ICYMI– Bank & Brews Temple | Business Plans

Our 2021 Temple-Area Bank & Brews event series kicked off this month with a relevant topic for new and seasoned entrepreneurs-alike– business plans. Our event was hosted by Extraco Banks South Region President, Brian Reinhardt, and Jason Ehler from the Small Business Development Center (SBDC) of North Texas. 

Jason and Brian see business plans every single day. They’ve seen it all from industries, businesses, and entrepreneurs of all kinds. Jason opened the session by explaining his work at the SBDC. The SBDC is funded by the Small Business Administration, but hosted by local entities. The local centers cover all Texas counties, however, Jason focuses primarily on Bell and Coryell Counties. In his work, Jason serves businesses and entrepreneurs with all kinds of business coaching. All coaching provided by the experts at the SBDC is both free and confidential. 

Here’s what Jason said he likes to see when someone brings him a business plan:

• An Executive Summary - Your summary should be your pitch to the lender explaining why they should trust you and, thus, lend to you. The executive summary can shed light on who you are, what you are going to do with your business, how you are going to do it, what you need to be able to do it, and what experience and money you have. 

How much skin in the game do you have? Your executive summary should include how much cash you are able to inject into your business. Jason also said to include information on your personal credit here. Lenders look to your personal credit to see how trustworthy you are. 

• Use of Funds Sheet - If you receive the funding from a lender, how will you use the money? This section should be a detailed breakdown of where the funds will be allocated. Brian says this is a critical part of what needs to be included in your business plan. The bank should feel confident in what you will use the funding for. 
• Manufacturing Details - Jason says that business owners should be able to clearly explain what vendors, partners, and suppliers they will be using. You can even include contingency suppliers in this. What if your primary supplier is unable to provide you what you need?
• Contingency Planning - Speaking to how 2020 changed the landscape for almost all businesses, Jason and the SBDC recommend having written plans for changes in the external environment. “Who would have believed me if I said all businesses were going to close and everyone would have to wear a mask?” asked Jason. Supply chain issues have affected thousands of businesses. Your business plan should include these contingencies.

The biggest lesson Jason took away from 2020 was that “cash is king”. Jason told the audience that businesses need to hold about six months of cash in savings. If your business does not have that, it’s important to plan how you will get there. 

Another issue plaguing local businesses is staffing. Include details of how you will handle issues like this in your plan. Lenders are well aware of the new issues facing businesses and will be looking for the answers to questions like these. 

Brian told the audience that he often encounters entrepreneurs who aren’t always practical with their expectations for their business. There are two parts of the business plan– the narrative and the financials. Jason agreed that the financials must back up the descriptions of what you plan to do with your business. 

Financial Projections

Do not overestimate your revenues and underestimate your expenses. Jason creates three years of projections on income statements, cash flow, and balance sheets. The income part of cash flow is a critical piece. What do your expenses look like each month regardless of traffic to your business? What are your salary requirements and expectations? These numbers are what will prove feasibility to the lender. 

A great resource that Jason and the SBDC have access to is robust industry data. This data is critical to your business plan. He often pulls reports for businesses to see what industry performance has been in the past five years, what it is now, and what it is projected to do moving forward. Jason and the SBDC can provide these reports for any local small business owner at no cost. 

Revisiting your Business Plan

Brian and Jason recommend that ALL businesses revisit their business plan after the last tumultuous year. The business plan should be a living, breathing document that businesses keep updated regularly. The plan should act as the roadmap for the life of your business. If profit falls, adjust your business plan. If the external environment changes, adjust your business plan. For a normal business in a normal year, this may happen only twice a year. Coming out of the pandemic, Jason recommends a monthly review. 

Whether it is a new venture or an established business, it is always a good time to assess, maintain, or make changes to your business plan. Jason Ehler and his team at the SBDC of North Texas are there to help you. The SBDC has provided an awesome Business Plan Checklist that you can download here.

We hope to see you for the next Bank & Brews workshop on August 17th. This session is titled “Don’t Quit Your Day Job” and will feature local business owners who will share lessons learned from their journeys to becoming full-time entrepreneurs. 

About Jason Ehler

Jason Ehler obtained his BBA in Management from the University of Texas at Tyler. He has over 20 years of experience in the consumer service industry with 14 years of management and performance delivery experience within the medical, technology, and financial industries. He is accomplished at lending, strategic planning, client development, sales, marketing, coaching, and organizational development. Jason is a graduate of Leadership Waco and is a current Temple Chamber of Commerce member. 

About Brian Reinhardt

Brian has been at Extraco Banks for 19 years. He says that his favorite part about Extraco is that it is a company that truly cares about its employees and the community in which it operates. Brian holds a BBA in Finance and an MBA from Baylor University. He is also a graduate of Stonier Graduate School of Banking. He serves as a Board Member for the Temple Health and Bioscience District and Rotary Club of Temple. Brian also coaches various youth sports teams and volunteers at his children’s schools. 

About Extraco Banks

Extraco Banks and its affiliate companies are dedicated to building people, businesses and communities. Since the Great Recession, Extraco has extended over $2.5 billion in loans to 25,000 customers, while financially supporting over 1,275 community organizations working to create economic vibrancy, job growth and overall quality of life to our communities across central Texas. Founded as a cotton warehousing company, Extraco, at $1.5 billion in assets, is the largest and most comprehensive locally owned bank between Dallas and Austin, serving over 120,000 customers banking, mortgage, insurance and wealth & trust needs with creative and innovative excellence.

Learn more at: https://www.extracobanks.com/.