by Dan Boudreau

There are some things that will stop your business idea, no matter how wonderful it is. These are the costly rough spots that you would rather conceal from the business analyst or banker. Hiding the information will only bring you and everyone you deal with frustration. Your best strategy is to get any deal breakers onto the table and mitigate them early – the sooner the better. In case any of these apply to you, here they are:

1. 100% Financing.
Sure, you and I have heard about those folks who manage to get it. It doesn’t happen that often; more often it’s a deal breaker. Would you invest your savings in someone who apparently doesn’t have the guts or the capacity to invest in themselves?

2. Bad Attitude.
There are entire books written on this topic. The real difficultly with this deal breaker is that most polite folks will not tell you that you suck – instead they will go quietly about taking their business elsewhere. It’s not the responsibility of bankers, employees or customers to create our approach to others. We are each responsible to manage our own attitude.

3. Cards & Toys.
Nasty credit card balances and a yard full of unnecessary toys. Owning toys is not the sin; it’s the high interest loans with outstanding balances and endless minimum payments that break the deal.

4. Fantasy Forecasts, Unrealistic Cashflow.
Would you invest your hard-earned savings in a person who can’t take the time and effort to build realistic sales forecasts? The cashflow is your opportunity to impress the lender that your know your business. It’s got to make sense. Missing or inaccurate expenses will destroy the reader’s confidence in your projections.

5. Getting into a Business You Know Nothing About.
If you are asking a lender to finance you to get into a business you know nothing about, be prepared for the jaundiced eye. Certainly, many folks have changed careers or leapt into a business they didn’t know anything about. I’ve done it, but I did it at my own risk. Would you have financed me to get into a business I knew nothing about?

6. Inconsistencies or Dishonesty.
Would you invest your money in someone who either doesn’t know or doesn’t make the effort to tell the truth?

7. Looming Liabilities.
There’s nothing quite like a pending legal action or a recent bitter marital break-up to scare off your potential lender.

8. Not Fitting the Lenders Priorities.
Lending agencies have different and ever-changing priorities. Know what those priorities are and target the right agency for your type of business.

9. Outstanding Taxes or Aging Accounts Payable.
If your business hasn’t been able to pay its bills, you had better have a good explanation why and a bullet-proof plan for recovery and success. Specifically, you need to show that you can and will pay back the loan.

10. Overpaying to Purchase a Business.
Your inability to negotiate a reasonable price to buy the business raises questions about your ability to survive once in business. With your credibility in question, the deal is broken.

11. Security Doesn’t Match Level of Risk.
Are you asking a bank to lend you money with no security? Sorry, banks are not in the business of taking major risks.

12. Ten-Bell Credit Rating.
The kind that gives your banker heartburn!

This article is part of Chapter 4 in Business Plan or BUST!

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