Ed, need help w/ business plan - Posted by Tracie Allen

Posted by Tracie Allen on March 28, 2001 at 13:54:27:

Thank you very much for your help and responding so quickly!

Allen & Allen

Ed, need help w/ business plan - Posted by Tracie Allen

Posted by Tracie Allen on March 27, 2001 at 17:45:33:

Hi, Ed

Me & my husband have just started investing. Our focus has just been finding the deals and looking at the numbers without a formal written plan. A couple weeks ago I visited this msg board for the 1st time when I read your response about having a business plan to get financing. I didn’t realize the need, however I should have considering how our last deal went with the bank. We went to a bigger local bank suggested by the realtor. Long story short we almost couldn’t get financing because they felt the property was in very poor condition and it didn’t matter that the deal was way below mkt value. Anyway they end up giving us the loan at a much higher interest. I think some of the problem was the loan officer; I say this because he intially did this as a conforming loan. I don’t think fixer/distressed properties can go conforming or can they?

You previously posted info. regarding writing a business plan for REI financing. Sorry, I can’t remember what post it was under or the question you responed to, all I do know it was very detailed and extremely good info. So, any and all helpful info. you can give will be greatly appreciated.

Thank you,
Allen & Allen

Re: Ed, need help w/ business plan - Posted by Ed Garcia

Posted by Ed Garcia on March 28, 2001 at 10:14:02:

Tracie,

A Business Plan is extremely important for 3 reasons.

(1) For you the Investor, it allows you the investor an opportunity to lay out a game plan from beginning to end. In that game plan you can evaluate yourself and your plan. If you done your job right, you can put all the pieces of how you operate together like a puzzle. Such as choosing your title company, appraiser, contractor, tell how you plan to invest in real-estate, your experience level, how you plan to buy, market place, how you plan to market or sell them, What your plans are if they don’t sell, etc.

(2) For you to obtain other Backers (Investors), now you can show them a solid buyable plan, rather than give them some verbal mambo jumbo with holes in it. The Backer will feel more confident in you and your venture, because you have mapped it out for them.

(3) For a Working Credit Line from a Bank. This line is just like having an Investor. It’s designed to allow you to buy property making cash offers to get a better price, cheaper cost for the money, faster closes, get more deals, can season your deal, etc.

Tracie, these are just a few reason for a Business Plan. Yes if your intentions are to just do a deal here or there, you don’t need one. If you plan to be a real-estate investor or entrepreneur, it’s PARAMOUNT, for growth and getting the real money from banks as well as romancing Investors (Backers). A good Business Plan adds CREDIBILITY to you and your real-estate venture.

Tracie, here is an example of an out line of a Business plan that I give in my workshop.

BUSINESS PLAN

A BUSINESS PLAN is an important tool for the Real-estate entrepreneur in order to obtain a working credit line from a Bank, as well as working with other investors or financiers.

No doubt the entrepreneur grows weary of hearing at every turn about the need for a business plan.

As a banker once told me, I don’t hear too well, but I read real good. Give me your business plan first, then we may talk. The reason for this attitude are several and sound.

First, they want facts, not hype. Most personal presentations are overloaded with hype. Bankers or Investors do not want to be sold a “bill of goods”.

Second, they want statistical and financial data to message before meeting with the entrepreneur.

Third, they want time to do some independent investigation of both the entrepreneur and the proposed business before meeting the entrepreneur.

Finally, they want some evidence of his analytical and conceptual skills.

Prospective associates should be most interested in your plan. Exactly what do you propose to do? How do you intend to do it? Your plan not only discloses you intentions, but how well you have thought our your venture.
Unfortunately, most entrepreneur give scant thought to many aspects of their proposed Enterprise. It often becomes all too apparent in the business plan that the promoter has not done their homework, therefore is not someone with whom you could trust their information.

Even more importantly, the business plan is essential to you planning. The things you would do in writing a business plan will force you to do many essential tasks that you would likely overlook otherwise. The very act of writing a plan for your proposed business will be most informative to you. Definitely, it instills a much needed discipline to the often overly enthusiastic of the " eager beaver investor".

Another definition for business plan, is a “GAME PLAN,” which in all reality we should have when doing a business venture .For this reason, most college entrepreneurial Programs are built around the writing of a business plan.

Most entrepreneurs or investors, are not familiar as to how to write a business plan.

As a result, they try to find someone to write it for them. There is much business for the person who can write good business plans. Unfortunately, much of the benefit of a business plan is lost if you have somebody else write it for you. Sitting down and pounding out the plan, section by section, forces you to do considerable thinking and evaluation of your plans… Without expectation, entrepreneurs who have written their own business plans, report that they were forced to rethink many aspects of their venture when it became apparent to them that they were some serious flaws in their thinking. The parts did not fit together properly.

Your plan is not a blueprint which you follow step-by-step in creating your empire. Instead, consider it a road map from where you are now, to where you want to go. There will be detours and lots of bad roads, but you will still find you plan helpful even if you are continually changing it as new information and new experiences are encountered.

Not surprisingly, most people first want to know what goes into a business plan. The outline below provides some ideas of what might be included in your plan, depending upon the exact nature of your proposed venture. Although I’m teaching you this plan for the purpose of a banking credit line, I felt it important for you to understand the full value of a business plan. Use common sense! What aspects are there to your new enterprise? You’ll have to plan every aspect of your business, either formally or
informally as you proceed. One way or another you must make a lot of decisions about what you are going to do in all phases of the business.

OUTLINE FOR BUSINESS PLAN

Summary-An Executive Overviewed

The Concept
The Market
Competition
The Organization
Your Credentials
The Product or Service
Production Plans
Pricing
The Marketing Plan
The Financial Plan
The Schedule
Operating System
Control Systems
Growth Plans

Tracie, Go to http://venturea.com/business.htm there you will find some information on doing a Business Plan. When you think you have your Business Plan done and want someone to review it, call me at (909) 944-0199 and I will have you fax me a copy and go over it with you. I hope this bit of information gives you enough information to get you started in the direction you need to go.

Good luck,

Ed Garcia