A well-written business plan is essential for any firm looking for debt or equity financing.
While banks and investors are looking for different things to make them feel good about your business model, they both expect you to have a professional business plan to review. Do you?
My guest this week is Cheree Warrick, a professional business plan writer and author of the book, “Creating Business Plans that Actually Get Financed.”
Over the past decade Cheree has written hundreds of business plans that have helped her clients acquire loans and equity investments from $10,000 to $20,000,000.
If you want to know what it takes to create a business plan that is “investable,” tune in to learn the answers from Cheree Warrick.
What follows is a computer-generated transcriptions of our entire conversation. Please excuse any typos!
Frank Felker 00:22
Thank you, Dude Walker. Yes, indeed, I am Frank Felker. Welcome back to Radio Free Enterprise. My guest today is Cheree Warrick. Cheree is a professional business plan writer and the author of Creating Business Plans That Actually Get Financed. Cheree Warrick, welcome to Radio Free Enterprise.
Cheree Warrick 00:41
Thanks, Frank. Thanks, everyone, for having me.
Frank Felker 00:44
I’m very happy to have you here. Cheree, I can’t tell you how many times your name has popped up on social media or various things. Since you and I met I think we figured out it was like 10 years ago. But we haven’t exactly stayed in constant contact. I guess we’ve stayed on each other’s radars. And your expertise in the area of business plans is directly in alignment with what I try to help business owners and executives with hear on Radio Free Enterprise. Now you have created hundreds of business plans that have helped your clients raise between $10,000 and $20 million in debt and equity capital. What sort of companies do you work with Cheree?
Cheree Warrick 01:28
I work with all sorts of companies. I’ve worked with government contractors, technology companies, catering companies, restaurants, low tech, high tech contractors, like you know, HVAC people, plumbers, etc. I’ve worked with startups all the way up to a company that was 23 years old, and everything in between. And I love I love it.
Frank Felker 01:56
That’s quite a wide range. And so obviously, you’ve had experience with both what I call lifestyle businesses versus growth businesses, bricks and mortar businesses versus virtual businesses or online businesses. I’m very happy to hear that because, as you know, probably better than I do that. While there are a lot of differences among all these different types of businesses, there are a lot of essential things that are the same. And I can see where within a business plan that you’re writing. With the objective of getting financing, a lot of those things are the same. Now, what types of financing have these companies been looking for?
Cheree Warrick 02:38
So it’s interesting, Frank, because people usually come to me knowing that they are thinking that they qualify and should go after one type of financing. And then based on our discussion, sometimes they end up really needing to pursue another type of financing. So I tell people get bank loans, family and friend money, private investor money, venture capital, money, equity, crowdfunding, you know, you name the gamut with regards to the different types of funding that is available to entrepreneurs, and I’ve helped them.
Frank Felker 03:15
Okay, so kind of like your last answer, you name it. That’s it. That’s who I help. And this is what I’ve helped them raise. And again, I think this is fantastic, because as we will discuss later, there are different things you should say or share or what have your project, in a business plan dependent upon what types of or type of finance you’re looking for. And I also thought was interesting, you think you want this, but maybe it’d be better with that. So your experience clearly can help. And with that, let’s talk about the business plan itself. What are the elements of a successful business plan?
Cheree Warrick 03:54
Well, the first element of I’m going to call it an investable business plan that banks or investors would actually love and want to put money in is number one, it needs to be a scalable business. There’s a difference between a lifestyle business and a scalable business, a lifestyle businesses, hey, I want to make 150 to $200,000 a year, I want to work 20 hours a week. And you know, I just want to keep it super small and boutique. Well, that’s great. But that is not the types of businesses that banks and investors fund. So that’s number one. And then from there, we have a framework that we use to put together investable business plans. It’s six parts. The first is the market opportunity. So quantifying the market and how much of the market you expect to capture. Part two is the marketing plan. How do you intend to get and keep customers?
Part Three is the team because the number one reason that a business is Not fun, has nothing to do with the validity, or the goodness or badness of the idea. It has to do with the fact that the team you’ve assembled, the investor doesn’t believe that this team can actually help the company reach its next milestone. Part Four is your competition and competitive advantages. Part Five is the financials. And we usually do a five-year financial forecast for our clients. And then Part Six is your exit or payback plan. So if somebody gives you half a million dollars, how and when can they expect their money back? And those are the six parts to an investable business plan?
Frank Felker 05:41
Well, you clearly know what you’re talking about. And I really appreciate you sharing that knowledge with us here today. No, I got to figure there a lot of times, people come to you, you’ve already mentioned a couple of things, where they think something is one way. But it’s actually another way regarding their business regarding what type of financing. What about regarding the business plan? And like the six areas that you just mapped out? Is there one of those areas where you find most business owners, or more than others are off base about or what are some common misconceptions that owners have about writing a business plan?
Cheree Warrick 06:22
Yeah, so a lot of people believe that writing a business plan is just, I tell you what I want, and you just slap it on a piece of paper. And as somebody who has done business plan reviews of other people who have written business plans, it’s not that. So what I always explain to people is, imagine, you have given your business plan to an investor, this is the investor that could write a half million-dollar check for you in your business. It’s 11 o’clock at night, they’re tired, they had a tough day. But they said before they went to sleep, they were going to look at this business plan. Now they expect this business plan to put them to sleep.
However, they read the first paragraph, and they’re immediately awake. By the time they’re done reading the business plan. They’re emailing you with all sorts of ideas, all sorts of people, they want to introduce you to it cetera. That is the power of a truly investable business plan. But that takes creativity. It takes somebody who was able to, to take the numbers within the business plan, and tell a story around those numbers and be able to say, if we get your money, we’ll be able to do this, this and this. And this is our expected outcome. And even if we don’t get to that outcome, we have an agile enough team where we can get to a cap an outcome sorry, that will produce a positive benefit for you in the money that you’re investing in this company. Wow. So it takes a strategist is Frank, I’m sorry, to
08:17
go ahead.
Cheree Warrick 08:18
Yeah, there’s a difference between a business plan writer and a business plan strategist, and I’m a strategist, I listen to people, I give feedback based on Well, if you tweak this, if you tweak that, then we can, you know, do a lot more with your idea. And I find that my clients really appreciate that from me, because I’m a business owner, and not just an order taker, business plan writer as well. And I keep up with the latest trends too. With regards to business, I spend a lot of money on educating myself with regard to the latest trends in marketing, and finance, it cetera, et cetera, competitive things that are happening, you know, in business.
Frank Felker 09:04
I often tell people that one of the most important things about your business, your business model, your business plan, or whatever the heck you think you’re up to in business is, what about you? What is your personal Why? Why did you go into business with the risk and the work, and you name it? And it’s that view, it sounded like you were just about there, you know, if you tweak this, then get that. Do you sort of do a little sort of armchair psychology to try to dig into what is this person actually trying to accomplish? Sort of irrespective of their business? How can I help them get what they want?
Cheree Warrick 09:45
Yeah, so yes, I am an armchair psychologist, sometimes I’m a marriage counselor. You know, if I have couples come, that is required. But I will say that goes back to my initial point. initial statement about do you want to lifestyle business or scalable business? And one of the big things that I try to listen for, as I’m speaking with people is, are they really looking for a scalable business? Do they have the type of lifestyle? And are they willing to spend the 50 to 60 hours for the first couple of years getting this thing off the ground, depending on the amount of money that you’re raising, and who you’re raising the money from?
These are some of the sacrifices that are going to be expected of a person, you know, you’re taking hundreds of 1000s of dollars, if not millions of dollars, in order to grow this business, there’s a certain amount that you’re going to have to be able to put into that business. So yeah, yeah, I mean, also being able to do what it takes to pull the team together and being able to direct that team in such a way that the right hand knows what the left hand is doing and everybody is working towards the same goal.
Frank Felker 11:05
So yeah, I really appreciate the wisdom that you’re sharing there, because I was the co-founder and CEO of a startup company back in the dot-com era. And I’ve widely documented my experience there, which was not good. And have a lot of it had to do with the fact we raised over $3 million. But these investors, they’re not kidding around. This is real money, they want their money back, and they want a return on investment. And no matter what happens, for example, 911 occurred while I was leading that company, that’s like, Okay, well, how about tomorrow? And so people really need to understand when you’re asking people for money, and particularly if they give it to you, you need to be able to pay them back? And are you willing to make the sacrifices required in order to get that ball across the goal? No, can you?
11:57
Please go ahead.
Cheree Warrick 11:58
So I was talking to an angel investor once, and she was telling me of her frustrations of one of the companies in her portfolio, who did not reach out to her when they were trying to get an appointment with a specific individual that she knew. And about nine months, you know, after her investment, she finally gets them on the phone with a couple of other investors. And, you know, the question is, what have you all been doing, you have made me money. And they said, Well, for the past nine months, we’ve been trying to reach out to this specific prospect in order to get a meeting.
And she’s exasperated on the phone saying, if you had just told me that that was who you were trying to meet with. I know this person, I could have gotten you a meeting nine months ago. So a lot of times investors get frustrated, because the entrepreneurs are trying to do everything themselves, instead of leveraging the team, which includes the investors that have given you their money. And if they have a contact, they obviously believed in your business, because they put money into it, they would be willing to help you in ways beyond the money that they’re putting in. So that’s another big lesson that I try to tell people.
Frank Felker 13:15
Yeah, they really are your partners in the business. I will tell you, though, from the entrepreneur’s seat, that the that the entrepreneur main entrepreneur may not have known that there was a connection there also may not have known that that investor was willing to do things like that, although it seems to make sense on the face of it. Of course they would they wrote to this big check, they’re willing to do whatever they can.
But anyway, it comes down to communication. And it’s interesting because I have an interview in the archives of Radio Free Enterprise. That’s exactly it. The title of it is How To Talk To An Angel. And it’s all about the breakdown of communication between those two levels. But obviously, surely, we could talk for days about this, and I have a feeling you would be able to deliver the value for days as well. But I wanted to keep moving with a couple of more questions, as sort of a real fundamental bottom line question that a lot of people wonder about is how long should a business plan be?
Cheree Warrick 14:16
So I’m going to break it down. Number one is the days of the 100-page business plan is dead. Even the 50-page business plan is dead. So everyone can take a huge sigh of relief to stop, right. There are two types of business plans that I do for people one is what I call a traditional business plan, which is anywhere from 20 to 30 pages and that includes your financials that you have in there, your financial assumptions, I should say. So it needs to be long enough to tell your story, but not so long. That it is overwhelming. So I say a good 20 pages. Now for my tech company. And most of my tech companies have five-to-seven-page executive summary, with some strong financials usually does the trick. And I’ve seen people I’ve had clients raise seven figures on a strong seven pages, this plan, pitch deck, and financials, because they care more about the MVP, or the prototype. And getting through beta, like that for a tech company. That’s usually the big thing, especially if you already have gone through beta, and you already have paying customers, then you usually don’t have to have as much. And now,
Frank Felker 15:42
You know, it’s funny, I don’t know whether you’ll be surprised to hear this or not. But the business plan at my dot-com startup was over 200 pages. And at that time, and it’s, it’s comes up a lot in interviews, how much things have changed. This is before the advent of the lean startup. And really, a lot of what we know now is what we learned about what was some crazy back then. But we literally had a thing we called the third factor, which had to do with how, what the noise was your business plan would make when it landed on somebody’s desk. So obviously, that is nonsense today, but and I agree, I mean, people just don’t have time to read all that. In fact, what are you going to tell them? It’s got to be, you know, icing on the cake, it’s just not necessary. Now, how long will it take to write a good business plan if someone were to engage you.
Cheree Warrick 16:33
So if someone were to engage me, it usually takes about two weeks, two and a half weeks for us to get a first draft. If you’re doing the business plan yourself, I usually tell people to budget 40 hours, because by the time you do your research, you write your first draft, you pull your financials together, you get an editor involved to edit it for grammar, for spelling, as well as for strategy. It’s usually about 40 hours. But our process is about two to two and a half, maybe three weeks, depending on our production schedule.
Frank Felker 17:09
So typos and bad grammar are not recommended for a business plan. No,
Cheree Warrick 17:19
you’re absolutely not. It’s really funny because I, I, somebody had suggested a writing assistant to me, and I gave the person a sample business plan to do and the English grammar was so horrific that even if the person like had a great idea, I could not tell because the grammar was so awful, that I couldn’t get through it. So I do tell people, I do really suggest going to write your own business plan to invest in a good editor. First impressions make a big difference.
And let me just say this, right? First impressions make a big difference. And if I have $300,000 that I can invest in your business, and I received something with grammatical errors, spelling errors, etc. I’m wondering what does your website look like. Right? You know, when you’re communicating by email with customers, who does that communication, reek of these issues, etc. So you definitely want to make sure that you invest in that.
Frank Felker 18:30
I’m a big stickler about that as well. But not everyone is but it doesn’t matter. This is business. And as you say, $300,000. And you don’t know the difference between there, they’re and their? I don’t think so. Yeah. Now, with that in mind, I, you know, one of the things that I do is help people become authors. And I often say I can help you write the book, but I can’t read the book for you. And I refuse to publish something to the public that you haven’t read and said, you know, because I can only imagine chapter three, I never would have said that. Well, apparently you did somewhere in one of our interviews. But anyway, it’s important to get the client engagement. Luckily, in your case, if it’s seven pages, or 20 or 30 pages, it’s going to be a little bit easier, I guess, to get them to buckle down and do it. But is client engagement with the process a problem for you?
Cheree Warrick 19:28
I haven’t discovered that. It is as much of a problem for me, I find that my clients are engaged. Now. The way that they engage is different. And I’ve learned that over the years, some clients are great with email, and they only email them because they’re busy, you know, during the daytime, etc. Some clients I have to get on a zoom call, you know, or on a telephone or something like that and say this is what we’re looking at. This is what We’re going to do, et cetera. But I’m very fortunate I do have engaged clients.
Frank Felker 20:07
You know, it just occurred to me It might be because there’s a giant pot of money at the end of the rainbow, you know, instantly or at least more instant gratification. My clients, of course, are writing books in order to generate revenue as well. But maybe they’re not seeing the direct connection quite so well,
Cheree Warrick 20:30
Can I just give a testimonial? With regards to writing books, my book is my competitive advantage in my business. And I believe that book is responsible, probably 70 to 75% responsible for me having the success that I have, I suggest that anybody, especially if you are a service provider, write a book, I cannot stress it enough, you are going to discover that your business is going to at least triple just and I give away my book to write sometimes I charge shipping for it, but I give it away to prospects, and they don’t read it. I’m telling you right now that the majority of my clients did not read my book.
However, I’ll tell you two things. Number one is they love the fact that they get something from me. And it’s another touch point, especially because my prices are not $500. Right. And then number two is I’ve had people say to me, Cheree, you know, I, I was doing something, and I will remember that I needed help with another business plan. And I saw your book on the bookshelf. And I contacted you, you know, because I googled you again, are found my email and I was able to send you an email. So what I’m trying to say is that writing a book is going to pay in dividends for you. Because people don’t throw away books. They tend not to,
Frank Felker 22:09
You know, it’s funny, You took the words right out of my mouth. It’s amazing. It’s almost like sacrilege to throw away a book.
Cheree Warrick 22:16
Yeah,
Frank Felker 22:17
I imagine you’ve had a similar experience, I will visit like, clearly pre-COVID. But I would visit someone’s office and see my book on their desk that I’d given them, as you said, as a gift, or see it standing up on the shelf. And there it is, you know, a silent billboard for me all year round. And a reminder to them that, you know, keeps me top of mind. And I agree, I give away lots and lots of books. And I would also agree that probably most people don’t read them. But they know a couple of things. They know I wrote a book. And they also know I was generous enough to give them a copy of it. So yeah, it’s a big, it’s a winner.
Cheree Warrick 22:55
And I say one more thing about the words is that I have been paid by especially colleges, they do not allow you to get a speaker fee, but they will buy your books in bulk. And that ends up becoming your speaker fee. So you know, I’m sure you tell people this, but I just want to say again, that I if you’re on the fence with regards to writing a book, I again, cannot stress it enough how it’s going to differentiate you in the marketplace.
Frank Felker 23:27
Fantastic. Well, I would appreciate it if you would continue doing advertisements about the power of becoming a business author. But let’s get back to the business plan for a minute. You mentioned financial projections, and I got to hand it to you. You know, there are people who can ride and there are people who can crunch numbers, but those usually aren’t the same people. So this is another area where you help people, what is it that, you know, do your clients bring your shoebox full of receipts? Like an accountant would get a tax time? What do they give you? And what do you produce as part of your service?
Cheree Warrick 24:05
So my clients, I’ll be honest with you, my clients usually give me you know, their, their aspirations, and then I have to turn those into numbers. If they’re a startup, okay, I’m working with a lot of existing businesses right now, I’m usually able to ask them for last year’s P&L – profit and loss statement and balance sheet. And I’m usually able to get that especially right now because we’re filming in April, and this is tax season. So most people do have their financials from, you know, the past 12 months, but I spend a lot of time reviewing what the clients want.
And then either I have to do market research, or I have to have them do some market research in order to figure out what the costs are. Sometimes there’s special equipment, sometimes there’s custom software that needs to be created. It’s cetera. at those points, the client has to go and get that information, because they know what they’re looking for. But then if there are salary requirements for certain types of personnel, etc. I’m able to get those.
Frank Felker 25:13
Right. And isn’t it true that different industries structure, their P&L statements, and I guess for that matter their balance sheets, differently as well? And so you have to create projections that are appropriate to the industry.
Cheree Warrick 25:27
That is sure. That is absolutely
Frank Felker 25:29
true. Let’s say I have gotten you to write me a professional business plan. And I assumed, as part of this process, I told you, what type of financing I’m looking for, and so forth. I’ve got it in my hot little hand. Now, what do I do with this beautiful new document.
Cheree Warrick 25:51
So I suggest people even before they have a business plan, they start talking to prospective funding sources. So one of the things that I suggest, for example, if you are looking for bank funding, is to start off with your bank, to go to the local credit union, to go to the local small banks, and to begin to develop a relationship with the bankers, the commercial bankers, they, the reason for that is because especially in a lot of small banks, what will happen is they will get your business plan and your application for the loan. And then usually, there’s a meeting that happens once or twice a week, where a group of people within the bank get together to decide which loans that they intend to fund.
And you want the person that you’re developing relationships with, to fight for your loan to fight for to get funding. So a lot of people don’t recognize that. So I say the best time to start that is before you have the business plan, you know, and the business plan is only one part of the application as well. So you ask your banker, hey, what else do I need? You know, this is the type of business that I have, when was the last time your bank funded a business like mine, etc., etc. And ultimately, you want to kind of pit banks against each other as well. That’s how you’re going to get the best interest rate. That’s great if you if you’re going for private investors who also want to, again, start developing relationships with them, even before you have the business plan that
Frank Felker 27:40
That’s a great idea. Because it really, it’s all about relationships. You’re borrowing money from people.
Frank Felker 27:48
The longer they’ve known you that better they trust you. And if you told him a business plan was coming, and then lo and behold, here’s a business plan. Wow, it reads great. It looks very professional. It’s telling me what I need to know. You know that really, that’s, that’s great advice. Okay, so Cheree, I’m sure a lot of people who are watching or listening are thinking, wow, Cheree really knows what she’s talking about. And I am thinking I might want to hire her to work with me. What what happens after, let’s say and well, let me ask you this first, what’s the best way to connect with you?
Cheree Warrick 28:25
So my left side is we write business plans calm, like we write business plans, calm, you come there, there’s a contact form, and you’re able to connect with me, and then we’re able to schedule a session for me to learn more about your project.
Frank Felker 28:40
Okay, and is that a telephone call a zoom call? How long does it take? Does it cost any money?
Cheree Warrick 28:48
So no money. It’s usually a zoom call, 15 minutes, however, I have done telephone calls for people as well. So I, I typically like to see people as well. So you know, I like to have the camera on and, and, and get to see people and get their energy to
Frank Felker 29:07
What sort of questions should they be prepared to answer for you?
Cheree Warrick 29:12
You know, I started out pretty broad. I just ask, you know, what kind of business are you starting? Tell me a little bit about yourself, how’d you come up with this idea? And I’m really getting a feel for the person and their aspirations what they’re trying to achieve? What kind of funding are they looking for? Do they have any idea how much funding they’re going to need? Frank, there are a lot of people who come to me and say, I don’t know how much money I need. All I know is I have this business idea. And I want to create a business plan for it in order to get it off the ground. So, you know, I’m a pretty flexible person, you’ll discover I just want to get a feel for you. And I want to get a feel for if I’m the right fit, because there are people that I turned down It’s not to be mean.
But sometimes, first of all, I don’t write anything that I don’t believe in. So I don’t do anything. You know, within certain industries, I’ll just say, I don’t do anything with them. So cannabis is okay. As long as it’s legal in your state, but you know, certain types of industries I stay away from. And then, you know, if I don’t believe it’s something that people will fund, I’ve had people get kind of upset with me. And you know, say, Well, if you don’t want my money, well, no, I’m trying to save you. And then, you know, one gentleman was gracious enough to call me back a couple days later and say, I shouldn’t have yelled at you once I thought about what you said, You’re right. You know, and a lot of people will just take people’s money. And as someone that, you know, yeah, that’s
Frank Felker 30:49
this, Roger London, the angel investor is talking about how he said, sometimes the biggest favor you can do for someone, as he put it, is to tell them their baby’s ugly, and that they need to move on, and save their marriage and not get a second mortgage on their house and not, you know, do all of these things in pursuit of something that’s never going to work anyway. Now, Cheree, we are just about out of time. But I always like to close by asking my guests whether there’s a question I have not asked you that I should have, or something that’s come to your mind that you’d like to share before we sign off?
Cheree Warrick 31:26
Sure. Um, I will say that, you know, being an entrepreneur is a blessing. But it also takes a lot of work as well. It is the great American dream. And one of the great things that a business plan does is it provides clarity. So not only do people fund great businesses, but people also join great businesses as well. If you’re looking if you have the type of business and 99% of businesses are dependent on their team members. In order to attract a great team, you need a great business plan. In order to get your spouse on board. You need a great business plan in order to, you know, work through those tireless nights of being an entrepreneur, you need a great business plan because it provides clarity and strategy for you and your growth. So with that, you know, reach out to me we write business plans calm, and let’s just talk about your, your project and see if there’s something that I can help you with.
Frank Felker 32:36
Cheree Warrick, thank you so much for sharing all this with us today.
Cheree Warrick 32:41
Thank you so much, Frank, for having me.
Frank Felker 32:44
Thanks, again to Cheree. And thank you for joining us. Until next time, I’m Frank Felker saying I’ll see you on the radio.
Dude Walker 32:53
Forgiving your entrepreneurial sins with a gentle wave of his microphone, here’s Frank Felker.
