Strategy Is Critical For Small Businesses Seeking Capital

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Given our area of focus as a business, it shouldn’t surprise you that we are keeping close tabs on access to working capital* in the United States.

We’ve covered why access is so important, the agonizingly slow rise in availability and how to make working capital work for you. But for all that, there’s a lot more to discuss, and The Street has a great post about planning for their opportunities.

Whether you’re looking for financing from a bank or another finance company, it will help you to be ready. That’s the message from Ron Walker, the founder of Boston-based Next Street, who has two pieces of advice that particularly stood out to me.

Browse The Marketplace

Figure out what kind of capital you need first, and spend some time researching your state’s offerings. Don’t go into a company blind; find out what they offer and what kind of rates they can give you. Be familiar with what you need and see how companies match those needs.

Or, as Walker says:

The message is there are all types of lending facilities out there with better rates and better terms, so you have to spend a little bit of time sourcing the different types of capital right in your neighborhood. City and states have various lending programs that small businesses are just not aware of. If we were working with that business, one of the things that we would do is an analysis of the types of capital that’s out in the marketplace.

Be Ready

Never engage in a meaningful talk with a lender without being familiar with your fiscal situation and having the paperwork to back up what you’re asking for. If your financial house isn’t in order, you’re going to find the process of securing capital to be a difficult one.

Walker, again:

Really spend time on straightening up your financials. Depending on the size of the company, you may or may not need audited financials, but you need to get a review of your financials for the last three years as well as get the books in order that are going to be appropriate for the financial institution you are dealing with. Secondly and again, what I have seen lately — because the bankers have taken their relationship managers out of the market — is that bankers want to know that there is a plan behind the business model. I recommend strongly — we see it all the time — there needs to be plan supporting the sources and uses of the capital they are requesting from the bank.

What do you think of Walker’s advice?

Photo credit to foxumon at http://www.sxc.hu/photo/1185031

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*Working capital not available in the following states: AK, DE, ND, VT

2 Comments

  1. Who are we kidding. The only way you get help in this country is to already have money and not really be in the need of financial assistance. We are and have been going through this very issue and I am beginning to realize that the little guy does not have a chance any more in being there own without major major dollars. It does not matter how smart or how hard you work if you dont have tons and tons of money. For example We have run a very good owner operator trucking company but when you need to break ties from wear you are only the big guy will be allowed because they rule everything and no finance company will support the little guy unless you have enough money for them to take a extremely low risk chance on you.

  2. It is very difficult to step out and become an owner operator unless you have cash in hand and are able to put your house up for collateral “which I refuse to do.” I have been researching for a while and have not been able to get rid of the fear associated with becoming an owner operator. For one I would need to be away from home on a regular basis. Two, I would want my own authority and don’t know how to do that . Three, I do not have enough cash or savings to make a down payment and register and insure a truck and trailer. And when it comes to leasing on. Forget about making enough per mile to pay yourself after all expenses each week especialy if you are leasing to own with the carrier you just signed on with. I agree with James’ comments on Nov. 11, 2011 when he states that if you don’t have tons of money. Here is the joke, It takes money to make money and those that do make the money buy there parts, fuel, fleet vehicles, etc. for less than the average person with one truck. “Called Buying Power” Don’t get me wrong, there are many people that started with nothing and now are very successful. Why? Because hard work and dedication was no stranger to them “and money to spend.” I have a dream of becoming an owner operator but I do not see the light at the end of the tunnel. Any suggestions?

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