It's one thing to present your banker with spiffy forecasts to justify why you need more money. After all, lenders expect that. But Arlene DeCandia, founder of Riverwood Metro Business Resort, a conference center outside Minneapolis, goes a step further. Whenever she's thinking about expanding her facilities, she backs up her loan proposals with detailed breakdowns on the business she's had to turn away.
DeCandia says her company, whose revenues are around $4 million, maintains a separate spreadsheet for tracking all the meeting-room and guest-accommodation requests that can't be satisfied; the data are broken down monthly to identify the peak-demand periods. In fact, she says, "we track the business we don't do as closely as the business we actually do." During 1992, for example, some $1.3 million worth of business couldn't be handled given the limited size of her facilities.
Although other factors, such as the economy, enter into DeCandia's determinations of when to expand (she opted not to add capacity in 1993), the data on unfulfilled customer requests provide a reality check that her banker finds useful. "It's much easier to make a judgment when you can review her tally," offers her banker, K. S. Houlton, chairman of FNB of Elk River, in Minnesota. "There's no question that it strengthens her case."
DeCandia says she has yet to decide if it makes sense to expand in 1994. To a large extent, she says, the answer will be in the numbers. "You don't want to borrow money for additional capacity unless you have to."