So you are getting excited and you have that great big smile with you everywhere you go because of a business idea that you are very certain that would work. But then it comes to a point where you realize you need to raise cash for you to be able to make your business happen.
You have two options. One, apply for a business loan which can help you generate the cash you need and two, look for investors who can put in cash that you can use to start the business. If you are not too keen of having partners over your business idea, then the first option will be your choice. But before you start driving to the bank and start filling up those forms, you need to understand and ask yourself some questions that can help you determine if it is the best choice to get a business loan.
Here are some questions you need to answer to quickly assess the need.
- Do you have a completed business plan?
Aside from being a requirement by the bank, a business plan is a core requirement for you to run your business. This will be your guideline that you can look back to once your business encounters some concerns. Having a business plan will help identify the small details that you need to take action of to ensure that your business is moving forward as time passes by.
- Do you have a source of income to pay for your loan?
If your business is just on the initial phase of operations, most likely your business will be struggling to get clients and will not generate income during the initial period. You will need to have a source from which you can use to pay your monthly expenses. Make sure this is part of your business plan and you have a back-up plan just in case.
- Do you know your numbers?
Numbers mean your forecasts. This is very simple but often the most neglected. When you know your numbers, you have a very high chance that your business plan will work.