Eugene, Ore. (PRWEB) April 15, 2014
Access to funding remains the biggest challenge for small businesses in 2014, with 41 percent saying it has affected their ability to grow, according to a study released today by Palo Alto Software.
The report, based on a survey of almost 400 small businesses, found that business owners are struggling to find financing to support their growth. According to the survey, this lack of funding has an even bigger impact on small business owners’ ability to implement their growth plans than both potential tax reform and the implementation of the Affordable Care Act. Only 13 percent believe tax reform could harm their ability to plan and grow and 19 percent said the Affordable Care Act.
“Small businesses are the driving factor behind economic growth in the United States,” said Sabrina Parsons, CEO of Palo Alto Software. “They’re resilient to most challenges that come their way, but without that access to cash via loans and credit lines, it’s difficult for them to grow and create jobs.”
According to Parsons, small businesses are often turned down for additional loans because they apply when they are desperate for cash. Instead of looking for additional funding when it’s needed immediately, small business owners need to approach banks or other investors ahead of time, when their business is cash healthy, and their fiscal health looks strong.
“One of the best ways for small business owners to improve their chances of getting loans when they need them most is by having a solid growth plan in place,” Parsons said. “Without a plan, it’s difficult to predict ahead of time when additional financing is needed, and banks are unlikely to approve an application when a small business has already run out of cash.”
The survey also found that nearly 80 percent of companies with a business plan say they are better off financially compared to a year ago, while only a third of small businesses without a business plan can say the same thing.
“Business plans are not just beneficial for loan applications, they help with revenue growth too,” Parsons said. “If business owners plan ahead and track daily, they’re able to spot problem areas and make the necessary adjustments in their businesses, before it’s too late.”
Lack of Funding Also Challenges Startups
Access to funding remains the biggest challenge for startups in 2014 as well, with 45 percent saying it has made it more difficult to grow their startup. An additional 44 percent of entrepreneurs say finding investors for funding will be one of their top three goals in 2014, trailing only customer acquisition, and more than half are currently seeking at least $100,000 in financing.
The survey also found that more than 80 percent of entrepreneurs develop their own budget and sales forecast, but only half are confident in the numbers. Parsons believes that without and solid budget and forecast, including a cash flow forecast, entrepreneurs won’t secure the financing they need.
“Its difficult to impress an investor or loan officer without a solid financial plan in place,” Parsons said. “The best way to secure venture funding is by presenting a confident plan, at the right time, for your business’ financial future.”
Download the full “Q1 2014 State of Small Business” report.
About Palo Alto Software
Palo Alto Software, Inc., makers of the #1 selling business planning software in the world, develops and publishes tools, products, and content to help small and midsized businesses pitch, plan, manage, and grow their ventures. LivePlan, the company’s flagship product, is a SaaS (software as a service) solution for business planning and financial management. Palo Alto Software has been the market leader in its category for over 15 years, has served well over 2 million entrepreneurs, and has customers in 180 countries. It was founded in 1988 by business planning expert Tim Berry. Sabrina Parsons has been the company’s CEO since 2007. Parsons successfully expanded its service offering into the cloud with LivePlan. Palo Alto Software is a privately-owned corporation based in Eugene, Oregon.