The Importance of Good Financing for Start-ups
I’ve blogged about having good financial health before taking out loans for startup capital, but I thought I’d write more in-depth about the importance of researching excellent financing for Business Funding. Every new business needs to be planned thoroughly before execution, or it may be the execution of your business. Review your current funding sources (interested relatives, friends, and your current assets) and see how much you can get done with unfinanced capital. Then, build a spreadsheet of your expenses and see what remains to be met. Even if you safely meet your needs, you’d hate to be at the starting line only to forget your running shoes. It would not be an unwise thing to speak to a small business adviser at the Small Business Administration (SBA) and get a list of common expenses overlooked by startups.
Next, speak to your current bank’s customer service representative, try to set up a meeting and talk about what you’ve calculated already, and see if your business could do business with them any easier or cheaper since you are already a customer with a personal account. Get information for but don’t sign-up for any accounts you might need, like business checking or a merchant account and payment gateway for credit cards.
Your financing plan (if you need to take out a loan) is really important. You should carefully review any terms of the agreements you sign, and use a loan calculator to see what kind of trouble you are in if (God forbid) your business fails completely. This is also an important time to check out the terms of your business: are you going to be a limited liability corporation (LLC) or a fully incorporated business? If you’re going to do any financing from a bank or other institution, I would not recommend staying as a sole proprietorship or partnership, because you could be liable if your business has any legal issues.
While you’re at it, take some of that startup capital and hire a lawyer and an accountant. No matter how business savvy you think you are, you’re always going to want someone with experience keeping up with your books and covering your hind end, legally speaking. Also, when you want to expand your business or (hopefully) sell your business for a profit later on, you’ll want their help then, too.