Finding Money When You Need It
What Does the Business Leader Need to Do?
Presented by: Tom Bohardt
Meier Transmission, Ltd.
Cleveland, Ohio
www.MEIERTRANSMISSION.com
PTDA 2001 ATLANTA
1
“Business is the art (or science?) of extracting
money from another person’s pocket without
resorting to violence.”
-Anonymous
(Therefore, if you are the leader of your business,
you need to figure out how to do this.)
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
2
EVERY BUSINESS NEEDS CAPITAL
“THE PERSON WHO BELIEVES THEY NEED HELP FROM NO ONE
QUICKLY LEARNS THEY HAVE A FOOL FOR A PARTNER.”
Successful businesses are:
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Well planned
Well capitalized
 Ability to access capital when you need it
 First step towards being well capitalized is good planning

Cost conscious
 Cost of capital must be managed
 Lowest cost capital goes to the most successful companies with a
“DOABLE” plan
“FAILING TO PLAN, IS PLANNING TO FAIL.”
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
3
PLAN FOR SUCCESS - It is a roadmap – Why are
you going, where are you going and how are you
going to get there?
Executive Summary (no more than 2 pages)
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Company Name, Desired Amount, Terms, Industry, Time in Business,
Owners, Use of Funds, and Collateral
Narrative
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Quickly and clearly define what your company does
It should take less than 20 seconds to do it.
History
Mission Statement

One sentence defining what the Company is all about – KISS
principle.
Market Niche

Where do you fit in the economic food chain
Market Research

Third Party support to your opinion that there is a viable market
Financial Overview

Gross Sales, Net Income,
Worth
forYOU
3 years
FINDING Net
MONEY
WHEN
PTDA 2001 ATLANTA
NEED IT
Tom Bohardt – Meier
Transmission
4
CREDIBLE ANALYSIS
You must know and be able to defend your analysis of your
business as it relates to:
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Market position
Competitive ranking
Financials as compared to peers
Strengths
Weaknesses
Third Party references add credibility
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Use PTDA Performance Appraisal Report for financials
Use Dun and Bradstreet to analyze your competition
Use supplier data
Trade Associations
 NEMA, PTDA, AHTD, BSA, AGMA, etc., etc.
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
5
THE PLAYERS
“IF YOU DO NOT BLOW YOUR OWN HORN SOMEONE WILL USE IT AS A
SPITTOON.”
Personal experience

Do you have what it takes to be successful?
Character

Honesty, integrity, tenacious, a winner?
Staying Power

Are you going to be around to finish your plan
Management Team

Who else helps you at your Company?
Survivorship

What happens if you die?
Third Party Professionals

Legal, Financial, Tax, Marketing, Investment Bankers, etc.
Advisory Council or Board of Directors
“BEING A GOOD ENTREPRENEUR IS NOT KNOWING EVERYTHING, IT’S
KNOWING WHERE TO FIND EVERYTHING.”
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
6
WRITTEN STRATEGIES
Definition of Strategy:

A detailed plan for achieving success
Written, understandable, realistic and measurable
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Valuable byproduct is getting answers to questions about your
business
Properly communicated internally it will mobilize your people towards
your goals
Subjects:

Marketing (How and what do you sell to whom?)
 Sales
 Promotions, mailings, etc.
 Coop

Operations (How do you take orders and fill them?)
 Customer service
 Warehouse

Cash Management (What is required to support business and when do
you get your money?)
 Inventory
 Receivables
 Cash Flow
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
7
AMOUNT AND USE OF FUNDS
Capital acquired must be consistent with your strategy
Funds must be included in your believable financial projections
Cash Flow Model must consider:
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Immediate needs for cash
Any asset purchases
Inventory investments
Other Working capital (payroll, payables, etc.) changes
Historical DSO or improvement program
Be conservative

You are using someone else’s money
Contingency plan required

Do you understand the impact of a downturn in your business?
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
8
TERMS
Know what you want, what you can afford and what you are willing to
give up.
Length
Amortized vs. Interest Only
Interest Rate
Other costs of financing
Personal Guarantees
Covenants & Conditions

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Be very careful. This is the best example of why you need
professional help.
If done wrong, these can cripple you
If offering equity you must know what your company is worth.
How much control are you willing to give up?
Collateral

If you won’t risk it, neither will anyone else
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
9
REPAYMENT PLANS
How are you going to make money and how much money are you
going to make?
Tied directly to your success
Current or Projected Debt Coverage Ratios

Banks
 Understand what ratios they expect you to maintain
Current or Projected Profitability

Investors
 Understand what keeps them happy
Amortization or Dividend

Return on Investment – When and/or how much?
“GOOD ENTREPRENEURS HIRE OPTIMISTS AS SALESMEN AND PESSIMISTS TO RUN
THE CREDIT DEPARTMENT.”
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
10
PRO FORMA FINANCIALS
Must be clear, concise, logical and supportable
Most important key to obtaining capital
If you cannot do a financial forecast, hire someone
Pro Forma periods for P&L’s, Balance Sheet, Cash Flow:
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First year monthly
Second and Third year quarterly
Fourth and Fifth year annually
Items:
Sales Estimates
Administrative Costs
Warehouse Costs
Sales Costs
Capital Expenditures
GM by Product Line
Sales growth by Product
Interest rates on debts
Income Tax rates
A/R collection plan
Inventory Turnover
Depreciation Schedules
Usefulness
of Assets
A/P Schedule
FINDING
MONEY WHEN YOU
PTDA 2001 ATLANTA
NEED IT
Tom Bohardt – Meier
Transmission
11
TYPE OF CAPITAL DESIRED
Debt versus Equity

Debt
 Cheaper (prime plus 0-5 pts)
 Easier to find

Available to all eligible
 Monthly payments regardless of cash flow

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THEY COME FIRST (before you and your employees)
Equity
 Investors expect high returns (greater than 20%)
 Harder to find

Restricted to businesses with fast and high growth
 Little or no return early, but, when and how much?
 More extensive reporting – are you headed in the promised
direction?

PTDA 2001 ATLANTA
Investors expect goals and milestones to be met
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
12
DEBT CONSIDERATIONS
What type do you qualify for?
How much can you afford?
Can you make payments if cash flow is off?
What happens if interest rates go up?
Are you willing to pledge company and personal assets?
Are you willing to give a personal guarantee?
More analytical than personal
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Are your ratios correct?
Are your assets properly valued?
Are you credit worthy?
Do you have solid financial help?
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
13
What type of investors do you target?
Are you willing to share control and future profits?
Do you really want investors as partners forever?
How big a share are you willing to give up and what is that share
worth? (Use PTDA website help. Fast, easy, good guide.)
Will you be able to keep up with the required reports?
Do you trust potential investors with company secrets?
Secret – LOOK FOR ANGELS
Private investors who keep money close to home
Limit their dollars and number of companies
Difficult to locate – no associations
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Friends
Customers
Suppliers
Competitors
PTDA 2001 ATLANTA
 Family
 Third Party professionals
 Brokers
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
14
FINAL WORDS OF ADVICE
Seek professional counsel before you sign anything.
Lawyers and accountants may not help fund your deal, but
they can help you spot the small details that may burden
you down the road.
There is tons of “how to” assistance available on the
internet, in magazines, in books and the Yellow Pages.
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www.BUSINESSFINANCE.com, www.GROWCO.com
Small Business News – (SBN Cleveland) “Raising
capital to raise capital” – What is takes to find funding in
an ugly market
Growth Company Guide by Clinton Richardson
Merrill-Lynch 1-800-XXX-XXXX can help you.
PTDA 2001 ATLANTA
FINDING MONEY WHEN YOU
NEED IT
Tom Bohardt – Meier
Transmission
15