My first real financing meeting went badly, and it took me a while to understand why.
I was well prepared, or so I believed. I had the project clear in my head, I was convinced, and I knew how to explain it. I spoke for twenty minutes about what I wanted to build. Across the table, the person listened politely and took very few notes.
At one point she asked me a simple question about a number. I answered approximately. Not wrong, but vague. She nodded and moved on. The meeting carried on pleasantly and I left thinking it had gone well.
It had not gone well. I had lost the meeting on that one answer, and I hadn't even noticed.
What I understood later: a banker isn't there to assess whether your project is good. He's there to assess whether you know it. An entrepreneur who hesitates over his own numbers is a risk, regardless of how good the idea is. And that's a fair way to assess someone, when you think about it.
Since then, I prepare these meetings the same way every time.
The file goes out before the meeting
I send the essentials two or three days ahead. Financial statements, projections, the precise request, and what the money is for.
It looks like an administrative detail. It is one, and it completely changes the nature of the meeting. Someone discovering your documents in front of you spends the hour reading them. Someone who has read them spends the hour asking real questions, and that's where you can make a difference.
I always add a one-page summary at the front. The request, the amount, the term, the use, and what it produces. Five lines. If my summary doesn't fit in five lines, my request isn't clear, and it's better to find that out at home than in the office across the table.
The four numbers I know by heart
I don't memorize the whole file. I memorize four numbers, well enough to give them without looking at my notes and to explain where they come from.
What comes in and what goes out each month. Not annual revenue: the monthly movement. That's what tells you whether the business is breathing.
The point where I stop losing money. The volume at which the operation pays for itself. An entrepreneur who knows that has done the homework.
What I already owe, and how fast I'm repaying it. Never let the other person be the one who produces that number. It's the worst moment in a meeting.
The number that shows it's working. The one specific to your trade that proves the model holds. Every sector has its own, and if you don't know which one is yours, that's the real question to settle before asking for financing.
For each one, I prepare the short version and its origin. The number, then where it comes from. Both, never one without the other.
The question I ask at the end
I keep five minutes and I ask: what is it in this file that would give you pause?
It's an uncomfortable question to ask. It's also the most valuable one in the meeting. Most of the time the person answers honestly, and you learn the real objection instead of guessing at it for three weeks.
Two times out of three, the objection isn't the one I had anticipated. And an objection you know about is an objection you can work on. An objection someone hides out of politeness costs you the financing without you ever knowing why.
I always add one last thing before leaving: when should I follow up, and in what form? That turns an awkward follow-up into an agreed appointment.
To try this week
Without opening your documents, write your four numbers on a sheet of paper. From memory.
Then check them against your statements. The gap between what you wrote and reality is exactly the gap a banker will perceive, and he'll perceive it in thirty seconds.
The exercise takes ten minutes and it's the best preparation test I know. It also works before a meeting with an investor, a partner or a large client.
The question I'll put to you
What's the question that threw you most in a financing meeting, and how do you answer it today?
My sense is that a lot of entrepreneurs prepare their pitch and neglect their numbers, because the pitch is the enjoyable part. Myself first, the first time.
