By Tania Hanouille, NYS Certified Business advisor
We have all read about success stories of an entrepreneur starting out with $500 dollars, opening a business in a garage and building a multi-million dollar empire.
These sensational news stories encourage some entrepreneurs to start their businesses with little or no planning or thought given to financing the business and working out a budget. After all, creditors want timely payments whether or not your business is producing an income. Many startup entrepreneurs think that the income will start pouring in as soon as the doors open. However, this is not the reality of small business.
There have been hundreds, if not thousands of articles written about why small businesses fail and all of these reasons are valid.
According to the Small Business Administration (SBA), only one half of small business startups survive five years. There are a number of reasons for failure, with the first year of business being the most critical. These include: little or no market for your product or service, poor location, lack of management skills, too much competition, lack of planning in terms of your businesses’ vision and goals, time and effort spent on the business is overwhelming, lack of stamina, among others. However, most business experts agree that the most crucial element for business startup and growth is having enough capital to provide the momentum to get the business off the ground as you build your customer base.
Business advisors recommend that the entrepreneur create a business plan for the purpose of planning the ifs, whens and contingencies. Part of this plan is the financial side: how much money do I really need and where will it come from?
There are a number of funding sources, the most traditional being banks and credit unions. There are alternative sources, crowdfunding, angel investors, cashing in your retirement, credit cards (never a good idea), home equity loans, borrowing from friends and family, high interest loans that you hear about on the internet and others. Many entrepreneurs are under the impression that there is grant money flowing from government sources for small business, but that is not the case.
Once the business plan has been created and an amount has been determined as a reasonable amount to cover the first few months and up to a year, with an additional amount for contingencies, it is time to talk to your business lender to see if your business plan is reasonable and if you are credit worthy based on your FICO scores and your personal financial statement. If your plan and your financial request is approved, you are ready to start or grow your business.
At the Onondaga Small Business Development Center, we work closely with clients, assisting with their business plans, guiding them through the process and recommending that they start by consulting with a small business relationship lender who is well versed in the aspects of financing a business so that the entrepreneur can mitigate the risk of doing business.
There is an opportunity for startup and existing business owners to meet one on one with over 25 lenders on June 2 from 8:30 a.m. to 12:30 p.m. at Onondaga Community College, Academic II, to learn about financing options for their small business.
Since every lender has different loan parameters and offers different products, this event will assist the client is selecting the lender who best suits their type of business and financial need and to set up an appointment at the lender’s place of business.
This event is FREE and registration is available at http://www.eventbrite.com/e/lender-matchmaker-tickets-15895468775? or by calling our office at 498-6076. You may also email: firstname.lastname@example.org.