5 Things to Know About Financing Your First Startup

5 Things to Know About Financing Your First StartupBy David Nilssen, Co-founder & CEO, Guidant Financial

If your goal for 2014 is to become a business owner, you’re most likely being inundated with advice and tips. Maybe so much that sifting through it and evaluating who you can trust is eating up time that would be better spent putting the wheels in motion for your new venture. In the interest of saving you time and aggravation, I’ve broken down the five most important things you should know about getting the funds squared away for your business:

1) Pre-empt your lender’s doubts.
If you’re seeking a loan to purchase a franchise, your bank may be well-versed in franchising—or not. Assume they will need convincing about the franchise and do their homework for them: a risk evaluation using banking terminology and analyzing standard underwriting topics. A FRANdata bank credit report in hand will smooth your path with lenders.

2) Get your financial records in shape.
That means get them together in one place in a condition that makes it clear that you are trustworthy, keep meticulous records and are a serious professional. The bank is going to want to see:

  • Personal and business credit history
  • Personal and business financial statements for existing and startup businesses and as well as a projected financial statements
  • A strong, detailed business plan (including personal information such as bios, education, etc.)
  • Cash flow projections for at least a year

3) Realize that your payment history is important.
There’s no question that your credit score is important, but banks will also look at your back payment history. If it concerns them, it could dilute the weight given even a strong credit score.

4) Make sure your resume reflects your business acumen.

Even if you’ve never owned a business before, highlight the experience you do have to show lenders that you have knowledge of the space you’re entering, that you finish what you start, that you have membership in organizations that are relevant to your new business.

5) Keep calm and carry on.

It’s become an internet meme, but it’s relevant here. Be patient and move forward with plans as best you can while awaiting a decision from the lender. If you get a ‘no,’ move on. Successful business owners know that it’s all about the long game.

Of course there are alternative ways to fund a business. If you’ve got a 401(k), there is a rather complex, but completely legal way to use the retirement account to purchase a business—without incurring any debt.

David Nilssen is the CEO & Co-Founder of Guidant Financial. Read more tips about becoming a successful entrepreneur in his book, Making the Jump into Small Business Ownership. He can be found on Twitter at @DavidNilssen.

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5 Smart Decisions Small Businesses Need To Make for 2014

5 Smart Decisions Small Businesses Needs To Make for 2014With 2014 looming on the horizon, small businesses need to not only assess the past year’s success and failures, but also plot a path forward. Businesses that have survived a challenging 2013, or even experienced some growth, can take certain steps to ensure and improve growth in the rapidly approaching new year. Here are a few tips to help prepare your small business for success in the coming year.

1) Explore all the options your bank (and competing banks) offer small business owners. Save money and stretch your dollars by choosing the right bank for your business. End of the year is a good time to take a look at the competition and see what offers they might have that would benefit you. Look for low account and transaction fees, low or discounted loan rates, and free direct deposit, among other offers designed to help the small business owner.

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How Young Entrepreneurs Can Overcome Poor Credit

One of the biggest challenges for young entrepreneurs when they are trying to start up a business is of course securing sufficient funding. The most common hurdle is the fact that they have not yet managed to build up a good credit rating. Let’s take a look at some of the ways to get ahead despite a poor credit rating.

A credit score is fairly important when it comes to raising finances for your business, the higher the score the easier it will be to get  loan or some other form of financing. However, it is not the be all and end all – you can still get funding with bad credit. The key is choosing appropriately so that you can begin to build up your credit so that when the time comes to move to the next level your business will have sufficient credit to do so.

Do Not Depend On Credit Cards & Bank Loans

It has recently been suggested that only 25 percent of entrepreneurs use traditional credit cards and bank loans to meet their start-up costs. That is actually great news for those seeking funding as it means that the majority of entrepreneurs are getting money from sources that are not so dependent on credit scoring. There are plenty of ways to fund a start-up which do not involve taking out a bank loan.

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What It Takes to Start a Small Business

It comes as no surprise that thousands of businesses, large and small, have gone bust during the current downtrend in the economy. Literally millions of workers have been made redundant, leaving them on their own to carry on. Some have tried their hand at contracting whilst others put their expertise to work at launching small business enterprises. Those enterprises that survived understood what it takes to start a small business in a bear market. Against all odds, many of these small businesses are flourishing concerns today because they took the time to get the facts straight before launching their company.

So You Have a Vision – Is That Enough?
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