Deciding to start a finance company can be a very lucrative endeavor. Entrepreneurs in this industry can set their own hours, arrange finance for businesses in every industry, work from home, and make as much money as they desire.
However, starting a financing business does involve laying a bit of groundwork before setting off down the road to success and financial independence.
Here is a list of actions you should take when setting up any type of business, but specifically a finance company.
Draw Up A Business Plan
A business plan is much more than a document to show to bankers and potential investors – it is a guideline for a financing business that details everything from the cost of running the company and market demand for business financing, to projected profits and how long it will take for the business to turn a profit. Business plans can always be modified later on, but for the first step, a financing business should adhere to the forecast and goals set down in the initial plan.
The Mission Statement
Think about the niche that your finance business provides. What sets a finance business apart from traditional banks? How quickly can you get approval for business financing? What industries does your business serve? Write the answers to these questions in a brief summary along with any major competitive advantages customers will get if they come to your company.
Some entrepreneurs in the field will only focus on financing business operation in the healthcare field. Others focus on commercial real estate financing. Still others are willing to finance a business regardless of the industry, but would rather focus on certain types of financing – equipment leasing, factoring, asset-based lending, etc. Your focus is entirely up to you, but it is better to specialize than overextend our abilities by trying to provide all types of business financing to all types of industries.
About Your Finance Business
When people call for advice on how to finance a business, or if they visit your website, they want to know about the people working at your business financing company. If you have a small team, talk about them and their backgrounds. List industry-relevant experience. Talk about any special awards or certifications your finance business has earned. Mention resources your have access to that that customers would find attractive. Show off, and tout the things your proud of in your finance business.
Your Business Financing Product Line
What types of business financing products does your company offer? Think about the focus that was mentioned above. Within that, what specific financing can you offer customers? Can your structure a debt refinancing loan? Mezzanine lending for multi-family dwellings? Seller carry back financing? Is your finance business a preferred SBA lender? Writing out the types of business financing you offer, along with lending amount ranges, competitive interest rates, and other details will draw in potential clients who need capital to finance a business.
Register Your Finance Business
Your finance business needs a name that represents who you are and what your company offers. The business name can appeal to a specific location, reflect the products you offer, or it can simply sound unique to stay in people’s minds. Naming your finance business is your chance to brand yourself and your company. On the technical side of things, naming and registering your business is how your finance company is able to get a Tax ID, obtain any licenses and permits, as well as getting listed in business directories. Additionally, having a registered finance business allows you to apply for business credit cards, so you can travel to meet with clients, have business lunches, and buy equipment for your office.
Develop A Marketing Strategy
Registering your finance business will get it listed in business directories, you will also need a marketing strategy in order to get customers to notice you. A marketing campaign can be everything from radio and television ads to promoting your business financing products via social media, and even partnering with other companies and individuals so that they refer clients to your financing business. Marketing strategy can be a grass roots campaign, or you can hire companies to manage your social media, value content, and other advertising in order to grow your client base.
Business Financing Training
While the basic concepts of financing a business are relatively constant and universal, the types of alternative and commercial business financing are becoming more nuanced all the time. Taking training courses and getting certifications in how to finance a business, how to broker a commercial finance agreement, the various tax laws, and negotiating to meet the needs of both customers and lenders alike is essential to running a successful financing business. Offering products is one thing – having thorough working knowledge and being able to shift gears to offer creative solutions tailored to your clients’ needs – that is an essential quality for successful finance business owners.