Scott Ford will tell you there are a few words and phrases entrepreneurs should avoid using when asking a lender for a loan to start a business.
"Don't use the words 'invest in my business' because what you're doing is renting money," said Ford, who is a volunteer with the Yampa Valley Chapter of SCORE, a nonprofit organization that uses retired business executive volunteers to counsel potential and existing entrepreneurs on basic business survival skills.
Ford was one of about 25 SCORE volunteers and Steam-
boat Springs bankers who attended a roundtable bankers forum last week at Colorado Mountain College's Alpine Campus. Ford's example of what not to say came up during a discussion of the needs of the local business community.
The forum was sponsored by SCORE and the CMC Small Business Resource Center in Bogue Hall, where 21 small businesses base their operations.
At the forum, SCORE volunteers learned from the bankers where aspiring entrepreneurs were making mistakes. Bankers learned how SCORE volunteers could help those same entrepreneurs, who potentially could become valuable customers and contributors to the local economy.
"Every business has money needs so knowing how to deal with a bank is important," said SCORE volunteer Mike Forney.
Bankers attending the roundtable said about 80 percent of the people who ask for a loan are unprepared.
"In general, people who show up for a loan are enchanted with the idea," said Wells Fargo banker Wade Gebhardt. "There has to be more of an understanding of the basics and fundamentals. I spend a lot of time trying to figure out who they are or what they've done : making sure it's a person who has the knowledge to succeed."
Bankers need to see a business plan, or even better, a summary of the business plan.
"Oftentimes, the thing that's missing is an estimate of costs," said Scott Gordon, president of Alpine Bank. "That's something where there needs to be a lot of detail."
Before bankers will lend money, they also want to make sure people have researched the competitive environment.
The group also discussed the business environment in the coming years and the high cost of renting space. The idea of requiring new businesses to provide housing for their employees was raised. Such "linkage" is being discussed by city of Steamboat Springs officials.
"When you're paying $30 a square foot for rent and the City Council goes for a high linkage percentage that will drive up downtown rents even further," said Dave Bruni, president of Vectra Bank Colorado. "The chain stores are the only ones that are going to be able to afford the huge rents."
Gary Kassel, who owns Appliance & Kitchen Center of Steamboat, also attended the forum to share with the lenders the crucial role SCORE volunteer Roger Good played in growing his business.
Kassel started the business with $3,000, and looking back, said the business relied too much on a healthy economy. He said he learned his overhead and employee costs were too high. The business needed to grow, but there was no cash flow. The business now has more than $1 million in revenues a year and it is growing at a rate of 30 percent a year, Kassel said.
"I would like to say it was rags to riches, but it was rags to rags to rags to not riches yet," Kassel said.
Randy Rudasics oversees the Small Business Resource Center and facilitates the local SCORE chapter. He can be reached at 870-4491.