We’re about halfway through the 2010 Black Enterprise Entrepreneurs Conference and I’ve got information overload from the ton of information I’ve received so far. One of the foremost concerns for most business owners is access to capital. Earlier, I had the pleasure of attending Get Money! Financing Your Business, where the panelists gave specific tips and tools on how to secure financing. Here’s what NOT to do when it comes to securing financing.
- Don’t bypass the SBA. An introduction from the Small Business Administration is akin to having a good friend pass along your resume to a hiring manager. “Banks are trying to mitigate risk and they trust the SBA,” says James Young, president of Citizens Trust Bank. “Forming a relationship with your local SBA branch can prove valuable.”
- Don’t forget that it’s a courting process. While you may have your sights set on funding from one bank, securing financing is more like dating – you should pursue more than one lead. “We put all our eggs in one basket and only went after one bank,” says Angela Cauley, president of food manufacturing company Coalescence, LLC.” When that didn’t work, Cauley and business partner Ian Blount began to woo several specific banks in the area that had a track record of lending to companies in the food manufacturing industry. That was the winning strategy for them.
- Don’t wait to build a relationship with your bank. “There’s a misconception that you’re not able to talk to a bank until you have a bulletproof business plan,” says Young. In fact, banks can bevery helpful in assisting you with your planning. Cauley says that prior to submitting her business plan, she invited potential lenders to her facility to meet employees and get an idea of how Coalescence works.
- Don’t leave your business plan to others. While it’s a great idea to have people from different industries look over your business plan and offer feedback, don’t put the task of building a plan on someone else. “It’s important to know the minutia of your business plan,” says Young. “If you have a solid plan but can’t articulate its details, that’s usually a red flag for lenders.”
For more on securing startup capital, check out these great resources:
- National Minority Supplier Development Council (NMSDC)
- Business Consortium Fund (BCF)
- Service Corps of Retired Executives
Renita Burns is a writer and content producer for BlackEnterprise.com.