Following your business plan helps you make decisions about borrowing. You know, that document you created when you first started your business? You never did one, you say?
I don’t know how many times I hear the answer to that question… All my ideas are in my head. What do I need a business plan for?
One of the key functions of a business plan is to look at your future cash flow before it’s too late. It is more difficult to receive funds from government organizations and banks if you are already in the middle of an expansion and your cashflow is all gone.
There are many organizations that can assist you in creating your business plan. Things like when to expand, how to go to market, and how financially support a hiring plan. All while taking your cash flow into account. BUT they need your financials… and you need your financials to make decisions. Are they up to date? Once you have a debt load, the tables can turn on you.
Make sure your business plan is up to date and includes the reasons or purpose for borrowing money before you go to your sources of financing. Also, you should always overstate how much you need. It’s better to have more options for cash flow than not enough. It helps with your overall working capital.
Never pay back a loan early. There is no point in doing so as you will need the working capital for other things. And make sure you shop around.
Are your financials up to date? If they are not, and you need a hand, give us a call.
Remember, you have to spend money to make money, as the Romans said.