Starting a small business is hard but finding small business funding can be even more challenging. While it may seem like there’s ample opportunity, from conventional loans to 401(k) funding, fledgling entrepreneurs may find themselves stuck when trying to figure out which funding source is right for their business. Here are some tips for small business funding that will help you get the money you need at just the right time.
Do These Five Things for Small Business Funding
1. Do your research. First, determine why you need the funding. Is it to scale the business? Do you have cash flow gaps you need to fill? Do you need to buy supplies or equipment? Determining why you need small business funding will help you research the types of resources that are available. Make a business plan and then look at whether a credit card, small business loan, or perhaps a government grant could provide you with the cash you need.
2. Do borrow just what you need. Just because you’re approved for a higher credit line doesn’t mean you need to use it. Plan how much and at what time you need small business funding to avoid unnecessary debt.
3. Do shop around to get the best terms. Settling for the first funding source that pops up may be a mistake. Explore your options, the terms and conditions for repayment, and any penalties for default or even early repayment.
4. Do track your finances carefully. Bookkeeping is one of the most important parts of your business, especially if you’re considering small business funding. The lender will want to know how your business is performing. If you’ve been stuffing paid invoices in an office file, now is the time to adopt better business practices.
5. Do know how to sell your business to a lender. This may mean a written business plan or a grant proposal. It may also require a concise explanation of your business and the ability to answer any questions the lender may have.
Don’t Do These Five Things
1. Don’t fudge the numbers. Over- or under-estimating your income and finances when seeking small business funding could be more than counterintuitive; it could be illegal. Review your forecasted budget against the daily realities of running the business. Make adjustments, and, when you feel you have an accurate profit and loss picture, seek small business funding.
2. Don’t be overwhelmed by the risk. There comes a time when almost every small business owner feels nervous about seeking small business funding. Try not to stress over finances. Instead, methodically create and follow a business plan for growth. Some of the best things in life require risk, and starting a small business is one of them.
3. Don’t forget to pay your small business taxes. We’ve seen it happen; in the flurry of a business startup, tax filing deadlines are missed. It can wreck a small business and set it up for failure.
4. Don’t always go for the obvious small business loan. While a conventional small business loan may seem like the logical choice, there are other types of alternative funding sources available that may be a better fit.
5. Don’t be afraid to seek help. Benetrends Financial has been helping small business owners get the funding they need when they need it the most. We can help you in your entrepreneurial journey.
To find out more about small business funding, download our Innovative Funding Strategies For Entrepreneurs.