Are you running a small business and wondering if you’re ready to invest in a loan to help you really get your business running? If you are, then there are a few questions to ask yourself before taking the leap and applying.
Is my Business Plan up-to-date?
Every single business should have a written business plan. Tt’s an essential document that is used to turn your business idea into a reality. If you’re thinking about applying for a small business loan, lenders will want to see a copy of your business plan. Therefore, ensuring that it’s up-to-date is absolutely essential. You need to make it clear what your goals are, how you intend to achieve those goals and what the potential problems you could face are.
Have I Forecast my Cash Flow?
Identifying how you envisage your business to be performing financially is a really important factor that small business loan lenders will take into account. You need to be able to forecast what you think your business is able to financially achieve. But be realistic. Everyone has high expectations and dreams of how much money they are going to make when they start a business but the reality of that isn’t often the same.
Do I Understand my Current Financial Situation?
Making sure that you’re fully aware of your current financial situation is absolutely essential. Being aware whether your making money or losing money is integral for making decisions. Being completely transparent with yourself means that you can conduct true evaluations on your finances. You will also need to demonstrate to lenders just how well you are able to manage your existing finances. Although you will be applying for a business loan, lenders will still want to see your personal credit score to make sure that you aren’t going to be a risky investment.
What is my Personal Survival Budget?
Once you have a good understanding of your current financial situation, you should be able to determine your personal survival budget. You can do this by calculating all of your necessary bills that you pay each month. This will allow you to work out exactly what the minimum amount your business needs to be making in order to support you.
Have I done enough Market Research?
Making sure that you have done plenty of research into the industry you are going to be working in is really important. You need to make sure you know everything about your competitors and the products or services you are going to be offering. Not only should you be passionate about your industry and the product or service that you are selling, showing that you are committed to growing your business and make it a success is really important if you’re looking at getting a small business loan.
What is my Plan B?
No one likes to accept that their business venture may not be as successful as they’d originally hoped. But unfortunately, not all start-ups work out and that’s why it’s really important to have a back-up plan there to lean on if things don’t quite go to plan. Even if you never need it, you’ll certainly be glad that you prepared a ‘plan b’ just in case you did need it to fall back on.
Have I got any Sales or Potential Contracts Set Up?
If you’ve already put a lot of time and hard-work into your business, you may already have built up a sales record and secured contracts with suppliers or other businesses. If you haven’t managed to do that already, then are you able to demonstrate that you have some lined up in the near-future? Being able to demonstrate that there is a demand for your product or service and you are able to supply it will help you display reliability and potential if you’re going to apply for a small business loan.
What do I Need the Loan for?
Last but not least is probably the most important question that you need to be able to answer if you’re considering applying for a small business loan. It may be a good idea to take some time to sit and determine exactly what you would use the money for and what purpose it has for your business. Whether it’s for product supplies or machinery, as long as you can demonstrate that the money will be spent on things that you need in order to get your business running, then you will find that you have a better chance at being successful.
Taking on a business loan is a very important commitment, and it’s important that you are making sure that your small business is ready to take on that type of commitment before you take the leap and apply. When you’re running a small business, it’s important to keep your finances in check. This often means finding areas that you can save money too. Check out our helpful infographic for 5 Ways to Save Money on Business Insurance.