Just When You Thought it Was Safe, 7 More Business Don’ts

An ounce of prevention is worth a pound of cure- small business Don’ts part two


Editor’s note: In part one we covered Don’ts 1-10.This is part two of two of what not to do.

Here are the final seven:

1.  Do not overlook the importance of shopping for insurance that may be required for your business. 

There is the usually liability insurance required by  a landlord, plus many other types of insurance to be considered – property, business interruption, flood, health, life, auto, and directors liability. Comparative shopping is important. The cost of insurance is difficult to comprehend yet vital to survival of your business.   

Consider how much of your operating budget is spent on various insurance components.  You many have a friend who is an agent, but make certain your friend is knowledgeable.              

2.  Do not make tax avoidance a priority: It will hamper the growth of the company.

Many small business owners distribute profits at the end of a each fiscal year. When they speak to their bankers about accessing capital, there is little interest from the bankers when there is nothing left on the P&L and the balance sheet. If ownership is concerned with creating an asset with long term value, he needs to show profits. Paying taxes can be a good thing if the company is in a growth mode. Business owners need to create a growth strategy with a competent financial planner. Paying taxes is an indicator of profitability.

3.  Do not seek funding from a lender until you have prepared to submit the required documents.

A short conversation with your banker is helpful. It will indicate if the lender has an appetite for your industry and the type of financing you are seeking or you should look elsewhere. In order to obtain a loan commitment from a lender you need to present a package of documents. Each lender has his own list, but the lists all are similar. Be careful about shopping for a loan and allowing several lenders to pull your credit. Screen the lenders and get a good indication of interest prior to allowing a lender to pull credit. A lender can provide a Letter of Intent (LOI) subject to credit affirmation and other conditions.  You need to know your own current credit score when applying for a loan for your business.

Business owners consider lenders difficult to please. Do not forget, lenders have underwriting requirements and legislative banking requirements, but they need your business. Small businesses make up the major source of employment in our Country and lenders know the importance of small businesses to the stability of our economy.

4.  Do not overlook local compliance issues.

Municipalities will differ in their requirements. Many businesses have regulations for various industries. Information  is usually available for your industry on line. Always check local requirements as well as Federal and State requirements.

Next- Don’ts #5-#7

Marj Weber
Marj Weber
Marjorie Weber has been educating entrepreneurs and guiding them in their search for capital for the past 20 years: combining financial literacy workshops with one-on-one mentoring. Marj is currently President of Primed 2 Grow Inc. a company that provides access to capital for both existing and start up enterprises. She has provided term loans and working capital to hundreds of small business in South Florida. She was Chair of SCORE Miami Dade from 2010 to 2014 and served as a financial advisor for SBDC/FIU from 2014 to 2017. She also served as an advisor to the Goldman Sachs 10,000 Small Business Program and the SBA Emerging Leaders Program and provides training for Veterans seeking an entrepreneurial path upon retirement from the service. She has facilitated workshops under the auspices of Miami Bayside Foundation, Little Haiti Cultural Center and several local banks. She commenced her career as a real estate investment banker in New York.

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