If you own your own business, chances are you’ve thought a good deal about your business’s finances. Or maybe you’re starting your own business soon, and are in the planning stages. In this modern world, it’s both easier and harder to get a business off the ground than ever before.
Whatever the state of your business at the moment, it is always better to have the right information when it comes to your finances. There is a lot of false information and incorrect assumptions about business finance, and it is sometimes hard to get a good read on what is true.
Most of what you hear is not true. To help clear some of these issues up, here are five of the biggest misconceptions when it comes to small business finances:
1. The bank is your only choice
You do not always have to get a loan from a bank. Yes, they have been around for a very long time, but banks are not the only option for a small-business loan. If you are wary of speaking to a bank, or maybe you’re just interested in the other options out there, you now have more choices than ever before.
Options like social media platforms, working capital loans, and crowdfunding become more popular every day. The new nontraditional ways of securing funding for your small business are great routes to consider. Even more traditional routes like short-term loans can be another way to get your small business jumpstarted. When you are thinking about your business finances, banks aren’t your only option.
2. You have to have perfect credit
There has been a bit of a sea change in the world of small business loans. Although all banks will look over your credit score before granting approval, many banks have started to look more holistically at the applicant. They will look for upward or downward trends in your credit history, for example, as an indicator as to whether your business will be a good investment. They may also look at your daily account balance or your monthly minimum deposit if you have owned a business before.
3. Lenders don’t like franchises
Every lender has its own personal preference when it comes to franchises. Some think franchises are an excellent idea for business security. If you’re looking to start up a franchise, a small business loan might be just thing to assuage those hefty start-up fees. Some lenders will even help you update older equipment or buy another location when the time comes around.
4. You’ll get your money back right away
Even if you start with a brilliant idea or a large customer base or broad internet presence, it can sometimes take a while to reach the level of your old income. Some experts state that it takes around three years to start making what you were making right before you quit your day job.
Some entrepreneurs believe that you only need to start keeping a budget when things aren’t going well. This is clearly not true. It’s a wise choice to keep a budget at all times; that way if you’re applying for a new loan or there’s some other change in your small business finances, you’ll be able to integrate these changes easily. In short, you’ll be more adaptable with a budget.
5. Lenders only care about profits
This is the saddest misconception surrounding small business finances. Professional lenders, of course, know the numbers involved with the business they’re looking at, but many also care about the people behind the numbers. Lenders often want to see small businesses succeed and understand that a business is an entire entity.
The one ingredient to small business success is a person who’s enthusiastic about an idea. The world of small business finances isn’t a one-size-fits-all kind of world. It’s helpful to be able to consult a professional to ask those nagging questions.
It’s true that starting your own business is hard, and you often have to pick which 18 hours of the day you’ll be working, but it’s a rewarding enterprise. The waters of small business finance can get murky at times, but with the right information and expert counsel like Cape Coral Accounting, you’ll see your way to a successful future.