The Edge Connection’s Access to Capital program begins by reviewing and analyzing our clients’ credit report and creating a monthly personal budget. We are members of the Credit Builders Alliance, a valuable resource that allows us access to a plethora of financial tools, webinars, and more. Using this information to guide understanding, we work with our clients to create immediate, short-term and long-term financial goals.
As our clients strengthen their personal finances, our program simultaneously introduces the concept of establishing and building business credit. We have partnered with Dun and Bradstreet Credibility Corp to offer our clients their Business Start-up package free of cost for one year. This lends our clients’ start-ups more legitimacy and improves their visibility as a reliable business. By using both our educational course and our relationship with community partners, we teach our clients that the wise use of business credit will help a company stabilize, grow, and prosper.
Simply put, a budget is an itemized summary of likely income and expenses for a given period. It helps you determine whether you can grab that bite to eat or you should head home for a bowl of soup. It is typically created using a spreadsheet, and it provides a concrete, organized, and easily understood breakdown of how much money you have coming in and how much you are letting go. It’s an invaluable tool to help you prioritize your spending and manage your money—no matter how much or how little you have. This will be an important tool as you move forward on your road to entrepreneurship.
Personal credit has been important throughout history, and it continues to become more important. The world has become a much bigger place, and therefore your credit score is used more often. Because lenders and other service providers cannot possibly know everything about you, they check your credit.
Your credit is far more than a record of your borrowing habits. People also use your credit to judge your character. While many people understand that loan terms depend on their credit, many people do not understand the other ways their credit affects their lives. Depending on your credit, you may be more or less attractive as a job candidate or an insurance-policy holder. If you already had some idea of how important your credit is, you’re way ahead of the game. A large percentage of the population doesn’t even know that a credit score is an indication of your risk as a borrower. For budding entrepreneurs, personal credit will be used to obtain loans and other funding for your new business.
Savings is the portion of income not spent on current expenditures. Because a person does not know what will happen in the future, money should be saved to pay for unexpected events or emergencies. An individual’s car may break down, their dishwasher could begin to leak, or a medical emergency could occur. Without savings, unexpected events can become large financial burdens. Therefore, savings helps an individual or family become financially secure.
Entrepreneurs will need to kick it up a notch because asking for money is one of the thorniest parts of starting a business. The first key is to save money so that you can put your own personal savings into the business. Nobody is going to want to invest in your business if you do not invest in your business yourself. It is difficult enough to get a loan with a business startup and next to impossible if you don’t invest in your own business. Lenders want a track record, and you may have none. Live frugally and save money so you can show potential lenders that you are committed to your business. Contact the Financial Programs Manager at The Edge to learn the importance of investing in yourself.
The Edge offers many exciting financial classes that supplement the financial curriculum. We have a plethora of subject matter experts in the financial arena who facilitate these informative classes. Here are some of our most popular:
- Inside The Vault
- “Micro” loans for “Big” Dreams
- Credit Wi$e Women
Budgets usually represent a detailed analysis of how a company expects to spend money in future time periods. Many companies create budgets on an annual basis so they can carefully outline the expected needs of each department in the business. Using an annual budget process also limits the amount of time companies spend creating and managing capital resources. Although larger companies may have employed accountants or other professionals to create the business budget, small business owners are usually responsible to complete this function themselves. A major benefit to using a business budget is the ability to limit how much money is spent on certain operations. Budgets usually count expense accounts to ensure that capital is not wasted on unessential items or the company does not overpay for economic resources used in the business. Limiting the amount of capital spent by the business may require owners and managers to find new vendors or suppliers for acquiring business inputs, saving money and meeting budget limits.
When you open a business, one of your first tasks should be to open a business bank account. It is important to keep your business banking separate from your personal banking. It’s not enough to just keep separate records. You should actually keep the money physically separate in different bank accounts, one set up as a business checking account. Some business owners even use different banks for their business and personal accounts, one being a business bank only. Make an appointment to meet with our Financial Programs Manager to learn how to separate your personal from your business funds.
Good credit is the lifeline of your business. It enables you to obtain funding for things like expansion, capital expenditures, research and development, and staffing. It is the principal contributing factor to your business’s future growth, not to mention the cash necessary for survival. Good business credit also allows you to keep the cash you have to cover your cost of doing business; such liquidity lets you respond quickly to time-sensitive requirements, without halting or compromising operations. It’s not just about getting access to financing; business credit has increasingly become the primary vehicle for setting terms on business loans, determining insurance premiums, even setting lease payments. Good business credit can earn you lower rates, strengthening your cash flow. We have partnered with Dun and Bradstreet Credibility to offer special benefits to our clients who need to establish their credit profile. Contact our Financial Programs Manager to find out how!
A pro-forma income statement is similar to a historical income statement, except it projects the future rather than tracking the past. Pro-forma income statements are an important tool for planning future business operations. If the projections predict a downturn in profitability, you can make operational changes such as increasing prices or decreasing costs before these projections become reality.
Pro-forma income statements provide an important benchmark or budget for operating a business throughout the year. They can determine whether expenses can be expected to run higher in the first quarter of the year than in the second. They can determine whether or not sales can be expected to be run above average in June. The can determine whether or not your marketing campaigns need an extra boost during the fall months. All in all, they provide you with invaluable information—the sort of information you need in order to make the right choices for your business.
The demands of running a successful business often cause business owners to defer important, personal wealth management issues. Implementing some basic planning strategies can help you make sounds decisions for you, your family and employees maximizing the value of your business.
It can take years or even decades to build a successful business. Yet, when the time comes to sell a company or transfer it to the next generation, the tendency is to move quickly, pushing the transaction through to accelerate the next phase of life. Business owners should proceed slowly and judiciously, taking the time to ensure that they not only scrutinize the “deal,” but also their family’s financial structure and their own personal objectives—well in advance of any ownership change.
In fact, whether a third-generation business or start-up, it is never too soon to prepare. Thinking ahead means coming out ahead in the long run. There are several practical steps a business owner can take throughout an enterprise’s lifecycle to ensure success when a transfer finally occurs.
Remember all those roadblocks you cleared on your journey thus far? Well, now here is where your hard work and diligence will prevail! You are ready to access capital for your business and continue on your road to successful entrepreneurship. Where and how you look for funding depends on your company and the amount of money you need. Here are some of the options that may be available to you.
- SBA Loans
- Venture Capital
- Angel Investors
- Crowd funding platforms
Please contact our Financial Programs Manager to set up an appointment with one of our Loan Packaging Consultants. He/she will discuss what type(s) of funding that will work for your business.
Funded in part through a cooperative agreement with the U.S. Small Business Administration.