4 Essential Tips to Entrepreneurial Success

4 Essential Tips to Entrepreneurial Success

Author: Kim Preheim, Senior Advisor, Community Banking

Across the United States, valiant entrepreneurs continue to spread their wings and fly. According to the Global Entrepreneurship Monitor, the number of new business startups increased in 2022 over the previous three years, despite high inflation rates, supply chain shortages and a shrinking workforce.

Challenges like these can put downward pressure on new startups, limiting revenue and growth, so entrepreneurs often rely on financing to drive their businesses and keep pace with an increasing list of financial obligations.

But it isn’t always easy for new owners to find the funds they need. According to a recent report from the U.S. Chamber of Commerce, the majority of entrepreneurs from across multiple industries listed gaining access to capital as their No. 1 challenge.

If you’re a business owner or running a new startup, here are four essential tips to help make your business more credit worthy, grow your operation and lead to entrepreneurial success.

1. Have a Business Plan

A business plan acts as a strategic roadmap, providing entrepreneurs with a guiding star toward success. This critical document defines the company’s vision, identifies target markets and determines the plan for growing revenue.

Because it takes time to demonstrate a strong history of financial success, a business plan also becomes crucial for new entities trying to qualify for financing.

Banks take a risk when lending money, so responsible lenders will perform due diligence before approving funds. A business plan demonstrates the viability and potential profitability of startup ventures, making it more likely that lenders will approve loan requests.

2. Don’t Forget About Your Personal Finances

While growing a business often requires monetary sacrifice on the part of the entrepreneur, it’s important to keep your personal financial house in order. Too often, startup owners raid their own bank accounts and rack up credit card debt to fund company costs, but this can hurt you when it comes to receiving business financing.

When validating a loan application, banks must check your personal credit history, your bank account balances and how you managed previous debts. An entrepreneur with a poor credit history and no money in the bank is less likely to be approved for business financing than one who exhibits more personal financial resilience.

3. Don’t Try to Be an Expert in All Things

Successful business owners understand the value of good partnerships and regularly seek out experts in other fields to support their operation. For example, a startup manufacturing custom accessories for travel vans may know the adventure market but isn’t likely to understand much about local zoning or how to draft the necessary plans for building a new construction facility.

Drawing on support from experienced professionals demonstrates to the bank companies and related projects are on solid footing, allowing them to qualify more easily for financing. Industry mentors can also provide inspiration and guidance to help entrepreneurs face challenges and grow their operations with fewer setbacks.

4. Plan for Adversity

Ample capital and a solid plan for growth may not be enough to keep your company finances in the black when unforeseen challenges arise. Perhaps a partner suddenly leaves or a key employee defects to a competitor. There are many variables in business, and owners can’t identify them all.

However, it is possible to improve your odds of weathering unexpected events with a solid continuity plan. Entrepreneurs should also save for a rainy day, making sure there is enough money in business bank accounts to survive an unanticipated storm or downturn in revenue.

The Biggest Key to Success Is a Good Banking Relationship

Getting to know your financial institution and making sure it knows you is a key step in the recipe for entrepreneurial success. Banks like FNBO believe in supporting the local economy and want to see startups succeed and bring value to the community.

Banks like these are willing to offer more than funding. They provide valuable support to businesses, through automated accounts payable solutions and cash management tools, that are designed to make financial operations more efficient and to facilitate growth.  

Banks like FNBO also play an important role in setting entrepreneurs on a successful journey. We can provide guidance to help startups navigate the local environment and overcome economic hurdles.

Fostering a robust relationship with a trusted bank may be one of the most valuable tools in an entrepreneur's arsenal, capable of propelling startups to greater heights and enabling sustainable growth.

About the Author

Kim believes that small businesses are the life blood of the local economy, making him a perfect match for his role as a Senior Advisor of Community Banking and Business Banking at FNBO. In his position, he provides deposit and lending products to help fuel individual business growth, but his approach is far more personal. With each and every customer, Kim seeks to build long-term relationships that help him to proactively serve individual needs.