Opinion: Simple steps can set a business off on the right foot

I want to start a business, but where should I begin?

As a community lender with an emphasis in small-business lending, I’m asked this question fairly often.

Here’s the first thing to think about: What is your knowledge of the business you want to start? Oftentimes aspiring small-business owners like the idea of owning their own business but do not realize the investment it takes to own it. Having the knowledge and experience in the chosen industry is an important piece to having a successful business. It may sound like simple advice, but it’s true.

Next, develop a sound business plan. Having knowledge of the industry but no management or financial support causes a higher risk of failure and theft for your small business. A good strong business plan is instrumental in setting the foundation for your company. Your plan should include goals and the core values of your business, target demographic data and marketing efforts to reach that target market, competition and what is going to set you apart from them, management background and at least three years of strong projections with justification on how those projections can be obtained.

Many times when I’m discussing business plans with small-business owners, there’s a pause when we get to this part – they don’t know how to write a business plan and it stresses them out. But that’s OK, there are resources that can help.

Try our local small-business development centers and business schools. Missouri State, Drury and Missouri Southern State universities, just to name a few, have Small Business and Technology Development Centers.

After your business plan is finished, establis a proper ownership structure. It’s best to seek out the help of a local attorney who can properly advise you about various business structures and which might be the best fit for your chosen type of business.

The next step is a crucial one –  choose the right lender. You’ll want a knowledgeable lender capable of keeping your business’ best interests in mind.

There are many different programs available to help small businesses get started. Perhaps the most popular products are loans from the U.S. Small Business Administration. The SBA has put together various programs to help build our communities by partnering with local banks to extend credit to small businesses and allow longer term paybacks, less strict collateral requirements and more. This can free up much-needed cash flow during the infancy of your small business.

Establishing a quality relationship with an accountant is also valuable. If everything goes according to plan and your business proves successful, which is always the goal, you may want to ask for additional credit to expand, acquire and do more. Providing the necessary financial information and projections quickly and easily will allow for faster credit approvals and closings.

Completing everything mentioned above allows for a faster turnaround time on the financing side. A lender will want to review the business plan, projections and personal financials to determine whether it’s a risk the bank is willing to take.

Small businesses are the heartbeat of our communities and the availability of credit is crucial to their survival. Creating a startup business will never be stress free, but following these key points will at least minimize it and, at most, get you started down the path toward the business you’ve always wanted.

Scott Tennison is a vice president and small-business banking officer for Guaranty Bank. He can be reached at stennison@gbankmo.com.