Sponsored content FIVE TIPS TO START A BUSINESS Financial tools that may help By BRUNO CHAJÓN: Business banking specialist, Wells Fargo Anchorage
The contributions of Hispanic small business owners to the economy of the United States are significant. According to the US Census Bureau, there are 3.3 million Hispanic-owned businesses in the country. Many of them are relatively new. In a Wells Fargo/ Gallup national study, Hispanic-owned businesses were more likely than their counterparts in the general population to be in the start-up phase (18 percent compared to 10 percent).
The statistics surrounding start-up success are sobering: only half of all the new businesses survive five years. Starting a business is no easy feat. It involves careful planning, making key financial decisions and above all, strong commitment. From our experience working with successful Hispanic business owners, here are five tips to start a business:
1. Develop a business plan Developing a business plan is a key step for success. An effective plan can help prioritize how to spend time and money, and set measurable goals. It also can help identify current or future obstacles to better anticipate and avoid potential risks. A business plan also may help obtain business financing. For example, for an SBA loan and some larger business loans and lines of credit, lenders may require a formal written business plan before extending credit.
2. Set up the business finances Financing is the fuel that can help a business run. That’s why it is good for businesses to start building a strong credit history, which is essential for future borrowing. To begin, a business owner should establish dedicated business accounts separate from personal accounts. Some other financial tools new businesses should consider include:
Checking account. A dedicated business checking account is the foundation of any business finances and makes it easier to monitor cash flow.
Savings account. Do not overlook a business savings account, which can be used for ongoing, recurring and future expenses.
Business credit card. A designated business credit card for everyday expenses might be helpful to separate business and personal expenses easily at tax time.
Payment processing. Offering customers convenient payment options with a merchant services account can help bring in more revenue and improve cash ow.
Online banking. Take full advantage of online tools offered by your financial institution for managing cash and tracking spending.
3. Get credit-ready One of the most important things a business owner can do before pursuing financing for his business is to get credit ready. It is important to work with a bank that offers tools and resources that make financing easier to understand, and a banker who shows him what his business needs to get approved for a loan. Before applying for a small business loan or line of credit, the bank will want to see that the business generates steady cash flow, has low levels of debt, and is in a strong financial position in order to manage debt payments. The more the business owner knows about what bankers want to see in a credit application, the more prepared he will be to pursue credit for his business.
4. Seek support from experts When starting a business, it is important to seek guidance from experienced peers and professionals, such as a certified public accountant, an attorney, and a marketing expert. An accountant can advise about tax requirements or exemptions that the business could qualify for, as well as how to keep detailed financial records that can help streamline the bookkeeping process. An attorney can help determine the legal protections the company may need, and help the business owner decide what legal entity is best for his business. A marketing expert can provide support on how to create a tailored marketing plan that fits the business goals, as well as help build a brand online with social media presence. A business owner may also consider working with a business banker for support in getting his company up and running.
5. Take advantage of networking and free resources There are numerous free resources available that can offer advice, training and assistance. The SBA.gov website is a great place to start.
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