Find Your Financial Footing
By Sally Buffum, Fidelity Bank
So you want to pursue a new business venture, but you’re not sure where to start. You have the passion and you firmly believe in what you want to do. But there’s so much else to consider, especially when it comes to financing.
Getting off on the right financial footing can make all the difference in how successful you are with your business. Whether you’re dealing with a bank or some other financial source, you need to have all your ducks in a row. With that in mind, here are some tips to consider:
- Come up with a business plan that’s realistic and implementable. As part of that plan, include a SWOT analysis – assessing your strengths, weaknesses, opportunities and threats. This will help in giving you a “big picture” lay of the land. And it will also show your potential financiers that you’re serious about launching your business.
- If you’re seeking financing through a bank, be prepared to show that you have experience in the business you’re pursuing. Bankers are likely to shy away from someone who’s delving into a venture for the first time. You’ll need to prove that you know your way around, so obviously the more experience you have, the better.
- Line up a guarantor before you head into the bank for a loan. It could be a relative, a friend, or someone who has an interest in your business. No matter who it is, the bank will want to see that you have a reliable guarantor to stand behind you.
- Many bankers consider some business ventures riskier than others, which could make it more difficult to secure financing. These include restaurants and seasonal businesses, such as landscaping. Be prepared to undergo additional scrutiny if you’re heading in one of these directions.
- Maintain good personal credit. Showing that you pay your bills on time and that you haven’t overextended yourself credit-wise will provide a good indication that you’re capable of handling finances in a responsible manner.
- The federal Small Business Administration has programs that can be helpful to newly minted entrepreneurs. The SBA’s website includes extensive information on starting and managing a business. Go to http://www.sba.gov/ to learn more.
- Aside from banks and other financial institutions, other means of financing include family and friends who have pockets deep enough to assist you, as well as venture capital firms. But be aware that the latter likely will want a stake in your business or could have higher interest rates.
- It’s better to start out small. Avoid the trappings of a big fancy office or unnecessary production space. They can be a drain on your finances.
Embarking on a new business is not for the faint of heart. There will be challenges to deal with, struggles to overcome. But with proper preparation and perseverance it can lead to a rewarding experience that will make it all worth the effort.
Sally Buffum is Senior Vice President, Business Banking Officer and Financial Designer at Fidelity Bank.
Sally has over 30 years of banking experience, at both multinational and community-based institutions.