Today, I discuss where the money to start your business is likely going to come from and factors to keep in mind when it comes to seeking and acquiring funding for your business. I highlight the importance of saving money and gaining clarity and credibility before seeking monetary support as well as different methods of obtaining outside investment. I also share the things to include in your loan proposal and the importance of being strategic throughout the process.
“You should never borrow money if you don’t know how you’re going to turn it into more money.” – Melinda Emerson
Listen to the podcast below:
Here’s what you’ll learn on this episode:
- The number one question I am asked by small business owners who want to start or grow their business
- The importance of having money set aside to invest in your business, why this is important, and tips for how to save
- What percentage of every paycheck you should be saving to starting your business, and for how long
- Why you shouldn’t necessarily rely on having investors when you first launch your business and what types of companies are most attractive to investors
- How the size and scalability of your business relates to investors
- What to consider before entering a pitch contest, and what to know going in
- How much money the average crowdfunding campaign raises, who tends to contribute to them, and factors to consider before investing your time in crowdfunding
- The role of giveaways in attracting crowdfunding support
- What to think through before you consider borrowing money
- What being truly ready to submit for a loan looks like, and what your credit score, taxes, and other paperwork should look like to appear credible
- The role of a banking partner in acquiring a loan and the relationship between the SBA and banks
- What the “loan of last resort” is
- How lines of credit should be used, what to be aware of if you open up a line of credit, and the importance of having a plan for how you are going to utilize your loan
- Whether your personal and business banks should be the same or different, and why
- Three specific bank accounts you should have, and what percentage of every check that comes in you should pay yourself
Resources Mentioned:
- Profit First by Mike Michalowicz
- SharkTank
- Small Business Administration
- Quickbooks
- American Express
Your SmallBizChat Action Point for the Week:
- Be honest with yourself. Is a loan really what you need at this point in time? Before moving forward with this mindset, consider whether there are other aspects of your business model that need adjusting. Once you decide on moving forward with the loan process, be realistic about how much money you truly need, and how you will transform this loan money into revenue.
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