Don’t bother running to the bank

Many new business owners feel like the first thing they need to do when they have an idea for their new business is to run off to the bank to obtain a line of credit.

This is one of those things that I discourage people from… especially that early in the process. The reason is that banks don’t invest in ideas. They want to see a track record in the form of assets or proven cash flow. That’s really what they’re investing in: your ability to repay what you borrow.

But time and time again I see new business owners waste valuable time courting a bank only to hear, “Sorry, no. We can’t help you.”

The biggest problem with this often futile run-to-the-bank exercise is that it distracts new business owners from doing what they most need to do. That is to concentrate on the basics of the business… such as creating an action plan that will jumpstart their business.