectively. The question is this: what would it take for you, EVAN, personally, to give me, a perfect stranger, money to start a business? What types of things would you look for to make you comfortable making a loan? So its not about banks or types of financing per se. At least, I didn't intend for it to be.
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A question like "what makes a good business plan" is basically impossible to answer. Well thought out and complete reasoning is about all I could say without having more details. It's like asking "what makes an idea good?"
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I totally disagree. IMO, there are a few very specific things that I'd look for in a BP, regardless of the type of business, to figure out if the person asking me for money 1) knows what they're talking about, 2) knows the industry they hope to enter, 3) has a realistic plan for making money, 4) has a realistic plan for growth, and 5) has the ability to make the biz work.
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Tien, do you really care what they write as a 10 year goal? That is almost never going to have any meaning even 2 years from now. Business structures and outside conditions can change so much in that sort of time span that trying to project that far into the future is really useless. For many businesses (pretty much any sort of web service, for instance) it's probably not even worth reading their 1 year plan. Read stuff from any successful startup founder and you will see that even core fundamentals of the business can change 180 degrees in the first few months.
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Yeah, a good BP only lasts as long as its first contact with the marketplace....
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If you're talking about something like opening an auto repair shop or a bakery or something a lot of this won't apply.
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Hmmmm.....I guess you are probably right. And I am talking about traditional B&M businesses because that's what I know about. I guess that e-businesses might be somewhat different. But I'd guess that the two aren't so dramatically different.
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