Imagining My Own Business | Part 1: Financing Fun

If you look back at my posts, you’ll see a theme whispering throughout.

When it comes to starting a business, research is imperative. In my case, researching the baking industry is part of my journey. Funny . . . already did that in From Paper to Pastry | Change is Delicious, so it feels like cheating to write about the industry’s economic status and target segment here. Or at least a bit boring for you and not the educational adventure this assignment is meant to be. Don’t worry! I found an article in Home Business Magazine that gives advice on financing a home-based startup – starting with a home baker turned successful businesswoman despite the pandemic. Please enjoy the following proverbial string on my finger.

So, good times for startups. Traditional loans were a long shot prior to COVID and a whole lot of ‘good luck to you’ now. Some critical factors in approvals are revenues, time in business, credit, and industry. Get this . . . a business under two years old has limited options in obtaining loans. (What!?) Fortunately, there are alternatives! Below are four to consider.

BUSINESS CREDIT CARDS | It’s simple, most often doable, and could help boost your business credit for future loans. The kicker is the interest rate and finding a card with rewards such as money back. (I love me some cash back!) And not going on a mindless spending spree. Debt is debt. Don’t go crazy.

TRADE CREDIT | Work with your vendors or suppliers on financing options! This should help with cash flow and builds that all-important business credit. Bonus – these creditors often work with you when you’re in a financial pinch and offer discounts for paying early (woo!). They want your business, so helping you is helping them. (Check out nav.com/vendors.)

CROWDFUNDING | This one would stress me out. Basically, you’re asking private investors to finance your endeavors by delivering a stellar pitch and solid marketing campaign. “Hi. I’m fabulous. Give me money.” Um, no. But, it’s a great resource if you have the guts to do it! (Make your life easier with the cheat sheet on crowdfundbetter.com.)

MICROLOANS | Traditional banks can’t like small business loans because they don’t make money on them, so allow me to introduce microloans. Non-profit lenders who actually want to help small businesses! (Finding them can be tricky, so SBA.gov/tools will be your friend.)

The article also stressed the importance of organizing your finances from the get-go by planning ahead for needs and wants, establishing an organized accounting system, ensure you get paid from clients through contracts and speedy invoicing, become BFFs with your accountant, and make sure you formally pay yourself. Noted!

So, what have I learned from this process? If (when) my business goes bonkers and I need a financial helping hand, then I have doable options above a standard bank loan. Not so terrifying! Except the crowdsourcing. I stand by my fears on that one (which I realize I must get over).

REFERENCE

- Detweiler, G. (2021). Money for Your Business. Home Business Magazine: The Home-Based Entrepreneur’s Magazine, 10–41.