Out on a Limb

Overview: Many entrepreneurs successfully launch a business only to encounter funding hardships as they attempt to grow. The ability to think outside the box, experts say, is critical for firms short on funding. Location does matter. Whether one has an actual business location generally factors into any funding decision. As a result, homebased firms already have a strike against them: Banks find them difficult to lend to because of their lack of assets. Banks do not laugh themselves off the chair like they used to, because there are now enough successful homebased businesses that they see these are credible operations. But they are still locked into the traditional mind-set that it takes so much paperwork and administrative cost to process a loan that one needs to have it big enough to make it worth the effort. When business loans aren't obtainable, homebased firms often rely on home equity loans for financing. Many entrepreneurs prematurely propose a financing arrangement without developing the plan in writing. They are then ill-prepared to answer questions, which can affect credibility. A strategic alliance is not for the weak communicator either. Both companies must thoroughly assess the other's commitment to a joint venture, as well as discuss more technical matters, such as how they will split revenues.

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Format: HTML | Date: Mar 2003 | Pages: 1