A key resource for any successful business is money. As I mentioned in a previous posting, to get your business up and running it usually takes 1½ to 2 times the amount of money that you had initially proposed.
I’ve had the opportunity to interview a number of bankers over the past year and the one universal comment that they all share with me is that they have plenty of money to lend, the problem is finding the right borrower to lend it to. There is money for small, emerging businesses with a strong track record of growth. Start-up businesses are not as lucky. A reoccurring mantra that I’ve heard is that small businesses must be collateralized to be able to qualify for a loan. The majority of banks are transfixed on safe, low-hanging fruit. I’ve had many a banker explain to me that risk-taking is for the entrepreneur, the bank is in the loan business.
Sounds like good business sense, but it has currently put a major dent in the number of loan transactions taking place, which means the amount of new funding for start-up businesses is not as readily available. As you may know, if the amount of loan lending is down the amount of new start-ups is down as well. No one likes to hear this but it’s the real economic world we are living in today. On a positive note, I continuously watch emerging, start-up businesses succeed (with a lot of work) in finding capital if they are willing to look at, not only conventional methods to funding, but non-conventional approaches as well. The money is out there it’s just simply harder to find these days.
Next week I will begin to address the many needed components of an effective business plan.
Mike Levi is C.E.O. of Levi Inc. a 19 year old business advisory firm that is in the business of building and implementing sales and growth strategies for emerging businesses.
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