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Posted in Entrepreneurial Strategy Blog Posts

Effective Customer Validation

A brief recap from a previous post. Customer Development is an essential part of the process when starting a new company because it eliminates unnecessary expenditures and identifies your “ideal” customer. In Four Steps to Epiphany by Steve Blanks, the first step in the Customer Development process is Customer Discovery. Customer Discovery is, “testing whether a company’s business model is correct, specifically focused on whether the product solves customer problems or needs.” (Banks, 2013) The second step is Customer Validation, a process that, “develops a sales model that can be replicated.” (Banks, 2013)

If done successfully, Banks states that Customer Discovery and Customer Validation can work hand in hand and have cyclical nature. Let’s take a look at how both processes can effectively work together.

Example:

Harmon wanted to start a kosher hot dog truck but wasn’t sure where to set up for his “ideal” customer. Harmon went through the steps of Customer Discovery and tailored his hot dog business to have a steady flow of repeat customers. Being that his “ideal” customer is typically male between the age of 18 to 35 and is all over town, he wanted to identify prime locations and which times to set up. Harmon started near college campuses and noticed that they preferred evenings around 8 p.m. to 10 p.m. Monday thru Thursdays and Thursday thru Saturday around 1 a.m. to 3 a.m. For his military customers, he noticed that they preferred lunch hours of 11:30 a.m. to 3 p.m. Monday thru Friday and near or on the military post.

To educate his customers of his exact location during certain times of the day, he posted on his social media sites and even offered days he was available for concession. Harmon began posting pictures of his specials for the day and happy customers enjoying their meals. He continuously asked for customer feedback and would try to make necessary adjustments as his business kept growing. Soon his company began to grow, and he had to hire a separate crew just for the concession at events. Harmon was committed to providing excellent product and customer service, as well as sticking to what worked. He relied on heavily customer feedback and utilized his social media sites to stay in constant contact.

Consequently, Harmon is an excellent example of how Customer Discovery and Customer Validation go hand in hand. Harmon was able to identify his “ideal” customer and position himself where his customers needed. He also found that promoting his business on social media with location updates and pictures were effective in driving his sales up.

Sources:

Banks, S. (2013) Four Steps to Epiphany: Successful Strategies for Products that Win. Retrieved via Amazon Kindle Edition. K&S Ranch Publishing

Posted in Entrepreneurial Strategy Blog Posts

The Importance of Customer Discovery

You’ve dreamed. You’ve drafted. You’ve found the money to make your dream a reality, and now it’s time to sell. Unfortunately, you find out very quickly that your product or service is selling very little or not at all. What happened? You reached for the stars but barely got off the ground. You created the business plan, had a grand marketing scheme, tested your product, and jumped through necessary hoops to ensure your customer has access to your offering. But did you ever stop to define your “ideal” customer and get their feedback?

In reading, Four Steps to Epiphany by Steve Blanks, you’ll learn very quickly the reason your product or service may not be selling. Blanks thoroughly explains the importance of Customer Development, which is discovering who your customer is before completing a product or service for mass production. There are four necessary steps in Customer Development:

  1. Customer Discovery
  2. Customer Validation
  3. Customer Creation
  4. Company Building

Banks defines customer discovery as, “testing whether a company’s business model is correct, specifically focused on whether the product solves customer problems or needs.” (Banks, 2013) He goes on to say that having a beta product or service is optimal when approaching your “ideal” customer.

Some key factors in Customer Discovery are:

  • Clearly define the problem in which you are solving. If your customer is not aware of a problem, they will not look for a solution.
  • Know your demographics and go to the “Gemba,” a Japanese term for “the real place.” Fundamentally, meet them where they work or assemble to see if you can identify how your solution could benefit them.
  • Be open to honest feedback and be willing to make addendums to your original “solution” to meet the customer needs.
  • If you have a beta product or service, try to sell it now or test it and ask for feedback once the customer has had time to use it.
  • Eliminate or reconfigure aspects of your solutions that are not useful or working for the customer.

Overall, customer discovery is hugely beneficial to a new or existing business because it allows the opportunity to drill down to “ideal” customer. It saves time, money, and resources. It enables a company to realize what aspects of their business are working and what is not. Similarly, it forces a business to go back to the drawing board and possibly find a different route to serving their customer base. Blanks also mentioned to be a sustainable business; customer discovery will have to be a continual process.

Once you discover your proven “ideal” customer, your next goal should be to create a sales plan to market to your prescribed buyer effectively. Stay tuned as we will discuss how to do that in the next post, “Effective Customer Validation.”

Sources:

Banks, S. (2013) Four Steps to Epiphany: Successful Strategies for Products that Win. Retrieved via Amazon Kindle Edition. K&S Ranch Publishing

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Understanding Your Market

Over the next couple of weeks, I will discuss the importance of identifying your market. The importance of learning and discovering your customer. Pitfalls startups often make and how to avoid them. How a business can stay customer focused instead of the bottom line driven. Lastly, strategies on how to rethink your business idea.

A fundamental principle of business is identifying which market your product or service will be segmented. Investopedia defines the market as, “goods and other services, which sellers determine by creating supply and which buyers determine by creating demand.”

It is essential to identify your market as earliest as possible when creating a product or service to ensure that you are meeting a demand. It also helps determine your position amongst competition or creating a niche within a market.

In the article “Defining Your Market in 7 Steps” Lynda Falkenstein, author of Nichecraft: Using Your Specialness to Focus Your Business, Corner Your Market & Make Customers Seek You Out states, that there are some basic principles an entrepreneur/startup must follow:

  1. Make a wish list – Be specific with whom you want your customer to be, e., consumers or businesses. Try to narrow down your ideal customer as possible.
  2. Focus – What you sell needs to be clearly What makes your product or service stand out? For instance, if you have a coffee shop, does your coffee shop specialize if domestic or international blends?
  3. Describe the customer’s worldview – How does your product or service identify with your consumer’s needs or wants? This is an excellent time to engage prospective customers.
  4. Synthesize – At this stage, your product or service should be aligning with what the consumer needs. You’ve reworked your initial idea to cater specifically to what will sell. You carefully plan at this stage and try to measure your longevity.
  5. Evaluate – Assess your competition and rate of growth. How many customers will you need to be profitable? How much will it cost? Be realistic in your evaluation.
  6. Test – “Give consumers an opportunity to sample your product or service.” Take note of their feedback. You may need to go back to the “drawing board.”
  7. Go for it – It is time to work on becoming a market leader.

Sources:

Market – Investopedia (2018, January 29) Markets in Context Investopedia.com Retrieved via Market https://www.investopedia.com/terms/m/market.asp

Entrepreneur Press (2013, February 13) Defining Your Market in 7 Steps Retrieved via https://www.entrepreneur.com/article/225656

Posted in Entrepreneurial Funding Blog Posts

Venture Capitalists

Over the last eight weeks, we have discussed funding sources available for a startup or existing businesses in the infancy stage. I have covered, Small Business Administration 7(a) Lending, SBA Microloans, using credit cards, non-bank lenders, and Angel investors. In my final post on funding, I would like to discuss Venture Capitalism. Investopedia defines Venture Capitalist as, “an investor who either provides capital to startup ventures or supports small companies that wish to expand but do not have access to additional funds.” (Investopedia.com) Venture Capitalists act similar to Angel investors, however, instead of investing personal funds they utilize a firm’s capital to make investment deals.

VC’s are all about a company’s valuation, strong management, and a keen competitive advantage. Their goal is to invest low and yield high returns with a controlling interest. As an entrepreneur, it is imperative to have an idea as to what you are willing to give up when seeking venture capital. Actually, when seeking funds from any investor. I would not be uncompromising, but I would advise an entrepreneur to consider if a VC deal would be a good fit.

In the book Entrepreneurial Finance – Finance and Business Strategies for the Serious Entrepreneur, Rogers and Makonnen quoted a VC saying, “I’m going to pay you as little as possible for a much of your company as I can get.” Entrepreneurs need to be cautious not to give away too much of their company for the sake of getting capital. Yes, VC’s investment needs to yield a profitable ROI especially because they are assuming so much risk. However, the entrepreneur should not “make a deal with the Devil,” to get the necessary funding.

Please note that I am not saying all VC’s are bad, but they are “in it to win,” as all investors are. Entrepreneurs just need to be aware that VC’s usually require a large stake in the company to make an investment. Between Venture Capitalist and Angels, I am in favor of Angels. What about you? Overall what investment option do you think would work best for you?

Sources:

Venture Capitalist – Investopedia – Sharper Insight (N.D.). Retrieved from http://www.investopedia.com/terms/v/venturecapitalist.asp

Roger, S. & Makonnen, R. E. (2014) Entrepreneurial Finance – Third Edition: Finance and Business Strategies for the Serious Entrepreneur [Kindle Edition]. McGraw-Hill Education & Amazon Digital Services LLC

 

Posted in Entrepreneurial Funding Blog Posts

Angel Investors

Angels are typically men and women that attained a certain level of wealth and can set aside large seed capital to invest in new business ventures. Amis & Stevenson considered Angel investing to be extremely risky but helpful to an entrepreneur that is trying to raise funds. Angels also operate in networks and have specific areas they choose to invest based on their expertise.

Angel’s invest based off of a company’s valuation. Entrepreneurs can either settle for an individual or host several angels. Depending on the terms of investment, Angels can become stake owners or be a coach to assist the entrepreneur as needed.

In the book, Entrepreneurial Finance – Third Edition: Finance and Business Strategies for the Serious Entrepreneur, Rogers and Makonnen discuss the positive and negatives of Angel investing.

Positive:

  • Seed capital available for true startups
  • Angels are typically experienced business professionals that invest in their area of expertise.
  • Angels are typically more lenient than firm investors.

Negative:

  • Some Angels require an active role in business decisions and operations
  • Angel may only agree to invest a limited amount.
  • Return on Investment must match seed capital and have excess residuals.

Angel investments are similar Venture Capitalist investments, except seed capital tends to be higher because of VC firm caps. Having an Angel investor is optimal for an entrepreneur because their venture is getting funded and investment capital does not require collateral. The hardest part for an entrepreneur is actually getting a meeting with Angels and having them believe in their vision and ability to give them a worthy Return on Investment (ROI).

Sources:

Amis, D. & Stevenson, H. (2001). Winning Angels: The 7 Fundamentals of Early Stage Investing. London: Financial Times Prentice Hall

Roger, S. & Makonnen, R. E. (2014) Entrepreneurial Finance – Third Edition: Finance and Business Strategies for the Serious Entrepreneur [Kindle Edition]. McGraw-Hill Education & Amazon Digital Services LLC

Posted in Entrepreneurial Funding Blog Posts

Non-Bank Lenders

So far I have discussed Small Business Administration 7(a), SBA Microloans, and Credit Cards as funding options for a startup or new business venture. Another lending option an entrepreneur should consider is non-bank lenders. Non-bank lenders are also referred to as “Alternative Lenders,” which provide a range of loan options outside the traditional bank loans. The approval for a loan is a lot faster and easier. However, percentage rates are also a lot higher. As the adage says, “Everything comes with a price.” There are several top alternative lenders, and each has its pros and cons.

Attaining capital for a new venture can seem like a never-ending battle. Especially if there are continual growth and your initial investment cannot cover expansion costs. It is imperative that an entrepreneur have access to the funds necessary to keep the business running and also have an affordable repayment plan. It is one thing to need money to make money, but it’s another not to be able to afford the money you need. Assessing a lender’s repayment rates and terms are imperative before making a final decision. Faster and easier can sometimes come off as a “Get rich, quick scheme” if one is not careful.

The Small Business Administration, Office of Advocacy, defines non-bank as “Lenders that provide a range of products and services, such as merchant cash advances, business lines of credit, and installment loans, the latter two of which may mimic similar products offered by banks.” (SBA.gov) Non-banks should be considered for individuals that credit issues but are actively opening a business or those who need immediate funds and cannot necessarily wait the length of time it takes to receive from a bank lender.

Here are four highly rated non-bank lenders:

Fundation – offers term loans for equipment or expansion improvements and working capital loans when operating cash is low. Loan range from $20,000 to $500,000 with annual interest rates ranging from 7.99% to 29.99%. (Fundation.com) Repayment terms are from 1 to 4 years with two pay frequencies. Minimum requirements include a good credit rating, $100,000 in annual sales, and in business for at least year with three employees.

Kabbage – offers lines of credit that range from $2,000 to $150,000. Repayment must be made with six to twelve months; fees are associated instead of interest. Depending on the loan, fees are 1 to 12 percent of the line of credit. Kabbage applications require your business account to be linked to the application for review and only takes ten minutes receive a yay or nay. Once approved,k Kabbage makes funds are available immediately for use. (Kabbage.com)

Accion – offers microloans specifically for small business startups. Credit scores can be no lower than 575 and entrepreneur must be able to prove a steady cash flow of $2500 and be in business for at least 3 months. Loans amounts range from $10,000 to $100,000 with percentage rates starting at 10.99%, and payments must be made on a monthly basis until the loan is paid. Accion offers loans based on state. For North Carolina, they offer loans for daycare services, food and beverage small business, startups that are based in the home, and existing businesses. (Accion.com)

OnDeck – offers fixed rate loans up to $500,000 and lines of credit up to $100,000 to individuals who have been in business for a year with at least a 500 credit rating and annual sales of $100,000. Repayments must be made with three years and paid on a weekly basis. Annual percentage rates range from 9.99% to 13.99%. (OnDeck.com)

Consequently, “Non-bank loans and online loans present an opportunity to procure capital more quickly and more easily. In turn, small businesses may be able to manage financial emergencies better or take advantage of unanticipated growth opportunities.” (SBA.gov) In my opinion, non-banks have similar percentage rates to credit cards but have higher limits to loan. The great thing about non-banks is you have options to pick which one fits your business needs.

Sources:

Office of Economic Research Staff (n.d.) INTEREST RATES AND NON-BANK LENDING TO SMALL BUSINESSES. Small Business Administration Office of Advocacy Retrieved via https://www.sba.gov/sites/default/files/advocacy/Interestratesissuebrief508compliant.pdf

Fundation (n.d.) Loan Products Retrieved via http://www.fundation.com/borrowers/

Kabbage (n.d.) Business Loans Retrieved via https://www.kabbage.com/?afsrc=1&refid=cj&PID=3934861#

Accion (n.d.) Loan Types Retrieved via http://us.accion.org/how-to-apply/loan-types/north-carolina

OnDeck (n.d.) Business Loans Retrieved via https://www.ondeck.com/business-loans

Posted in Entrepreneurial Funding Blog Posts

Using Credit Cards as a Funding Source

Since the dawn of credit card or having the ability to “charge” an account, consumers have flocked to the idea of buy now and pay later. “In the 1800s, during the westward expansion, merchants use credit coins and charge plates to extend credit to local farmers and ranchers, allowing them to forgo paying their bills until they harvested their crops or sold their cattle.” “In 1958 major banks launched revolving credit, which allowed cardholders to carry their monthly balance forward for a nominal finance charge.” (MacDonald & Tompkins, 2017) Thus began amass influx of consumers and entrepreneurs owing more and more debt. So I have to ask, should credit cards be the best option for a small business? What should owners use and not use them for?

I recently had to work on an assignment where it required me to look at the cash management of my business several different ways regarding a line of credit. A line of credit operates similarly to a credit card. The repayment structure and flexibility are almost identical. The credit owner can request a certain amount, only pay interest on the amount they spend, and either make a full payment or make the minimum payments toward the balance. Additionally, credit cards also operate on a 30-day pay, so an owner has until the end of the month to pay. Thus allowing the owner enough to collect their account receivables to pay the bill or operate off of the retained cash but only paying the minimum.

In the Entrepreneurial Finance – Third Edition: Finance and Business Strategies for the Serious Entrepreneur, Steven Rogers and Roza Makonnen stated, “Combined personal and business credit cards are the most common source for business loans.” Even after the financial crisis of 2008, small businesses continue to use credit cards to fund their business expenses. One would think that small businesses would begin to shy away from relying so heavily on their credit to pay expenses but when customers and other businesses are late with account receivables payments, how are they supposed to survive in the interim?

Funding Circle, a direct small business investment site states, “A credit card is a good fit for handling small, ongoing working capital expenses, but if you need to make a big one-time investment to finance a long-term plan, you’re out of luck.” (FundingCircle.com) Small ongoing expenses being, office supplies, travel engagements, membership fees, or small emergency expenditures. On the contrary Funding Circle states, “Larger or more investment-oriented spending like new office equipment, new real estate, or bulk purchases of manufacturing supplies are usually better suited to a term business loan. This is because spending larger amounts on a card ties up your revolving credit load (which also damages your credit score) and comes with greater interest costs — both of which hurt your bottom line.” (FundingCircle.com)

In my opinion, credit cards should only be used for emergency situations or much like what Funding Circle suggested, “small expenditures only.” Mainly because credit cards tend to higher interest rates and if you are unsure about being able to pay the full balance each month; it would not be wise to use for any larger expense because, in the long run, it would cost you a lot more than what the purchase was actually worth. Nevertheless, if you are reluctant to obtain a small business loan or a line of credit because of collateral or personal credit issues, and still prefer to the go the credit route, be sure to shop around for the best annual percentage rate (APR).

Sources:

MacDonald, J. & Tompkins, T. (2017, July 11th) The History of Credit Cards, Credit Cards.com Retrieved via https://www.creditcards.com/credit-card-news/history-of-credit-cards.php

Roger, S. & Makonnen, R. E. (2014) Entrepreneurial Finance – Third Edition: Finance and Business Strategies for the Serious Entrepreneur [Kindle Edition]. McGraw-Hill Education & Amazon Digital Services LLC

Funding Circle (N.D.). Fund Your Business With Credit Cards? 3 Reasons To Consider. Retrieved from https://www.fundingcircle.com/us/resources/3-reasons-business-creditcards/

Posted in Entrepreneurial Funding Blog Posts

SBA Microloan Programs

If you plan to start fairly small in your small business, but still require capital, the Small Business Administration Microloan may be a good option. The SBA provides funds to a designated intermediary lender, which administers the loan on behalf of the federal agency. Microloans slightly differ from the SBA general business 7(a) loans. The application may also require an entrepreneur to complete an educational training component to qualify. Microloans are especially useful for those who need to clean up their finances, in economically disadvantaged areas, and need to grow a business.

The Microloan program provides loans up to $50,000 to help small businesses and certain not-for-profit childcare centers start up and expand. The average microloan is about $13,000 (SBA.gov). Typically Microloans are a lot more popular with small business owners because it allows them to get the capital they need without such a lengthy application process. Much like the 7(a), money cannot be used to pay any existing debt an owner has incurred. Proceeds can be utilized for working capital, inventory or supplies, furniture or fixtures, and machinery or equipment.

Intermediary lenders are non-profits, banks, credit unions, or private lenders. Interest rates and repayment terms depend on the loan amount, use of funds, terms of the financial entity, and needs of the small business owner. However, interest rates range eight to thirteen percent. The SBA’s maximum Microloan term is six years. You’ll get solid loan terms from these lenders, making it possible for you to grow your business and establish better credit. That can help you qualify for other types of financing down the road (Pimentel, 2017).

Microloans also differ from 7(a) in the length of the application and do not have as many requirements. Though, some microlenders do require collateral and a personal guarantee from the small business owner. Depending on the lender there may also be an educational training component that will need to be fulfilled to be considered for lending. Seeking help and assessment from an approved Small Business Center will be your best option when applying for this particular loan.

There are many advantages to using this loan program. However, it does not come without its disadvantages. Advantages being it is a lot easier to qualify especially if an owner has not already secured funding for operations. However, “The [disadvantage] of the microloan is the “micro” part: Funding may not be sufficient for all borrowers.” (Pimentel, 2017) If an owner has a spike in business and needs additional funds that the loan is not provisioned to cover an owner can take a loss because they are not able to handle the demand. Nevertheless, I still believe microlending is still a good option to initially pursue because ultimately the good outweighs the bad.

Sources:

Microloan Programs (2017, September 21st) SBA Loans & Grants retrieved via https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs/microloan-program

Pimentel, B. (2017, July 19th) How to Start a Business: Where to Find Startup Business Loans 2017 Retrieved via https://www.nerdwallet.com/blog/small-business/start-up-business-loans-for-bad-credit/

Posted in Entrepreneurial Funding Blog Posts

Small Business Administration 7(a) Lending

In continuing with the discussion on funding opportunities, the Small Business Administration (SBA) is a federal agency that provides support, education, and lending opportunities to local entrepreneurs. Startups and existing companies can apply to one of their five loan programs. The 7(a) loan program offers twelve types of loans that cater to the small business owner’s needs. Many of these programs require collateral to be leverage against the business loan. In my opinion, SBA lending programs have both advantages and disadvantages for a small business owner.

“The SBA’s primary business loan program is the 7(a) General Business Loan Guaranty Program. It’s mostly used for business start-ups and to meet various short- and long-term needs of existing businesses, such as equipment purchase, working capital, leasehold improvements, inventory, or real estate purchase. These loans are generally guaranteed up to $750,000. The guaranty rate is 80 percent on loans of $100,000 or less and 75 percent on loans more than $100,000.” (Entrepreneur.com, 2017) SBA lending does not finance loans but guarantees funds received from banks, credit unions, or private lenders.

7(a) Loan Programs:

 

Collateral is required for the 7(a) loan programs, and yes you pretty much have to give away your firstborn. Kidding! Well kind of, “If your business dissolves, you will be responsible for repayment. Creditors will go after you in the event that your business fails to repay the loan. The SBA now requires that all loans it guarantees must also be personally guaranteed by anyone with a 20 percent or greater ownership stake.” (Lagorio-Chafkin, 2010)

The primary 7(a) application forms are:

Applicants must submit a lengthy loan package. The package must include:

  • Executive Summary
  • Business Profile, e., type of business, product or service description, history, annual sales, number of employees, proposed future operations, competition, customers, suppliers, and date of the information.
  • Management experience
  • Description of loan proceeds will be used
  • Loan repayment details
  • Collateral to leveraged (although a few institutions do not require this)
  • Personal financial statements from all owners
  • Business reports from the last three years if applicable
  • Pro-forma balance sheet
  • Projections e., Assumptions showing positive cash flow documented explanations.

Consequently, SBA lending programs have both advantages and disadvantages for a small business owner. There are many options available that can be beneficial to new business, but there are also strict requirements that an owner must meet. Seeking help from one of the SBA counselors (for FREE no less) should be your first step in deciphering which financing would be the most suitable for your business needs. Overall I think going through the SBA is a great place to start when looking to finance a small business. What are your thoughts?

Sources:

Entrepreneur Staff Writer (N.d.) Small Business Encyclopedia: SBA Loan retrieved via https://www.entrepreneur.com/encyclopedia/sba-loan#

SBA’s Permanent 7(a) Loan Programs (2017, September 20th) https://www.sba.gov/category/lender-navigation/sba-loan-programs/7a-loan-programs/permanent-7a-loan-programs

Office of Capital Access (2017, September 20th) SBA 7(a) Forms retrieved via https://www.sba.gov/offices/headquarters/oca/resources/9104

Lagorio-Chafkin, C. (2010, February 15th) “What You Need to Know About Making a Personal Guarantee” The Inc. Magazine. Retrieved via https://www.inc.com/guides/personal-guarantee-making.html

Posted in Entrepreneurial Funding Blog Posts

Funding for Small Business Startups

The difference between a dreamer and an entrepreneur is a plan of action. A dreamer does not have to figure how “the dream” will get financing and sustain through lean business. However, an entrepreneur does. Entrepreneurs have to have a plan of action and implementation. In most cases having good credit and making sound personal financial decisions are foundational requirements. Also being aware of what type of financing option will benefit the business now and what could be considered later, if at all. Over the next couple of weeks, I will be discussing funding options that should be examined by any new or existing entrepreneurs.

So you want to start a business? Here are some preliminary things to consider when getting started.

  1. Make sure you identify your industry of interest. Only knowing a few things about an industry is not enough. Research, research, and research some more.
  2. Pull your all three credit reports. Lenders are not willing to give financing to someone who is not capable of managing their finances.
  3. Start building rapport within the industry. Network with others to see what kind of funding options worked for them.
  4. Have a thorough business plan.
  5. Be willing to start small to build a track record. A history of sales included in your business plan is always more appealing than just having assumptions.

If there was one thing, I could not stress enough, having and maintaining good credit history is imperative. I have spoken with a branch manager from a national bank, a capital loan officer, and a business counselor and all three were very adamant about how not having good credit standing is one of the main factors lenders deny funding. You can have a sure fire way to make money, but the likelihood of lenders or even investors wanting to take a chance on you is highly unlikely. Also, make sure you are up to date on any tax payments. The business counselor told me of a deal between a client and a bank, both parties were ready to sign, but the bank uncovered that the client owed several thousand in back taxes. The deal was killed instantly. Make being in good credit or financial standing one of your top priorities.

It’s important to know that there is no “one size fits all” when it comes to financing a small business. There are several types of funding available, but you must research to find out which one is the right fit for you. Here are eight resources to consider:

  1. Personal Savings
  2. Friends and family/inheritance
  3. Personal loans
  4. Small Business Administration Loans
  5. Angel Investors
  6. Venture Capitalists
  7. Crowdfunding
  8. Grants

Each one has an upside and downside. It will be up to you to determine which one can satisfy the needs of the business and hopefully cause you the least amount of pain.

Financing for a business is normally one of the things that are considered last. Which is typically why a lot of small businesses end up closing shortly after opening. If you are still in the dreaming phase or on the cusp of opening a business, be sure to have a thorough financial plan in place. Be sure to also factor in the unforeseeable such as weather-related catastrophes, a lender calling a loan, or personal life events that could directly impact your business. I hope you stay tuned in coming weeks as I delve further into some of the funding resources that are available.