According to recent research sponsored by AdviCoach, a business coaching and advisory service for small and medium-sized companies, managing finances is a key challenge for many entrepreneurs.
"About 50 percent of small business owners run into cash flow hurdles and use personal credit cards to finance operations in order to compensate for a lack of funding or revenue," said AdviCoach COO and president Brian Miller in a statement.
Miller added that many entrepreneurs "get caught up with working 'in' the business versus 'on' the business," which is where soliciting financial advice from a business coach or representative at your local community bank can come in handy.
"Working with a business coach, entrepreneurs can create realistic goals, be accountable for these goals and make fact-based decisions, thus increasing company performance," Miller said.
During the continuing economic recession, obtaining commercial loans may be the only way for some companies to finance improvements or expansions. In a recent article for Prairie Business Magazine, Wayne Bradley, a CPA at Fargo, North Dakota-based Bradley Business Advisors, laid out some best practices for entrepreneurs looking to secure a loan from a commercial bank.
When it comes to pitching a loan request, the old adage "slow and steady wins the race" seems to apply. Company owners who rush in without taking the time to think through the project, organize information and put together a preliminary financial plan risk seeming unprepared and even unprofessional – hardly the ideal image to give off when you're trying to secure funding.
Entrepreneurs who take a systematic approach to collating historic statements and supporting information before drawing up expansion plans are likely to fare significantly more positively. But the benefits don't end with the approval of your loan.
As Bradley notes, "Approaching your finance needs in such a manner will make you a better businessperson … because you will be better prepared for what actually happens after the expansion."
In a recent post for SCORE Small Business Blog, Anita Campbell of Small Business Trends noted that taking action to improve your credit report and credit score can also help improve your chances of getting a loan request approved. Don't wait until you need a loan to make those improvements, though. You can take simple steps such as making sure closed accounts don't still show open balances and paying down credit cards on other accounts at any time.