Growth Pains in a Striving Business
Brittany Doe-Samples is a well to do cleaning professional who started her cleaning business in 1997. She works primarily with large office complexes utilizing three to four crews of four to six individuals. Her business has prospered tremendously because she uses state of the art equipment and her staff is very well trained. Brittany also wins a number of bids for large government contracts.
Recently Brittany acquired a huge commercial contract granting her an additional 600,000 square feet of office space to clean in 12 huge buildings. She realized with the added work she would have to hire eight additional crews to work around the clock.
Brittany had an established relationship of approximately ten years with her bank. She also had a personal relationship with her banker. She contacted her banker to discuss a business loan and was advised to complete an application.
Brittany also discussed her loan requirements with her tax consultant. He informed her that her taxes were in order, filed on time and always showed an increase in profit, and that she had a strong history of six years in the business. He assured her that she would be able to qualify for a business loan because she had such a great track record.
Her loan application was accepted and taken under consideration. During loan committee review it was discovered that Brittany did not have the following:
- A business plan
- A mission statement, or statement of purpose
- Financial Projections
- Income and expense projections to include her new contract
- Past financial history
- Her pro forma was based on past history of the company but did not include projections based on anticipated earnings, contracts and staffing requirements.
- A marketing plan
- Brittany incorporated five years after she started her business but did not have an organizational structure.
- Brittany had accounts with the bank averaging $20,000 regularly, but her income to debt ratio was high.
- Brittany did not know who her competition was
Brittany's loan was denied. Her business was unprepared for unilateral growth and she must now decide if money should be borrowed from her estranged rich relatives, from Guido the loan shark with interest rates to die for, or forfeit the contract.
A business plan with all the elements listed above including strong marketing and financial strategies would have been beneficial in getting Brittany her business loan. A financial plan would have shown that her profit market would have increased at a higher rate of success than her debt ratio, and the marketing plan would have shown progressive growth in business resulting from increased market penetration.
Jaunta J. Rudison, CEO
Attend our upcoming seminar May 10, 2003, to hear the outcome of Brittany's dilemma. We will analyze her situation and develop an alternative plan that will help her secure the contract while preparing an effective business plan. Please review our website at www.rudisons.com for more details.