Many times small business (and medium business) owners say, “I need money, I wonder if I can get a bank loan.” Or if they own tech companies, they say, “I need money. I wonder if I can get angel investors or venture capital.”

I say to this, WAIT! Don’t jump the proverbial gun. There are a few other questions to ask; otherwise, you’ll immediately narrow your focus to one or two particular sources of small business financing. Put another way, if you focus on the “how” too quickly, you shut down your imagination and limit your options. To broaden their perspective, business owners and executive management need to focus on the “why” and the “what.”

Here are the questions to ask FIRST:

• How much money do I need? This is a crucial question. However, there are so many business owners who cannot answer this question. The amount you need is a big driver of the best source of financing. The actual amount may be low enough for a customer to pay upfront and therefore have the funds they need. Some funding sources will not consider anything above a certain amount (ie $100,000), while others will not consider anything below a certain threshold (ie $1 million). If you have NO idea what SPECIFIC amount of money you need, then you are at a huge disadvantage.

• For what is the money? Does your business need working capital? Do you need money to expand sales and marketing efforts? Do you want to acquire another company? Do you need funds for software development? Or do you need general expansion capital to expand the business across all sales, operations, etc.? Again, the answers to these questions are key to determining the funding source.

• What are your short, medium and long term goals for the company? Do you intend to sell the company in the not too distant future? You may want to obtain financing now from a strategic investor who could buy your entire company later. Do you have several partners or an intention to grow through partnerships? You may want to take advantage of those partnerships to break even or gain investment. Do you want to expand internationally? Your sources are no longer limited to US-based entities.

Remember, asking the right questions FIRST is the key to deciding who to go to (ie source) and how much to ask for (ie quantity). Better questions make better decisions. Limit your options by jumping to a conclusion or solution as soon as your imagination turns off.