Financing is a major concern for those who are starting up a smallbusiness, and with good reason. Capital is a vital part of any newbusiness venture, and banks are tight fisted when it comes to smallbusiness loans. Many an entrepreneur finds themselves scraping forwhatever startup funding they can find. Startup capital can be easier to acquire, however, by following a few simple steps.
That having been said, don’t run out and quit your job today justbecause you have a great idea for business. And don’t let your startupdistract you from doing your job so that you end up getting fired. There is definitely a lot of prep work that goes into any new business.Consider three things that you want to have in order first.
Three Must Haves for Your Startup
Before you can leave your present job and start a new business, itis really important to have your credit in order. Credit affectseverything from the ability to get a loan to your ability to get theutilities turned on at an office. Good credit can mean lower insurancepremiums and it can affect your ability to acquire a mobile contract for your company. What can you do if you have poor credit?
First you will have to find out what is wrong with your credit.Then you need to fix it. Sometimes that can require a helping hand andthat’s one of the things that we are here to help you do. Don’t worry if a takes a few months to turnyour credit around. Once you have past credit issues squared away, youare far more likely to be able to acquire the capital your businessneeds.
Don’t pile new business debts on top of old personal debts. Getthose squared away first. Your debts won’t just disappear on their own.Not if you want to maintain your credit. Talk to your creditors and seeif there is any way to pay them off. This is a part of why you can’tjust quit a job to start up a new business. You need the steady incometo take care of past debt. Investors and lenders will frown upon givingmore money to someone who already owes money. The likelihood of a loandecreases to nil if you have no income on top of the debt. I can’t tellyou how many clients want to borrow enough money to start up theirbusiness and clear their olds debts. The problem is that no investor or lender is going to be willing to do that.
If you have impeccable credit, assets to be used as collateral, orreal estate that can be refinanced, then you shouldn’t have a problemfinding a lender. Lenders are a short term fix for business capital.Investors need to be your endgame. What will an investor be looking forin business?
Most investors want to see a product that already has a following.There are still a few gamblers out there, but not many. That meansgetting money from a lender to get your business to the point where itwill catch the eye of an investor. There are over 500 Billionaires inthe US alone so don’t worry, there is no shortage of people who caninvest in your company. Just concentrate on building a business thatgets recognition.
The Best Laid Plans…
This is where a business plan comes into play. A strong businessplan can help convince a lender who is on the fence about providing aloan to give your startup a shot. A poor business plan, on the otherhand, may cause a lender to withhold a loan, even to someone with strong credit. So how do you formulate the business plan? Is it about minutiae and the providing of every little detail? Is a general business planthe better option?
Hopefully, your business plan will fall somewhere between the twoextremes. No lender wants to see a 10 page paper on why they shouldsupport your business. First of all, they don’t have time to read it.Second of all, a long and detailed business plan stinks of a clevertrick to try and con some capital for a business that may or may not pan out. If you can’t fit everything on 2 pages, you’re trying too hard.
At the same time, don’t generalize. When you talk about theindustry, provide a few specific statistics to show how lucrative theindustry is. When commenting on the qualifications of staff oradministration, include relevant info about credentials such asschooling or work experience. When discussing how you foresee thebusiness doing in the community, compare how similar businesses do insimilar communities.
Successfully Financing a Startup
Keep in mind these simple steps, and it may not be as hard as youthink to get your business going. Hang on to your job until the business is truly ready to go. Take care of your credit and any debts you havefirst. Use a business plan to attract lenders, and spend that capitalwell to create a company that will catch the attention of investors.Before long, you can have all of the capital that your growing businessneeds to thrive.