A husband and wife started what many would consider a typical small business. Out of their garage, the couple ran an auto repair shop, but they wanted to secure a loan to grow their small business into what they thought it could become.
They had a dream – a more visible location, multiple employees and even greater success.
The garage next to their house, however, restricted the couple from serving the many clients they had already secured in their first year in business. The less-than-optimal space was just one of their many small business problems.
In this short time, the business owners had been through two accountants before partnering with Forrest Glass, a small business consultant who helped them identify and address their problems.
A Small Business With Problems, And No Plan
Like many small business owners, this husband and wife knew very little about the financial world. Their previous small business accountants provided only the minimum required service and clearly weren’t invested in the auto repair shop.
Those accountants provided no advice and didn’t help the couple grow their business or develop a strategy that would get them into a real garage in a great location.
When Forrest finally sat down with the couple, he started to learn about some of the problems holding their business back. The husband and wife:
- Paid many of their personal bills out of their company (like many uninformed small business owners)
- Didn’t have good records (like many small business owners)
- Had poor credit
Educating The Owners And Planning For Their Future
The first step t0 streamlining a small business is ensuring its owners are educated on the important details of running a business. Topics such as accounting, tax, cash flow and payroll are vital to success.
In the case of these small business owners, loans and how to get funding was a critical starting point for Forrest.
Getting a loan as a new business is difficult. The husband and wife knew this, especially with their poor credit. What they did not know is that the SBA runs loan programs to help kick-start small businesses. They weren’t necessarily ready to apply for a loan, however.
As their small business consultant, Forrest needed answers to some important questions to create the right plan. These questions included:
- What assets do you have?
- Do you have money to invest in a garage?
- How big do you want your business to become?
- How soon do you think you want to make this move?
Having defined their goals and timeline, and put it on paper, Forrest started to help the couple identify the right property and a lender to help fund their project.
Taking Action And Running A Real Business
A plan only gets business owners so far. These owners needed to start taking action to prepare them to secure a small business loan, streamline their company and address its problems.
Forrest helped prepare their books on a monthly basis. Of course, it helped them gain an understanding of the financial health of their business, but also showed the SBA or a bank a track record of profitability. With a legitimate profit and loss statement, the owners could better understand their next steps, in addition to helping them eventually prepare their tax return.
Acting like a business, the owners (with the help of their advisor) could identify problems in their small business and focus on achieving their goals. As long as they continue to show profitability and build their track record, they will soon obtain the loan they need to take their business to a new level.