On the one hand start up financing is the toughest you will ever encounter as an entrepreneur. You've got no track record. Banks won't even talk to you. Angel investors and venture capital firms won't talk to 99% of the startups out there. So it's tough.
But on the other hand it is the easiest financing you will ever go after. First, you know the obstacles and don't expect a whole lot; and second, you're not bringing a lot of garbage to the table.
Existing companies tend to wait too long to look for financing, not realizing that it can take months, or even years, to tie down financing for expansion. In those months and years they have bills to pay, contracts to complete, employees to pay. By the time financing comes around, it is often too late.
Start up financing is a different keg of fish. You know it is going to take a long time. You either hunker down and slog on through, or you make alternate plans for starting smaller. Or starting differently. Or shifting the business to make it more appealing. But during these months and years, you are not logging up millions of dollars of debt like existing companies, which puts you way far ahead in the financing game.
Truth to be told, by the time you are able to latch onto "start up financing", odds are that you are no longer just a start up. You probably have made significant refinements to your business. You may even have a few clients. You've certainly refined your business plan. All of which makes you a much juicier prospect for any type of lender or investor.
It is the entrepreneur who sits on his proverbial duff, doing nothing, who doesn't get funded, can't get started, and rots away moping. You -- you, with the angel in your own purse strings -- you are the one who succeeds.
So take that time to do your homework and get started right. It will pay off handsomely in the long run.
Wednesday, November 04, 2009
Tuesday, October 27, 2009
WAHMs - Never Doubt Your Clout!
The National Association of Women Business Owners estimates 10.1 million companies nationwide are owned by women, accounting for $1.9 trillion in sales and employing 13 million people.
Those are not typos. That's 10,100,000 companies; $1,900,000,000 in Sales; with 13,000,000 employees. And that ain't nothing to sneeze at.
And that is truly just the beginning. Then there are all the work at home moms (and dads) who have single person, at home businesses. These smallish businesses get overlooked in surveys because most statisticians consider them inconsequential, or, at best too hard to locate. WAHMs and DAHMs know better. These are not inconsequential businesses. But, ok, they are probably hard to locate. How do you call up every home in the country and ask if anyone has a home based business? It can't be narrowed by any demographic group because these WAHMs are everywhere, rich and poor, big homes and small, young and old. I personally know several hundred of them, and the only thing that seems to be a common denominator is their desire for a business at home.
Many of these WAHMs have internet based businesses. Some sell products. Some sell services. Some are artists. Some are financial wizards; some aren't. Some are website gurus; some don't know what "SEO" means.
But each and every one of them is successful in her own right, whether she is earning $100 a month or $100,000 a month.
WAHM businesses have taken on more significance since the economy became so unstable and women found themselves without reliable income, or any income at all. Their own creativity and ingenuity has become their stock in trade.
The growth has been driven, too, by a deeper desire to be there for our families, to create an atmosphere of warmth at home -- and still make a living. It has been a long time in coming, but women are finally learning how to successfully combine work and home so that both are successful.
And the world is starting to note.
Those are not typos. That's 10,100,000 companies; $1,900,000,000 in Sales; with 13,000,000 employees. And that ain't nothing to sneeze at.
And that is truly just the beginning. Then there are all the work at home moms (and dads) who have single person, at home businesses. These smallish businesses get overlooked in surveys because most statisticians consider them inconsequential, or, at best too hard to locate. WAHMs and DAHMs know better. These are not inconsequential businesses. But, ok, they are probably hard to locate. How do you call up every home in the country and ask if anyone has a home based business? It can't be narrowed by any demographic group because these WAHMs are everywhere, rich and poor, big homes and small, young and old. I personally know several hundred of them, and the only thing that seems to be a common denominator is their desire for a business at home.
Many of these WAHMs have internet based businesses. Some sell products. Some sell services. Some are artists. Some are financial wizards; some aren't. Some are website gurus; some don't know what "SEO" means.
But each and every one of them is successful in her own right, whether she is earning $100 a month or $100,000 a month.
WAHM businesses have taken on more significance since the economy became so unstable and women found themselves without reliable income, or any income at all. Their own creativity and ingenuity has become their stock in trade.
The growth has been driven, too, by a deeper desire to be there for our families, to create an atmosphere of warmth at home -- and still make a living. It has been a long time in coming, but women are finally learning how to successfully combine work and home so that both are successful.
And the world is starting to note.
Saturday, October 24, 2009
Small Business Is Too Big To Fail! Business Planning For The New Age
Business planning just got easier for many small businesses. In his address Saturday, President Barack Obama said small businesses have created nearly two-thirds of the nation's new jobs over the past decade and a half.
"They must be at the forefront of our recovery," he said.
This year's $787 billion economic stimulus package made $5 billion in tax breaks available to small business and cut the costs of Small Business Administration loans, Obama said. Last week, he asked Congress to increase the size of some SBA loans and announced a plan to provide low interest loans to small banks that agree to lend more money to small businesses.
So many times it feels like government just doesn't "get it". The trickle down economics that has been popular for so long just doesn't trickle down to the businesses can really jump start the economy. It is essential for government to provide assistance directly where it will do the most good: to the small businesses themselves. Small business can -- and will --be the catalyst to ignite our struggling economy if they are given half a chance.
There are a lot of reasons why the government's money should go directly to small business, not the least of which is that small businesses are just more agile, more able to adapt, than big businesses, without the bloated salaries and bonuses. Small business owners are dependent on the success of their companies, unlike their large business counterparts, and are therefore much more inclined to put the money where it will do the most good, and not in their own pockets.
Business planning for small business means having the ability to NOT plan everything, to be open to shifting economies and trends, to see ahead of the curve. And this is where small businesses really do excel.
And did small businesses really provide two-thirds of the new jobs in the past fifteen years? My guess is that we provided much more. I don't think that statistic takes into account the millions of new entrepreneurs on the web, or others that are just so "small" that they fly under the statistical radar. And many of these businesses are hugely successful by any measure.
It is good to see the financing flow to small business. Very good indeed.
Wednesday, October 21, 2009
Small Business Marketing Research Turned Upside Down
Suppose you had a potential market of over a billion people? Nice, eh?
Well, suppose that potential market didn't have much money. Not so nice, eh?
Wrrrrrrrrrrrrrong.
Indian inventors have taken that basic information and turned small business marketing research on its head. Consider these products:
If western products are going to prosper over the next decade, this is the type of thinking we need to do in our marketing research. Reduce the number of parts. Cut manufacturing costs. Create products out of cheaper materials. Get creative.
It is nice when you've got the next biofuel formula waiting for a patent. But if I had my 'druthers, I'd take cell phone service for $2 a month.
Well, suppose that potential market didn't have much money. Not so nice, eh?
Wrrrrrrrrrrrrrong.
Indian inventors have taken that basic information and turned small business marketing research on its head. Consider these products:
- A wood burning stove can make more heat at a cost of $23.
- A refrigerator that runs on batteries sells for $70.
- Heart monitors and baby warmers for clinics have been redesigned to be built for about 10% of their western counterparts.
- A new car goes for $2,200.
If western products are going to prosper over the next decade, this is the type of thinking we need to do in our marketing research. Reduce the number of parts. Cut manufacturing costs. Create products out of cheaper materials. Get creative.
It is nice when you've got the next biofuel formula waiting for a patent. But if I had my 'druthers, I'd take cell phone service for $2 a month.
Tuesday, October 13, 2009
Government Contracting -- 7 Ways To Get Your Foot In The Door
The government is immense. You are not. So how do you bridge that gap? Here are some tried and true approaches to contracting with the government:
1. START SMALL. Yeah, it is nice getting a great big huge contract. But if you are the new kid on the block, odds are that it won't happen. So go after the smaller jobs. Prove yourself. Get that recommendation from your contact person, then forge on ahead to a slightly bigger one. Before you know it, you will be able to go after those biggies, and succeed.
2. NICHE IT. No company is good at everything. Know what you are good at, and bid just on those projects. Your specialized knowledge can take you a long way on a government contract.
3. PLAN IT. The bid may not ask for your business plan, but be sure you've got one handy, just in case. If you do get a chance to talk with anyone, a well thought out, well-documented business plan will go a long way to make up for other deficiencies.
4. REGISTER. Go to Central Contractor Registry: www.bpn.gov/ccr and register as soon as you are ready to start bidding. Make sure your website is up and ready too.
5. PERSONALIZE IT. Bidding is still a person to person task, especially with smaller bids. Approach the agency that you believe you can serve. Get to know the people there. The smaller the bid, the more likely you can swing it in your direction when you know the right people.
6. LOOK LOCAL. The US government is only the beginning of government contracting. There are still state governments, county governments, city governments, and a gazillion different agencies that are possibilities. Let your imagination be your guide.
7. FOLLOW EVERY LEAD. Even if the lead doesn't pan out, get your name out there. The more people who know about you, the better.
Hundreds of thousands, if not millions, of businesses prosper on government contracting work. It is probably the most overlooked source of business that there is. No matter how esoteric your business is, odds are that there is a niche somewhere in the government for your services.
1. START SMALL. Yeah, it is nice getting a great big huge contract. But if you are the new kid on the block, odds are that it won't happen. So go after the smaller jobs. Prove yourself. Get that recommendation from your contact person, then forge on ahead to a slightly bigger one. Before you know it, you will be able to go after those biggies, and succeed.
2. NICHE IT. No company is good at everything. Know what you are good at, and bid just on those projects. Your specialized knowledge can take you a long way on a government contract.
3. PLAN IT. The bid may not ask for your business plan, but be sure you've got one handy, just in case. If you do get a chance to talk with anyone, a well thought out, well-documented business plan will go a long way to make up for other deficiencies.
4. REGISTER. Go to Central Contractor Registry: www.bpn.gov/ccr and register as soon as you are ready to start bidding. Make sure your website is up and ready too.
5. PERSONALIZE IT. Bidding is still a person to person task, especially with smaller bids. Approach the agency that you believe you can serve. Get to know the people there. The smaller the bid, the more likely you can swing it in your direction when you know the right people.
6. LOOK LOCAL. The US government is only the beginning of government contracting. There are still state governments, county governments, city governments, and a gazillion different agencies that are possibilities. Let your imagination be your guide.
7. FOLLOW EVERY LEAD. Even if the lead doesn't pan out, get your name out there. The more people who know about you, the better.
Hundreds of thousands, if not millions, of businesses prosper on government contracting work. It is probably the most overlooked source of business that there is. No matter how esoteric your business is, odds are that there is a niche somewhere in the government for your services.
Thursday, October 08, 2009
The 3 Things You MUST Do To Capture SBA Loans, In Good Times And Bad
Yooooooooooooooooooooooo hoooooooooooooooooooooooooooo, SBA. Here we are! Thousands upon thousands of small businesses need your help. Where aaaaaaaaaaaaaaaaaare you?
The Small Business Administration's fiscal year ended in September, showing a drastic drop in 7(a) loan approval -- fewer than half as many loans were approved in 2009 than just two years earlier.
Half. Drat it, that's a lot. Even in a bad economy that's a lot.
So if you feel the pinch of not being able to get SBA loans, you are in good company. My guess is that slews of great small businesses cannot get SBA loans right now. And that's not good.
So what do we do? There are no miracle answers. But when you need an SBA loan, you need an SBA loan, so try some of these:
1. Write a very good business plan. "Spectacular" isn't needed. "Professional" isn't needed, and is often counter productive. But "Good" will get you a long way, and "Very Good" will likely hit a home run. Entrepreneurs have simply forgotten how important written business plans are to banks, and how to write them. So if yours is very good, it will stand on the top of the stack.
2. Get an experienced bookkeeper or accountant to review your projections. Entrepreneurs tend to be optimistic, so get the real scoop from someone else -- and listen to their advice.
3. Document, document, document. Bankers by nature are conservative. It is a gene they carry. That means they aren't going to take your word for much of anything. The more you can document your stats, the better off you are. If you can include testimonials or establish a strong advisory board, those are really big plusses too.
Look to alternative funding as best you can. The more you can garner from elsewhere, the less you have to go begging to the SBA to provide. Odds are that you will still need a solid business plan, but your odds of success increase exponentially as you draw in more sources of funding.
The Small Business Administration's fiscal year ended in September, showing a drastic drop in 7(a) loan approval -- fewer than half as many loans were approved in 2009 than just two years earlier.
Half. Drat it, that's a lot. Even in a bad economy that's a lot.
So if you feel the pinch of not being able to get SBA loans, you are in good company. My guess is that slews of great small businesses cannot get SBA loans right now. And that's not good.
So what do we do? There are no miracle answers. But when you need an SBA loan, you need an SBA loan, so try some of these:
1. Write a very good business plan. "Spectacular" isn't needed. "Professional" isn't needed, and is often counter productive. But "Good" will get you a long way, and "Very Good" will likely hit a home run. Entrepreneurs have simply forgotten how important written business plans are to banks, and how to write them. So if yours is very good, it will stand on the top of the stack.
2. Get an experienced bookkeeper or accountant to review your projections. Entrepreneurs tend to be optimistic, so get the real scoop from someone else -- and listen to their advice.
3. Document, document, document. Bankers by nature are conservative. It is a gene they carry. That means they aren't going to take your word for much of anything. The more you can document your stats, the better off you are. If you can include testimonials or establish a strong advisory board, those are really big plusses too.
Look to alternative funding as best you can. The more you can garner from elsewhere, the less you have to go begging to the SBA to provide. Odds are that you will still need a solid business plan, but your odds of success increase exponentially as you draw in more sources of funding.
Tuesday, October 06, 2009
Business Financing for Women: Start Your Engines!
Key Bank is an amazing resource for women entrepreneurs. It has already loaned $2 billion to women owned businesses, and is planning to lend another $3 billion. That's no typo: that is "B" as in "billion".
There are now over 10 million small businesses that are female owned, and the number is growing. We suspect that number is low because it probably doesn't include all the WAHMs (Work At Home Moms), and that is a very substantial number, many of whom earn substantial incomes. Women owned businesses now generate over $2 trillion in sales each year.
Ladies, we've become a force to reckon with!
BusinessPlanMaster has long supported the accomplishments of women entrepreneurs. When we first put a page on women entrepreneurs five years ago, we put it into our "minorities" section. Well, we aren't really a minority any more. We are a dynamic force, if not a dominant one.
Business financing for women has continued to evolve with amazing programs like those at Key Bank. We thank everyone who has contributed to the success of women entrepreneurs. And, ladies, pat yourselves on the back, too -- you've come a long, long way.
There are now over 10 million small businesses that are female owned, and the number is growing. We suspect that number is low because it probably doesn't include all the WAHMs (Work At Home Moms), and that is a very substantial number, many of whom earn substantial incomes. Women owned businesses now generate over $2 trillion in sales each year.
Ladies, we've become a force to reckon with!
BusinessPlanMaster has long supported the accomplishments of women entrepreneurs. When we first put a page on women entrepreneurs five years ago, we put it into our "minorities" section. Well, we aren't really a minority any more. We are a dynamic force, if not a dominant one.
Business financing for women has continued to evolve with amazing programs like those at Key Bank. We thank everyone who has contributed to the success of women entrepreneurs. And, ladies, pat yourselves on the back, too -- you've come a long, long way.
Wednesday, September 30, 2009
The Best Small Business to Start: Don't Let Your Business Startup Idea Bully You!
The best small business to start isn't always the sexiest idea, or the flashiest, or even the cleverest. It isn't even necessarily the one that will make you the most money.
It is often the one that you can afford.
All too often entrepreneurs reach further than they should when starting a business, buying more stuff, getting a bigger store, hiring more people, going after too much money. And it doesn't stop there. New businesses are vicious mistresses, demanding more and more money all the time. There are always things that you just didn't think about before you started, and those things are always expensive. That's just one of the rules.
Most business advisers say that businesses fail because they don't plan properly, or they don't have enough money. That's just not it. I would wager that most fail because they try to start too big out the gate. They want success NOW, not a year or two from now. They need to brag about the big new office they have, the dozens of new employees they have, the venture capitalists they are talking to.
Well, balderdash. That just isn't the formula for success. Success is based on creating a solid foundation, and building on that foundation over time. If you can start your business as a one person business, do it. If you can start by creating an online business, do it. If your cousin laughs, fine. You aren't in business to please your cousin; you are in business to create a solid, long term business for yourself and your family.
The best small business to start may even be one that you start parttime, from home. YOU control what it will be. Don't let your business become the demanding one in this relationship!
It is often the one that you can afford.
All too often entrepreneurs reach further than they should when starting a business, buying more stuff, getting a bigger store, hiring more people, going after too much money. And it doesn't stop there. New businesses are vicious mistresses, demanding more and more money all the time. There are always things that you just didn't think about before you started, and those things are always expensive. That's just one of the rules.
Most business advisers say that businesses fail because they don't plan properly, or they don't have enough money. That's just not it. I would wager that most fail because they try to start too big out the gate. They want success NOW, not a year or two from now. They need to brag about the big new office they have, the dozens of new employees they have, the venture capitalists they are talking to.
Well, balderdash. That just isn't the formula for success. Success is based on creating a solid foundation, and building on that foundation over time. If you can start your business as a one person business, do it. If you can start by creating an online business, do it. If your cousin laughs, fine. You aren't in business to please your cousin; you are in business to create a solid, long term business for yourself and your family.
The best small business to start may even be one that you start parttime, from home. YOU control what it will be. Don't let your business become the demanding one in this relationship!
Tuesday, September 29, 2009
Microfinance Conference at Cambridge
The Cambridge Microfinance Initiative hosts a conference every so often to help local entrepreneurs, and one is coming up on October 11, 2009. Here is the announcement:
If you are in the neighborhood, do stop by. Loads of great information on microfinance and small business financing will be available!
We are pleased to announce that we will be hosting a free web, marketing, presenting, and legal issues conference on October 11, in partnership with Accion Bank and the Harvard Law School's Wilmer Hale Clinical Center. The conference will focus on building the skills that entrepreneurs need in order to successfully promote their businesses and market their products, with an additional emphasis on learning about the myriad of web and legal resources that can aid in this task. The conference will also feature opportunities to network with fellow small business owners as well as with representatives from our partner organizations.
The event will take place from 10-3 on October 11 at the Harvard University Yard at Sever Hall, Room 113. A more detailed map showing the location of Sever Hall can be found at www.map.harvard.edu.
Please RSVP at http://tinyurl.com/cmi-conference if you are interested in attending this free small business workshop, and we hope to see you there!
If you are in the neighborhood, do stop by. Loads of great information on microfinance and small business financing will be available!
Wednesday, September 16, 2009
$100,000 Up For Grabs in Indiana Business Plan Competition
Keyword for this post: Business Plan Competitions
Should you live in Indiana, more specifically near Purdue University, you are welcome to join The 23rd annual Burton D. Morgan Business Plan Competition. Teams of faculty, staff, graduate students, alumni and area business people will compete in the Gold Division, while students will compete in the Black Division.
While we are on the topic, if you should live near any sort of university, especially one with a business school, do check and see if you are eligible to join a business plan competition. Most universities do hold such competitions, and many open them up to non-students, especially businesses in the area. This is one of the more esoteric alternative ways of funding a new business, but if it works for your business, go for it!
Should you live in Indiana, more specifically near Purdue University, you are welcome to join The 23rd annual Burton D. Morgan Business Plan Competition. Teams of faculty, staff, graduate students, alumni and area business people will compete in the Gold Division, while students will compete in the Black Division.
While we are on the topic, if you should live near any sort of university, especially one with a business school, do check and see if you are eligible to join a business plan competition. Most universities do hold such competitions, and many open them up to non-students, especially businesses in the area. This is one of the more esoteric alternative ways of funding a new business, but if it works for your business, go for it!
What's Your Motivation In Starting A Business?
Keyword for this post: Best Small Businesses To Start
What motivates you? What motivates your employees? The immediate -- and often WRONG -- answer is "money".
I know you are not in business for the money because most entrepreneurs earn less than their corporate counterparts. Honest. No, there are other reasons.
AUTONOMY. That's a good one. It may, in fact, be the most important reason. You simply like being your own boss. I personally know a number of entrepreneurs who just cannot make it in the corporate world. They are too independent, think too far out of the box, don't like red tape. I know one person who was fired from every single job she had over a 20 year career. She opened her own business and is a roaring success. Obviously, she works extremely well autonomously, and was a lousy employee.
CREATIVITY. It is an axiom that most corporations stomp on creativity. Most employees are little more than paper pushers and pin counters. And that is such a waste of a good mind. You needn't be daVinci to be a great entrepreneur, but odds are that you are far more creative than your present job allows you to be.
RESILIENCE. Entrepreneurs can bounce back. Corporations fire. Entrepreneurs learn from their mistakes, and go on to make stronger businesses. Corporations, well ....
These are just three of the many very valid reasons that you are an entrepreneur at heart, even if you are not yet starting a business. You know what you want, and you are ready to go after it.
And what about your employees? How will you treat them? Did you realize that money doesn't motivate most of them either? It is true. Money is not the motivator that most people seem to think it is. Take a look at this video . I was amazed. Like most people, I had always assumed that if you pay people more, you get more. Not true. Not true.
How willing are you to follow in the footsteps of Google and grant your employees time to make their own discoveries? (That's a real conversation stopper, isn't it.)
If you are not dealing with electronics in starting a business, but retail, then how willing are you to let employees design displays or otherwise step out of their assigned jobs?
Giving serious thought to this issue before starting a business means that you may have the pick of the litter when it comes to hiring. You can't offer employees what BigCo offers. But you can offer more, just as you want more yourself.
What motivates you? What motivates your employees? The immediate -- and often WRONG -- answer is "money".
I know you are not in business for the money because most entrepreneurs earn less than their corporate counterparts. Honest. No, there are other reasons.
AUTONOMY. That's a good one. It may, in fact, be the most important reason. You simply like being your own boss. I personally know a number of entrepreneurs who just cannot make it in the corporate world. They are too independent, think too far out of the box, don't like red tape. I know one person who was fired from every single job she had over a 20 year career. She opened her own business and is a roaring success. Obviously, she works extremely well autonomously, and was a lousy employee.
CREATIVITY. It is an axiom that most corporations stomp on creativity. Most employees are little more than paper pushers and pin counters. And that is such a waste of a good mind. You needn't be daVinci to be a great entrepreneur, but odds are that you are far more creative than your present job allows you to be.
RESILIENCE. Entrepreneurs can bounce back. Corporations fire. Entrepreneurs learn from their mistakes, and go on to make stronger businesses. Corporations, well ....
These are just three of the many very valid reasons that you are an entrepreneur at heart, even if you are not yet starting a business. You know what you want, and you are ready to go after it.
And what about your employees? How will you treat them? Did you realize that money doesn't motivate most of them either? It is true. Money is not the motivator that most people seem to think it is. Take a look at this video . I was amazed. Like most people, I had always assumed that if you pay people more, you get more. Not true. Not true.
How willing are you to follow in the footsteps of Google and grant your employees time to make their own discoveries? (That's a real conversation stopper, isn't it.)
If you are not dealing with electronics in starting a business, but retail, then how willing are you to let employees design displays or otherwise step out of their assigned jobs?
Giving serious thought to this issue before starting a business means that you may have the pick of the litter when it comes to hiring. You can't offer employees what BigCo offers. But you can offer more, just as you want more yourself.
Monday, September 14, 2009
When Someone Buys Your Business With An SBA Loan
Keyword for this post: SBA loans
So you are ready to sell. And your buyer will be asking for an SBA loan to help in the purchase. What will the buyer need from you?
Financial. Yes. As far back as you've got them.
More importantly, the buyer will need to establish a value for your business, one that will support an SBA loan. Be sure the following things are in order:
Customer List: For businesses with a great deal of repeat business from its clients, the database of clients certainly has value.
Proprietary Processes: Businesses whose success is partly due to proprietary processes, technology, or methods, have value in those processes or technologies. These processes should be documented in such a way as to be transferable and repeatable by a new owner.
Location and Facilities of the business: I know one retailer who sold three different businesses solely on the basis that he had negotiated great lease terms. If yours are great, they do indeed provide value to your company.
Patents and Copyrights: Make sure all patents and copyrights are in the name of the business, not your name. They add real value to business. Doing this before you are asked to do it shows your cooperative nature.
Goodwill: Make sure your employees are trained in all the skills they need to keep the business running without a hitch. Keep media contacts in place. Keep supplier contacts in place. Be ready to sign a non-compete agreement. If you leave the business, and the business leaves with you, your buyer will go under in no time.
Reputation: If your company has been selected to sell to high profile companies or agencies, it is assumed that you acquired this business through having a solid reputation. More than that, the more solid your clients are, the more solid you are as a company. Flaky clients make a flaky business.
There is a lot more the appraiser will ask for -- your lease, your various agreements, etc. All that is pretty standard. Just make sure he takes into consideration the items listed above. It will make an SBA loan go through much easier.
So you are ready to sell. And your buyer will be asking for an SBA loan to help in the purchase. What will the buyer need from you?
Financial. Yes. As far back as you've got them.
More importantly, the buyer will need to establish a value for your business, one that will support an SBA loan. Be sure the following things are in order:
Customer List: For businesses with a great deal of repeat business from its clients, the database of clients certainly has value.
Proprietary Processes: Businesses whose success is partly due to proprietary processes, technology, or methods, have value in those processes or technologies. These processes should be documented in such a way as to be transferable and repeatable by a new owner.
Location and Facilities of the business: I know one retailer who sold three different businesses solely on the basis that he had negotiated great lease terms. If yours are great, they do indeed provide value to your company.
Patents and Copyrights: Make sure all patents and copyrights are in the name of the business, not your name. They add real value to business. Doing this before you are asked to do it shows your cooperative nature.
Goodwill: Make sure your employees are trained in all the skills they need to keep the business running without a hitch. Keep media contacts in place. Keep supplier contacts in place. Be ready to sign a non-compete agreement. If you leave the business, and the business leaves with you, your buyer will go under in no time.
Reputation: If your company has been selected to sell to high profile companies or agencies, it is assumed that you acquired this business through having a solid reputation. More than that, the more solid your clients are, the more solid you are as a company. Flaky clients make a flaky business.
There is a lot more the appraiser will ask for -- your lease, your various agreements, etc. All that is pretty standard. Just make sure he takes into consideration the items listed above. It will make an SBA loan go through much easier.
Small Business Financing -- Four Top Approaches
Small business financing in the Age of Bailouts
We just heard President Obama's speech to the financial world, admonishing them for creating the financial mess we are in and setting out the warning sign that the next time it happens there probably won't be a bailout. He didn't say that, but that is the truth.
It IS small business that has really felt the brunt of the lousy decisions made on Wall Street. It IS small business that can no longer access lines of credit. It IS small business that is having immense problems exporting products.
Each of those small businesses is owned by real people. People who may have also lost their homes due to the greed of Wall Street.
Sadly, however, I don't think it is Wall Street that is going to bail us out. We are going to have to do it ourselves. The fancy execs in their fancy suits and expensive cars wouldn't take so much as a 10% cut in bonuses to provide funds to lend to small business. They are truly Greed Personified.
And the next time they get us in this kind of mess, I'm certainly not going to be so willing to bail them out. Nor, I think, will most other entrepreneurs. If small businesses have to fail, then so should big businesses.
Even now, we are pretty much on our own. In spite of the President's admonishment, I don't really expect any changes from the self-serving SOBs on Wall Street.
So what can we do about small business financing? Here are a few quick ideas:
BOOTSTRAP GROUPS. Join a bootstrap group if you haven't already. These groups are composed of small businesses helping small businesses. Ask when you need something, and be willing to provide help too.
WORK THROUGH YOUR REPRESENTATIVES IN CONGRESS. Work with others in your geographical area to tell your Representatives and Senators exactly what is happening in your area. Can't get loans? Document your case and send it to your representatives. If anyone has influence with local bankers, it is your Representative.
SHARE STUFF. You don't need your whole warehouse right now? Rent out part to another business. Likewise, don't be shy about renting part of a warehouse for your own business. This is the Age of Ingenuity not the Age of the Braggard, so be as ingenious as your can in running your businesses and cutting costs.
PETITION YOUR CITY COUNSEL. This is another group that should respond to the needs of small business. If you go out of business, the city loses tax revenue. Let them know what you need in terms of loans and/or other assistance. Get them on your team.
One more thing: Watch for ads promoting small business. There are a few banks that I have noticed lately that are looking to attract more small business clients, such as Bank of America and Wells Fargo. There may be more out there. When you see these, ads, support those companies. You may not qualify for a loan, but you can open a checking account or have them process your payroll. Give them whatever business you can.
These steps won't guarantee that your business will be successful, but they sure will help. Small business financing is never easy, and the past year has made it nearly impossible. Now is the time to show the country just how creative we are.
We just heard President Obama's speech to the financial world, admonishing them for creating the financial mess we are in and setting out the warning sign that the next time it happens there probably won't be a bailout. He didn't say that, but that is the truth.
It IS small business that has really felt the brunt of the lousy decisions made on Wall Street. It IS small business that can no longer access lines of credit. It IS small business that is having immense problems exporting products.
Each of those small businesses is owned by real people. People who may have also lost their homes due to the greed of Wall Street.
Sadly, however, I don't think it is Wall Street that is going to bail us out. We are going to have to do it ourselves. The fancy execs in their fancy suits and expensive cars wouldn't take so much as a 10% cut in bonuses to provide funds to lend to small business. They are truly Greed Personified.
And the next time they get us in this kind of mess, I'm certainly not going to be so willing to bail them out. Nor, I think, will most other entrepreneurs. If small businesses have to fail, then so should big businesses.
Even now, we are pretty much on our own. In spite of the President's admonishment, I don't really expect any changes from the self-serving SOBs on Wall Street.
So what can we do about small business financing? Here are a few quick ideas:
BOOTSTRAP GROUPS. Join a bootstrap group if you haven't already. These groups are composed of small businesses helping small businesses. Ask when you need something, and be willing to provide help too.
WORK THROUGH YOUR REPRESENTATIVES IN CONGRESS. Work with others in your geographical area to tell your Representatives and Senators exactly what is happening in your area. Can't get loans? Document your case and send it to your representatives. If anyone has influence with local bankers, it is your Representative.
SHARE STUFF. You don't need your whole warehouse right now? Rent out part to another business. Likewise, don't be shy about renting part of a warehouse for your own business. This is the Age of Ingenuity not the Age of the Braggard, so be as ingenious as your can in running your businesses and cutting costs.
PETITION YOUR CITY COUNSEL. This is another group that should respond to the needs of small business. If you go out of business, the city loses tax revenue. Let them know what you need in terms of loans and/or other assistance. Get them on your team.
One more thing: Watch for ads promoting small business. There are a few banks that I have noticed lately that are looking to attract more small business clients, such as Bank of America and Wells Fargo. There may be more out there. When you see these, ads, support those companies. You may not qualify for a loan, but you can open a checking account or have them process your payroll. Give them whatever business you can.
These steps won't guarantee that your business will be successful, but they sure will help. Small business financing is never easy, and the past year has made it nearly impossible. Now is the time to show the country just how creative we are.
Wednesday, September 09, 2009
New Business Ideas For Troubled Waters
Seems like everyone is looking for new business ideas. "Green" is gold, and gold is out of fashion. And if you really want "fashion", try "personal style". It seems like everything is topsy turvy.
In fact, the business world is settling down.
In recent history we have had the dotcom boom and bust of the '90s. We have had the roller coaster ride of real estate of the '00s. And we've had the economic tsunami that plagues us still. It sounds like everything is busting up. So where are the great new business ideas?
Simple. Look back. And look forward. Take an business idea from the past and give it the boost of the 21st century, and you've got a whopper of a new business idea.
Look at tutoring. For decades -- yea, for centuries -- tutors have shuffled up the steps, books in hand, overflowing with Knowledge. Not the 21st century tutor. This tutor spotlights his/her talents on the web and garners clients from around the globe. With online meetings, email, voice and video connections so readily available, tutors in all disciplines can now reach out further than they ever imagined. This is such a strong business that we have identified it as one of THE top new business ideas.
Or look at the revolution in the wholesale business. This used to be the property of large warehouses and printed catalogs. No more. Now closets are the storage space and wholesalers market goods online. Goods are anything from miniature dollhouse furniture to tie clasps to jewelry to paints for model airplanes to teddy bears. Anything goes! Well, anything goes as long as it fits in the garage.
The revolution in marketing is not in the new, New, NEW business idea, but in taking the old tried and true and giving it a new spin. Thousands upon thousands of entrepreneurs are finding success who never before dreamed it possible.
What a time to be alive! and be an entrepreneur.
In fact, the business world is settling down.
In recent history we have had the dotcom boom and bust of the '90s. We have had the roller coaster ride of real estate of the '00s. And we've had the economic tsunami that plagues us still. It sounds like everything is busting up. So where are the great new business ideas?
Simple. Look back. And look forward. Take an business idea from the past and give it the boost of the 21st century, and you've got a whopper of a new business idea.
Look at tutoring. For decades -- yea, for centuries -- tutors have shuffled up the steps, books in hand, overflowing with Knowledge. Not the 21st century tutor. This tutor spotlights his/her talents on the web and garners clients from around the globe. With online meetings, email, voice and video connections so readily available, tutors in all disciplines can now reach out further than they ever imagined. This is such a strong business that we have identified it as one of THE top new business ideas.
Or look at the revolution in the wholesale business. This used to be the property of large warehouses and printed catalogs. No more. Now closets are the storage space and wholesalers market goods online. Goods are anything from miniature dollhouse furniture to tie clasps to jewelry to paints for model airplanes to teddy bears. Anything goes! Well, anything goes as long as it fits in the garage.
The revolution in marketing is not in the new, New, NEW business idea, but in taking the old tried and true and giving it a new spin. Thousands upon thousands of entrepreneurs are finding success who never before dreamed it possible.
What a time to be alive! and be an entrepreneur.
Thursday, September 03, 2009
The Business Plan For Non-Successes
Keyword for this post:
Start Up Business Plan
There's an interesting post in Entrepreneur.com's blog. They asked "50 top bloggers" for "top recommendations". What makes it so interesting is things like this:
There was a surprising amount of this in the list. Like there is no good advice. Like the experts don't know what they are talking about. And, guess what? The experts DON'T know what they are talking about.
Truthfully, there is no one "right" way to start a business, or run one. The "right" way is the way that suits your style. Some people feel most comfortable trusting their gut. Others need numbers to back up their decisions, or even to make decisions. The key is to find YOUR style, and stick with it. Don't let bullies try to tell you what is "best". They aren't you. They don't know what is best for you.
(Here's a brief commercial.) That is all very comforting, because that is how we constructed our "start up" series. There's not a lot of lecturing. But there are a lot of questions. Lots. Entrepreneurs need to answer these questions for themselves. If you really need to be told everything, you are not meant to be an entrepreneur. Go work for someone else -- they will tell you what to do. But for creative, intelligent people, entrepreneurship is a wonderful adventure. (end of commercial)
Perhaps that is why so many of us aren't a roaring success the first time around in business. We need time and experience to develop our own center, our own style. It is sad that so many banks won't look at business people who have these "less than success" stories in their background, for that is where we learn about our style. We learn about how we work best. We learn how to make a success of what we've got.
Should you be faced with constructing a business plan, and someone on your team has been less than 100% "successful", focus on what the successes really were. Never, ever lie. But focus on the plusses. Lots and lots of entrepreneurs make great comebacks, and you could truly be one of them.
Start Up Business Plan
There's an interesting post in Entrepreneur.com's blog. They asked "50 top bloggers" for "top recommendations". What makes it so interesting is things like this:
18. "If you don't enjoy planning your business' future, you must be doing it wrong; ease up on the business plan document, do just the planning, just big enough to run your business and control your own destiny."
19. "Measure EVERYTHING in your business that you care about and use your findings to drive your decisions so they are based on facts, rather than emotions or seat of the pants guesswork."
There was a surprising amount of this in the list. Like there is no good advice. Like the experts don't know what they are talking about. And, guess what? The experts DON'T know what they are talking about.
Truthfully, there is no one "right" way to start a business, or run one. The "right" way is the way that suits your style. Some people feel most comfortable trusting their gut. Others need numbers to back up their decisions, or even to make decisions. The key is to find YOUR style, and stick with it. Don't let bullies try to tell you what is "best". They aren't you. They don't know what is best for you.
(Here's a brief commercial.) That is all very comforting, because that is how we constructed our "start up" series. There's not a lot of lecturing. But there are a lot of questions. Lots. Entrepreneurs need to answer these questions for themselves. If you really need to be told everything, you are not meant to be an entrepreneur. Go work for someone else -- they will tell you what to do. But for creative, intelligent people, entrepreneurship is a wonderful adventure. (end of commercial)
Perhaps that is why so many of us aren't a roaring success the first time around in business. We need time and experience to develop our own center, our own style. It is sad that so many banks won't look at business people who have these "less than success" stories in their background, for that is where we learn about our style. We learn about how we work best. We learn how to make a success of what we've got.
Should you be faced with constructing a business plan, and someone on your team has been less than 100% "successful", focus on what the successes really were. Never, ever lie. But focus on the plusses. Lots and lots of entrepreneurs make great comebacks, and you could truly be one of them.
Monday, August 24, 2009
The Shark'sTank vs The Real Angel Investors Of Orange County
Keywords for this post:
Business plans for angel investors
I finally broke down and watched an episode of The Shark's Tank, that new "reality" show that has entrepreneurs pitching ideas to "venture capitals". And, yes, it was just about as "real" as The Real Housewives of Orange County. None of the candidates had so much as a business plan for angel investors. No, these are not "venture capitalists". They are "angel investors". That distinction, however, is far less important than the incredible misconceptions the show is propagating.
The only time I have EVER seen angel investors listen to a five minute pitch and write a check for $500,000 was during the heydays of internet companies in the 90s. When those companies flopped on their ill conceived bellies, angel investors pretty much gave up their ill conceived ways and returned to business plans and investigation. There was actually an offer of $500,000 and another for $250,000 "investment" in this episode. Absolutely unbelievable.
The one thing the show did drive home is that inventors far over-value their inventions. They seem to place a value somewhere in the future, after the investment has made it successful. That's not how the real world works.
In a real venture investment, the company is valued at present value, not future value. It is the investment that will bring the company's value to grandiose figures. It really is a partnership between ideas and money.
The show also emphasized what poor business sense most inventors have. And that is probably true. There are millions of "better mousetraps". But very few of them ever get noticed because the inventors don't know how to promote and sell them. I think that is why I really did like one lady who appeared. She had a new fangled baster for turkeys, one that doesn't drip or splash. She sold 51% of her company for something like $35,000 to a guy who could promote it effectively. That lady is going to make a lot of money.
If you are creating a small business plan for angel investors, do take a look at the show. Some of the questions the investors had were good, relating to marketing research, prototype development, licensing options and use of funds. In the real world you will have an opportunity to discuss these issues, so be ready.
Business plans for angel investors
I finally broke down and watched an episode of The Shark's Tank, that new "reality" show that has entrepreneurs pitching ideas to "venture capitals". And, yes, it was just about as "real" as The Real Housewives of Orange County. None of the candidates had so much as a business plan for angel investors. No, these are not "venture capitalists". They are "angel investors". That distinction, however, is far less important than the incredible misconceptions the show is propagating.
The only time I have EVER seen angel investors listen to a five minute pitch and write a check for $500,000 was during the heydays of internet companies in the 90s. When those companies flopped on their ill conceived bellies, angel investors pretty much gave up their ill conceived ways and returned to business plans and investigation. There was actually an offer of $500,000 and another for $250,000 "investment" in this episode. Absolutely unbelievable.
The one thing the show did drive home is that inventors far over-value their inventions. They seem to place a value somewhere in the future, after the investment has made it successful. That's not how the real world works.
In a real venture investment, the company is valued at present value, not future value. It is the investment that will bring the company's value to grandiose figures. It really is a partnership between ideas and money.
The show also emphasized what poor business sense most inventors have. And that is probably true. There are millions of "better mousetraps". But very few of them ever get noticed because the inventors don't know how to promote and sell them. I think that is why I really did like one lady who appeared. She had a new fangled baster for turkeys, one that doesn't drip or splash. She sold 51% of her company for something like $35,000 to a guy who could promote it effectively. That lady is going to make a lot of money.
If you are creating a small business plan for angel investors, do take a look at the show. Some of the questions the investors had were good, relating to marketing research, prototype development, licensing options and use of funds. In the real world you will have an opportunity to discuss these issues, so be ready.
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