One of the most important things you can do for your business right now (and regularly) is to always be ready for bank and other types of debt financing. Here are 5 steps you can do to be well-prepared:

1. Review your financial statements regularly to ensure that they are accurate.

Financiers are looking to help you build a business, not just a brand. Your financial statements summarize your business performance and highlight any key achievements and problem spots. Common issues include errors in figures, negative numbers that should be positive (especially on aging Accounts Receivable reports), and misclassifications of items or incorrect or misleading naming of particular line items. When reviewing your statements, ask yourself, “What would I have to explain to someone from the outside?” Ideally, you want everything to be easily understandable by anyone outside your organization.

2. Understand your credit report thoroughly, beyond the score itself.

Banks will require your personal credit report for a business loan, and in most cases will require you to personally guarantee it. While the score is often the focus, the history itself contains the details that provide context. When a score is close to resulting in an approval or a decline, being able to explain what contributed to that score is key. If there are any issues in the past, and especially within the last 12 months – even one late payment – it’s important to have the reason why or explanation ready.

3. Keep your finance team up to date about your plans and closely involved in any process.

Your bookkeeper and/or CPA are critical to providing you with timely and accurate information. Share your plans so they know how to support you, be responsive to requests, and help you quickly move through the process. That said, try not to begin a process during the heaviest tax-preparation periods, or at least be aware that it will likely take longer to get funding.

4. Be aware of alternative financing options.

During the past few years, there’s been a proliferation of financing products that have come onto the market. Stay up to date with new options by asking around to other founders. Debt-based crowdfunding, inventory financing, revenue-based financing, and more could be good options for you as you’re building your business. Just know that the products that tend to be more convenient and accessible also have higher interest rates.

5. Build good financial habits.

Make a list of the business financial activities you need to do yearly, quarterly, monthly, weekly, and daily. Then build a routine by scheduling these on your calendar and reserving time. Many tasks can be done in as little as 15 minutes a few times a week. This will ensure that you have up-to-date and accurate financials so you don’t have to go back and correct mistakes.

Wrap Up

Finding financing for your business can be challenging, so set yourself up for success by maintaining these 5 healthy financial habits.

Keith Kohler is The Financing Man, who helps CPG founders take control of their business finances. He’s on a mission to help every founder in our Foodbevy community.

Keith is offering everyone a free strategy call to create a 2-3 year financing plan including debt, equity, and alternative investments. A number of Foodbevy community brands have taken advantage of this call, and here what they say:

“Thank you for setting up a call with Keith Kohler. I don’t say this lightly – it was one of the most productive and meaningful calls I have had recently. He listens, offers suggestions, and is knowledgeable. In short, he is someone I want on my team.” – Sharon Chamberlin, Catalyst 4 Fitness

Book your free call here: www.yourfinancingreview.com