Your business needs to grow to stay relevant, vibrant, and successful, but that takes capital. While you may be regularly reinvesting as much as you can, eventually you will need to grow in a big way. Start now to prepare for the time your business will need a major boost in capital.
Maintain a Good Credit Score
Your credit score is like a barometer measuring the financial health of your business. It indicates that you are using credit responsibly and paying bills on time. A high credit score tells investors and loan officers that you are a good risk.
To maintain a good credit score, avoid overextending yourself on credit, especially with high-interest credit cards. Set your payments on autopay, if you can, so that you don’t miss a payment. Finally, check your credit score regularly. Mistakes can happen, and though it’s rare, you could be the victim of fraud.
Structure Your Business to Accept Investors
Structuring your business strategy can make it easier to accept capital for investors. Some business structures won’t work. For example, if you have a sole proprietorship, accepting any investments will transform your business into a partnership, which will require a legal restructuring at the least.
On the other hand, if you proactively structure your business as an LLC (limited liability company), you will have the legal framework in place for seeking investors. LLCs can have an unlimited number of members. An LLC also distributes any risks among the investors.
Have a Solid Business Plan
Whether your plan to obtain capital involves investors or loans, or a combination, you will need a solid business plan. Before anyone will extend your funds, they will need to know what you do, how you do it, what your future goals might be, and what your financials are.
It’s a good idea to prepare a basic business plan well before you start investing, and then keep revising it as changes occur. Having a plan handy will not only make you prepared for investment prospects, but it will also help you keep your vision and goals sharply focused.
Every business needs capital to stay competitive and achieve success. You never know when you might discover opportunities for growth, and you want to be prepared. Stay committed to excellence, and start now to build the framework for your future.
Check out this article on financial mistakes new businesses often make!
