Yesterday I was talking to a client about when to get financing. I started out with when you should not get financing. Like when you don’t have an clients. I’ve lost count of the number of people that have gone into huge credit card debt to start a small company and then do zero or one deal. There are many ways to do business without having to come out with a lot of money.
Richard Branson back in the early 70’s would sell records, get the order and then buy them from a wholesaler and ship to the client. He got paid before he spent the money.
Build up your clients and then start investing your profits into more and more marketing. And good marketing, don’t spend it on branding. Don’t follow what the big brands do that is just a complete waste of money. Instead spend it on things you can track the numbers on. No numbers then don’t do it. Start off slow and learn what works.
Only get financing when you know for sure you can get more clients that you can handle but don’t have the cash to do it. You’ve proven to yourself and your bank that you can add many more clients. Don’t finance it with credit cards. That rarely works. Get a business loan. If you can’t convince your bank then you should seriously look their concerns. You may be to attached and need to rethink.
I get concerned when people have a lot of money to spend on their new business because they tend to spend poorly. I’ve seen many people go thru $100,000 or more on training, seminars without making one cent. They constantly are learning and not doing. The people with little money, proceed forward more smartly and have a higher success rate.
Money can and does solves problems but you need to know when and how to use it. If you’re just starting off with your first business then be cheap and proceed slowly. Constantly learn but always implement on a daily basis.
Learn, do, rinse repeat.