What tends to be either missed entirely or poorly estimated is the realistic cash flow required to operate the business until such time as the business can sustain itself on a month to month basis.

Part of the reason for this is a working assumption that the business will immediately be cash flow positive in the first month of operations. In most cases this doesn't happen, the shortfalls are financed by personal credit cards because of the lack of planned working capital, and the borrowers end up i

Statistically, the odds of small business start up success is less than 20% within a 5 year period.

A large part of the reason for getting your loan request turned down, and the basic reason start ups end up failing in large numbers in the first place, is the mistakes made when seeking financing.

Here are my top 7 small business startup money seeking mistakes.

>>> Mistake #1 - No borrower risk. The biggest single mistake I see with people seeking startup capital is that they ask a lender for 100% of their capital requirements.

Risk needs to be shared between borrower and lender. Startup situations, depending on their nature, typically require the borrower to invest anywhere from 30% to 50% of the total capital required into the deal.

A personal equity investment not only reduces the cost of borrowing but also provides some serious skin into the deal that indicates a strong commitment on behalf of the borrower.

>>> Mistake #2 - Purposeful Business Plan. For most small business start up money, a business plan is a required part of the application.

Fundamentally, this is an important requirement for someone getting into any business. Unfortunately, most borrowers look at this strictly as an academic exercise to get financing with the only purpose of completing the business plan being to satisfy a lender requirement.

A business plan should always be prepared from the point of view that the primary benefactor of the process of creation and preparation is the underlying business. If this approach were taken more often, start up situations would achieve greater success, faster.

>>> Mistake #3 - Poor Working Capital Projections. Start up situations tend to intensively focus on the assets they need to acquire, the space they're going to lease, the leasehold improvement cost, and other initial expenditure outlays required to get the business up and running.

What tends to be either missed entirely or poorly estimated is the realistic cash flow required to operate the business until such time as the business can sustain itself on a month to month basis.

Part of the reason for this is a working assumption that the business will immediately be cash flow positive in the first month of operations. In most cases this doesn't happen, the shortfalls are financed by personal credit cards because of the lack of planned working capital, and the borrowers end up in

Risk needs to be shared between borrower and lender. Startup situations, depending on their nature, typically require the borrower to invest anywhere from 30% to 50% of the total capital required into the deal.

A personal equity investment not only reduces the cost of borrowing but also provides some serious skin into the deal that indicates a strong commitment on behalf of the borrower.

>>> Mistake #2 - Purposeful Business Plan. For most small business start up money, a business plan is a required part of the application.

Fundamentally, this is an important requirement for someone getting into any business. Unfortunately, most borrowers look at this strictly as an academic exercise to get financing with the only purpose of completing the business plan being to satisfy a lender requirement.

A business plan should always be prepared from the point of view that the primary benefactor of the process of creation and preparation is the underlying business. If this approach were taken more often, start up situations would achieve greater success, faster.

>>> Mistake #3 - Poor Working Capital Projections. Start up situations tend to intensively focus on the assets they need to acquire, the space they're going to lease, the leasehold improvement cost, and other initial expenditure outlays required to get the business up and running.

What tends to be either missed entirely or poorly estimated is the realistic cash flow required to operate the business until such time as the business can sustain itself on a month to month basis.

Part of the reason for this is a working assumption that the business will immediately be cash flow positive in the first month of operations. In most cases this doesn't happen, the shortfalls are financed by personal credit cards because of the lack of planned working capital, and the borrowers end up i

>>> Mistake #2 - Purposeful Business Plan. For most small business start up money, a business plan is a required part of the application.

Fundamentally, this is an important requirement for someone getting into any business. Unfortunately, most borrowers look at this strictly as an academic exercise to get financing with the only purpose of completing the business plan being to satisfy a lender requirement.

A business plan should always be prepared from the point of view that the primary benefactor of the process of creation and preparation is the underlying business. If this approach were taken more often, start up situations would achieve greater success, faster.

>>> Mistake #3 - Poor Working Capital Projections. Start up situations tend to intensively focus on the assets they need to acquire, the space they're going to lease, the leasehold improvement cost, and other initial expenditure outlays required to get the business up and running.

What tends to be either missed entirely or poorly estimated is the realistic cash flow required to operate the business until such time as the business can sustain itself on a month to month basis.

Part of the reason for this is a working assumption that the business will immediately be cash flow positive in the first month of operations. In most cases this doesn't happen, the shortfalls are financed by personal credit cards because of the lack of planned working capital, and the borrowers end up i

>>> Mistake #3 - Poor Working Capital Projections. Start up situations tend to intensively focus on the assets they need to acquire, the space they're going to lease, the leasehold improvement cost, and other initial expenditure outlays required to get the business up and running.

What tends to be either missed entirely or poorly estimated is the realistic cash flow required to operate the business until such time as the business can sustain itself on a month to month basis.

Part of the reason for this is a working assumption that the business will immediately be cash flow positive in the first month of operations. In most cases this doesn't happen, the shortfalls are financed by personal credit cards because of the lack of planned working capital, and the borrowers end up i

What tends to be either missed entirely or poorly estimated is the realistic cash flow required to operate the business until such time as the business can sustain itself on a month to month basis.

Part of the reason for this is a working assumption that the business will immediately be cash flow positive in the first month of operations. In most cases this doesn't happen, the shortfalls are financed by personal credit cards because of the lack of planned working capital, and the borrowers end up in credit card hell, paying high interest rates with potentially no way out.

Unfortunately, creating more realistic, and potentially conservative cash flows may indicate that you don't have enough money to actually get started, so the temptation is to be overly optimistic in order to make the numbers work, which statistics show is a bad idea more often than not.

>>> Mistake #4 - No Real Marketing Plan. For most retail and service start ups, the marketing plan consists of placing some advertising, offering some grand opening specials, and sitting back and waiting for the flood of customers. Advertising can be very expensive and if you don't know what you're doing, you can burn through all your available cash pretty quickly.

From the financier's point of view, they want you to be able to clearly articulate what you're going to do and why its supposed to work along with the related costs. Lenders typically are not very good at assessing marketing plans, but they can likely tell if one is missing or grossly incomplete/unrealistic.

One of the most powerful ways to support your marketing strategy and related tactics is with written orders or letters of interest, or letters of intent to do business with you once you open.

>>> Mistake #5 - No Rationale For Key Assumptions. Even if you have a plan and realistic cash flow projections, part of being credible is articulating what you're attempting to do in a logical and clear to understand format so that someone who potentially knows nothing about you're business can follow along.

If a request for small business start up money is logical and contains well documented assumptions, it automatically stands out from the pack.

Be clear on how you came up with each and every number you represent in your application package and why you feel they are relevant to your business case.

>>> Mistake #6 - No Expertise and Support Team. One of the first questions that goes through any lender's mind when someone asks them for small business start up money is whether o