At this point in the article, you should feel confident about entering a new business without using your own cash. Then there’s the obvious question: “Where am I going to get the money for the rest of the purchase price?” Finding a way to cover the $100,000 down payment on a $500,000 deal seems relatively easy once you know all your options and opportunities. However, obtaining the remaining $400,000 may be a more difficult task to achieve. To his great surprise, it is not. Like the process of not agreeing to a down payment in cash, methods of paying the rest shouldn’t be a concern. Let’s start with this simple thought: If you think of money as a commodity or product, you’ll have an easier time finding it, asking for it, and getting it from those who can afford to lend it. Many people have these resources to lend you. All you need to know is how to order it the right way.

Question: Which door should I knock on first?

Answer: You may already have your foot inside that door. That’s because, as I mentioned before, the most likely source could be the seller. In fact, before considering any other source of financing, discuss the prospect with the seller. (Some other avenues of financing will be discussed later, in case the seller is uncooperative with his or her pitching techniques.) Seller loans generally offer a few key advantages:

1) Sellers are not fans of earning interest. Their goal is actually to sell their business at a price that they find more acceptable. The seller wants to get rid of your business for whatever reason. This can be to get rid of a financial burden and, for you, an opportunity to apply your management experience to transform the same business into a huge mountain of profit.

2) Sellers can be much more understanding than banks. Let’s say your new business has a couple of slow months and the cash flow has become more of a cash trickle. So now you are forced to miss a payment, or even two. Which lender is more likely to penalize you, the bank or the person with whom you have formed a strong relationship and who can empathize with your business problems? I’m sure you and I share the same answer.

3) And no, sellers will not remove your personal property. While most banks are obsessed with collateral, sellers rarely require the same. Yes, they may want you to put a security interest in the deal, but beyond that, a handshake will often seal the deal.

Question: If seller financing can’t be worked out, should I just go to my bank?

Answer: In reality, the ideal bank may be the one that the company already uses. They know the business, and if the seller can introduce you to their long-time banker, it could ease the transition of ownership. However, you can also apply for a business acquisition loan at any commercial bank. However, as you can imagine, there is much more to this type of transaction than completing an application like you would for a car loan. They want to know a lot more about you and your chances of success before they approve the loan; And of course that depends on your credit history and management skills. One thing you must remember is not to beg. You should never go to any financial institution, “hat in hand”, to apply for a loan. As intimidating as banks can be, they’re really just money supermarkets with shelves stocked with a product they want you to buy.

They need you as much as you need them. If you have a deal that makes reasonable sense, they will accept and make a lot of money from you. If you go to the bank with an idea for a new business, a good business plan is also required. Solid projections will also be needed as part of the package. Using the business plan, the bank can analyze the viability of the business and will make a decision accordingly.

Question: You mentioned “business plan” at the beginning of the article. What kind of information can I send the banker that might be relevant to what they’re looking for?

Answer: This is what you can find in a business plan that will help you gather the necessary information for the banker.

Elements of a business plan: cover page, statement of purpose, table of contents, description of the business, marketing, competition, operating procedures, personal business insurance, financial data, loan applications, capital equipment and supply list, balance sheet , break-even analysis, pro forma income projections (profit and loss statements), three-year summary, detail by month, first year, detail by quarters, second and third years, assumptions on which the projections were based, and cash flow of proforma cash.

It is also necessary to present the supporting documents for the business plan. A banker will need to see them before even considering you for a loan.

Some supporting documents are: your tax returns for the last three years, your personal financial statement (all banks have these forms), in the case of a franchised business, a copy of the franchise agreement and all supporting documents provided by the franchisor, a copy of the proposed lease or purchase agreement for the building space, copies of licenses and other legal documents, copies of resumes of all directors, and copies of letters of intent from vendors.

Question: Is there a difference between a marketing plan and a business plan?

Answer: Marketing plays a vital role in successful business ventures. How well you market your business, along with a few other considerations, will ultimately determine how successful or unsuccessful it is. The key element of a successful marketing plan is knowing your customers: their likes, dislikes, expectations. By identifying these factors, you can develop a marketing

strategy that will allow you to wake up and satisfy your needs. Identify your customers by their age, gender, income/educational level, and residence. In the beginning, target only those customers who are most likely to buy your product or service. As your customer base expands, you may need to consider modifying your marketing plan to include other customers. A sample marketing plan is included in report #8 to give a more detailed idea of ​​its components.

Business and marketing plans are necessary tools to help you get a good idea of ​​how you should run your future business. However, if you are looking for a loan from the bank, the business plan should suffice. The marketing plan can be useful when presenting it to trading brokers, venture capital providers, and of course the seller. Since many businesses are seller’s finances, he will be curious to see what his ideas will improve the sales of the business. By doing so, their shares in the business will increase in value and they will feel comfortable when you take over.

Question: Can you describe in more detail some elements that are in the marketing plan?

Answer: My pleasure. A marketing plan is necessary to put your new business on the path to success. Consider it as your bible. It will help you target the market or, as we said earlier, create your niche. The marketing plan will help you answer the following questions: How can you position yourself against your competitors? How is your product perceived by consumers? How should you set a price for your product? Who will distribute your product? How will you promote the product to the public?

In your strategic situation summary, you should summarize the key points of your situation analysis (market, segment, industry and competitor analysis) to tell the main events and provide information to better understand the strategies outlined in the marketing plan.

The second section of the marketing plan should include the goals and objectives. This section explains how to define the market demographically-geographically in social and economic terms. Each market target must have needs and wants that differ, to some extent, from other targets. These differences may be with respect to the types of products purchased and the frequency of purchase. The objectives should include the following program components:

1) Product

2) Price

3) Delivery

4) Promotion (or sales force)

5) Technical services

Turning to the third section of the marketing plan, here you will provide the position statements that will help you describe how you want each target market to perceive each product relative to the competition. State the core concept used to position your product (brand) in the eyes and mind of the target buyer. Position statements should describe:

1) What criteria or benefits does the customer consider when buying your product along with the level of importance.

2) What you offer that differentiates your product from the competition.

3) The limitations of competing products.

All these details gave you a general idea about the content of a marketing plan. The most important segments are the following:

Product strategy:

o You will need to identify how each of your products fits with the target market. Other topics that can be addressed would be new product suggestions and adjustments to the existing product mix.

Price strategy:

o The overall pricing strategy should be identified along with the cost/benefit analysis. Identify what role you want price, increasing participation, maintenance, etc. to play.

Distribution strategy:

o Describe specific distribution strategies for each target market. Topics to be addressed are intensity of distribution, how distribution will be done, and assistance provided to distributors.

Promotion Strategy:

o The promotion strategy is used to initiate and maintain a flow of communication between the company and the target market. To help develop your communication program, your product attributes or benefits should be identified for each target market.

Market research:

o Describe the market research problem and the type of information needed. Include a statement that addresses why this information is needed.