Last week, I had two strikingly different conversations with entrepreneurs about borrowing money, one after the other. One entrepreneur I spoke with is in fast-growth mode. This entrepreneur knows that his business will "eat cash" next year, but he has only a vague sense of his need.
I hung up, and the next call was less fun. This entrepreneur's business is going through a pivot, and she knows that next year will be a down year. She also knows that she will need cash but for a reason different from the growth entrepreneur's. And yet, she, too, has only a gut sense of her need.
If you think about the two calls, both entrepreneurs know they have a need, and they were right to call us. But they have one thing in common: they lack a well-thought-out forecast and projection that shows clearly what their cash needs will be next year. We need to understand the need before we can sort out the best lending approach to pursue (assuming there is one).
Please read more about this in my 21 Hats column.