It took everything you had credit cards, a second mortgage, a loan from your brother-in-law. But you did it. You survived the most difficult challenge any business owner faces you got your company up and running.
But as the business grows, you know youre going to need more employees, new equipment, maybe even professional managers. After all, you know your limitations.
So how are you going to find what you are going to need? Who can you talk to? Youre safe now, but in two or three years, youre going to need a fresh influx of capital. How do you get it?
Here are some tips from experts and those whove been there before.
Have a business plan
Even a one-man shop, says Mark Leventhal of Leventhal Partners M&A, should have a business plan. Running a business without at least an outline is a dangerous thing.
Its like going on a vacation without a map, without knowing where the roads are and where you want to end up, he says. Sometimes, they work real well. It can be real fun. But more often than not, they end up in a lot of frustration and driving around in circles.
Of course, getting from the start-up stage to the growth stage requires money. And, as many business owners have found, its hard to get money without a track record.
Get a bank loan early on, Leventhal suggests. As soon as youre creditworthy enough to get one. Keep some kind of a debt relationship, so that you have something to go from. With that relationship, you can grow and do what you need to do.
Getting a small loan even if you dont need it will allow you to establish that all-important history youll need later, and it only costs a few hundred dollars in interest.
Misery loves company
It is also useful, when youre really small, to begin to establish a group of friends who are also in business, because there is a shared knowledge aspect that you can (use to) learn and grow, Leventhal says.
Finding someone to commiserate with is essential, says Stanton Cort, assistant professor and head of the marketing division at Case Western Reserve Universitys Weatherhead School of Management.
This is especially true early in an organizations life, he says, because you dont have the staff and you dont have the easy contact with the big bankers.
Having other entrepreneurs in the same boat may also make you feel less lonely. But if that boat is a lifeboat, and it was the Titanic that just sank, another entrepreneur may not be what you need. It is essential to have some impartial group to review operations before you make plans to board the doomed ship.
Every small business, it its going to be an entrepreneurial business, and if its going to be trying to grow, needs to have a board of advisers, Cort says. That doesnt mean a big fancy set of directors with big fancy directors meetings. But it means someone who is going to say, Weve got to have a business plan. And then at the next meeting is going to say, How are we doing against our plan?
Those people taking an outside view can see things happen that cant be seen quite as clearly inside, or can see the debilitating effects of some of those things.
I think its essential to mix the emotional and rational part of starting and growing an enterprise, Cort stresses. The emotional part is the sort of fanaticism that makes an entrepreneurial organization work in spite of the lack of resources. And its important to have a self-confidence that says, I can go out and do better than RW in a niche in the marketplace. But there also needs to be that rational part that says, OK, Im going to write down what Im going to accomplish here.