How to Get Money so You Can Make More

No doubt you are all familiar with the adage that “it takes money to make money,” but the old saying does not mention whose money it takes. What detail business doesn’t need money for new equipment, additional inventory, and to market and advertise? Keep in mind there are several places you can get money without dipping into your own wallet.

The single-worst source of funds you can use is a personal credit card. Unless you can pay off the balance in full before the end of the month, the interest is going to kill you. (Of course, if you could payoff the balance, you probably wouldn’t need to borrow in the first place.) You won’t stay in business long if you borrow money at 18 percent (or more!).

And, no, you won’t make it up on volume.

Many detailers look to family and friends for loans, especially when they are starting up their venture, because it’s tough to borrow money from a bank or credit union at the outset of a business.

Personal loans are a viable option not to be overlooked, even considering personal relationships involved. They usually carry a lower interest rate and have a less cumbersome approval process than one from a bank, for example.

You do need to be aware of a few IRS rules and a thousand reasons to have a legally binding written loan agreement signed. Consult with your attorney or tax adviser before you ask Uncle John to reach under his mattress.

Going to the Bank

For a larger loan you’ll want to turn to the people whose purpose in life is lending money: banks, credit unions, and savings and loans associations. Even though going through the loan application and approval process can be cumbersome and problematic, think of it like spinach — you may not like it, but you’re a better person for eating it.

In addition, the process of compiling the loan information and thinking through your presentation will help you focus on some important shop management factors.

While you may not think so, banks are actually eager to loan money because it is how they make their profits. Lenders will give you a loan if you show that your business proposal is sound. Conversely, they will turn your loan down if they judge you to be a bad credit risk.

Your personal credit history will be a factor in their decision. Bank loans are often denied because proposals were inadequate or poorly presented. Realize that your detail business’ financial history, alone, is generally not sufficient proof that the loan you’re requesting will be secure.

To achieve that, you must demonstrate that the future of your detail business is rosy enough to make the probability of repayment very high.

Don’t apply for a loan unless you know three things: exactly how much money you need, what you need it for, and how you will pay it back. To qualify, you will need every one of these items substantiated in some way.

How much money you need directly relates to the amount of cash your shop currently generates, so you will have to provide up-to-date financial statements certified by a CPA and/or tax returns.

The information to help you quantify why you need the money will come from your marketing plan and help you answer questions like who is going to buy your detail services, and the likelihood of their purchase based on