John Linton As we go through the processes of finalising funding for one or more major projects with the financial institutions with which we do business and two other specialist leasing companies we are considering it becomes more obvious that the complexities of technology are a major barrier to understanding what we are asking for and what a financial institution understands. That's fair enough in terms of trying to grasp the basic differences between wireless and land line 'dslams' and 'backhauls' and I had expected those problems and knew that they would involve multiple attempts at explanations and a great deal of patience (on behalf of both parties).
What I have found surprising is the sketchiness of the commercial information that is 'required'. When I sent a complete copy of one of the technology project's preferred supplier's proposal to one of the leasing companies they responded by asking where the summary pricing page was that listed the equipment and costs. I replied pointing out the section of the proposal that contained this, very detailed, information that took up around 20 pages. After three days I received an email saying that they would prefer a one page summary that just listed the amounts required to be paid by date over the period of the installation.
Fair enough, I thought - and sent them my version of what I expected together with the statement that the schedule could change on a month by month basis and it wasn't possible to strictly quantify an exact amount by month. This was apparently OK as this particualr company could easily accommodate that very common situation - but there were varius terms on a 'take and pay' basis which were sort of OK though I was a little disappointed at the lack of what I thought was realistic flexibility.
What surprised me more was when I sent, as requested, the Exetel business plan and budgets for the period up to the end of FY 2009. Exetel isn't a big company and I very much doubt that our budget spread sheets are very voluminous or complicated in terms of our size of technology company. We are 'sophisticated' enough to match our general ledger codes on our financial reporting documentation to the expense lines on the business plan pretty much line for line with some inevitable consolidations.
This proved to be far too much detail and I received a request for a consolidation of the detailed business plan in to a "one or two A4 page spread sheet. I did my best and sent that to them - it made little sense to me in any meaning ful way.
The same request was made on the business plan narrative we submitted. Our business plan runs to around 30 pages of plain English explanations and some relevant figures. It covers the ten seperate areas of our 'operating departments' which anyone's lightening fast mind will work out to be an average of less than 3 pages per department (allowing for an introduction and summary). Of course, each area of the business plan narrative is completely detailed in the business plan budget spread sheets and neither the narrative itself nor the budget lines can be used 'stand alone' if you wanted to understand what the business was really aiming to achieve and the financial validity of the assumptions.
So I have tried to cut down 30 pages to 5 or 6 and will send that to them.
One of the questions asked by one of the banks I found very surprising. The question was "how often do you look at your budgets?" I thought I'd misheard so I asked for clarification of the question. The clarification was "do you ever look at them after you develop them or do you review them once a quarter or so?" I explained that they were looked at every day in terms of the daily order intakes and revenue by service projections and constantly adjusted based on day to day experiences with all expense and revenue lines modified with the actual results when the monthly P and L was completed.
This seemed to surprise this particular bank greatly and he said he'd not seen that level of use made of a business plan previously.
Maybe I don't really understand how to plan a business in the terms that large banks believe is necessary and appropriate.