Tuesday, October 1, 2013

Good Business Practices – Your Personal Commitment and Background

Here are a couple insights into the personal aspects of getting ready to get financing.

-If you are asking an investor or bank to risk money on your business, you will need to show that you (and your partners, if any) have a deep commitment to your business. Typically you will be asked to show a personal investment of about 25% of the total amount needed for a particular loan purpose.

-For small businesses, especially new ones, the collateral may need to be personal assets of some kind, such as a home, other valuable property or a co-signature. It is important that you and your family members understand the risk and benefits of offering up personal property as collateral.

-Talk with your family members about the effort necessary to make your business a success and be sure that you can count on them to help you along the way. Running a small business can be exhausting, require long hours, and result in a lower standard of living for the owner in the growth years, lack of family support could seriously hurt a start-up business.

Have you ever been affected by financing in the past?

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