The ABC's of Small Business Finance
Every business begins with an entrepreneur's dream. Many people start businesses because they want to pursue their passion in life, whether it's cooking, creating floral arrangements, renovating homes or some interest. There is something empowering about coming up with an idea for a business, building it from the ground up and being in control of one's destiny. Risk-averse individuals may opt to take a more cautious route of purchasing a franchise, which comes with an established brand and proven operational systems.
Other times, companies are launched out of necessity. It is not uncommon for someone who has been terminated from a job to then take the opportunity to start a business. In fact, they may have dreamed about being the boss for some time, but were unwilling or unable to assume the risks associated with starting a business while still gainfully employed. Often, this type of entrepreneur launches an enterprise in the same field they have always worked in and vows to do it better.
Once you have committed to starting a venture, it is time to write a business plan, which explains what the business is, who the customers will be, location, and when it will operate. The plan provides a roadmap to profitability and details the inherent assets of the business that will make it successful. Importantly, the business plan will be reviewed by lenders whom you might approach for capital.
Potential funders ultimately want to know whether borrowers will be able to repay in a timely manner. They will base the decision on the vision you outline in the business plan, the expertise of those involved in running the company and the financial data provided.