As you’ve learned, starting a business is your hardest challenge ever. Many businesses report it’s getting harder and harder to increase revenue.
So growing a business is a big challenge.
Sometimes a business needs access to capital to grow. But in order to grow, it helps to build credit profiles to land financing.
Budget your time to take the right precautions. Put yourself in the best-possible position to access capital so your business is ready to grow.
Here are five tips:
1. Establish a banking relationship
A good banker has experience with a wide myriad of companies and probably for your sector, too.
Your banker can help you get credit-ready with financial solutions. You’ll need them for your immediate business needs and your long-term goals.
Keep your banker up-to-date on your ongoing business and financing needs.
2. Erect a strong credit profile
Your good credit is a valuable asset. You must have good financial habits personally and in your business.
In considering whether to advance you money, your banker has multiple concerns. It’s not limited to your credit score.
Your banker will ascertain the health of your business such as your cash flow, your payment history, your debt-to-income ratio and your customer base.
3. Review all financing options
Your banker is best-suited to review your best opportunities to obtain capital. They include a line of credit, equity financing, venture capital and angel capital.
Your banker might also advise to consider an SBA 7(a) loan.
4. Closely monitor your cash flow
Your banker will look at your profit situation and cash flow to determine your credit capacity. You must demonstrate you have enough cash to meet your financial commitments.
So regularly review your cash flow.
5. Split your business and personal accounts from each other
Many small businesses make the mistake of not having dedicated business accounts. Co-mingling of funds will lead to disaster.
Moreover, it demonstrates the soundness of your business when you’re asking for credit and money. And it helps you keep better records of your business income and expenses.
From the Coach’s Corner, here are links to related articles:
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“You can’t be in debt and win. It doesn’t work.”
-Dave Ramsey
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