Do's and Don'ts of Financing Your Business
Two entrepreneurs sitting next to each other at a table in front of laptops working on a deal.
Money is the lifeblood of business. Here are MOBI’s top ten do’s and don’ts for getting the money you need to start and grow your new business. Before you get started, be sure to answer some basic questions regarding how much you will need and where to get it. You should also watch MOBI’s videos on financing a business.
THE TOP TEN DO'S
- Live frugally and begin saving up money now to start your own business.
- Use your cash flow projection as your key tool to determine financing required.
- Complete a business plan for meetings with potential lenders or investors.
- Have your business plan reviewed by appropriately informed people. Revise as necessary.
- Ask the Small Business Administration for advice. (Have your business plan with you.)
- Maintain a current financial information packet including financial statements and recent tax returns.
- Consider bartering services if appropriate.
- Use your CPA or attorney as referrals to lenders.
- Keep your lenders informed of your progress and any potential adverse events.
- If you need a loan for 6 months, ask for 12 months to be on the safe side.
THE TOP TEN DON'TS
- Expect a bank to help finance your new business.
- Ask for a loan without a detailed repayment plan in hand.
- Overlook vendors and landlords (for tenant improvements) as sources of financing.
- Avoid being the bearer of bad news to your lender.
- Ask for less than enough to meet your realistic needs.
- Exaggerate. (Instead, be conservative in your presentations to lenders.)
- Write a check without adequate funds in your bank account.
- Risk losing your home by taking a "Home Equity" loan unless you are certain of your ability to repay.
- Sign a personal guarantee unless it is absolutely necessary.
- Budget or spend money on expensive entertaining of potential lenders.
MOBI’s articles, videos, and free online business courses can help you get the money you need for your business. Thorough preparation will help you avoid common mistakes and increase your chance of success.