Is it Smart, or Not, To Obtain Business Start Up Funding Before You Quit Your Job?
Thursday, September 25th, 2008If you’re a new entrepreneur you may be thinking it’s best to wait until you get your business up and running before applying for a loan or funding for your biz needs. For example, equipment. And this is OK if you have an established business. And a customer base to rely on.
Suppose you don’t have an established business? But do have a great biz idea. With just enough money to start up. But no clientele to speak of. If so, the chances you’ll obtain the funding - without a salary or some type of income - is slim or none, say bankers. In fact, they believe it’s best to apply for loans and funding before leaving your day job. Or giving up whatever current income you may have.
4 important reasons why obtaining pre-startup funding is smart: 1. It’s much easier to obtain funding when you have a job, bankers and financial experts agree. Plus, to start, your biz may not provide you with a steady or guaranteed sales; or even a salary. So unless you have property or investments to use as collateral, it will either be very hard, or likely you’ll be incapable of obtaining funding. 2. Your personal credit worthiness is higher with a job. Lenders generally give you points for each requirement you meet. And a salary is one of them. Think seriously about applying for a line of credit, another credit card, or a loan - which you’ll use exclusively for your new business - before giving notice on your current job.3. It’s always easier to obtain funding when you don’t need it.The old adage “You can always get what you don’t want” is so true when it comes to obtaining loans and funding. It’s crazy, but bankers and other lenders are generally willing to hand out loans to those who aren’t in desperate need.
When you’re planning to start a new, or small home business, it’s good sense to apply for it long before you need it. And when your credit rating is good.
4. Many venture capitalists and angel investors, for example, are willing to invest in great ideas. In fact, most prefer pre-startups. Because they want in on the ground floor.Doing this, you’ll have quality time you can devote to it, unimpeded by the serious focus you’d need to successfully get your biz off to a great start.
Plus, investors will want to interview you. At their convenience. Which in some cases may require frequent travel. Also, if you haven’t yet started, your investor may want to provide the invaluable help and resources you need to jumpstart your new biz.
One last word: Remember, it’s always easier to obtain funding and loans when you don’t need them. Don’t start your business and let it suffer from the lack of funding you could have easily obtained before opening it’s doors.
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Jean L. Serio has 35 years experience in business, working for 4 top retail corporations. Helping launch and manage 7 multi-million dollar operations. During the past 15, personally, and through the Network, has helped thousands of women start up a biz of their own. Not sure it’s for you? Take our Free Business Readiness Assessment. We’ll score it and email you the details along with some great biz start up tips.
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