By Dan Boudreau

So you want to start a business… You have a spectacular business idea and are about to launch into the business planning process. In my role as business advisor I have come to realize that there are a number of pitfalls or traps that can stop you, no matter how catchy or right your concept is.

In the business world, there are a number of forces and factors that push and pull us whether we know about them or not. And those forces affect us just as certainly as gravity will pull us steadily toward the earth or down a hill. ‘Not knowing’ about a problem simply does not entitle us to any protection from the effects of that problem. In fact, it’s often those things “we don’t know we don’t know” that can be most threatening to the health of our business.

Our best strategy to deal with the traps is to get to know them. Negative credit history is one example of a trap or circumstance that affects the entrepreneur. Most people encounter financial challenges at some point in their lives. Personal financial management is a full-time job and it is too easy to drift into financial ca-ca than to stay afloat. I have come to accept that many perfectly healthy, hard working people can have a black eye somewhere in their credit history. And those shiners can make it difficult, if not impossible to secure a bank loan.

What does this mean to you? More than anything, it means you need to plan to correct the original problem. If your business plan shows that you need to borrow $50,000 to get started and your credit rating inspires your banker to reach for his Rolaids, you may be headed for disappointment. Better to recognize and deal with that particular financial challenge before pounding a lot of energy into a business plan that can’t work until you do. Being the proud packer of a poor credit rating doesn’t necessarily mean you can’t start your business, but it might require you to take a slightly different path to start-up.

Rather than giving up on your dream business idea because of financial complications, there are a number of options you might want to try. Tactics such as reducing the amount of money you need to borrow, starting smaller, seeking money from some source other than a bank. This article is not intended to be a lecture about proper financial management. A muddied credit history is just one of many challenges which highlights the importance of doing a reality check early in the business development process.

Here is how it works. Rate yourself from 1 to 5 for each of the following statements. Give yourself a rating of 5 if the statement is all or mostly true and 1 if it’s all or mostly false. The lower your number for any of the points, the more work you might need to do to prepare yourself for business.

1. I have enough money of my own to invest in my business

2. I have access to money from others (family, friends, banks)

3. My credit rating is excellent

4. I have assets or equipment to invest in the business (car, computer, tools)

5. I have enough time to work on my business

6. I have enough energy to work on my business

7. I know how to run a business

8. I know my business

9. I have experience at running a business

10. I know and understand the industry that my business is part of

11. I have the necessary certification, accreditation or credentials for my business

12. I have strong trade skills (ability to make commerce happen, negotiate, etc.)

13. I have a strong network of contacts in my industry

14. I am persistent

15. I use technology (computer, internet, email)

16. I have an adequate tolerance for risk

17. I feel I can control the risk for my business

18. I am confident about starting my business

Now, this list of items can be daunting. I urge you to use it in a positive way and to view each “deficiency” as an opportunity to improve. Invariably, when I use this activity in a business planning session, there are one or two people who get stumped on something in this list. I mean “stumped”; stopped cold. That is not the outcome I hope to achieve.

The reality check is designed to focus you on a number of points that stop too many aspiring business owners from getting their business of the ground. Ultimately, you are the best judge of how ready you are to start your business.

Here is one way to get the most mileage out of this activity. Pick the five areas you consider to be your weakest, and set goals to improve each area. In medicine, we hear it said that ” identifying the problem is 50% of the cure”. In business, being clear about areas of difficulty is critical to survival. If you choose to embrace each insight as an opportunity to improve, you’re well on your way to starting that dream business and making it successful. The really great thing is – the choices are yours to make!

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