Smart Small Business FinanceWhen a cake-shop owner was able to get the additional financing she had been praying so hard to get, she thought that her problems were over. She was able to expand her shop to include a small cafe, bought new equipment, had new uniforms made for her staff (she hired an additional 2) and brushed away suggestions by a well-meaning friend to do some financial studies on the impact of the new financing on her business. Was this smart small business finance sense? No. In about two months, she was in trouble. Her cake-shop was showing symptoms of small business finance gone awry. When she asked her financial friend for advice, she got the customary I-Told-You-So as well as a lesson on Small Business Finance 101. Smart small business finance means that once you get the financing you have applied for, you do not sit back and relax. Too often, some business owners become complacent believing that the financing inflow solves all their problems. This normally happens to owners who do not believe in sitting down and having an adviser take them through the flow of how the loan or credit affects every aspect of their business. Being a baker, the cake-shop owner should have known from her culinary experience that adding a different measurement or a new ingredient changes the outcome of a cake considerably. Much of the reluctance of entrepreneurs to go through this process of evaluation is based on their perception that such analyses are too technical, like a troublesome business plan. But it is not smart small business finance to just do the figures in your head or a simple addition, multiplication and subtraction session with a pen and a paper napkin. Remember that unless you are running a simple lemonade stand, you cannot afford to be complacent. You are running a business that involves a financing obligation that may run in the 6 figures and as such deserves a professional treatment. If you think that you are not up to it, hire or ask someone who knows matters about small business finance. You may have a friend in the financial services that will gladly walk you through the whole process over coffee and cake. Make a call or an online inquiry with the bank or commercial lender who approved your loan. Chances are, banks and lending institutions have extra services (some are free while others may have charges) that come with your loan or credit in the form of financial consultations and management. In recent years, such services arose partly because it was in the best interests of the bank to make sure that its money was handled wisely. Your bank or lending company will only be too happy to provide you with financial instruments that would enable you to see the outcome of financing in a positive and profitable light. Remember that there is nothing small about small business finance. Getting financing means that one is taking the first step towards growth and transition and that this phase is when your business can actually be most vulnerable. You can relax, but not complacent. |