Starting a small business? Do your homework
Three essentials to starting your small business.
By WP Creative Group
Sandy Spring Bank’s experts share advice on opening, financing and successfully running a small business.
If it feels like everyone is starting their own business these days, you aren’t wrong. From bakeries and food trucks to tech startups and pop-up shops, entrepreneurship is at an all-time high. After the covid-19 pandemic destroyed jobs at a rate not seen since the Great Depression, American workers responded to the uncertainty by betting on themselves.
“The Great Resignation gave people an opportunity to rethink what’s important to them,” says Tanya Speed, Senior Vice President and Director of the Consumer & Small Business Loan Center at Sandy Spring Bank, a people-focused financial institution that offers a broad range of commercial banking, retail banking, mortgage and trust services with over 50 locations across Maryland, Virginia and Washington, D.C. “They started to tap into their passions and what brings them joy — that’s led to this whole new world of businesses starting up.”
And, with more entrepreneurs, comes more questions about how to fund, open and successfully run a business. Fortunately, Sandy Spring Bank has a wealth of knowledge to share, is locally based, and thoroughly knows the market. From funding to finding a mentor, here are top tips from the Bank’s small business experts:
Research, research, research
The first and most important step to starting any business: do your homework and outline it in a business plan that defines clear goals and explains why an investor or bank should support your venture.
“Your business plan doesn’t need to look beautiful,” says Jessica L. Butler, Vice President and Business Banking Sales Manager at Sandy Spring Bank. “It doesn’t need to have pretty pictures, but it does need to give me an understanding of what you’re doing and who your competitors are. This is your opportunity to sell me on what your business is, so I can feel confident partnering with you.” To best tell your story, include key background information such as your company’s vision, strategy, relevant personal information, your team and financial projections. Market research or a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is also crucial.
“Make sure you educate yourself about the industry, including its nuances, your competition and the risks of the business that you’re trying to start,” says Speed.
The good news? You don’t have to do it alone. First-time entrepreneurs can use SCORE, the nation’s largest network of volunteer expert business mentors, to navigate the process, while the U.S. Small Business Administration provides a straightforward checklist that outlines what you need to get started, including information about taxes, licenses and permits, and business structure. In addition to in-person advising, Sandy Spring Bank provides advice online about writing a business plan that works. Relying on those a little closer to home helps, too.
“Reach out to the people in your circle, get some really good advisors, talk to people who you trust and get a good, strong team behind you,” says Butler. “Do your research and take your time. That’s the biggest thing. Too many new entrepreneurs move way too fast because they’re excited and make decisions without thinking it through. That’s when mistakes happen.”
Funding your business
Once you’ve written an iron-clad business plan and secured a trusted team, it’s time to finance your business. There’s no one-size-fits-all financial solution — what sort of funding you use will depend on your industry, your personal financial situation, how much money you need and your business goals. For example, if you’re trying to finance the purchase of specific equipment, your best bet may be a term loan request, while funding the operating cycle of a business would be better suited by a working capital line of credit, says Speed.
While there aren’t any hard and fast rules when it comes to financing small businesses, many entrepreneurs opt for Small Business Administration (SBA) loans, as obtaining a traditional business loan can be more challenging. Even so, you should still expect to inject at least 10 to 20 percent of your own money into your business to establish reasonable equity.
“Most of the time when I see people not qualify for loans it’s because they don’t have any of their own money or assets to put into the loan,” says Butler. “It’s really important when you start a business from scratch that you bring something to the table. When you’re seeking financing from a financial institution that’s providing SBA loans, you’re going to have a financial institution and maybe the government there to help. You have to make us comfortable.”
An SBA loan also requires that you demonstrate business experience, have good character and good credit, provide some form of collateral (such as marketable securities or real estate), and apply for a loan within a qualified industry.
After you determine your personal capital injection and primary loan, Butler recommends looking for any other funding that may be available — a task that Sandy Spring Bank is more than equipped to handle. “We can help you look at what opportunities are out there,” she says. “For example, what type of bank financing is available? Are there grants in the D.C. area? We have all of that at our disposal.”
A lasting partnership
The guidance of experts such as Speed and Butler is needed now more than ever before.
“It really comes down to relationships,” says Speed. “Sandy Spring Bank is a locally based relationship bank. We’re not focused on your transaction. It’s about understanding our clients and being a trusted advisor, now and for the future.”
To this point, even after a loan is approved and funded, Sandy Spring Bank looks out for its clients, speaking with accountants and attorneys, offering to assist the business in other ways such as cash management or retirement plan programs.
“We’re more than just a bank,” says Butler. “When I first meet someone, I get to know who they are. I helped a government contractor start her business with an SBA loan years ago. She just won her first prime contract with the government. I delivered flowers and shared in her genuine excitement. I think that’s what makes us so different. When someone really needs us, they know we’re here.”
Learn how you can start your own business with Sandy Spring Bank here.
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