Before seeking funding, there are several things that I advise my clients to do in order to determine if their business idea is viable. These are important tips that should be used by all entrepreneurs – things lenders will look for when making a decision to approve funding or NOT! Here are 4 extremely important steps that all new entrepreneurs need to take before seeking funding!
Need a #SmallBusiness #Loan? Put Personal Finances in Order & seek resources as @SCOREMentors, @sbagov
Prepare a Business Plan
A comprehensive business plan is imperative to your business success. It is needed to not only organize your business but to get a small business loan. Your business plan should be written early in the planning process and is your road map for starting and operating your small business. Because business plans can be daunting, you don’t have to do it alone. Here are some resources available to assist you:
- SCORE offers online business tools to assist you in business planning.
- SBA offers online business tools to help you start, grow and succeed.
- Business Plan Pro software is easy to use, affordable and loaded with hundreds of templates which guide you in writing your business plan.
Research and Know Your Competition
Understanding who your competitors are helps to project sales, avoid surprises, decrease reaction time as well as helps in understanding your own business (or proposed business) better. After your research information has been compiled and evaluated, it is important to develop strategies for competing, thus, determining if your if your idea is viable.
When you look at your competitors, you are analyzing:
- Who are your major competitors?
- What share of the market do they have?
- How do you compare to your competitors and how will they react to your entry into the market?
- What are their strengths and weaknesses (e.g. quality, price, service, payment terms, location, reputation, etc.)?
- What factors could increase or reduce your competition?
Analyze Your Market
The success of your business depends on making sales. Marketing is a way of communicating with your target market so they (customers) will buy your products and services. It is a necessary element of business. A constant marketing effort is required to establish, stabilize, and grow a successful business. Marketing & Sales practices include: describing your products and services clearly; continuously developing your understanding of your “marketplace”- who’s buying (customers), who’s selling (competition), what’s selling (products & services) at what price, how is the market changing; tracking the success of your marketing & sales strategy; improving your business’s ability to establish and maintain good prospect & customer relationships.
Put Personal Finances in Order
A prospective entrepreneur’s relationship with money and his/her ability to successfully manage personal finances and credit are directly connected to his/her success in the planning, decision-making, detailed oversight and big picture strategizing that are necessary to healthy business finance management. It can take time for a new business to develop a cash flow, so, making sure your personal finances are in order before launching your new business, is essential. Here are four quick tips to organize your personal finances:
- Pay off your credit card debt. Charge it! We are so used to whipping out the credit card and buying ‘things’ that we don’t need or can’t afford. Consider paying off your credit cards and consolidating balances to the credit card with the lowest APR. You will breathe a sigh of release once you realize you ‘CAN’ live without the dreaded plastic. And, you can thank me later!
- Invest wisely. Having an investment plan is the key to long term success. There are a lot of options out there, so I suggest you speak with a financial advisor.
- Save for an emergency. With the economy being so weak, sometimes it takes every penny that comes in to make ends meet. You must get out of that mind set and start saving on a regular basis. Start small and increase as time goes on.
- Create a personal budget. A personal budget is extremely important in managing your household. In fact, your monthly budget will help you in determining how much you will save and invest! An informative book that I’ve read and suggest is by author John L. Macko: Budget Yes! 21st Century Solutions for Taking Control of Your Money Now!’
By following these steps, you will position yourself for a successful funding request.