Twenty-nine percent of new small businesses fail within four years because they run out of cash.
If you’re thinking about starting a small business, be aware that typical businesses need $10,000 at a minimum to get going. Don’t have that cash just lying around? Startup loans exist for just this purpose.
Here are five signs your business is ready for a startup loan.
Your Business Idea Fulfills an Unfulfilled Need 1u143t
New businesses start every day. How do you know if yours will succeed? How do you know if you would even qualify for a startup loan?
If you have an idea that fulfills an unfulfilled need, you have a great start. Do some market research. Are there other products or services like yours? If so, how will your product or service differ from what’s out there?
Look at Lunchables, for example. Lunchables launched in 1988 as a pre-packaged lunch of meat, cheese, and crackers.
Moms had been feeding their kids meat, cheese, and crackers or bread for decades, so the idea itself wasn’t that groundbreaking. However, the packaging was.
No one, at that point, had produced a cute lunch with little compartments, giving the consumer the opportunity to make their own mini sandwiches.
The first year, sales exceeded $200 million.
In this case, just packaging an age-old idea meant an instant hit. Perhaps your idea isn’t new but it’s presented in a new way, and that will make it a success.
You’ve Proven You Can Manage Money 1e6529
Banks will take a chance on people worthy of the risk.
If you have a record of bankruptcy and bounced checks, most likely, a bank will not approve your startup loans.
However, if you have a proven track record of wise money management, a bank will be more likely to take the risk.
The biggest downside of getting a startup loan rests in your new idea. If you have a great idea and know it will work out, you still need to prove that you’ll use the money wisely to make the company grow.
If you’ve never had a loan before for an idea with no real path of proven success, you may find yourself tempted to spend the startup money on things that will not necessarily grow your business.
Try to boost your credit score by opening a business credit card and then using it wisely. Research ways to boost your credit score. A higher credit score will make you a more viable candidate for a startup loan.
You Can No Longer Finance the Idea Yourself 5q3m4w
Here’s the real kicker. You saved money for years with this idea in the back of your head, holing it away until you felt you had enough to make a go of the plan.
Then you start the business, and you were right. It’s a roaring success. You’re meeting an unmet need.
Furthermore, you haven’t squandered your money. You have managed it well, and the business is thriving.
Now you have more ideas on how to expand. You can see that if you do not expand now, other businesses will begin to take over the market.
But you no longer have that big wad of cash sitting in the bank because you’ve been running your business.
What do you do?
You may need a startup loan, even though you’re not technically starting up the original business. If you can no longer finance the idea yourself, you have financing options. Use them.
You Have a Business Model and a Plan 2p1u4l
When you walk into a bank to apply for a startup loan, you will need more than just a great idea. You will need a plan.
Writing a business plan means more than just writing out your idea. Business plans consist of several elements:
Write an Executive Summary j635q
This should include an overview of what your company will do or sell, who you will serve or sell to, and where you will be located.
Describe Your Company 2n6b1l
State your company’s mission statement, business structure, and owner details. Explain where you will be located and how your location will help meet a particular market’s needs.
Analyze Your Market 441u3r
You should complete some sort of market study and then report on that in your business plan. Look at the research others have done as well as the customer surveys you complete.
In this part of your business plan, examine both your consumers and customers as well as your competition. Explain how your business will do a different or better job than the competition out there.
Explain Your Product and/or Service 6117
Take a few sentences to explain exactly what your company will do or what product you’ll be producing, marketing, and selling.
Outline Operations and Management Roles u8m
Are you a sole operator? Do you have employees? Do you plan on having employees?
Explain the roles of all involved in the business.
Design a Marketing and Sales Strategy 2b1z6b
Explain how you will grow your business and communicate with your customers. What platforms will you use to market your product? How will this effectively meet your customer’s needs?
Detail a Financial Plan 6x2s31
A basic financial plan should include a minimum of the start-up cost, the financial projections, and a funding request for the startup loan. The more detail you can have, the more you can prove to a lender that you’ve thought through your financial needs.
You’ve Recruited a Qualified Team 1s1d67
Those who consider advice are more likely to succeed. If you’re trying to start a business all by your lonesome without any advisors, prepare yourself to fail.
Recruit a qualified team of advisors as well as qualified workers. Once you have a trusted team, you’re ready to push the button on the startup and seek a startup loan.
Where Do You Find Startup Loans? v4028
Once six months have ed since you hung your shingle out and started your business, and once your credit score is 680 or higher, start looking for your startup loan.
Look for an SBA loan, a small business loan secured by the Small Business istration. The SBA is not doing the lending. Typically a traditional bank will have SBA loans available.
Don’t be afraid to look locally. A local bank with SBA loans will know you best. They’re most likely to approve your loan especially if your business will serve your local community.
As you look for startup loans, consider who you will serve and how you can best serve them.
Move Forward With Confidence 20181c
Starting a new business can be scary. When you have the right idea at the right time, then you should move forward with confidence.
For more information about startup loans and other financial advice, visit our website.
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