5 TOP IMPORTANT THINGS TO KEEP IN MIND WHEN FINANCING YOUR SMALL BUSINESS IN MY PERSPECTIVE

Business I look at as a sport. Except I am very fortunate that I get the ability to play whatever position I want, 365 days a year, as long as I want, if I choose. I may not be the best player in my position, but I am determined to get better and train everyday as a player would for his team. It is all about mindset and discipline. As a young business owner I hit a lot of obstacles when I was tasked to find financing for our business, which a lot I believe had to do with my youth..... That is for another day and discussion. Below are my 5 things I kept in mind when I was looking for financing.

1.BORROW WHAT YOU NEED

One of the most important things to know when looking for financing is how much you need. Do not just have a ballpark number in your head or a guestimate. You need to evaluate a full review of your projected cost and revenue with planning for best- and worst-case scenarios. Too much money for most can leave them with debt that you need to repay, but too little money could leave you facing challenges when unexpected expenses arrive.

2. DON'T FOCUS ON JUST THE INTEREST RATES

Even though I personally think interest rates are important, it is just one part of my evaluations when looking at a loan. Instead, I think about this:

• What do I think of the financial institution I am currently working with or looking to develop new relationship with as well as their representatives?
• How much is the bank willing to lend based on my assets?
• What loan term is the lender willing to offer?
• What guarantees are being asked from you in the case of default?
• What is the lender's flexibility on repayments?

3. BORROW AT THE RIGHT TIME

Business is all about planning and preparation. Whether you are just starting a business or looking to expand you need to take time to know your business. Plan the specific time you will need money is important as well as where it will go when you have it.

Some borrow to early and are tempted to spend the money on things they need now vs. what you have planned to allocate it to. You have to stay disciplined! Some borrow to late and go into desperation mode which can create financial stress and put serious pressure on financial process of your business.

4. KEEP TRACK OF YOUR NUMBERS

As a business owner especially in a small business, bookkeeping can be the last thing on your mind when dealing with the rest of your operations. Invoices get piled up. Purchase are made sometimes on both your personal and business credit card. The list can go on and on. You must stop; those are bad business habits.

A lack of keeping track of your financial records can leave you guessing on how your business is really performing. I find that amazing every time I have asked business's how they keep track of their profitability and they don't know how to answer. This makes it difficult for a lender to assess your viability without documentation and trust your responsibility for repaying the debt.

Being organized with your financial records up today, and even hiring an accountant, will help you keep a pulse on your money and make sure you are investing it wisely back into your business. This will also benefit you when looking for financing.

5. KNOW YOUR PITCH

Speaking to a lender can be intimidating at first to most. I see it almost as if you are there for a job interview. You are vetting them out to make sure its a good fit for you and your career and they are vetting you out to see if the alignment is there. You need to know your track record "RESUME". Here are a item I think are good to be asked or ask when talking to a new financial institution.

• What makes your business viable for this bank?
• What is your 2-5 year plan?
• What is your business and why are you passionate about it?
• Who are your consumers and why do they choose you?

CONCLUSION

I finally found a great financial partner that took a chance with us. They truly are aligned with our values, our vision, and our growth. If you apply these steps and organize yourself, you too can secure a great financial partner.