Know Where To Find Credit and Capital for Your Business

In previous posts, I’ve talked about two of the three most common pitfalls that face small business owners and new entrepreneurs alike. The third, and perhaps most significant hangup for the modern small business concerns inadequate business funding. Be it a lack of credit, a lack of raw business capital, or both, these kinds of issues can bring even the best business concept to its knees. How do you avoid this probelm with your own business?

The first thing you need to do is recognize a) that you need capital to begin with, and b) where to find the capital you need. There has been a lot of recent press about the shrinking of the credit market, and this trend applies to businesses as much as it does to individuals. Many small business owners have felt the crunch, with credit lines shrinking or even disappearing altogether. With small business as the lifeblood of commerce in this country, where does that leave you as a small business owner?

The funding landscape might be foggy but there is still some visibility for today’s entrepreneur. You just need to know where to point the fog lamp and what you should be looking for. I’d like to cover several sources of capital you can pursue, including the aforementioned option for business credit. Let’s stick with this for just a moment. Business credit is still accessible, but is simply a little more finicky than it was even 12-18 months ago. Here’s what you need to realize.

First, you may need to offer a little more information about your business than you’ve been accustomed to in the past. For example, you might need to provide both a recent sales history and some proof to back it up, to best qualify for available business credit lines. Second (and especially if your business is new), your personal credit score may need to be  excellent in order to even be considered for business credit. What you may have been eligible for two years ago with a 620 score now may require a score of 720, just to put some numbers to the situation at hand. Last, you might expect to be granted lower credit lines, with the right to request increases once you have a stornger payment (and usage) history with a particular grantor of credit.

The bottom line is that your personal credit is as important to establishing business credit as it ever has been, so now is the time to be thinking about optimizing your personal credit score, both for your benefit and for the benefit of your business. In future posts, I will be discussing both ways to improve your credit and much more about many different types of capital that exist in the wordl of the modern entrepreneur. From the use of retirement accounts, to government loans, to tapping into the multi-billion dollar world of private investment capital, you need to know where to find the funding your business needs, and also the knowledge of how to acquire it.

Manage Your Way to Business Credit and Private Capital

In a previous post, I discussed the all-important aspect of having a solid business idea. Not only is a good idea critical for the entrepreneur to enjoy the kind of business success they seek, but it also is a critical area on which your business will be judged by funding sources.

Another important aspect of business success is that of management. Many entrepreneurs are classic dreamers and, as such, are good at coming up with new ideas. It is taking these ideas forward that is not always easy. One must have a management team in place to help bring a business idea to life. Having such a team does not mean having to have employees. Many common management tasks can be effectively outsourced, especially in today’s virtual world of commerce.

Examples of management tasks that you, as an entrepreneur, need to consider are:

• Marketing and design of promotional materials
• Website design and administration
• Product development and production (if applicable)
• Product shipping
• Customer service
• Accounting/bookkeeping

If these kinds of tasks aren’t exactly your forte, then you are certainly not alone among the world of small business owners. The key is to recognize that these management tasks must be somehow accounted for, in order for your business to be successful. If it means delegating them to an outside source, so be it. The best way to enjoy success in business is to focus on what you do best and at least be aware of what else needs to be done so you can make it happen.

Now, let’s see how this applies to funding for your business. Let’s say you have a great business idea and feel you can show its value to anyone who might provide credit, capital or other business funding. This is great and what will you do when these same funding sources ask about your management team and how the tasks listed above are going to be handled? Will this be a nervous moment for you or will you be prepared with the kinds of answers that produce financial results?

The truth is that great ideas are born every day, which I think typifies how the entrepreneurial spirit is still alive and kicking in our country. What sets a good idea apart from those that never receive business credit or capital to support them is the quality of management that can be shown, in support of the business.

Make a point, if business is something you are committed to, to develop your management structure alongside your ideas. Sources of business credit and private business capital will want to see that you have good management. They’ll need to see it in fact, and when you can show you have your ducks in a row, that’s how your great idea can develop into your business dream.

Good Business Ideas Lead to Business Credit and Capital

A survey of small business owners would show that their biggest challenges are common things like management, finding quality help, and even business funding. A much smaller number of business owners would really question whether or not their actual business concept was any good. Why? Entrepreneurs, as a group, tend to think their ideas for a business are good, sometimes to a fault. Think of it as like an employee who remains devoted to his or her employer, even if they aren’t sure the company is heading in the right direction.

In the case of small business, the price of loyalty to a bad concept is not just being laid off. It could mean sacrificing months or years of time, effort and money to a venture that may not have ever had a chance to succeed in the first place. This is the importance of a good idea in small business and why entrepreneurs need to pay very close attention to the ideas they wish to pursue.

A primary difference between an untested business idea and one that can stand up to the rigors of market competition is how well the idea has been compared to competitive products or services. Answers to the following questions will help you determine if your business idea is tested or untested.

• What is the primary competition for the product or service?
• How does your product or service compare to the competition?
• How can you position or market your product as being better or different?
• What specifically will make your customers want to buy from you?
• How much time will it take to get your product or service out there and ready to make money?

One of the main focus areas of this site is to provide information and resources for how to optimize credit and raise capital for a variety of purposes, both for personal reasons and for business. In the case of small business, a bad (or at least improperly tested) idea may not only threaten the credit rating of a business owner, but also may not stand up to the scrutiny of the funding sources who might provide capital for the business. If business is something you are passionate about, remember that just because you love your idea, it does not always mean others will too.

Think about how someone who might grant you either credit or business funding would see your idea and develop your business as if you had to sell your idea to the skeptics of the world each and every day. When an idea can survive this kind of testing, it likely can survive in the tough modern economy, and be able to attract funding too.

Starting Your Own Small Business- What You Need to Know

The dream for many Americans is to someday own and operate their own small business. Small business means freedom from the 9 to 5 rat race, a chance to be one’s own boss, and of course the chance to make money doing something you love. Before you get started in any business, be it part time or full time, you should first understand what makes businesses successful. In this way, you can follow a path to success right from the beginning!

The first thing a small business needs is a solid idea or concept. Basically, do you have a product or service that will have value to someone else who wants to purhcase it? Many entrepreneurs are so ga-ga about their own business ideas that they fail to really evaluate them before taking their business “to market”. This can result in poor sales, a slow path to success, or even outright business failure. Simple idea development and really putting your business concept to the test before ever making a sale can help you avoid this potential problem.

Next, a small business needs to have some sort of funding. The traditional route to business funding is to use your personal credit and/or assets to get a bank loan and launch the business that way. News flash…business funding has tightened up like never before and you need to have some other options to look into to get the money you need. Sure, it is still great to have good personal credit and there are resources here to help you improve your score if the need is there. You also want to be able to raise money for your business from outside sources, when the banks just won’t cooperate. Will you think out of the box or will you just put your small business dreams on hold?

The last thing a good small business needs is quality management. You have many opportunities for home-based businesses to choose from but don’t get lulled into thinking your business doesn’t need to be managed. Even without 30 employees, businesses have books to keep, sales to track, taxes to file, and the list goes on and on. How you get these important things done is at the heart of management and is critical to small business success.

In future posts, I will be looking at each of these three aspects for small business success in more depth. Whether you’re starting a new small business right now or are looking to do so in the near future, these are things you simply must know so stay tuned!