A great business idea may seem like a light bulb going off in your head, but no matter how much passion you feel for your new business and how quickly you want to jump on the idea, there are two things that you need to remember. One is that you need money in order to begin your business. The second is that you need a plan in place. Here are four ways to know if you are well prepared for a business loan.
Is your plan solid?
Most newbies to businesses will assume that they have a solid plan without really working through the facts and figures. Before you start your business, perform market research on your company. Make sure the idea is in demand in your area. If the business idea is already saturated, you will need a method for standing out. Lastly, you need to know whether your idea is fleeting, meaning whether it is a business that will boom for a few years and fizz out or be steady forever. A solid plan means knowing the type of realistic future your business is looking towards.
Is a proper plan together?
Having a business idea, starting and inventory, and even setting up a website or a brick and mortar shop mean little if there is no plan in place. Those who are ready for a business loan will have paperwork including a short and long term business plan ready to show banks. They will also have clear instructions on how their business will work front end and behind the scenes.
Proof of personal investment
Though a business loan will give you a lot more capital, you must be willing to personally invest in your business. A commercial banking institution will want to see some profits and stability prior to making an investment through a business loan. Make the personal sacrifices you need to put money into your business and give it a good push before applying for a loan.
Is there a plan B?
Having a plan B doesn't mean having a plan other than your business. Having a plan B means that you need to create some flexibility in your business model. For instance, if you are opening an indie coffee shop, you may need to expand into a full-on restaurant with pastries and breakfast, or an internet café. If you are opening a consulting firm, be prepared to branch out into marketing and PR to expand your income in the event that consulting tapers off.
Share