Most of us have a dream for the future and, for some, that
dream includes launching a small business. Maybe you’ve always
wanted to see if you could use your acclaimed cookie recipe as
the cornerstone of a successful bakery. Or you’ve dreamed of
turning your marketing savvy into a work-at-home job that allows
you to be the boss.
Yet many people never go after their dreams of small business
ownership because they think launching it would be too expensive
or the process too cumbersome.
In the interest of dreamers, we’ve listed five common myths
that potential new business owners often buy into. Then, we’ve
provided a dose of reality to help give new business owners the
determination to follow their dreams and the know-how to do it
successfully.
Myth One: You can’t afford to pursue your dreams.
True, you will need funds to launch that business you’ve always
dreamed about. Most financial institutions won’t finance the
entire project; you need to be prepared to financially support
your project. Yet the amount of money you will need may not be
as much as you feared.
The reality is that many small business owners start
businesses with their own money – often small amounts. A recent
Wells Fargo/Gallup Small Business Index study showed that small
business owners use an average of $10,000 to start their
businesses. Most used their own savings, though funding from
family and friends is another option.
Myth Two: SBA loans require too much work. Many
entrepreneurs think that applying for a Small Business
Administration loan means lots of paperwork and delays. You may
think an SBA loan is not worth the trouble. Not so! An SBA loan
offers flexible loan terms that benefit new business owners.
You will be able to spread the cost of starting your new
business over more years, providing your business with better
cash flow during the early months when it is still being
established.
The objective of an SBA loan is to provide you with more
access to capital than a bank conventional loan. You can borrow
for your working capital needs so you won’t have to worry about
running out of money during the first three to six months, when
you’re trying to spread the word about your new business. In
addition, applying with a preferred lender who has a lot of
experience with SBA lending can make the process a quicker one.
The SBA grants the preferred lender the authority to manage the
entire lending process including loan approvals. Thus your SBA
loan is processed more quickly.
Myth Three: Your business plan is for the benefit of the
bank. You might think that creating a business plan is
something you have to do for your lender. Not so. Your business
plan is for you. Your plan lays out your vision and your
strategy for success. Don’t throw it in a drawer and let it
collect dust after your loan is approved. Look at it every month
and measure where you’re falling short and where you’re
exceeding expectations. Make adjustments. The business plan is
what you said you were going to do when you launched your
business. Use it as a management and tracking tool to see what
you’ve achieved and where you will go.
Myth Four: The success of your business is all about you.
The success of your business is really all about your team. You
can’t do it all. You need to enlist the help of a good financial
services advisor, an attorney and an accountant. These experts
will offer you advice that will help you steer your small
business.
You also might consider pulling together an informal board of
directors that you can tap when you need ideas or advice. Choose
other business owners in the same or related fields. Their
experiences can help guide you as you grow your business and
navigate bumps in the road. When you face a problem, they can
offer help and the benefit of their experiences.
Myth Five: You can run your new business out of your
personal accounts. It’s always a good idea to keep your
business and personal finances separate. A business checking
account makes it easier to manage your cash flow and track your
business success. A business savings account can help you
collect money earmarked for taxes or payroll. A business credit
card can help your business establish credit so that you’re
ready to go when it’s time for that dreamed-of expansion. Your
business needs all the financial services and products that you
have for your own personal use.
Bill Burton, Wells Fargo Bank
