How Do You Determine When and If Borrowing is Right For You?
Being a small business owner, you are always trying to stay ahead of all you must do. From operations to taking care of inventory and employees; the tasks can be overwhelming. There is one constant that every small business owner needs to keep ahead of: the need for capital to help with cash flow, big purchases, expansion, and much more. Not all business owners need to borrow, but all will need to assess whether that's a need or not and what opportunities and challenges might arise. How does one determine those needs?
A solid business plan will serve as a great tool to determine what types of challenges or pitfalls you may face. Will you buy some equipment? Will you need to grow your cast? What transportation will your business need? Will you be able to afford those from your net income or will you need to invest in it upfront? These are the questions you will need to ask yourself to best determine how things will unfold.
A well thought-out business plan will inform all of your decisions within your business. From how the business is structured, to operations, to growth opportunities, you'll need to create a business plan that works for you and knowing where to start can be overwhelming. Because of this, Business Impact NW offers business plan resources for entrepreneurs at any stage of business. For those just starting out, we offer our Square One course to help get you started. Our Launch & Grow course will help you create your business plan from start to finish, and our Grow & Thrive series helps established businesses re-imagine their existing plans for growth.
2. Know how to get there
The next step is finding out when these challenges and needs will come. Whether you're a new business or an established one, the best way to find this answer is through financial projections. When will needs arise and what means do you have to support them? While it’s great that you may be able to afford things when needed, projections allow you to explore additional opportunities.
Through financial projections, you might discover for example, that if you had another truck you could deliver more products and generate that much more in revenue. Or if you hired those extra two employees, you would be able to sell x amount more to potentially double or triple your revenue. It can be as simple as buying a piece of equipment to eliminate the worry of finding 2 more people to do the job. Whatever your outcome, you need to find the resources to get to that point.
3. Finding the right funding
Luckily there are lots of different loan options for small business owners to help get you through the next challenge. Whether it’s an SBA microloan program or our Business Impact NW Loan, we are always looking for ways to create access to capital for small business owners. We know not all businesses are the same and not all the needs will be either. Whether it's credit or collateral, we are always working on finding a solution to funding needs including recently rolling out the Impact Loan for borrowers who don't have collateral to offer.
Although we want to make sure everyone has an opportunity, we still work on the 5 C's. If we can’t find an opportunity, we will work with a business owner to get them back to their story and find a way to help them build that plan to get back to where they want to be. The team at Business Impact NW is always available to have those conversations to help you examine your business needs, determine if it is the right time for capital, and how we can help you continue to write your small business story.
About the author
Victor was the Business Banking Center Manager at KeyBank Beaverton. Victor brings nearly 20 years of banking experience, a passion for small business, and community activism. He is President of the Hispanic-Latino Key Business Impact networking group and a graduate of Business & HR Management from Portland State University. Victor has personally done more than $5 million in commercial lending each year, plus much more with his teams. Son of Armenian & Argentinian immigrants, Victor is inspired by his family, community, and the opportunity with Business Impact NW to promote the economic development of marginalized communities.