Before starting a business, it’s important to be prepared in all aspects involved such as planning, managing, and financing. This article talks about points you need to remember in developing your business plan, determining your business structure and preparing your business funding.
Developing Your Business Plan
One of the first steps you should do is to create a realistic business. This document will serve as your guide as you make major decisions for your business. By the time you need to apply for business loans or business lines of credit, presenting an impressive business plan to a prospective lender will surely work to your best advantage.
Your business plan must clearly define your business entity, your target market, your products and services, and your financial projections. Take note that a lender can approve or disapprove your business loan application based on how your plan is presented.
Determining Your Business Structure
Of course, to be licensed and legal, you need to register your business with your State government. In registering your business, you can choose from the following common business structures:
Sole Proprietorship- a business owned by an individual;
Partnership- a business owned by two people or a group of people;
Corporation- a business owned by shareholders;
Limited Liability Company or LLC- a business that is both a corporation and a partnership
The type of business entity you choose will determine the rules you follow with regards to liabilities and tax obligations. You can also change your business entity from the one you initially registered as your company grows. Visit www.business.gov for a list of business registration locations in the US.
Preparing Your Business Funding
Before plunging into a business, you need to make sure that you have sufficient financing. Keep in mind that it might take a few months to a year before you can enjoy real profits. If you quit your day job now, do you have enough savings in the bank to support you and your family? It is crucial to ensure that you will have a fallback just in case your business doesn’t go as well as expected.
A lot of successful business owners have been able to start their businesses through the help of business loans. If you have a property that can be used as collateral, a secured business loan is a good option because it gives you the chance to obtain higher amount of financing at a lower rate. Nevertheless, to get approved for a business loan, you need to be able to meet a lender’s criteria and submit all prerequisites including your business plan, business licenses and permits, financial statements, and business loan proposal.
Aside from loans, you may also consider getting a business credit line or a business credit card for additional funding. It is technically easier to apply for a business credit card than a business loan and it can be used for building your corporate credit. Just make sure that your chosen business credit card company will report your payments to major business credit trackers like Dun & Bradstreet.
About the Author:
Emma Collins is a credit consultant and advocate for entrepreneurs and small business owners. She has been writing articles online for about 7 years now. Corporation Support.com aims to provide you assistance in obtaining corporate credit (business credit lines) for those who want to run or expand their business.