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201 GREAT IDEAS for Your SMALL BUSINESS, Third Edition by Jane Applegate

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GREAT 30 IDEA: Create a Sensitivity Analysis

Want to impress a banker when you apply for a credit line or loan? Walk into the meeting with a sensitivity analysis. It sounds hard to do, but it's not especially complicated, according to Denise Howard, a former banker who now works as a financial planner for many business owners.

“You basically need to look at what will be your break-even point,” said Howard. “Figure out the minimum dollar amount you will need to break even. Then, look at the worst- and best-case scenarios.”

Howard said if you are prepared to discuss the impact of these various scenarios, “you will blow the banker away.”

Before you meet, bring along or submit in advance a pro forma balance sheet and a profit-and-loss statement. ...

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