During these difficult business times many small businesses are looking to financing for reprieve from the current losses they are incurring. Though financing is a great option that should be carefully looked at, every small business owner should be looking at their operations to see where their shortfalls are inside their business.
Every business has things that they do very well, while other parts of their operation lack the necessary care that will stop the company from fully reaching the potential that they have. The first step, before seeking financing, should be to discover the parts of their business that does not function the way it should. Often times, the business owner should plan to hire an outside independent consultant. The consultant is the best approach to discovery as they are emotionally removed from the business. They are not in fear of losing their job due to layoffs or closure. Too often, as business owners, it is hard to see what is not working properly because we are too close to the business, sometimes it is too personal to admit our business’ short comings because it may be our own.
Financing comes into play once the business has a firm understanding of those short falls. If the business does not understand where the issues are, nor have a plan on how to fix them, the business is doomed to continue walking down the same difficult path…only with more debt. That is to say that the finance company is willing to lend to the business in the first place. Developing a solid plan will show anyone who is looking to invest or finance the company that the business is willing to grow and develop and that their money will be spent wisely and they will have a good return on their investment.
Without a solid plan, any financing would be like placing a bandage on an untreated wound. The bandage (financing) will cover the wound, maybe making you forget about it for awhile. But without proper treatment (proper plan) the wound will become infected and require more treatment.
Proper planning with good financing options will lead your business to long term success!