Owning a business is never easy, and there will surely be some new skills that you will need to learn if you wish to succeed. Perhaps you already naturally possess some of these skills, but there are sure to be some that you will need to develop. Marketing, sales, customer relationship management, planning, management, financial, human resource management, and careful cost management are just some of the skills that you will need. In addition, you will have to master the art of providing value for money in terms of service and products to your customers without sacrificing your work and life balance.
Entrepreneurs have sharp skills when it comes to gathering funds for their businesses, and many of them have multiple potential sources of funding when they need to raise cash for their activities. The following posts will provide an overview of the different ways in which businesses can raise money for their operational needs.
How to Make Banks Work for You
New business owners may have trouble in obtaining loans based solely on a good business idea. Although some bankers may be listening to your business idea with enthusiasm, they will actually be more interested in building a relationship with you. This is because they want to position themselves as a potential source of funding once your business passes the idea stage and enters the realm of the reality. Concretely, what are the banks looking for in new businesses, and what should a new business expect from a bank?
Banks are most interested in collateral, and also in the revenue history of your business. The collateral will act as a safety net in the event you are unable to pay back your loans due to any unforeseen circumstances, while the revenue history provides a projection of your income potential. This allows the bank to estimate a comfortable monthly repayment plan for you, without putting your business under undue stress.
Franchisees have the advantage of being able to include the franchise revenue history in an application for a loan. This is more favorable to most banks when it comes to accepting your application. You would also be wise to compare the various fees that are associated with the potential bank’s services. Although they may seem small at first, fees can add up over time and can be quite detrimental in the long run. Always keep this in mind when shopping for banks.
Most of the time, businesses view their banks as being an essential part of their activities as far as cash flow is concerned. However, when you compare this with the other sources of cash that may exist, you quickly realize that banks are only one piece of the puzzle as far as financing is concerned.
Sometimes it happens that an applicant who has failed to secure a small business loan may opt for a home equity loan instead, putting their private house up as collateral for a loan. This is strongly discouraged, as this practice places your personal property at risk, so that you could potentially lose your house if your business model fails.
Alternatively, there some people decide to offer their personal savings as collateral. There may also be a possibility of obtaining unsecured loans from brokers and other third-parties institutions. However, interest rates for these types of loans may be quite high when compared to a typical bank loan. In fact, interest rates will vary depending upon your credit rating and the amount of risk involved. It is important that you read all of the terms and conditions carefully, as these will vary from company to company. Be especially wary of early repayment fees and processing fees that may be applicable on some loans.