The flip side of investing money is borrowing. Here are a few considerations to keep in mind when your business has financing needs.
•Determine how much you’ll need. This entails developing a good business plan. Include in the plan a break even analysis, which estimates the amount of revenue the business must generate to cover expenses before even a dime of profit is made. The analysis can help you determine the funding you need to survive until you reach—and exceed—the break-even point.
•Don’t be too conservative when estimating your financing requirements. Some experts recommend adding 10 percent to your estimate to cover unexpected needs.
•Weigh all your financing alternatives. Personal savings, loans from family or friends, credit cards, commercial bank loans, personal bank loans, federally backed loans or private investors. Each choice
has pros and cons; think them through carefully.
•Arrange for credit sources in advance. Don’t wait until the last minute.
