Not all small business is the same

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All small businesses are not the same, BUT

I have spent many years talking to differentcategories of small business owners. Even knew a underwriter who underwrote SBA loans and one topic seems to be the common take away. Even though there are many different small business problems, financing is usuallythe number one. Why? I think that by nature small business owners are very ambitious and therefore seldom completely satisfied. When times are good, they want to expand operations and need financing to fuel growth. When times are bad, they remain focused on their targets, are hesitant to cut back, and encounter financial pressures. The common thread is that working capital always seems to be in short supply.

Small business owners are constantly wondering what is the best way to obtain the working capital that they need. During good times the best approach is to use some of the increased capital being generated to finance the expansion. Putting your money into a business that you know well is always a good idea. While business generated capital can support an incremental expansion, a major expansion or a plan to enter a new product or service line may require significantly more capital. New, less familiar projects require detailed investigation and solid comprehensive planning. Even so, most projects take longer and cost more than originally thought.

Borrowing money should always be the last option for getting through tough times. It’s great to have an emergency rainy day fund, but few small businesses can afford this luxury, so borrowing may be the only option. But keep in mind that there is always a lag time between the investment of money to support business actions and receipt of increased revenues from these improved actions. And almost all changes end up taking longer than expected to implement. If you have a building you may be able to use that collateral to get a SBA loan.

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