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:
Tips to Get the Lowest-cost Small Business Loan — Small business owners are facing unnecessary financial risks because they increasingly seek debt consolidation and loan refinancing as the result of high interest rates and onerous fees, according to a small-business lender. Here’s what to do.
Drowning in Student-Loan Debt? How to Pay it Off in 1 Year — You’re not alone if you’re drowning in student-loan debt. The average college graduate in 2015 was saddled with student loans totaling $35,000, which takes 10 to 20 years to pay off. Here’s what you can do to stay afloat.
Debt Consolidation Will Sink You without These 6 Tips — If you’re not careful in your debt-consolidation plan to bundle your debts for a lower interest rate and minimum payments, you might get into more financial problems. Here are six precautions.
8 Financial Vows for a Young Couple’s Successful Marriage — Young people have starry eyes when they plan to marry. Certainly, they look forward to a lifelong bliss together. Unfortunately, about half of first marriages end in divorce. Often, it’s over money disagreements.
Money – Your Net Worth Matters More than What You Earn — When it comes to finance, most business owners and other individuals strive to increase their wealth to have more opportunities. The trouble with some, however, is that they focus on income and not their net worth. That means, of course, spending less than they earn.
“You can’t be in debt and win. It doesn’t work.”