Congratulations FYI years ago I heard a business person say if you have to borrow money to start a business you shouldn’t start a business.  There are certain steps that you have to take to get your business up and running. Your cost for starting your small business is an estimated $250.00 with a good credit score.

Your credit score is everything and your goal should be seven hundred and thirty. The highest score that you can receive from the credit agencies is eight hundred and fifty. There are several reasons for reaching the highest score as possible. As a young start up, you will need a telephone, computer, and office space. If you have these tools and can work out of your home, that’s great.

If you have a product or providing a professional service you have to register with a state on what type of business entity you want, i.e. doing business as (d.b.a) l.l.c or a corporation. You can go on the Internet,  prices range run from $99  and up.  Once you are registered, you will need business cards. Distribute your business cards to every person you know and every person that you meet.

Let’s do a simple scenario, you have a product. You are selling wigs. You have your telephone, your computer, and you are working out of your home. The name of your business is Brenda’s Wigs d.b.a. Here’s is where your high credit score comes in handy. You go to your local bank and speak to a business banker and open a small business checking account. You will automatically qualify for a  credit card from five hundred to one thousand dollars and you might qualify for an unsecured line of credit from five thousand and up to fifteen thousand or more.

Brenda’s Wigs has a checking account, credit card, and a line of credit. You have spread the word all over town about your new business, and people want to see your wigs. You have a company in mind to purchase your wigs at wholesale prices, and you ask for a credit advance on assignment. You receive one hundred wigs for $5000. Your profit margin is $100 to $200 per wig. You start your wig parties and your potential profits are $15,000 per month.  Give yourself three to six months and sell, sell, sell!  Within that period of time you should have been able to sock away $15000 to $30000. And you did all this out of your house!

Another important step that should be on your agenda is a business plan. Your business plan is like a bio. of your business. There are three reasons to create a business plan if you are looking for an investor or partner, to borrow money, and your guide for you or your business. Along with your business plan you should do a weekly profit and (loss) statement. You want to know your sales and expenses. So far you have not borrowed any money you only used credit and those three to six months have given you a gauge of your business and you are still working from your house giving wig parties.

The skinny in borrowing money in trying to get a bank loan or SBA small business administration loan to expand your business is that you have to be in business for two years to qualify and show revenue growth in fifteen out of those twenty four months.  A SBA loan is up to $250,000.  Once you have proven your ability to payback the money that you have borrowed, your business banker has larger loans available for your business. The available loans for business can run up to hundreds of thousands of dollars. Follow these basic steps, and you are on your way to becoming an entrepreneur!


Mr. Ted Harvey Sr.

Money Connection Blogger



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