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42 March 2014 | beautystorebusiness.com hours—may result in significant savings for your beauty store business. Future projections are equally impor- tant. If the financial area is not your bailiwick and you have an accountant or bookkeeper who handles that end of the business, then seek his help in preparing projections. Free counseling services for existing and prospective business own- ers are available in many communities through organizations such as SCORE (Ser- vice Corps of Retired Executives), Small Business Institutes and Small Business Development Centers. Some colleges, including community colleges, also have entrepreneurial and other small business- assistance programs. If you are preparing the business plan to help you obtain outside funding, be sure the projections are realistic. Investors and bankers alike are looking for no-nonsense numbers that are adequately backed up by reasonable assumptions. Unrealistic projections will cause the lender to doubt your competence as a small business owner. One suggestion is to provide three different sets of projections—best case, worst case and most likely case sce- narios. This demonstrates to the banker (or the investor) that you have considered both the upside and downside risks. Fore- casting future financial data can be kept relatively uncomplicated. But the results will be invaluable in helping you plan the future path of your business, as well as in helping you obtain outside capital. X. Conclusion Use the conclusion to summarize the key strengths and weaknesses of your beauty business. If you are seeking out- side capital, also provide a synopsis of the funding request, summarizing the amount, uses, terms and proposed con- ditions of the need. Two final suggestions concerning the preparation of business plans. First, there are many good, inexpensive books available on how to prepare a business plan. I would recommend that you pick one or two up at your local bookstore or online before proceeding with the plan preparation. Second, seek out a respected and knowledgeable business person to edit your plan. Objective feed- back can help turn a good business plan into a great one. What Not to Do in a Business Plan If you plan to use your business plan to help you in seeking outside capital, here are 10 points that will almost certainly result in a denial from the investor or bank, so avoid them at all costs. 1. Submitting a rough copy . A coffee- stained copy or one with edits or cross- throughs tells the outside party that you don't take the proposal seriously. 2. Stale information . Outdated historical financial information or industry com- parisons will leave doubts as to the planning ability of the entrepreneur. 3. Unsubstantiated assumptions . You need to be prepared to explain the "whys" of every point in the plan. 4. Too much blue sky . Failure to con- sider the prospective pitfalls will lead the outside party to conclude that your idea is not realisitic. 5. Lack of understanding of the finan- cial information . Even if an outside source is used to prepare the projections, you must fully comprehend the information. 6. No consideration of outside influ- ences . You need to discuss the potential impact of competitive factors, as well as the economic environment that is prevalent at the time of the request. 7. Owner has nothing at stake . This is a particular problem for a new venture. The investor or lender will expect you to have some equity capi- tal invested in your business. 8. Unwillingness to personally guar- antee any loans . If the business owner won't stand behind his company, then why should the bank? 9. Introducing the plan with a demand for unrealistic funding terms. The outside party wants to find out about the viability of the business before discussing the terms of the funding request. 10. Too much focus on collateral in lieu of the owner doing his homework . Even for a cash-secured loan, the banker is looking toward projected profits for repayment of a loan. Cash flow is where the emphasis needs to be. ■ J. Tol Broome Jr. is a Winston-Salem, NC-based freelance writer with nearly three decades of commercial- lending experience. T h e I m p o r t a n c e O f A P l a n . i n d d 4 2 The Importance Of A Plan.indd 42 2 / 4 / 1 4 1 : 3 3 P M 2/4/14 1:33 PM