How Much Funding Will I Need for My Business?

funding for business

Where Do I Go to Get It?

How Much Funding Will I Need for My Business?

As with any financial borrowing strategy, lines of credit can be sticky when it comes to regulations and the bureaucracy that goes hand-in-hand with lending options in general. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (known also as the Credit CARD Act) was passed into law in May of the same year. At that time, it was met with tremendous backlash and criticism by some who feared it would prove detrimental. Looking back, we now know that it undoubtedly has had adverse effects on those applying for lines of credit. From the negative ramifications it passed on to existing cardholders with little or no delinquency history, to the higher interest rates, tougher approval requirements, and the lower credit limits that are currently available, it’s important to tread lightly when making a decision about which institution to partner with.

With the myriad of credit options that are available on the market and the pages and pages of terms and conditions that come packaged up with any new credit card offer, it’s easy for consumers and startups to be misled down a path that’s not necessarily in favor of the new business plan. It may be helpful to consider enlisting some guidance or an experienced third-party to ensure the financing solution of choice is a sound investment and that it’s cash flow friendly to your budget. It may seem like a no-brainer, but positive cash flow can easily be forgotten when it comes time to look for financing. Always look towards choosing a funding option that has reasonably low monthly payments.

Managing Your Funding and Cash Flow for your Budget

The art to balancing your finance option with maintaining a positive cash flow is truly knowing your expenses. Beware of how much your product or service costs and ideally what it is worth. This way you can determine whether or not you can afford to offer special pricing and still keep up with your financial commitments, not to mention balancing all the other budgetary requirements. A gentleman by the name of Greg Pollak, an entrepreneur and a guest speaker on McKeown’s podcast, offers his advise on how he made it out of Early Struggle: Get paid up front. Don’t be too shy to ask for payment up front so you don’t get trapped in Early Struggle waiting for income. This keeps cash flow positive and frees up more of your external funding for other business needs. Other ideas on getting your cash flow in good working order include creating spreadsheets, and not including what your projected income might be, only your agreed upon sales revenue. This prevents any surprises if said projection doesn’t come to fruition. Build your business on what you know. Rely less on outside sources to build your business, and more on your own personal expertise to shape your offerings and services. This will cut costs and eliminate unnecessary expenses in the critical early stages.

From Side Hustle to Small Business

Side hustle to small business transition questions

How do I take my side hustle and make it a small business?  All successful side hustlers asked themselves that question at least once?

Before moving from side hustle to small business there are few things to consider.  The very first thing to consider is will your side hustle survive the next level of “risky” small business status.

A side hustle survives mainly because the owner is not totally dependent on the income and/or success of the side hustle.  A side hustle is just that; a side hustle.

So what questions should you ask yourself before jumping “all-in” to your small business?  This may mean quitting your regular to run your small business.  Big difference from having a regular steady income, plus side hustle dough.  This also means having to find health insurance, if this is something you receive from your regular job.  Health insurance for employees is different for entrepreneurs/the self-employed in the sense that the rates can go up drastically.  So now you are out your regular income stream with increased out-stream.  And we are just getting started.

This short blog is not meant to scare you, just shed some light on the differences between running a side hustle and running a small business full time.

So here are a set of questions to ask yourself before moving from side hustle to small business:

1. Do I have some back cash until the business moves from side hustle to small business?  Keep in mind, a side hustle may be able to run under the radar from business licenses, business insurance, business corporation, local license requirements and other expenses, not recommended, but many side hustlers run under the radar without any major bumps.   A small business will definitely have some expenses getting legal to run like a legit small business.  We won’t discuss business taxes in this article.

2. Will you need to hire more staff to help take the side hustle to the next level?  Most likely you will need at least an assistant or secretary.  Handling a small business is paperwork, documentation, lead building, visiting customers, marketing, and many other tasks that a side hustle may not need to succeed at the side hustle level.

3. Do I have the capital to fund a small business? Perhaps you have saved up some money from the side hustle level. But now you are moving up to small business.  Expenses are different and the initial stage from side hustle to small business you are going to need to invest some money? Do you have enough money to run a small business?  Ask yourself today and then again tomorrow.  If the answer is yes, you are ready. If not, start looking for the capital to start your small business.  There are many capital sources for small businesses.

Business lending Credit BLC can help you find the capital needed to transition from side hustle to small business.  Drop us a line.

Why Your Business Needs Reserve Business Capital

All successful businesses will always have reserve business capital. It’s necessary to support growth.

The dream of running a small business can quickly come to a crashing end when the small business owner realizes all the revenue that is generated at the small business goes back out to suppliers, employees, taxes, utilities, and other expenses.   Most business owners within their first few months in business will realize that even though money is coming in through the front door, most of it, if not all, is going out the back door (not literally, but you get what we are talking about here).

Bill Spencer owns a small auto repair shop in West Palm Beach, Florida.  He and his wife have been in business for about ten years.  That’s quite a long time when it comes to a small business considering that most small businesses fail within the first couple of years. The truth is that most businesses are succeeding, but fail because of the lack of business cash flow. If the owners had more money to continue to fund the growth of the business most would flourish to be big successful businesses.

The challenge of the small business owner is balancing money that comes in to keep the business afloat, paying its bills, managing overhead and in most cases taking care of the owner’s home and personal expenses.  In other words, the owner is living off the business at a very early stage.

This is exactly what happened to Bill. He and his wife were successfully running a small business that was making over $750,000 per year in gross revenues. However, after a few bumps in the road that led to lawsuits and other costly events, the business started to suffer.   The interesting thing wasn’t that the business was suffering, the business was actually growing. Bill’s business went from 25 clients to almost 50 clients.  Growth requires money. Most times the small business needs money to support new business spurts.  The business could need more space, more equipment, or more personnel. In Bill’s case, the business needed all of the above.  Coming out of a few costly lawsuits. Bill was still paying back personal loans he took to start the business. It was impossible for Bill to find banks that would lend him money.  So his business started to suffer.  Imagine trying to serve 50 clients with a staff, equipment, and space to service 25 clients.

Joe Samson of Business Lending Credit (BLC) says, “The best part of business is cash flow.  Sure there are some beautiful personal joys of owning and running a small business, but none like having the right cash flow at the right time”.

The moral of the story is that growth and success can kill a small-to-midsize business owner if he/she doesn’t have access to business capital in the form of business loans, business credit lines or business credit cards.

The moral of the story is that growth and success can kill a small-to-midsize business owner if he/she doesn’t have access to business capital in the form of business loans, business credit lines or business credit cards.  Even if your business is doing well today, it is wise to have some reserve business capital handy and available to support your business’ success.

Business Lending Credit can help you find that reserve line of business working capital or business credit cards. Let get your business covered today.  Reach out to BLC using the CONTACT FORM.