As you start your own business, there are a lot of decisions you have to make. Although small business owners make many decisions every day, one of the most important decisions you can make at the beginning of your small business journey is whether to use your own money (bootstrap) or take out a small business loan to get things rolling.
There are pros and cons to each, and in this article, we will discuss what bootstrapping is, what it means to bootstrap a business, and whether bootstrapping or taking out a traditional bank loan is right for you.
In terms of small businesses, "bootstrapping" a company means you begin operations with minimal investment or financial help. As a small business owner, bootstrapping often requires using your own personal money as the source of venture capital.
There are many reasons business owners decide to bootstrap their small business instead of applying for a...
Learning about financial forecasting is an essential step in your journey toward growth as a small business owner. Being able to accurately project what your future revenues and future expenses will be is vital to helping your small business not only survive but thrive. For this reason, it's time to get comfortable creating and reviewing a financial forecast and cash flow projections.
If you're just starting out in business, then you're likely to be assembling your business plan and financial statements from the ground up. What I do is help business owners understand the need for creating financial projections, why financial planning is a key part of becoming a successful small business owner, and how you can leverage these numbers to make growing your business more predictable.
A financial forecast consists of a cash flow statement, financial statement, or pro forma statement. The cash flow statement details the company's cash management...
Recently, a prospective client came to me looking for help gaining some extra resources to grow their business. He wondered what would be required to get an SBA Loan. We walked through a list of qualifications together, and everything seemed to check out just fine until it became apparent to him that he'd have to draft a business plan.
He already had a well-functioning business with a great-looking cash flow statement, so why would he need a business plan? He assumed that business plans were typically drafted for startups or new companies just trying to get off the ground, but not for an existing business entity with a proven track record.
As we continued with the conversation, we discussed how much this prospective client was looking to borrow and why he wanted a loan from the Small Business Administration in the first place. He stated that he needed about a half-million dollars. Wow, this guy must have big plans, I thought to myself.
However, when I asked what his plans...