Valuable Guidance for Entrepreneurs from Your Michigan Bank
If you’re thinking about starting your own company, you may wonder, ‘Is 2021 a good time to start a business?’
- The tremendous uncertainties of 2020 can understandably lead to less optimism about following your entrepreneurial spirit.
- Even in the best of times, launching a new enterprise is challenging.
- With an idea to address a consumer need, a sound business plan, and support from a local Michigan Bank, 2021 could be the right year to move forward.
Look at Your Business Idea through a Consumer Lens
Surprisingly, 4.4 million entrepreneurs started companies in 2020, an increase of almost 27 percent over 2019. But, the U.S. Bureau of Labor Statistics shows that 20 percent of new businesses fail within the first two years, 45% fail within the first five years, and only 25 percent survive 15 years or longer. How can you ensure your fledgling business stands its ground and enters that league of the survivors? And not just survive, but thrive!
Assessing the potential longevity of your idea starts with answering a few fundamental questions:
- What problem or ‘pain point’ does your idea solve?
- Who is experiencing this problem?
- How are people with this problem solving it today, if at all?
- If other companies are trying to address the same (or similar) problem, how is your solution better? It has to be!
- Will people willingly spend money to buy your solution?
- Can your solution be flexible to adapt to changing demands and technology over time?
Consider talking with potential customers about your business idea to validate your understanding of their problem and get their reaction to your solution.
- If you’re selling a product, show or demonstrate a prototype.
- Ask people how much they would pay for your product or service.
- Look for opinions outside your family or friends; getting objective feedback (even from people who dislike your idea) is useful information.
Your analysis and investigation will help you make useful revisions to the framework of your business plan.
Create a Business Plan to Help Secure Financing
Many entrepreneurs launch their business by bootstrapping it, investing their savings, or borrowing from family or friends to cover start-up costs. Although bootstrapping has a few advantages, it can constrain your growth if you need a fast influx of cash to meet demand for your product or service.
Many banks in Michigan, including banks in Ann Arbor, banks in Detroit, and banks in Grand Rapids, offer flexible financing solutions designed specifically for small businesses. To qualify for funding, you'll often need to submit your business plan. The foundational research you completed about your idea becomes the basis of your plan. Lenders will also ask for financial analysis and your projections for expenses and income. Here’s additional guidance about crafting a business plan with information that Michigan banks expect from entrepreneurs.
Select a Lender who Understands Small Business and Entrepreneurs
As you explore options for financing, consider these criteria to help make your decision.
- How much capital can the lender provide? Some banks in Michigan may have limits to funding for small businesses.
- How quickly can the bank approve your loan application? If you're facing a cash shortage, waiting for 30, 60, or 90 days can have a significant effect on your ability to keep your business operating.
- How does the bank make funding decisions for small businesses? Look for lenders who evaluate elements like payment history, industry risk scores, and business plans in addition to local market conditions.
- Where is the lender located? Smaller community banks that understand your local market may offer more flexibility than larger out-of-town banks.
- What rates are available for small business loans? In addition to vetting the bank’s Better Business Bureau rating and reading customer reviews, check the business lending interest rates to find the most favorable terms.
- What other services are offered? Some banks in Michigan will bundle services like cash management tools and checking accounts, so it’s important to consider the entire relationship and shop around for the best fit.
To learn more about fueling the growth of your new business, contact the Level One Bank team. We understand the capital requirements of entrepreneurs and provide personalized, expert service and professional guidance.
“If opportunity doesn’t knock, build a door.”