When you’re opening your very own dance studio, there’s a lot of money that needs to be invested in the business. Dance studio owners need a great location, quality floors, all-around mirrors, office supplies, marketing materials and more, not to mention you’ll need to pay teachers and other staff. Chances are that you won’t be able to afford these expenses out-of-pocket, which is where a small business loan comes into play.
You might be overwhelmed when it comes to securing funding, so use this guide to navigate the world of business financing.
Determine Your Financial Needs
Before you ask a bank or other lender for money, you’ll want to take the time to plan out just how much financial assistance you’ll require. The U.S. Small Business Administration has a number of useful resources that can help first-time business owners get their monetary needs straightened out. Start by detailing the different costs you’ll need to successfully start your studio, like the ones outlined above. Be sure to include costs for any construction or renovations, studio equipment and advertising. Lenders will look on your application more favorably if they know exactly where the funds are going.
If possible, it’s also beneficial to anticipate any financial assistance you’ll need in the near future. It’s easier to secure loans when you have plenty of time to prepare applications, so do your best to foresee any expenses that may crop up within your first few months of operation. These might include money for costumes, teachers or studio merchandise.
Find a Mentor
Mentors are often invaluable resources for budding entrepreneurs. They can give you helpful hints on applying for loans, securing interest rates and starting a business in general. If you’re friendly with other studio owners in the area, you may want to reach out and see if they’re willing to offer advice. However, make sure that your new school won’t be in direct competition with the studio owners you’re contacting.
You may also be able to find a resource through SCORE, a website that connects small business owners. Another viable option is to seek advice from a financial consultant or legal professional – though you’ll likely have to pay for these services.
Present Yourself Favorably
When it comes time to meet with a loan officer, you’ll want to be informed and confident. Advanced preparations can help you to present yourself as a favorable borrower, so take time to put together a detailed and thorough business plan. Come to the meeting with hard data on the state of the industry in your area, the benefits of each proposed expense, your plan for repaying the loan and timelines for your expansion.
In addition to researching your strengths, it helps to be aware of the factors that may be working against you. Business News Daily explained that there are a number of common problems that small business owners stumble over when trying to secure financing. Look into your credit report and have rebuttals prepared for any issues that lenders may find. Keep in mind that many banks view dance studios as high-risk borrowers, and be ready to fight for your business!
Most of all, be passionate about what you’re doing. If lenders see that you’re really going to give the business your all, it may tip the scales in your favor.
“You have to exude a passion,” Paul Steck, president of an international restaurant franchise, explained to Business News Daily. “I’m going to do this, and I’m going to be the best in the whole wide world. You have to go into it with that sort of mentality, and a lot of presumed business owners don’t do that.”
Other Financing Options
Any studio owner who’s gone through the financing process will tell you that it’s not easy. Many small business owners get rejected the first time they seek a loan, and if this happens, you have two options. You can either keep trying by improving your business plan, ironing out any issues and consulting with other banks, or you can look into other financing options.
On a dance forum, a few studio owners noted that they took out loans from friends, family and business partners to get their schools off the ground. Most were able to repay the money in a matter of years and weren’t hit with the high interest rates that banks would require.
If borrowing from others isn’t an option for you, consider taking out a home equity loan, which are normally accompanied by very affordable rates. You can also look into performing arts grants, crowdfunding or business credit cards. These are all viable options for dance studios, so don’t give up on your dream just because you get rejected by a bank. With the right mindset and a lot of determination, you can likely start the school you’ve always imagined.