Plan for Success: Shaping a sound business plan.

• Author: Bardsley, Ann Jardine
• Position: Small Business Advisor

In June 2000, a month prior to founding his own business, 39-yearold Andrew G. Caprio approached three Salt Lake City banks for a business loan to finance his startup, Monet Medical, a firm that buys, reconditions and resells movable medical equipment to the hospital and healthcare industries. All three banks turned him down.

That same month he applied for a $170,000 loan from Utah Technology Finance Corporation (UTFC) and UTFC Financing Solutions LLC, which provide capital to new businesses with little operating history. Again he was turned down and told to "come back in three months" when UTFC felt he would have a bit more experience behind him.

But Caprio needed money immediately. Undaunted, he succeeded in obtaining funding from a friend and the Utah Microenterprise Loan Fund (UMLF), totaling $25,000. His success in securing the funds was due, in part, to Caprio's impressive business plan. With these funds and his only other assets -- severance, a computer, an education and the drive to succeed -- Caprio launched the business.

In its first three months, Monet Medical topped $250,000 in sales. When Caprio returned to UTFC three months later, the lending institution was so impressed with what the company had achieved in such a short time, that he was loaned $100,000.

Although lenders and investors differ in their terms and offerings, each is looking for the same thing from the entrepreneur: a strong, strategic business plan.

"I worked on my business plan for two years -- and with many revisions," Caprio remembers. "It was a living, breathing document that was backed up with information and hard data. It was rock solid." Caprios business plan has since helped him obtain an additional line of credit.

According to The Small Business Start-Up Guide by Robert Sullivan, " ...Planning is the single most important element in starting and operating a business." Like many business compendiums, the book emphasizes the importance of a well-defined and structured document and cautions entrepreneurs against the temptation to exaggerate.

As managing director of UTFC, Steve Grizzell reads about 150 business plans a year. He believes the crucial elements of a business plan include the experience of the management team; a clear description of customer needs and how the new business will appeal to these needs; and strong projected financial statements based on the condition of the market. UTFC loans usually range between $25,000 and $250,000. In the past...