Recently, Dan Drechsel wrote a guest blog article on Small Business CEO. Below is an excerpt. To view the entire article, please go to http://www.smbceo.com/2010/11/29/bad-habits-funding/
By Dan Drechsel
It’s common for small businesses to slip into bad habits that limit their ability to get funding. From unscreened customers to generous payment terms, here are some of the most common reasons lenders will not loan to small business owners.
1. Not putting profits back into the business
When you hear these pleasant words from your accountant, “You should take a draw before the end of the year,” think again. Building equity in your business has a positive impact on your ability to get funding. A lender always looks at your debt-to-equity ratio. The more equity you have, the better your ratio. If you believe you will be able to grow the business next year, and will need financing to make it happen, manage your debt-to-equity ratio as carefully as you manage your personal taxes.
Good habit: Keep your business solid by re-investing to support growth.
Check out Dan Drechsel’s entire guest blog article by visiting: http://www.smbceo.com/2010/11/29/bad-habits-funding/ on Small Business CEO.