Entrepreneurs like you tend to be visionaries that think outside the box. Your unleashed creativity is the reason for all the great advances that have occurred throughout history, yet it can also be the root of your greatest challenge. Idea people often have the most difficulty with planning and tasking out a flow sheet for step by step activities.
You know how to “keep the end result in mind,” as Stephen Covey reminds us to do, but the in-between stuff can somehow seem too mundane to warrant your attention. A clearly laid out business plan that outlines daily actions and timelines is a must when it comes to starting a new business. This is precisely what will lead you to your end result and your projected goals. A note to the wise – one of the biggest lumps you will have to swallow when starting up a business is the fact that you will need the cash to get it off the ground, so make it one of the first challenges you tackle.
In your minds eye you may have pictured your best friend or a relative with a savings account fronting you the investment capital you need. Unless you are looking for a partnership with this person, really consider the pressure you can bring to your relationship if your plan fails to unfold as projected. What do you propose to do if you are unable to fulfill your agreement to repay the personal loan? On the other hand you could approach your local banker for funding but maybe your personal credit score doesn’t quite cut the mustard, and besides, do you really like the idea of putting personal assets, such as everything you own and the roof over your head at risk?
What the entrepreneurial minded often forget is that incorporating a business with the state means that your business is now a legal entity with its own life! Despite the fact that you created it, now your business has been pushed out of the nest and it has to make the choice to fly. The bottom line here is that you went into business to make money. Expect your business to perform for you and give up on the notion immediately that you need to pull cash out of your pocket or back it with personal assets to keep it afloat.
In the world of business financing a business has the ability to build a credit score for itself that is not associated with personal credit. A business credit score is required for a commercial business loan and thus, the commercial lender does not run a personal credit check on the business owner(s). Dun & Bradstreet and Experian are the two primary companies in the U.S. that provide reports on the business credit scores of companies that have registered with the state. The process of developing business credit does not happen automatically as it does with a personal credit score. There are steps involved in determining a business credit score, such as how many people you employ, where your business is located, how well you keep updated with your state of incorporation and your payment habits with your vendors and suppliers.
Another note to the wise – don’t get stuck on the idea that the bank or the SBA is your only source of funding. There is a plethora of private lenders in this country that make their business helping small business owners like you. Using a private lender in the beginning can be the quickest way to the cash you need and will be a plus for your business credit score, providing you maintain your loan obligations with the lender. Once your business credit score is established at a certain level you will be more readily accepted for a traditional loan from a bank.
Willingness to take the required steps toward a strong business credit score will land you the financing you need. One of the first details in your business plan needs to be registering to begin the process. Find yourself an experienced business mentor that can show you the ropes and save you from unnecessary costs. Having all your ducks in a row before you approach a lender will be to your greatest advantage for financing your small business. Entrepreneurial wisdom means aligning your daily business operation tasks with your overall vision and is a sure way to achieve success.
About the Author:
Robbi Gunter is a staff writer for Strong Business Credit , a website that helps small business owners launch or expand, and small businesses with no credit or bad credit obtain business-based loans.
Subscribe to this comment's feed
Show/Hide comments
