According to the JPMorgan Chase Institute, the average small business owner has 27 days of cash reserve. There may come a time that founders need to consider taking on debt or investment. At Techstars Startup Week in Columbus, powered by Chase for Business, a panel of entrepreneurs shared advice on preparing financial information to attract flexible capital.
Most Business Plans Suck; Get a Mentor
The majority of founders don’t know how to build out a detailed business plan. Our experts suggested asking for help and working with someone that can develop your business plan before seeking money from institutions.
What You Really Need Is Marketing
Part of building out a business plan is figuring out your go-to-market strategy, and having the ability to execute this plan. By getting the product out there, gaining traction, and building revenue, founders may not need to take on as much debt as they think. “[It’s important to have] someone to put your plan together, rejections for that next level, and taking what you’ve done historically and tweak it forward. [We help you] use forecasting tools, project what cash you’ll be needing soon, and get a sufficient line of credit to get you through. You don’t want to manage your business based on your bank account. You might realize that you are burning through cash and won’t be able to replenish it.”
Skin in the Game
Just because you have a fancy pitch deck and an innovative idea, doesn’t mean someone is going to completely fund your dream. Investors want to see that you have your money invested in the company. You might also have to take on a side hustle to fund your company or build up savings before you quit your job and work full-time on the business, she said.
Get Your Credit in Order
Having bad credit could be a factor in whether or not you receive investments. While some financial sources have “character lending” programs and review circumstances around credit problems, getting your credit in order will certainly improve your chances of accessing capital.
Don’t Get Caught in the Spotlight
Raising millions of dollars can be really exciting for a startup, but it’s important to continue to forecast your cash flow needs to avoid draining your bank account. Read more advice for entrepreneurs on TechCo This article is part of a Techstars Startup Week content series brought to you by CHASE for BUSINESS. Techstars Startup Week is celebration of entrepreneurs in cities around the globe. CHASE for BUSINESS is everything a business needs in one place, from expert advice to valuable products and services. Find business news, stories, insights and expert tips all in one place at Chase.com/forbusiness. Read the rest of our Startup Week series on TechCo.
