Turning your passion into a business is an exciting opportunity made better by answering some key questions.
The best advice when starting a business is to do your homework, create a plan and ask yourself some important questions. How viable is my business? Who is my market and how will I reach them? What are my goals for this business and what steps do I need to take to reach them? The first step a business lending specialist would recommend is to have a plan.
Do your homework
As you start your planning process take time to look at trends in the market, and evaluate the demand for this type of product or service. Being realistic and honest when planning helps build a solid business case based on reasonable projections. Make sure your plan includes one to two years of projected sales to show the business is financially viable. It’s also a good idea to identify and understand the potential barriers to effectively execute your plan, and ensure you have sufficient capital in place.
If your plan is thorough, you’ll have something to reference if you’re confronted by unexpected challenges. A plan also helps you evaluate your performance based on your earlier projections. It’s a great way to remain focused on the goals you established when you created your plan. Having a roadmap keeps your business on course and away from quick fixes with little or no long-term benefit.
One of the critical assessments when financing any business is its long-term market viability. You’ll want to avoid a common pitfall of looking for money before you have a plan. A good plan will outline and confirm your business’s financing needs and in response, funding will support your company based on your plan’s projections.
Small business is personal
In addition to developing a solid plan, starting a business requires character, collateral, and cash. Since you are your business, your personal credit history, not your business credit will be key to the evaluation. This means lending specialists will look at your personal FICO® Score, which is based on a summary of your credit report. Along with your credit history, a loan assessment will include your net worth, the integrity of your finances, the viability of your business idea, and your long-term commitment to your business.
You don’t have to do it alone
There’s a lot of homework to do if you want to open a new business, but much like anything else in life, the work you do to prepare in advance is an essential part of the process. And in the end—more than worth it. Think of your SCU business lending specialist as an invaluable member of your advisory team, along with your accounting and legal experts. The specialists at SCU can help you access many resources to help support your new business. And remember, you don’t have to do it alone. We’re here to help and believe that there’s nothing better than being part of a team that helps members achieve their dreams.
Take the next step
If you're interested in taking the next step for starting a business, visit one of our branches, or fill out our contact form to get directly in touch with a member service representative to talk about your goals.
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