For some, a great idea for a business comes a lot easier than the capital needed to get started. This has led to one of the most important ways the Small Business Administration (SBA) supports business owners. Through their loan guarantee program, the SBA helps ensure entrepreneurs have access to capital regardless of their financial background.
When it comes to conveying what your company is passionate about, many business owners start by putting pen to paper and writing out their mission statement. Obviously, this is important. As a brand, a mission statement allows you to own your organization’s public-facing story. But aside from what you write about your commitment to your community, there’s another way you can demonstrate what your company stands for and how you plan on changing the world: Your budget.
The way you spend your business’s capital represents not just what your team values, but what you value as a leader. You want to build a budget that paints an accurate picture of how you prioritize each part of your business.
The startup model has its flaws—instability, naiveté, long hours—making startups one of the last places one would think to look for an example of high-functioning business operations. But amidst the madness, startups that succeed are doing one thing better than more traditional small businesses and other startups: streamlining process.
My colleague recently wrote about the importance of closing your business’s books at the end of your fiscal year. A few of you reached out to us after reading her post, asking for more about some of the financial statements that Melissa mentioned.
We’re happy you asked!
If you run a startup or other business in the midst of growth, you picked a hell of a time to embark on your entrepreneurial journey. We’ve reached a point in the global marketplace where the tools and products out there designed to help you manage your company are virtually limitless.
The question then becomes: Where to begin?
The landscape of business resources is vast and weeding through the internet is time consuming... so we did it for you! As of April 2016, here’s a comprehensive list of resources you should know about, from marketing to sales to teamwork to legal help and beyond:
For a startup to survive and succeed, it needs to manage cash flow with utmost care and skill. Founders and business owners often find it challenging to maintain a steady handle on their burn rate, and this has become a common reason for many startup failures.
Even if you’ve reached profitability or raised a significant amount of capital, you can still fall short if you don’t manage to meet your overhead, payroll, and other operating expenses that keep your business afloat.
Many entrepreneurs get their business off the ground as a limited liability company (LLC).
This can make a lot of sense if you are the single owner of a company or if you only have a few partners. Operating as an LLC gives business owners flexibility.
From a tax perspective, an LLC couldn’t be better: The business’ income is treated as the income of the owners. That’s right—you don’t pay separate business taxes if your company is an LLC. Instead, the company passes taxable profits and deductible losses through to the owners, who are all considered partners by the friendly folks at the IRS.
Pretty straightforward, right?
But there may come a time when you need to convert your LLC to a C Corporation. There are a few indicators that you should think about converting to a C Corp.
You’re a startup CEO. You’re running your business fast and lean. Getting your company’s financials cleaned up and organized is on your to-do list, but so are a thousand other things. You’ll get around to it—just as soon as you secure the loan that will help you scale up.
I hate to break it to you, but as long as your financials are a mess, that funding is going to stay forever out of your reach. At Lighter Capital, we field a lot of loan applications, and the number one reason we reject potential borrowers is that the entrepreneur is unable to produce financials. And we’re not the only ones who feel this way.
Over the course of your life, you’ve probably known someone who holds on to all their receipts, no matter how old or trivial those receipts may seem. Maybe it was your grandfather and his shoebox. Maybe it’s your mother and her filing cabinet. Maybe it’s you and that overflowing desk drawer.
While the practice of saving receipts can verge on obsession, startups have good reasons to retain and organize those little scraps of paper with care. Receipts help your business keep track of expenses, so you can provide proof of purchase for any future exchanges or claims under warranty, understand what your organization is spending too much money on, reimburse employees when necessary, and, of course, deduct everything you possibly can on your taxes.
For any business owner considering taking out a loan with the Small Business Administration (SBA), it is not uncommon to be put off or overwhelmed by the sheer volume of information that you need to provide to apply.
But if you’re willing to put some time into it, you can absolutely prepare everything that you need to apply for and successfully obtain an SBA loan. Here, we’ve put together a cheat sheet detailing all of the most common pieces of information or documentation SBA lenders expect from loan applicants.