Many people view owning a strong, fruitful business as the epitome of success. December is National Write a Business Plan Month, and Citizen Potawatomi Community Development Corporation staff look forward to helping Native Americans begin the journey of becoming business owners through resources and assessments.
For Senior Lender Bob Crothers, a detailed, flexible business plan that accounts for growth “is the key to opening the door to successful business ownership.” He likens it to two equal ships, one with and one without instructions, a map and a navigator. The ship using its resources more than likely makes it to its destination.
“And I would put the same odds in reverse,” Crothers said. “I think 99.9 times out of 100, (the one without a plan) won’t even make it out of the harbor. And if they do, they’re going to get out in the middle of the ocean, just go around in circles, finally run out of gas and sink.”
As a community development financial institution, the CPCDC counsels business owners and individuals from underserved populations on how to excel at finances, improve their credit scores and achieve their monetary goals. Many times, that begins with a developing a plan to applying for a loan with the CPCDC.
Commercial Loan Officer Felecia Freeman often works with business developers unable to obtain a business loan at a traditional bank, which consider them a high-risk borrower for any number of reasons.
“The best thing we could do to any customer is mitigate their risk and tell them the hard stuff,” Freeman said. “And sometimes those are the worst days that we have because we don’t want to be a dream killer, but we also don’t want somebody to lose their hard-earned money.”
Crothers and Freeman offer assistance for as long as it takes to educate someone on the basics of business and lending and how to analyze opportunities as wins or losses from a financial perspective.
“Our clients have a vested interest. They’ve been trained. They’ve been shown. They’ve learned. And … 99 percent of them — and that’s not a hyperbole — pay off their loans,” Crothers said.
According to him, the CPCDC’s default rate is lower than many other financial institutions.
A good business plan includes a thorough market study of the area where the owner anticipates opening. It shows analysis of the need or desire for the product or service, the location of the market and its accessibility, and the potential total cost for entering that market.
“If you have a $50 hamburger, it might be great. But your market’s going to be very, very limited because there are very few people who will pay 50 bucks for a hamburger. I don’t care what you make it out of,” Crothers said. “The market study proves to you, and to those that might invest in you, that you have a place to ply your wares.”
A good plan also includes pro forma analysis, which involves calculating financial results with various projections and foreseeable costs. It helps determine the market’s reaction to rising prices and includes budgets and profit margins. Combined with a market study, these types of analyses determine strengths and weaknesses, efficiencies and hard costs — and ultimately if enough money remains to continue operating.
“You analyze your gross revenue at the top, and then you start subtracting your monthly costs. And that goes everywhere from labor to insurance to taxes. A lot of things people don’t think about that are going to be expenses for them. And that all has to come out of your top line. And then you look to see if there’s anything left on the bottom line,” Crothers said.
Freeman and Crothers often see detailed business plans that show expansion opportunities or spark new ideas to increase profit margins with a slight change of direction. They know the process intimidates some people and makes them feel hesitant about branching out on their own.
“There’s a big need (for our services). People need that handholding. People need that one-on-one help. There’s no cookie-cutter approach. Every business is different. Every business needs something else,” Freeman said.
Many of Freeman’s clients are unaware of the community resources that assist with business plans. She always recommends contacting a local technology center’s business and entrepreneurial services, which includes Gordon Cooper Technology Center in Pottawatomie County.
“I say, ‘Don’t just show up. Make an appointment, and you have their undivided attention,’” Freeman said. “If you show up, you get some homework, and you’ll get an appointment to come back because they want to know for sure that you’re serious. Make an appointment. That tells people you’re serious about this. Because making a plan is work.”
Market studies require deep local and regional data about economics, businesses and consumer behavioral patterns. Small business development centers and sometimes public library systems offer access to software that compiles it and has the ability to filter information and project various scenarios. In central Oklahoma, Pioneer Library Systems provides research databases for this purpose and staff assistance at no charge to library members.
“We want CPN tribal members to know that there is help out there,” Freeman said. “And it is pre-paid with their tax dollars most of the time, so they shouldn’t be paying somebody to help with the plan. Our state, all the states, have provided funding for that economic development that they want to see.”
After creating a solid business plan with local resources, clients often come back to Freeman and Crothers to apply for a loan and get approved. The loan officers hope their clients achieve enough success for their relationship to become unnecessary after paying off their balance.
“One of our happiest days is when … a customer says, ‘I’m going to expand. I’d love to come back and borrow some more from you guys, but I can get a better rate at the bank now,’” Crothers said. “Well, that’s when we pop the champagne corks and celebrate. Because we did our job.”
Find more resources for beginning a business plan and learn about the Citizen Potawatomi Community Development Corporation at cpcdc.org.