What “To Do” and “Not To Do” when starting a business
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 critiqued by appropriately informed people. Revise as necessary.
- Maintain a current financial information packet including financial statements and recent tax returns.
- Consider bartering services if appropriate.
- Use your consultant, CPA or attorney as referrals to lenders.
- Keep your lenders informed of your progress and any potentially adverse events.
- If you need a loan for 6 months, ask for 12 months to be on the safe side.
TOP TEN DON’TS
- Don’t expect a bank to help finance your new business.
- Do not ask for a loan without a detailed repayment plan in hand.
- Don’t overlook vendors and landlords (for tenant improvements) as sources of financing.
- Don’t be afraid to be the bearer of bad news to your lender-get their help to make things better.
- Don’t be afraid to borrow enough to meet your realistic needs.
- Never exaggerate. Be conservative in your presentations to lenders and investors.
- Never write a check without adequate funds in your bank account.
- Don’t risk losing your home by taking a “Home Equity” loan unless you are certain of your ability to repay.
- Do not sign personal guarantees unless absolutely necessary.
- Do not budget or spend money on expensive entertaining for anyone.
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