Before applying for a loan, ask trusted friends or professional advisors to review your business plan to ensure you’re not overlooking anything critical or making inaccurate assumptions. Often credit unions offer lower interest rates and fees than commercial banks, so don’t narrow your search for financing down to only big banks.
You may consider asking the following sources:
- Friends who own their own business
- A loan officer at the bank where you do business
- Your local credit union where rates for business accounts may be friendlier than a commercial bank
- An accountant, but first get an estimate for reviewing your plan, so you aren’t surprised by a high invoice
- Check out the Small Business Administration’s SCORE program of free monthly mentoring sessions with retired professionals, designed specifically for people launching a business.3
In addition to securing financing for your new enterprise, come up with a financial backup plan for your business and personal finances if you fail to hit your initial revenue projections. It is a good idea to build up your cash reserves to have enough to live off for six to 12 months. Make sure you budget carefully, so you can continue making your most crucial payments: rent/mortgage, insurance premiums, utility bills, and food. Finally, check your gut—and your bank balance—to make sure you’re ready to start your new venture.
Starting a new business when the economy is taking a nose dive takes creativity and ingenuity. Marketing is vital to getting ahead of the game and your competitors. Take your business plan and flesh out the marketing components: What exactly are you going to sell? Who are your target customers? How will you price your products or services? What is your plan for promoting your business?
You stand a better chance of succeeding by thinking niche. Slice and dice your original customer base to come up with smaller segments so you can market more strategically. For example, if you offer a professional service geared to women, can you narrow it down to target women within a specific age range, career type, or geographic location?
Alternatively, think about ways to alter your products or services to broaden your business appeal and customer base. For example, if you opened a make-your-own-dinner company, could you also offer dinner delivery or premade/prepackaged dinners for customers who want grab-and-go?
Remember to keep a close eye on the competition. Do ongoing competitive analyses. Watch what other providers are doing and study the marketing techniques they’re using to build their businesses. Are they tweaking the product? Lowering the price? Using creative promotional tactics? You’ll need to know where your competitors are to differentiate yourself and gain market share.