In the US, a staggering 90% of startups fail within the first two years of starting. Those are unfavorable statistics that could ward off any would-be entrepreneurs. But despite these stats, many entrepreneurs take a chance and venture out to start their businesses. Few succeed and some, unfortunately, become statistics.
There are numerous elements that go into the success of a new business:
- A great product or service for the market,
- An entrepreneur with the necessary skill set and resources to execute, but
- Most importantly, the required funding to fuel growth.
The key word here is FUEL. You see, having a business without financing is like having a car with low or no gas in it. Clearly, you won’t get very far. As important as the business idea is, it is just as important for the entrepreneur to map out a two-year financial plan that charts financing options the business will need to operate successfully. Although this blueprint can be drafted and revised at any stage of the business based on need, it always best serves the business to create this blueprint from inception. Now I’m not describing financial projections here, this blueprint solely addresses business financing and when to seek it out.
When an entrepreneur starts a new business, there are a list of reasons to find business financing, i.e., inventory, working capital, marketing, to name a few. Outside of revenue, finding business-financing products to cover costs, especially if the business isn’t breaking even, is imperative to the business’ continued existence and success.
With the assistance of a business-financing consultant, an entrepreneur can map out their business’ financing procurement goals in tandem with their financial projections. This puts them on track with their revenue and knowing when to seek out financing, its requirements and where to find it. The blueprint earmarks scheduled milestones the company has to reach which in turn will qualify the company for lending products based on time in business. This blueprint will alleviate the need for a desperate search for loans or financing when cash flow is low.
Some business financing products and time in business requirements:
- Microloans: Time in business required – 0+ Months
- Equipment Financing: Time in business required – 0+ Months
- SBA Loans: Time in business required – 0+ Months
- Term Loans: Time in business required – 1+ years
- Business Lines of Credit: Time in business required – 2+ years
As a business-financing consultant, the first recommended step with clients is creating this blueprint. The roadmap charts two years of financing options and requirements at every quarterly milestone per suggested lender application. Business lenders will mainly look at a business’ quarterly performance, among other criteria, to determine whether to offer financing. By staying ahead of the curve with the Blueprint, entrepreneurs stay on track with their financing and can determine which financing products they would be eligible for at each quarterly milestone should they need it at all.