Consultant specializes in finding money for startup businesses

By Maureen Wallenfang
Post-Crescent staff writer

Q Is it true that 50 percent of new businesses fail in the first two years?

A According to the Small Business Administration, 50 percent of small businesses fail in the first year and 75 percent fail in the first four or five years.

Q Why do they fail?

A They’re under capitalized. They didn’t do a business plan. Without doing a business plan, you don’t know how much money you actually need to start a business. If they turn a profit in month three, it’s not a big deal. But if its month nine or month 12 when they first start showing a profit, the need a lot of working capital, which they may not have budgeted for. They usually need more money than they think they do.

Q You’ve helped businesses get loans from $20,000 to $1.3 million. How many have you worked with?

A In the last two years, about three dozen. About 50 percent are startups. Twenty-five percent are expansions, like restaurants opening second location, and 25 percent are businesses that need a refinance-type debt consolidation loan. In some cases, we don’t need to do the full-blown business plan.

Q What percentage of your clients have gone on to get financing?

A All of them so far.

Q Has everyone stayed in business?

A There is one folding up shop.

Q What percentage of people come in for a consultation and realize their idea isn’t going to work?

A Probably 25 percent of the people I meet with don’t end up doing what they came to see me about or they need more time to save some more money.

Q Do a lot of people come in with rose-colored glasses?

A It’s about 50/50. Some people are very well prepared and they just need help putting the business plan in a format that the banks like to see it in.

Q Are you charging by the hour or a flat fee?

A By the hour, but our first meeting is free. For a full-blown business plan, on average it takes about 50 to 60 hours of our time. I bill at $120 an hour and Amy charges $80 an hour. If clients qualify for the early planning grant through the Wisconsin Department of Commerce, it covers 75 percent, up to $3,000.

Q Have you said to people, “I can’t help you”?

A Yeah. There’s just no way I can get them a loan if their personal credit is so bad or they have no collateral to support it. I’m not going to waste their time. Probably 25 percent of the people I meet with actually become clients.

Q Is money loosening up?

A In the last two years it’s been rather tight. Unfortunately, banks are pretty conservative and they’re the last ones to come around. The economy is starting to loosen up a little, but it’s gradual. Everyone’s still a little gun shy. It’s not like the dot-com days where people were throwing money at every Internet business. That won’t happen again.

Q How many people do what you do in the Fox Cities?

A Not a lot. Pretty much every accounting firm has the ability to do what I do, but they just don’t. We’ve averaged two business plans a month, where most accounting firms might do two in a year. They tend to not like them because they’re very time consuming. My specialties are knowing how to put business plans in a format that lenders like to see and knowing what deals I can take in the quickest amount of time. All lenders are different. Nobody likes bars or restaurants. They have a much higher rate of failure than other business. Probably 80 percent in the first two years.

Q How are you different from SCORE?

A Places like SCORE, the Small Business Development Center, Urban Hope and E-seed are very good, but they don’t do what we do. We actually put together the business plan, the projections and the write up.

Q What are the main mistakes people make in writing a business plan?

A They don’t look at the cash flow.

Q Any other cardinal sins?

A Underestimating how difficult it is to generate sales. What’s key is that you’re conservative with projections. You’re not saying that first month you’re going to have $20,000 worth of sales for a small gift shop in downtown Kaukauna. That’s not realistic. It is realistic that you’ll sell $1,000.

Q Are you tired of people saying, “Show me the money?”

A No. I love helping people get money for their businesses. The lending process is complicated and overwhelming at first. I take over that overwhelmingness and make it easy for them.