When it comes to starting a business, it’s a matter of basic math: solid business plan + available financing options = show me the money.

However, many new entrepreneurs underestimate the time it takes to develop a detailed business plan and effectively present it to potential lenders and investors, according to Karen Karcher of Karcher Associates in Chester, who says, though the equation seems simple, it still takes hard work and effort to ensure the numbers add up.

Karcher will present “How to Obtain Financing and Business Plan Review” on Wednesday, December 2, at 6 p.m. at Raritan Valley Community College in Branchburg. Participants will receive a business plan critique, as well as advice and guidance from a financial institution representative. The seminar is free, but registration is required. Call 908-719-1027, or visit www.raritanval.edu.

A business plan “is the one thing lenders always ask for,” Karcher says. “So you have to put in the work. It takes time to really do it well. The business plan makes you think through all aspects of your business. The business plan stares you in the face, holds you accountable, and helps you set goals and achieve them.”

Karcher grew up in West Orange, where he father was a salesman and her mother was a homemaker. She earned her bachelor’s degree from Montclair State University and initially worked as a chemist, but she enjoyed business more. She then earned her M.B.A. in finance from Fairleigh Dickinson University.

Karcher accepted a position with AT&T, where she was assigned to create a new business unit. “That meant putting a business plan together in order to have it be approved by the executives. After three times, we got final approval, and we created the AT&T Universal Card.”

Karcher also oversaw a data center and created a plan that helped turn the business around in less than a year, taking it from the red to the black by merging centers to reduce operating costs. In 2001 she started her own business, which focuses on strategic business and marketing planning.

She has also worked with Raritan Valley Community College’s Small Business Development Center since 2002, offering one-on-one counseling and teaching various seminars. “I love it because I get to meet all different types of people and learn about all different types of industries,” she says.

Planning your business. Just as job seekers must have resumes, entrepreneurs must have business plans. Lenders and investors review businesses plans to determine how successful a venture will be, so the plan must be detailed, organized, and succinct, Karcher explains.

“It’s sort of like a guide or a road map to get from Point A to B to C to D,” she says. “It keeps you accountable, and it’s a reference point and keeps you on track. It helps business owners make decisions and see how those decisions affect their business.”

“Businesses that have business plans grow a lot quicker and are a lot more successful,” she adds. “You don’t want to do things that aren’t getting you where you want to go. If it’s not working, you need to take that step back and make changes.”

Writing a solid business plan. According to Karcher, a solid business plan should include several components, including a description of the business, outline of the target audience, marketing ideas, organizational structure, operating plan, overview of the competition, your industry experience, and your current clients or contracts.

“Discuss your business success so far and show that people are willing to buy from you,” Karcher says. “You need to really define your target market so you can market effectively, and you need to look at your competition and figure out how you’re going to compete. If you don’t know who your competition is, you’re not going to be able to differentiate your business.”

Another essential component, Karcher says, is financial, both cash flow and potential for return on an investment. “Lenders are going to look into the financial to make sure they are realistic. They want to make sure they’re going to get their money back. You need to forecast your cash flow and show that it’s a positive. When you’re out of cash, you’re out of business.”

Show me the money. The most common sources for financing, particularly for start-up businesses, are banks, credit unions, venture capitalists and angel investors, Karcher says.

“Networking is still key,” she says. “It’s all about getting people excited about your business. That’s where the business plan comes in. And you had better know what you’re talking about. You can’t wing it.”

It’s always important to do that research piece and make sure that you’ve done some due diligence on your target market and your goods or services and that you can show you’ve gotten some traction by having clients,” she adds.

Other financing options, Karcher says, include a microloans and Small Business Administration loans. Microloans are typically offered for $35,000 or less through community nonprofit programs; SBA loans are typically between $100,000 and $2 million, and the organization guarantees 90 percent of the loan to the lending bank.

“The purpose of the SBA loan is to encourage banks and credit unions to loan to small business,” Karcher explains. “It’s a safeguard for the bank because they want to make sure they get that money back.”

While it might be more difficult to obtain financing during the country’s current economic turmoil and credit crunch, Karcher says the down market actually provides an excellent learning opportunity for entrepreneurs, particularly those working on a business plan.

“You have to understand the economy and how it will affect your business, and how you’re going to manage through the good times and the bad times,” she says. “You’re going to see the highs and lows of the economy, and you need to figure out now how to handle the highs, even growth, and the lows. You have to look at all the pieces of the puzzle.”

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