Wish Granted?

Ask the answer man and you shall receive.
Magazine Contributor
3 min read

This story appears in the March 2008 issue of . Subscribe »

Here are three questions I've recently received at AskJim.biz from budding entrepreneurs like you. Take a look and see if they help. And remember: Always seek excellence, not perfection. --Jim Blasingame, The Small Business Answer ManT

Question: How can I get a grant for the woman-owned construction business I'm planning to start?

Answer: The businesses you're going to compete with have never relied on grants; they've grown their businesses incrementally by competing in the marketplace. If you think you need a grant, you're not ready to compete.

Having a construction background is the most important thing for you right now. If you don't have the experience, you'll just be throwing away any capital you receive, no matter the source.

I'm not saying you can't be a construction owner. Plenty of entrepreneurs are running successful construction companies. But they start their businesses after gaining experience, which teaches them how to find the working capital they need--but not from a grant.

Question: Is there anything wrong with running my business through my family's checkbook and using my personal credit cards?

Answer: It can be difficult at first, but if you're serious about being a successful business owner, set up separate accounts for your personal and business finances and keep records accordingly as soon as possible.

Keeping separate business accounts and records will help ensure that you know where your cash is coming from and where it's being spent. And while the U.S. Tax Code doesn't directly address how to handle finances for a startup, the IRS looks suspiciously at small businesses that deduct business expenses while commingling personal and business funds.

Question: What is the best way to prepare for questions from prospective investors?

Answer: First, the simple answer: Prepare by answering all the hard questions you would ask if your money were going into a venture you're not in love with. Do this by role-playing with some of the obvious critical questions beforehand.

Be sure your business plan is comprehensive and clear. Minimize your chances of getting beat up on your financial projections by creating three financial scenarios: 1) the reasonable model, which is what you expect to happen, 2) the homerun model, which is possible but is also a scenario you can't count on, and 3) a break-even model, which demonstrates what might happen if your plans hit a speed bump (they almost always do). Also, be prepared to explain what adjustments will be made if this last scenario comes to pass.

If your prospective investor brings a professional advisor, all your advance preparation will be especially handy and help you avoid playing defense for the entire meeting. If you get a question you're not prepared to answer, admit it and promise to get an answer right away. Then do it.

Jim Blasingame is the award-winning host of The Small Business Advocate Show and creator of the small-business knowledge base AskJim.biz. Also find Jim at smallbusinessadvocate.com.

More from Entrepreneur

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

It Started As a Joke and Turned Into a Startup That Raised $1 Million in Funding