Business Loans – BizFundingResource.com

52 Small Business Tips

1. Developing Your Business Plan Appropriately

Arguably the hardest part of starting any new business venture is raising capital. However, while this process may take a significant period of time, it is not overly time pressure sensitive. Before you even start your business operations, you are going to need to develop an in depth business plan that outlines exactly what you will need to do to get your business off the ground. Most importantly, when you are developing your business plan – you are going to determine whether or not you have an economically viable venture on your hands. Many businesses fail due to the fact that they should never have been businesses in the first place. For instance, if you live in a small town with a small population then there is no need to try to open a large scale department store. The first pieces of advice that we can offer to you is that you need to honestly look at your business, almost from a scientific perspective, to make sure that your business will be able to start to turn a profit in the first two years of operation. As it relates to time management, you should spend at least a month (or about two full working weeks) dedicated to writing a business plan that has complete industry research and a reasonable financial projection.

2. When Raising Capital, Do What is Best for You

Given that it is difficult to raise capital, it is important that you always do what is best for you depending on the type of capital that you are seeking. Many people make the mistake at taking the first offer that comes to them when it comes to getting the capital they need. It is important to remember that if one person is willing to invest in your business then other people will most likely be willing to do the same. Many new business owners jump at any offer for capital that they receive thinking that they will never find another funding source for their business. Nothing could be further from the truth. Additionally, if you are seeking a loan – it should be noted that there are thousands of banks and funding sources that will be willing to look at your business venture in order to make a lending or investment decision. With the advent of the internet and crowd funding, you will find that you will be able to find the capital that you need. In regards to time, you should expect that the capital raising process will take three months to a year depending on the type of capital that you are seeking. It is far easier to get a bank loan than it is to source capital from a number of private investors.

3. When You Are Trying to Get a Bank Loan – Be Extremely Prepared

When you are raising capital for your new business venture, remember that investors are looking for a return on their investment while banks are looking to earn interest payments from you each and every month that the loan exists. Banks make highly scientific decisions as to whether or not you and your business can repay the loan without defaulting. Prior to approaching a bank for a business loan, you are going to want to have a properly prepared business plan, a list of all of your assets, a list of all of your debts, and two to three years of tax returns. This is a must if you are seeking a Small Business Administration Loan. Your bank may require additional information from you as they review your application. As such, having all of your ducks in a row is imperative if you are going through this process.

4. Your Credit Needs to Be In Good Shape At All Times

As it relates to raising capital, your credit can be your most valuable asset outside of your plan to start an economically viable business. If you are seeking capital from private investors then your credit is not as much of an issue. Of course, the downside is that you are going to need to sell a portion of your business to a third party in order to get the capital you need. When you obtain a business loan, you still own 100% of the business. These days, the minimum credit score you need is 650 (using the FICO scale). However, in reality, your credit score should be in the 700 range in order to get the best terms possible. If you have some outstanding credit issues that need to be fixed, you should have those issues fixed by a licensed credit counselor that can effectively and quickly remedy the situations with your personal credit. Remember, you will need to personally guarantee any new business loan that you are taking out and that is why your credit score is so important for this process.

5. If You are Working With Investors Then Make Sure You Have a Proper Terms Sheet

If you are seeking a business loan then the process is pretty straight forward. You submit a business plan, tax returns, and lots of other paper work and then you either get the money you need or you don’t. When it comes to investors, the terms are never straight forward. Some investors want a substantial amount of control as it relates to your business while others want to be more hands off. Some investors want to take dividends while others would rather see the profits reinvested into the business. As such, when you are working with a private funding source it is imperative that you have a properly formatted terms sheet that shows exactly what the investor will be providing, and how much control they will have over how the business operates on a day to day basis. Your attorney and your investor’s attorney should be involved in each step of the process. This will ensure that any misunderstanding or legal issue is kept to an absolute minimum.

6. If Possible, Try Not to Use Capital from Friends and Family

This is always a difficult situation. If you have a great idea for a new business or new product then you may want to approach your friends and family for a loan or investment into your business. If other ways of raising capital are available to you then you shouldn’t. Friends/family and money rarely mix well. If your business does not end up working out as planned (and your friends and family lose money) then you may have resentment from them. On the flip side, if your business is extremely successful then you may have issues as well. First, if you were loaned the money then your friends and family may feel left out as you are now running a successful business on money that they lent to you (a loan does not entitle the lender to profits…just a loan repayment). This can result in jealousy. Two, if they did provide you with investment (meaning that they own a certain percentage of your business) then they may want to become an active part of your business. This happens more often than you would think. As such, unless this is really your only option for raising capital, then you should try not to use their money to start or expand your business venture.

7. Finding The Best Location For Your Business and Just Having to Deal with the Landlord

This is one of the trickiest and aggravating aspects of starting a new businesses. If you are operating in an online capacity then you do not need to worry too much about your location as you can work from anywhere. However, if you are starting a new business like a restaurant or retail store then it is absolutely imperative that you find the best location possible. Even if the location is more expensive than you budgeted for, you should make sure that your business gets the most visibility possible. You can expect that it will take one to three months to find a suitable location for your business. One of the issues regarding this matter, as it applies to time management, is that much of your negotiations will be at the whim of the landlord. As such, you can expect that you will be called during both working and non-working hours to handle these matters. This is just one aspect of starting a new business that is out of your control as it relates to time management.

8. Do Not Get Overly Anxious About Leaving Your Job

Now that you have spent a tremendous amount of time developing your business plan, sourcing capital, and finding your location – now it is time to leave your day job. For many new entrepreneurs, this is the most difficult aspect of launching a new venture. At your job you most likely had a salary, benefits, and a retirement program (all of these things if you are lucky in today’s job environment). The most important thing to remember when you are about to start your business is that you have done all of the necessary leg work to show that you will ultimately have a profitable business venture on your hands within one to two years. However, these one to two year periods can be extremely anxiety provoking. This is even more true if you have a spouse and a family that is depending on the success of your business. The best advice as it relates to this matter is to keep a scientific mindset when you are about to launch your business. You’ve put in the groundwork, now it is time to get this business running. This should be your primary focus.

9. Be Prepared To Work Like Hell For One to Four Years

The first one to four years of a new business venture are absolute hell. Between knowing that you have put a tremendous amount of time and effort into your business (not to mention money), you are going to need to work extremely hard to make sure that everything runs smoothly. During this time, you will be developing a number of protocols and procedures that will ensure that your business will become profitable quickly. You will be constantly looking at your monthly profit and loss statements while making sure that every employee is doing their job correctly. For me, it took four years of 80 hour work weeks before I actually felt comfortable running my business on a day to day basis. From there, I was able to better structure my work days and understand how to properly prioritize everything. I strongly recommend that you use a day planner to map out each hour of the day. When you are running a business, there are always going to be surprises, but when your day is structured – it becomes easier to deal with unexpected matters appropriately without losing your mind.

10. Learning How to Say No

When you are starting a new business venture, it is extremely hard to say no to customers or clients. This is because you are desperate for the business. In your mind, you are thinking that one bad customer experience or one bad customer review will bankrupt you. However, this is not the case. While customer service is the most important aspect of your business, you are going to need to say no to clients/customers that want to take advantage of you. For me, 98% of my clients are great and reasonable people. The other 2% cause about 80% of my business ownership stress. In many cases, these people are extremely unreasonable. While early on you will make the mistake of doing whatever these people ask of you – over time you will develop a extremely keen sense of what clients will become a problem. These clients or customers will eat away at your time.

11. Trust Your Employees

For many business owners, this is the toughest part of the job. The truth is that no one cares about your business as much as you do. They get paid first, you get paid last, and yet you care the most about what happens on a day to day basis. When you are starting a new business or expanding a venture, you should hire people that are extremely trustworthy. In time, you are going to have these people run your business when you are away, and by not micromanaging these people you will find that they like their jobs. Once someone has a complete understanding of what needs to be done and how to resolve small problems as they arise – they will feel a certain sense of ownership over their work. As such, once your employee(s) have reached this stage then there is no need to continually monitor them unless you expect that they are up to something suspicious.

12. Don’t Be Paranoid

While this may sound strange, it is important that you not become paranoid when it comes to your employees. This is one of the things that I have noticed among some business owners. The truth is that many people simply want a day job that they can rely on and get paid for on a biweekly basis. I once had a client that made every one of their employees sign a non-disclosure agreement and non-complete cause (no matter what the job was) as soon as they were hired. I’m not even certain that those contracts were legal. However, he was only running a small consignment store (not a high end technology firm), and he was convinced that employees were there so that they could get an understanding how his business worked in order to start a competing business for themselves. While these events do happen from time to time, they are extremely rare. Unless you are running a business that uses highly proprietary information or trade secrets – try not to become overly paranoid about your employees’ intentions. They want a stable job that they enjoy.

13. Incentivize Your Employees

People like getting their paychecks every two weeks and a nice bonus at the end of the year. However, if you truly want to run a strong business then it is in your best interest to provide them with financial incentives when the business does well. This will not only increase productivity, but you will have a much happier staff. The incentives do not have to be large, but if you develop a proper structure for providing financial incentives – you will find that amazing things will happen. Most importantly, your employees will feel that they have an ownership stake in the business. While this may be as simple as a profit sharing program, by implementing this type of program you are aligning your interests with those of your employees. They will want to work harder for the business, and in turn you will most likely have a much more successful business venture in the long run.

14. Frequently Meet With Your CPA

If you are a small business, you most likely do not have a chief financial officer on staff. When you launch you new business venture, you will be amazed at the number of regulations and laws – as it relates to taxes – that you will need to comply with on a day to day basis. Personnel taxes, sales and use taxes, and business income taxes are extremely complicated. As such, you should find a CPA that you can work with on an ongoing basis, and in a sense you should treat them as if they are a partner in your business. They will be able to provide with an invaluable amount of information and assistance as it relates to running your business on a day to day basis.

15.Use a Payroll Company

Although it is somewhat expensive to have a payroll company – you will save yourself a tremendous amount of hassle as it relates to having a third party produce your paychecks and file all necessary local, state, and federal filings when you have employees. The paperwork that is associated with hiring and maintaining an employee base is massive. With my small business, I generate upwards of a 1000 pages a year in documentation regarding employee timesheets, payrolls, paycheck stubs, and other documents that can drive a person mad if they do not have a business that is dedicated to maintaining this aspect of a business. If a business owner was to do this on their own – it would easily eat up 25% of their work day. The expense is worth it.

16. Remember that Being an Entrepreneur is a Profession

When you decide to become a business owner, you have decided to enter into a profession. You are no different than a lawyer, doctor, or accountant. Although anyone can run a business, the best advice is that you treat what you are doing in your business venture as if it was a professional practice. You are professionally engaged in the business of turning a profit. As such, you should have the proper understanding of all facets of running a company before you decide to go into business for yourself. Although many aspects of running a business are intuitive, many are not. As such, you should become an expert on matters pertaining to accounting, marketing, and business management before you start your new business venture.

17. Learn About Accounting

Everyday, I speak to people that want to run their own business and have a business plan developed. Among my clients, there are often times when individuals have no understanding of how to properly read a profit and loss statement, cash flow analysis, or balance sheet. Prior to starting a business, you should become an expert on basic financial statements. When I see businesses fail, more often than not, the owner was not at all attuned to how financial statements work. In the long run, you will save yourself a great deal of headache when it comes to running your business, on a day to day basis, if you have a strong understanding of financial statements. Again, you are becoming a professional business owner – regardless of your industry – and you need to have a full understanding of how well your business is doing from both a profit and loss statement overview to how you are doing as it relates to your cash balances. This is especially true if you business sends out invoices for work that has already been completed and you now need to collect on outstanding invoices.

18. Keep Your Accounts Receivable to a Minimum

Wouldn’t it be great to order something that you needed and then never pay for it? Although this may sound like a ridiculous question, it is very common among businesses. For instance, what if you are a contractor and your provide someone with a new deck that they need? You send them the invoice, and the never pay. This happens far more often than you would think. In these instances, you have already paid your staff and for materials needed to complete a job and now the person who wanted the work didn’t pay you. In some cases, you may need to take the person to court. As such, when you are starting a new business – you need to keep your accounts receivables to a minimum (the people that owe you money). It is not unreasonable to ask for certain aspects of any job to be paid upfront. Additionally, if you are a product based business – it is not unreasonable to ask for the entire amount of the order to be paid upfront before you send merchandise. You wouldn’t walk into a store and tell them that you will pay them 30 days later, and nor should your clients. Only after years of trust should you provide your clients with credit.

19. Retain an Attorney

In the long run, you will need to have a individual that is very well versed in business law at your side. Our previous tip should illustrate that greatly in that there are going to be instances where your business did what was promised only to not have a client pay for their goods and services. Although there is some upfront cost of retaining an attorney for your business – the benefits are tremendous. Foremost, they will be able to draft legally appropriate letters to non-paying customers while also providing you with advice as to how to handle certain legal matters. Even for small businesses, you may get a lawsuit. As such, your attorney (along with your CPA) is one of your best business partners. They will provide you with forward looking advice regarding how to deal with legal matters while concurrently ensuring that a small legal matter does not get out of hand from an expense standpoint. Additionally, you have complete confidentiality when you speak to an attorney regarding any matter.

20. Your Best Asset is Customer Service

My business survived the worst recession since the Great Depression. The primary reason being, I think, is that I have always strived to offer unparalleled customer service. I am usually always available to my clients (within reasonable time frames). Unlike large corporations, you cannot afford to lose a customer or a client. Again, some people are unreasonable and you will learn to deal with those people (the best methodology is to provide them with a refund). These days most of my business comes from referrals due to the fact that over the past ten years of being in business – I have always been a constant source of help to my clients. As such, you should treat your clients (as should your employees) with the utmost level of respect at all times. These are the people that are making you a successful business owner. One of the benefits of operating a small business is that you are able to provide a level of customer service that is not found at large corporations.

21. Remember that Revenue Is Not Profit

Recently, I had a client that launched a highly successful retail store. Although this is highly unusual, the business started to take in about $75,000 per month in gross sales. This was more money than the individual every thought imaginable. He started to spend money like a lottery winner. What he neglected was the fact that the business was generating substantial revenues, but no profits. His cost of goods sold was about $50,000 per month. Quickly, he started missing deadlines on inventory invoices and soon the business went bankrupt. He could have had an extremely successful business on his hands, but he got caught up in how much physical cash was coming through his door. When you own a business, you are paid last.

22. Become a Marketing Expert

Although this is a quick tip, it is imperative that you become an expert in marketing your business to the general public. As we discussed earlier, no one cares about your business as much as you do, and getting the word out there regarding what services or products you provide is absolutely necessary to running a successful business. When it comes to running a business, you should be absolutely shameless in your marketing efforts. If you run a small business then you should distribute postcards and flyers frequently. If your business operates on a larger level then you should maintain an expansive web presence that tells people what you can provide for them.

23. If You Run A Service Business, Provide a Set Price For Some of Your Services

Everyone wants to know that something will cost them. Whether it is providing someone with a new roof or doing their taxes, they want to know the expense. If you are a service business then you should develop a program that provides a set price for a specific service. You will be amazed at the number of customers that flock to you door because you simply set a definitive price for your services. This is often a fact overlooked by so many businesses. People do not like open ended billing. As such, if you operate a client based business then have a few services that you offer at a set price. You will many more inquiries about your service.

24. Take Advice from Others with a Grain of Salt

When I was a younger man, I took a lot of advice from people that had degrees from fancy colleges. Although I started one business, I decided to start a subsidiary business that would compliment my main business. One of my business friends that had graduated from an esteemed business college told me that starting that type of business would hurt “my brand.” I took her advice to heart, and after sitting on my hands for a few years with a great business idea – I decided to build the business. It eventually became my most successful business. The individual that had provided me with the advice eventually ended up driving her own business into the ground. My secondary business ended up becoming my primary business, and the best business that I have launched. Long story short, trust yourself and be somewhat wary of people that tell you that you will “ruin your brand.” If this is a concern for you then start a business under a different brand name or corporation.

At the end of the day, you are the one that owns and runs the business – you know what is best to do.

25. If Possible, Do Not Attach Your Name to Your Business

If you are a small business owner – you should be extremely proud of your business. You worked extremely hard, took a risk, worked like hell – and brought a business to profitability. Unless it is absolutely necessary, I usually do not recommend that a business owner attached their own name to their company (unless you are a professional like a lawyer). When it comes time to sell your business (hopefully for a substantial profit), it will make the transition easier to the new owner. In cases where the owner has become the centerpiece of the business, it may be difficult to sell your company because your clients/customers feel like they are dealing with you personally and not your corporation.

26. Learning When To Give a Refund

As it relates to time management, the worst scenarios you are going to encounter are difficult clients. It is very hard to have completed an outstanding project for a client only for you to hear that they hate it or it was not what they expected. It is even more anxiety provoking when the individual is angry about the situation or fails to give you constructive criticism. When I encounter these people (which is rare), I find that remaining calm is imperative. Despite the fact that they may be angry, the best thing for you to do is to ask what you can do so that the project meets their expectations. After some additional work to try to resolve the issue, present the work to your client. If they still aren’t happy – offer to provide them with a full refund. Although this not ideal, it will get that person out of your life so that you can resume working with normal people and getting new clients. Generally speaking, 10% of your clients/customers are going to be 90% of your problems. As such, giving a refund puts a quick end to the problem and the angry client walks away feeling unhappy – but not feeling like they were ripped off. I have even had clients thank me for providing them with a full refund.

27. Hobbies Make Bad Businesses

All of us have hobbies or things that we enjoy doing. In some cases, I see people that want to turn their life long hobby into a business. This is generally a mistake. The love of your hobby is something you enjoy because of its simplicity. A hobby should cost you money, not make you money. Running a business that sells the hobby that is your interest is entirely different. As such, you should keep that in mind if you are thinking about turning your hobby into a source of income. However, if you intend to keep the business small and sell your wares on a small website, Etsy, or eBay then it might not be a bad idea to have your hobby produce a small amount of secondary income. Again, this is totally a personal choice but more often than not I see hobbyists unhappy when they try to turn it into a genuine small business.

28. Use Social Media to Promote Your Business

In today’s world, you need to be connected to your clients and customers. As such, it is imperative that you maintain a strong presence on FaceBook, Twitter, Google+, and other popular social networks that will spring up as time goes on. It is no longer enough just to have a website and use search engine optimization. The best benefit of using social media is that you will be able to connect with your existing customer/client base while attracting people that need or want your services/products. Additionally, without too much effort you can promote discounts and specials that your business is offering. Again, the ability to connect at anytime with your customers will give you a tremendous advantage over your competitors. If you are not familiar with social media then you may want hire a social media marketing firm to help you get this aspect of your business off the ground.

29. Maintain a Website and Use Search Engine Optimization

If you are small business then you need to have a properly developed website. Although this may be somewhat of a large upfront expense for a professional website, the benefits will be substantial. Almost everyone finds local businesses via the internet these days. When you look for local businesses, you often find haphazardly put together sites that look awful. As such, make the investment (usually $1,000 to $2,000). Additionally, the same firm that puts together your website should also help you with search engine optimization. This type of marketing seeks to have links directed to your business’ websites. These firms will enroll in local business directories while also producing content that is quickly found by search engines. As such, when some one does a search for your type of local business in your local market – you will appear on the first page (and hopefully be the first result) or the search.

30. Don’t Look At Your Revenue Everyday

This is so much harder said then done when you first start your business. You will be tempted to look, everyday, at how much money came through the door. At first, you will become extremely anxious if you have a slow day or a slow week. It is important to remember that as a business owner – you are going to have a slow day, a slow week, or even a slow month. If you are a highly established business then this may be part of your normal yearly business cycle. For me, summers are the slowest. Instead of worrying about the lack of business I have come to understand that it is simply because people are out doing summer activities and are not in need of my services. I use this down time to develop new service and take a break myself from my standard 50 to 60 hour work weeks. When you are new, you want as much business to come through that door every single day without realizing that on some days that is just not going to happen. You should only start to worry if start seeking declines in your established business cycle. If you are new – realize that you will notice that certain days of the week are typically better than others. On the days that are slower, and do not generate as much revenue, rather than worry – focus on doing something that promotes your business.

31. Stay on Top of Tax Filing Deadlines

If there is any part of my business that I hate the most, it’s filing taxes and other government documents. Sometimes I procrastinate, which only makes the process that much more nerve racking. When it comes to any type of document that you need to file with a government authority, it is in your best interest to say on top of it at all times. The worst thing you can do is not file important documents that are required by your business in a timely manner. You and your CPA should make a chart of when each type of filing is due for each month. Some states, as it relates to sales tax payments, require that payments are made monthly or bi-monthly. It can get very confusing, very fast. As such, make sure you are aware of each deadline and make your filings before they are due. As it relates to your payroll, make sure that your chosen vendor does this for you. Again, payroll companies are expensive to use but they will save you a world of time in the long run.

32. Be Careful with Advertising Agencies and Marketing Firms

Advertising agencies and marketing firms are great when it comes to developing new promotions and advertisements for your business. However, they are very expensive. Many firms require a retainer or a percentage of how much you intend to spend on marketing your business to the general public. One common issue that I have found with marketing and advertising companies is that they continually want you to increase your budget. Sometimes this is justified, but sometimes it is not. When you are approaching a marketing firm or advertising agency to assist you with marketing your business, you should make sure that they use a metrics-focused approach to determining how successful their developed campaigns have been for your business. This includes showing you figures such as Cost Per Thousand Impressions and Conversions to Marketing Dollars Spent (ie…how many people became customers and how much did it cost you). If you advertising firm is focused solely on having your new ad “go viral” or something of that sort then you may want to find a firm that understands that you are looking to gain the greatest reach without breaking the bank.

33. When You Close Your Doors for the Evening – Do Not Continue to Work

As we have said earlier, when you run a business, it is easy to have it become a total obsession. You are going to be working constantly throughout the day. In order to maintain your sanity, you are going to want to set specific times of the day when you are working. For instance, when I am having dinner with my family – I always put my phone on silent. Even though I leave my office around six, I completely stop checking emails at 9pm. This allows me to relax and unwind. If you start checking your emails right up until the point when you go to sleep then you will not be well rested for your next day. Getting enough sleep is often an issue that is overlooked by most small business owners. If you are not well rested then you will, without a doubt, begin to make mistakes. A sharp mind operates a well run business.

Of course, from time to time there is a going to be an emergency or an issue that just takes up more of the day than is expected. This is natural, and you just have to deal with it from time to time. However, these days should be limited and not how your normal day to day business operates.

34. Take Vacations When You Can

This is by far the hardest thing that you can do as an entrepreneur. When I first started my own business, nothing struck fear into my heart than being several hundred or several thousand miles away from my business. Each time I would travel, at least for the first four years I was in business, I would pack up a computer and printer so that I could be ready for any situation that would happen. I would have my office line forward directly to my cell phone so that if a client called – I would be immediately available. As such, I never really felt like I was on vacation. I was merely working from a different location. Now, ten years in, I trust my employees to run my business in my absence. My clients know that I am on vacation, and very rarely will they call unless it is an absolute emergency. Additionally, the most important thing that I learned, is that my business runs better when I am away. Each employee knows what they need to do and they do it well. As an incentive, I pay a small bonus to my staff for keeping the place in running order while I was gone. Also, I get the best ideas for new products or services to offer when I am away from my company. I am not wrapped up in the day to day operations of my business, and it gives me the opportunity to review things with new perspective.

35. Keep Employee Meetings Short

There is nothing in this world more boring for an employee than having to attend an employee meeting. No one likes it, and everyone is afraid to be called upon. Some business owners feel that they are not properly meeting with their employees if they do not hold a daily meeting. Unless it is necessary, try to keep meetings to no more than 20 minutes. During this time, people will remain alert and focused on what is being said. These days, the attention span of people seems to be very limited. After 20 minutes, employees will start thinking about other things (mostly non-work related matters). Additionally, the longer your meetings run – the less time your employees have to complete their assigned work. Some business owners prefer standing or walking meetings. These typically work very well for certain situations.

36. Never Reveal Your Competitive Advantages to Anyone

Give a man to fish, and he will eat for a day. Teach a man to fish, and you just created a competitor for your fishing business. For some entrepreneurs, there is a drive to mentor others that are trying to launch a new business. While advice is important, you do not want to reveal how your business remains successful at all times. Maybe you use a selected vendor to keep certain costs low, or you have instituted a protocol that keeps what is normally a time-intensive task into a short procedure. As such, once you have been running your business for a significant period of time – you are going to have developed strategies that minimize the time needed to do something or something that sets your business apart from your competitors. As such, when doling out advice to new business owners keep anything proprietary out of the conversation.

37. Use Technology But Do Not Overuse It

My business requires that each of my employees have access to a computer that uses high speed internet. They need Microsoft Office and access to email programs. We have not updated some of the programs that we use for years. The primary reason being is that we do not need to. Now that technology has entered each part of our lives, there are numerous advertisements that you will receive as a business owner that pitches their software as the newest, latest, greatest cost savings program that you will ever need. If you continue to read about each and every program that can help you run your business – your head will start to spin. As such, for each technology category type – keep it simple. If your employees need computers – use the same brand. If they need cell phones – they all use the same model. Email software – everyone gets the same. Once in a while you will need to update what programs and computers that people use, but this should be done all in one swoop. I had a client that continually had his employees using new applications and programs every few weeks because he was sold on one certain feature. The end result was absolute chaos with every employee using different applications and wasting time figuring out how to use the new ones that he demanded his employees use.

38. Keep and Pencil and Paper Day Planner

I have found that simply using a day planner with a pencil is the quickest and most effective way for me to manage my day. Each week, I write out which clients I am seeing and when, which people I need to call and on what day, and what other matters to be dealt with during that week. In the same planner, I keep a list of the bills that need to be paid each week. This system has never failed me, and if I lose my day planner then I have only lost a week of scheduling. Each time I complete a task, I scratch it off or write a double check mark next to it. I can feel a little hit of dopamine hit my brain when I write out that double check mark next to a completed task. While this system isn’t for everyone, it is simple and it has worked for business owners for hundreds of years. Again, I don’t like being tied to applications when it comes to running my business on a day to day basis – and it is much faster just to write something down than it is to type into my smart phone.

At the start of each week, I have my assistant enter the information into our database so that employees are aware of what is going on and what needs to be done.

39. Keep Your Expenses As Small as Possible At All Times

It is incredible how quickly a business’ budget can grow once a decent amount of revenue starts to come through the door. While many of your costs are fixed (such as rent, salaries, and some utilities), many of your expenses are not. If you do a lot of business online then you may find yourself signing up for small services that cost $10 to $20 per month. While these may seem like a good idea at first, you will find that they will start to tally up on your corporate credit card pretty quickly. When my business was growing, I signed up for a number of services that helped promote my website (to varying degrees of success). After reviewing my credit card statement, I realized that I had signed up for 15 different services that were charging my credit card anywhere from $10 to $40 per month. When you are running a business, it is easy to forget these service providers. When you do remember, you think to yourself that you will cancel that subscription or service at the end of the month. However, you will forget and hundreds of wasted dollars will go out the window.

As such, you should keep a detailed spreadsheet of every vendor you use. This includes your landlord as well as that service that costs your $10 per month. Believe me, these charges will add up in the long run unless you keep a tight control on them.

40. Only Give Trusted Employees a Credit Card

Unless you absolutely trust the person, don’t give employees a corporate credit card unless it is absolutely necessary. The only individuals that can have access to spending my business’ money are those that have been employed by me for at least a year and hold a managerial level position in my business. Early on, I gave certain employees corporate credit cards just to make my life easier. I once told an assistant to run over to our local office supply store to get what we needed for the next few weeks, and she came back with more than $500 worth of paper, coffee, pens, pencils, and organizers that no one needed. If you do give lower level workers (and I am not implying that they aren’t trustworthy or will steal from you) then make sure that your financial institution puts a limit as to how much can be spent on that card. Additionally, you should make lists of what should be purchased using that card. If you aren’t comfortable at all with giving out corporate credit cards then you should maintain a petty cash box that requires that receipts are deposited at the end of each day for all purchases made. You should have your bookkeeper review these receipts each time they come in (provided they are not a staff employee).

41. Hire a Great Bookkeeper

Outside of your CPA (who gives you tax and financial advice), your bookkeeper will be one of the most important people in your company. In many ways they will act as the comptroller of your business when as it relates to making sure that all receivables are coming in and all bill payments are going out. Additionally, many bookkeepers (especially the experienced ones) are generally very well versed on tax issues. They can assist you, on a day to day basis, when you need to deal with certain routine filings. Although your CPA should be the one to have all final say as it relates to tax matters, your bookkeeper will be invaluable to you in these matters as well. Additionally, during tax time, your bookkeeper can work directly with your CPA to determine how certain transactions were booked. They will also be able to assist in clearing up any confusion regarding any specific type of transaction (such as refund). There will be confusion from time to time, and as such having a bookkeeper is of the utmost importance. Much like with using a payroll company – bookkeepers aren’t cheap. You should expect to spend $20 to $30 per hour for anyone that comes into your business to do your accounting. A person that holds this position should have at least two years of experience as a full charge bookkeeper. When you meet with your CPA, you should try to take your bookkeeper with you. It will make those meetings extremely productive.

From a time management standpoint, you will be very grateful for this person’s work with your company.

42. Avoid Books on Managerial Style

I don’t know why that every billionaire and business magnate needs to write about their managerial style. Typically, these books focus heavily on the success of the individual that wrote it (or the ghost writer that did it for them). As it relates to running any business, it is going to be solely on the owner’s shoulders as to how they run their company on a day to day basis. Some people are micromanagers and some people like to make upper level decisions and let the employees do the rest of the work. You are going to need to develop a managerial style that works best for you. Books on how to properly manage a business are difficult because every business is different. Corporate cultures are different from small business cultures. As such, while these books are interesting to read – try not to put too much stock into them. I once had a client that would read one of those books every other week and then want to reinvest his business in the image of the author that he just read.

43. Some Days You Just Aren’t Going to Want to Be An Entrepreneur and That’s Okay

Everyone gets burned out. Whether you have a 9 to 5 job or own a business (of any size) there are going to be those days when you just don’t want to go into work. This is usually due to the fact that you have been putting in long hours, are mentally exhausted, and you are in need of a good vacation (remember our tip about taking vacations). The short answer is that it is perfectly okay to have these days sometimes. Running a business is not always about trying to make as much money as possible or launch off new products and services every quarter. Some days, when you are running a business, you should take the approach that it is a 9 to 5 job. You will clock in, run the business, deal with employees, deal with customers/clients, and then go home and relax. For me, about two months of the year I act this way. I certainly don’t neglect the business, but I take a bit of breather from my usual breakneck pace. If I didn’t do this once in a while I would have sold my business a long time ago or worse – had my business fail because I was trying to go in too many directions at once. Once you are established, you will have the luxury of taking it easy from time to time.

44. Don’t Go In Too Many Directions At Once

Although this may seem intuitive, if you are running a business then it is very easy to start to stretch yourself thin. This is especially true if you run a company that specializes in providing new and innovative products and services to your customers. If you are developing a new product or service continue to do so until it is fully developed. Even if you have a good idea for something new, write it down and revisit it when you are finished with your current project. If you have too many new things being developed or going on at once then the quality of all of these projects will suffer. Not only will the quality of your new products or services suffer, but you will develop a tremendous amount of anxiety about needing to get a tremendous amount of work done. As we have discussed, running a business requires a tremendous amount of work. As a business owner, you are going to put a lot of pressure on yourself to succeed. When you continually pile more and more things for you to do grown your business you are going to start to feel that you aren’t successful since you have so much unfinished work that needs to be done.

45. Dealing with the Failure of a Product or Service

Beyond a business failing all together, nothing is more difficult than handling a failed launch of something that you thought would be successful but ultimately wasn’t. A few years ago, I launched a specialized website geared towards financial products. After months of research, planning, and development I uploaded the website and began marketing it to the public. I spent thousands of dollars on marketing. Although almost 30,000 people came to the website – I only made 9 sales. This was a tremendous disappointment for me. Although I was still running a profitable business, I felt as if the entire thing had gone bust. I thought about the failure day and night. It made me restless thinking about where I had gone wrong or why people were interested in a service that I thought was outstanding. The truth of the matter is that to this day – I still do not know why it failed. I had used a similar formula for businesses in the past, and I couldn’t figure out why it did not work out. My lesson from this matter was that sometimes – no matter how good of an idea you have and no matter how hard you worked on it – it just isn’t going to work out. During these times, it’s good to reflect – but not obsess – about what went wrong. For me, I now keep a journal for when things do not go as planned and for when things went as planned. To date, I have started eight businesses. Three have done very well, three have done okay, and two have failed miserably. It’s important to remember that you can always start a new business with a new idea. The true key to being a good entrepreneur is to know that you are going to succeed 70% of the time. If you can remember that then you’re golden.

46. Running More Than One Business At Once

For experienced entrepreneurs, running more than one business at once is not a problem. However, when you have one successful business venture and then decide to open a second one (or buy another one) – you are going to feel immediately overwhelmed and stretched very thin. This is especially true if these business are in different industries. You will be dealing with a different set of customers, and each different type of business has its own unique set of problems. It is recommended that you should be in business for at least five years with an existing profitable business before you try to start a second one. Commonly, for people that have developed a profitable company they think that they can make any business profitable. Their ego starts to get the best of them and just because they have had one success – this doesn’t mean that everything they are going to do is going to become successful. As such, before deciding to develop or buy a second business – you should put a tremendous amount of thought into what you are doing. More often than not when I counsel people on this matter they ultimately decide to try to make their existing enterprise bigger rather than doing something completely different with a second company.

47. Franchises Are a Great Idea

If you are worried about starting your own business from scratch then franchising may be for you. Some business consultants do not like the idea of franchising due to the constraints of what you can or cannot do as a business owner – I love the idea of franchising. When you buy into a franchise you are getting a well known brand name, a protected territory, and marketing support. Although it is expensive due to upfront start up costs, initial franchise license fees, and ongoing royalty payments – the benefits can be tremendous in that much of the risk with starting a new business venture is immediately removed. If you are thinking about buying into a franchise system then you should be aware that you a certain extent you may feel like you are a business manager than a business owner. In some respects, this is true. Generally, you cannot dictate your own marketing campaigns and you are required to adhere to extensive contractual agreements about how the business is run. However, most franchising businesses give you tremendous opportunities to expand via the ownership of more locations. In fact, most franchisors prefer that existing franchisees develop new locations rather than having to train new franchise owners. As such, if you are wary about starting a new business then you may want to see if franchising it right for you.

48. If You Buy a Franchise, Also Hire a Lawyer

Although we mentioned retaining an attorney earlier, this is doubly true if you are buying into a franchise. This is because there is a document known as the FDD (Franchise Disclosure Document) that is hundreds of pages long and contains every detail of how you have to run your business (sometimes its called a Uniform Franchise Offering Circular). There is very little wiggle room for you to put your own spin on how your franchise is run on a day to day basis.

These details are often written in highly complex legal language. Even seemingly simple things like how you decorate your location may be dictated in this contract. As such, your attorney should put every detail of this agreement into simple every day language for you so that you know exactly what you are getting yourself into. Additionally, you are going to need to train your employees very well on all operating facets of how customer service is handled. Often, franchising companies will hire mystery shoppers to go into locations to use services or buy products. These shoppers then report back to the franchisor, and if their are issues you could risk losing your franchise license. This is something that you should consider heavily.

49. Buying a Business Can Be a Great Way To Reduce Risk

As an alternative to starting a business from scratch, you can buy a business that is already up and running. This is a great way to reduce the risks associated with starting a new business as you are buying an already profitable venture. However, you will be paying a premium for this business. For instance, if you want to buy a local plumbing contracting business that is making $75,000 a year in profits then you can expect to pay $200,000 for it. This is because you are paying the person who is selling your business for the risk they took in starting this profitable venture. It may have only cost them $50,000 to start the business but they were the person that did the marketing, got customers, and built a brand name for the business. As such, when you are buying a business – the premium you are paying for is someone else’s hard work. However, if you are well capitalized and want to start making a profit right away then buying a business may be a better solution for you. One of the best parts about buying a business is that you can immediately start to grow the company once the ownership transitions to you (which is usually a six month process).

Additionally, banks love to loan money to people that are buying businesses. This is because they are a proven money making business and the risk of business default (depending on how long the business has been in operation) is substantially lower than that of a new company.

50. If You Are Going to Buy A Business – You Are Going to Need to Do Your Homework

First, you are going to need to find the business that want to purchase. Much like with real estate, there are a number of websites available that lists businesses for sale. Popular sites include BizBuySell.com and BusinessesForSale.com. These sites have thousands of businesses that are available to be purchased and basic information about the business. However, you are going to need to do a tremendous amount of your own homework as it relates to a potential candidate for a business purchase. The process will take you just as long as if you were raising capital to start a new business on your own.

You are going to need to review all of the tax returns and financial documentation that the owner gives to you. Generally, you will be required to sign a non-disclosure agreement as to any information that you receive. Additionally, you are going to want to talk to employees, customers, and other people familiar with the company. You should also do checks on the company’s rating with the Better Business Bureau, and you are going to want to make sure that all online reviews are accurate. Although it is often overlooked, you should ask the seller to provide you with a third party independent valuation of the business before you make any offer.

As with any large transaction, you are going to need a CPA and an attorney to assist you. Your CPA will make sure that all information provided by the owner is correct while the attorney will produce all of the necessary legal documents to carry out the sale. You should make sure that the transaction is insured with Errors and Omissions Insurance (this kicks in if the owner lied to you about something).

Finally, the owner of the business should be willing to stay on as an employee or consultant for a few months while you transition the business to your ownership. Be wary of business owners that want to jump ship quickly.

51. Starting Your Business Slowly

Not every type of business requires that you immediately quit your job and dedicate yourself fully to starting a new business venture. Some businesses, like online e-commerce websites, can be started from home at very little cost. There are a myriad of ways to make money online or by starting a business very locally. For instance, we recently had a client that wanted to open up her own dog sitting and dog care business. Rather than quit her full time job (which paid a decent salary and benefits), she decided to make it into a weekend business. People that wanted to get away for the weekend dropped their dogs off at her house for two days at most. People that wanted to take day trips dropped them off for the afternoon. She did an outstanding job, and word spread around about how reliable she was as it related to dog care. After she built up a roster of about 100 customers she decided to take the plunge and rent out space where she could run the business seven days a week. This business is now the highest rated dog care center in my area.

As such, if it is possible – see if you can “toe in” to starting your own company before launching the whole thing at once.

52. Once You Hit Profitability – Consider Yourself a Success Story

The moment you hit profitability gather up your friends and family to celebrate. You’ve done it! You have put the work in, you took a major risk, and you have now created a profitable business. Many businesses fail and never get to profitability. It is important that once you hit this point – consider yourself extremely successful. Even though you are going to want to continue to grow your revenues and profits, you now have a profitable business venture that you can grow even bigger by reinvesting profits, attracting investors, or by acquiring a business loan or line of credit. Never think that you are not a successful business owner because you aren’t running a business that is going to go public or be sold for tens of millions of dollars. While those stories are the ones most likely to grace the covers of business magazines, the vast majority of profitable businesses are barely featured in a local news article.

Factors for Obtaining a Business Loan

We are going to discuss the factors that are involved when a bank is making decision as to whether or not to provide a loan to a entrepreneur or small business owner. Foremost, they’re going to look at the individual entrepreneurs credit score. While it may seem as clear-cut as simply just looking at the credit score and going from there – a number of financial institutions will take a complete look for issuing a approval or denial letter. For instance, many individuals that are engaged in the continuing buying and selling of real estate will often have very high debt to income ratio was given that they have a number of loans secured by a number of different properties. As such, this can have a slightly negative effect on a independent real estate entrepreneurs credit score and thus might bring their score down to a point where they would otherwise not be accepted for a loan. Again, this is not provide the whole picture of an individual’s finances given that the realist the entrepreneur may have very appropriately leverage these properties and is within completely normal range for this type of business activity. As such, many banks will look – again – at a total financial picture of the individual borrower before making a decision. In certain cases, other factors such as a previous bankruptcy may impact the individual’s ability to obtain a conventional business loan or a business loan that is backed by the small business administration. Generally, any individual prior three years is not eligible for however, there are a number of specialty lenders out there that are willing to take the risk on a higher lower quality borrower if they have substantial assets or collateral to back the financial instrument.

The second factor that the financial institution is going to look at is the collateral that is used in conjunction with the business loan. Banks and lenders are not really in the business of taking a risk or generating a profit from capital appreciation or profit. Banks are in the business of lending money for a specific interest rate with the intent to receive these payments on a monthly basis without fail. As such, the financial institution is going to want to see that nearly 100% of the money that their lending is going to be used for the acquisition of tangible assets for banks to provide extensive working capital loans to individual small businesses. However, there are exceptions to this rule especially among professionals such as doctors, lawyers, dentists, certified public accountants, and other individuals uphold a professional license that generate revenues from their professional services. In these instances, a financial institution may be willing to accept a much lower collateral amount given that the individual is going to be able to generate substantial revenues by providing their services to the general public. Again, working capital loans are primarily geared towards high-margin businesses and individuals uphold professional licenses. Prior to submitting an application to a bank for a loan, a full list of the assets are going to repurchase with the loan proceeds should be provided so that the bank understands exactly what their funds are being used for. In some cases, a financial institution may actually purchase the assets directly themselves and then provide the items to the individual entrepreneur so that the appropriate titling and collateral can be held directly by the bank. This is primarily reserved for companies that are engaged in the large-scale acquisition of equipment and specialized assets.

The other factor that is going to come into play as it relates to receiving a business loan is the character of the borrower. Usually, a criminal background check is done against every borrower that is seeking a business loan. As such, previous criminal history maybe impede an individual’s ability to receive a small business administer. If it walks per Newark and they should speak with an attorney as well as an accountant to ensure that they are able to properly qualify for a business loan given any past issues with the law.

Finally but certainly not least – the financial institution is going to want to see your very well-developed business plan. As we have discussed throughout this website, the business plan should have a three-year to five-year overview that will allow the bank to make a decision as to whether or not to provide the borrowed funds. As always, this business plan should have a profit and loss statement, cash analysis, balance sheet, and other financial metrics that a lending institution is going to want to see to render a lending decision planning materials that you have developed in order to make sure that they fall in line with industry standards and that they are appropriate for the amount of money that you are seeking. The certified public accountant will also assist you with putting together a personal financial statement that a bank is almost always going to want to say as a relates to your current assets and current outstanding liabilities. Your personal financial statement is going to need to list everything you own such as a home, car, retirement accounts, and other assets that are considered to have tangible value. All of your debts are also going to be showcased within this financial statement including credit cards, existing business loans, mortgages, and any other type of liability that you are able to get the funding you are seeking.

In closing, if it seems that there is a lot of documentation that is needed in order to get a business loan then you are not wrong. All banks and lenders are going to want to see that their investment is secured by a substantial amount of collateral and that the individual entrepreneur is qualified to operate the business on a day-to-day basis. As such, it is imperative that an individual entrepreneur is extremely prepared as it relates to making sure that everything is organized, neat, and can be easily followed by a loan officer or a lending committee. Throughout this website, were going to continue to discuss some of the issues that are involved with obtaining business financing through financial institutions such as banks, credit unions, and independent lenders.

Credit Scores and Business Plans

The things that is often brought up to us is whether or not a discussion regarding individual’s credit score should be put within the business plan. Usually, when we develop a business plan on a customized basis for a client we do not include information regarding the individuals personal credit. This is primarily due to the fact that the individual bank or financial institution is going to pull all three major credit reports when they are examining the loan application. However, especially for service-based businesses there may be times when it is appropriate to discuss the underlying credit of the individual borrower directly within the business plan. This is especially true if the individual is applying for a small business administration loan given that the credit score is going to be a very important factor when making a lending determination. As a whole, most banks consider three primary factors when developing and reviewing a loan application. First, they thoroughly review the business plan to ensure that the business is going to be able to remain economically viable in most economic climates. This includes an overview of the anticipated revenues, expenses, and pretax profits. It is important within the business plan to show that the business can satisfy the debt obligation by more than 20% per month within the first years of operation. Most banks and lenders focus substantially on the ability of the individual entrepreneur to make timely monthly principal and interest payments regardless of how the business is doing.

Second, the loan officers or lending committee will look very thoroughly at the individual bar themselves in regards to their experience, educational background, and their ability to effectively operate the business on a day-to-day basis. Most people that seek small business administration loans or conventional business loans are new entrepreneurs. The small business administration programs were developed specifically so that newer and younger entrepreneurs could have access to affordable credit. This is going to be one of the key factors moving forward as it relates to the federal government support of these programs. One of the nice things about getting a small business administration loan is that the terms are flexible especially for an entrepreneur that does not have a substantial amount of experience operating businesses on a day-to-day basis. Most importantly, a full resume and biography should be included within the business plan so that the bank has an understanding of the individual’s ability to effectively bring a new enterprise to profitability with a positive cash flow within the first 24 months of operation. If this is specific for a professional practice, such as a dental practice, then a substantial amount of information regarding the practitioners history and their ability to render services to the public should be included as well.

Third, there is going to be an examination of the collateral that is going to be used for the loan. Most banks and lenders strive to have his much collateral as possible so that in the event of a default they are able to recoup their investment. Common types of collateral include real estate, furniture, fixtures, related equipment, retirement accounts, checking accounts, 401(k) accounts, and any other asset that has a salable value. For SBA loans, most banks want to see that at least 80% of the loan is collateralized. This is why a 20% capital injection is typically needed by the borrower in order to ensure that the bank is comfortable providing this investment to the entrepreneur. Of course, one of the other frequent questions we get is whether or not the individual entrepreneur is going to need to provide a personal guarantee for the loan. The short answer is yes. Almost all banks and lenders require that the individual entrepreneur personally undersize the loan in conjunction with their company. After the credit crisis of 2008 and spanning through a recession for three years – most banks have implemented much more stringent lending protocols so that in the event of a default the bank is able to recoup a significant portion of the loan. This is one of the things that an entrepreneur should discuss with their certified public accountant given that when a small business administration loan is undertaken – a substantial amount of the individuals personal assets can be put at risk. As such, it is up to the entrepreneur to make an appropriate determination as to what they consider to be a can reasonable risk for their personal assets. Many people have a significant amount of concern specific for their primary residence. This of course could mean that a house could be lost in the event that a business fails. As such, it is important that the entrepreneur determine whether or not they consider this to be acceptable risk.

In closing, lending is a very complicated process especially for small businesses given the high-risk nature of these operations. The small business administration seeks to alleviate some of the risks associated with banks providing small business loans by issuing guarantees. However, it is still very much incumbent upon the entrepreneur to have an airtight business plan that will ensure that even if revenue targets are not met the business is able to satisfy the underlying debt obligation. This is going to be something that we continue to discuss on this website also focusing on how to properly develop a business plan that is specific for a SBA lending bank.

Business Plans for Technology Businesses

Developing a business plan for a technology business is a little bit more complicated then producing one that would be specific for a general service based business or a retailer. This is primarily due to the fact that technology businesses have highly proprietary technology that can be patented. As such, special additional precautions need to be taken when developing this type of business plan given that you do not want to have the reader given too much information regarding anything that is highly proprietary. For these types of business plans, an attorney will often be hired in order to have a nondisclosure agreement developed so that anyone who is reading the document will be bound by a legal agreement that they will not disclose anything that they have seen within the documentation. One of the keys to writing a business plan specific for a technology business is that you want to be able to provide an understanding of exactly what the new technology does without being a huge overview to the operating process were underlying patent. In many cases, a qualified business writer can be hired so that they can gain an understanding of exactly with the technology does and providing insights as to how it can be beneficial to businesses and individuals without disclosing the exact operating nature of the patent worthy to be patented technology.

One of the more difficult aspects of writing a technology focused business plan is also discussing the valuation of the business within this document. This can be optional given that many technology businesses will often undergo a formal valuation of the patent or technology by someone who is qualified to make that determination. Most business plan writing firms do not engage in doing business valuations given that there is a significant amount of liability that is associated with rendering the service. However, there are number of specialty firms – known commonly as business valuation experts – that can render an opinion as to what they feel that the technology would be worth in the open market. Most venture capitalists, private equity groups, and highly seasoned angel investors are going to want to see that a formal valuation is done and either have this as part of the business plan or as a stand-alone document. One of the other things that many of these firms can do is to develop an economic viability analysis that shows whether or not this specific piece of patent technology would be in demand within the marketplace. One of the common issues that occurs when an individual is developing a new technology business is that with the rapid increase in the way that technology is developed these days – a competitor could easily copy what the company is doing and create a similar platform on their own. As such, speed to market is one of the key focuses that needs to be discussed within any type of business planning documentation that is going to be read by potential funding source.

One of the other key components to the business plan specific for a new piece of technology is the development of the financial model. More so than any other type of business, a technology focused business plans financial model can be difficult to draft given that there are a number of different revenue streams from which the business can produce profits. First, the entrepreneur needs to determine whether or not they are actually going to engage in the production of the technology or simply license it to a third-party. As many people have spent years developing these patents, they are often looking for a quick exit as it relates to either the licensing of the patent or the entire sale of the business along with the patent for a substantial price. However, many entrepreneurs are driven to see that they want to bring the product to market and therefore will develop an entire business around their patented technology. In these instances, the entrepreneur needs to make a determination as to what type of revenue model will be used in conjunction with their development. Frequently, technology as a service or software as a service (“SaaS”) business models are used that they produce highly predictable streams of revenue on a monthly basis. This is especially true among companies that offer general-purpose technology where the general public will pay a monthly fee for accessing the service. These companies tend to have a much higher sales premium given the highly predictable nature of the revenues. Of course, certain technologies are based on product sales and in this case the revenues are not nearly as predictable as individual units need to be sold on a month-to-month basis. As such, the entrepreneur needs to have a complete understanding of the gross profit that will be generated from each unit of the technology sold. If this technology is going to use as a component for a standalone device then examination of what manufacturers will be incorporating the product needs to be examined as well.

One of the key focuses to developing this type of business plan is to discuss the speed to market. Most venture capital firms and other private investment groups want to have an understanding of how much capital is going to be needed before revenue generation occurs. This is commonly referred to as the burn rate. A very large table showcasing each month’s expenditures needs to be clearly provided to a venture capital group in order for them to understand exactly how much money is needed before they can gain a return on their investment. One of the other things that is frequently put into the business plan is a discussion as to whether or not the business will be sold in the event that revenue generation does not commence. As such, this is where the valuation of the technology can come into play given that this is a salable asset and can be divested in order to recoup any investment that may be lost if the business fails to produce revenues and profits.

One of the things that we have often seen as a relates the technology focused business plans is that these companies often focused far too heavily on with the technology does and its revolutionary nature rather than the business itself. While it is extremely important to provide moderate technical specifications regarding the company’s product, what is really being sold in the business plan is the business itself and its ability to produce a profit. As such, when we develop a business plan for a client we often focus no more than 50% of the documentation on the product itself. Many newer entrepreneurs or individuals that do not have a significant experience with business planning will often allocate 50% to 90% of the document on the technology itself while neglecting to properly mention how a business will be developed around it. One of the things that can remedy this situation is to have a standalone white paper or documentation regarding schematics and specifications that accompanies the business plan rather than putting all the information into one document. Given the complexities of technology-based businesses this is completely appropriate to do given that you do not want to overwhelm the reader with a substantial amount of technical information will not focusing enough on how the business will ultimately produce a substantial amount of profit for the management team and investors.

On this website we have a number of different resources that are specific for technology and e-commerce base businesses. We encourage you to review everything we have on the site as it will help you determine what direction to take when developing a business plan for a technology focused business.

Business Plans for Service Companies

Developing a business plan for a service-based business is generally quite different than that of developing one specific for a product that is going to be for products sold either on a retail level or a wholesale basis. Service based businesses always generate extremely high gross margins from the revenues given that it is underlying labor that is being sold to the customer or end user. As it relates to raising capital for a service based business, most banks and financial institutions are willing to extend a working capital one credit that will finance the underlying operating expenses until the business develops a customer base is able to remain profitable and cash flow positive. However, it should be noted that individual entrepreneurs that do provide services to the general public will still be required to have a very strong credit score or a significant amount of collateral that can be used in conjunction with the working capital one credit. Most service based businesses have very low start up costs and these can range anywhere from $10,000 all the way to $200,000 depending on whether or not vehicles and other equipment are used in the conjunction of rendering services.

For instance, a plumbing based business – which is a service business – is going to be required to have a truck or van as well as some equipment in order to provide the services to the general public. Another example of a service-based business would be a small law practice in which almost no equipment is necessary outside a desk and a computer. As such, when an entrepreneur is developing this type of business plan a special focus should be paid to how much equipment is going to be needed. Typically, a working capital line of credit should be available to finance approximately six months to nine months of underlying operating expenses. While this can be a significant undertaking, the benefit of using a working capital line of credit is that it can be drawn down as needed rather than receiving a one lump sum loan. This will allow the business to have a greater control of the interest expense associated with the revolving credit line.

Much like any other business plan, one that is specific for a service based company needs to include a profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. Within the business plan as well – a special focus easy paid to the demographics that we targeted as it relates to specific services. A demographic analysis should include a examination of annual household income, median family income, population density, gender, age, and other relevant psychographics and statistics that are specific to the type of service being rendered. For instance, a performance automotive tuning specialist is going to have a set of demographics that are among people that are a younger age where a home healthcare agency is going to focus specifically on people that are older for the most part. It is very important to develop a laser focused demographic profile as it will come to be used when the marketing plan is being developed.

Given the low barriers to entry for most service based businesses, a very comprehensive marketing plan is going to be needed so that customers can be properly targeted at all times. Many entrepreneurs when developing their marketing plans and marketing materials to have trouble properly disseminating their message within their websites and sales literature. As such, an advertising agency can be hired to assist with the development of these marketing materials. While this does contribute to a much higher upfront expense the benefits can be substantial. Foremost, there are a lot less likely to be a number of mistakes made when a third party is developing an advertisement. Two, these businesses often have established connections with newspapers, public relations firms, online marketing agencies, and related entities that can assist the owner with distributing their advertisements to the general public. As most of these firms like having ongoing relationships with their advertisers, they may be able to provide you with a modest discount at the onset of operations. Many periodicals – especially with the substantial amount of competition these days – are willing to provide some level of discount two new businesses that are looking to establish their operations. In the long run, these relationships can be an invaluable source of revenue for a number of different businesses. One of the nice things out owning a service based businesses that can be readily expanded or contracted at any given time.

Given that they can simply expand by hiring additional service personnel that can render a greater number of services. One of the common issues that needs to be dealt with a service-based business is of course human resources. It is imperative that the owner of this type of business have an expansive employee handbook that clearly spells out the roles and responsibilities of each job. Additionally, this employee handbook should have some documentation regarding dispute resolution especially as it relates to unfair employment practices. Many attorneys maintain this type of documentation as a boilerplate template so that a new small business can quickly get the employee handbook they need without a tremendous amount of undue expense.

Of course, when developing a business plan so specific for a service-based business a certified public accountant should assist the individual owner with ensuring that the financial statements within the document are reasonable and in in-line with GAAP or generally accepted accounting principles. This is especially important if the entrepreneur is going to be seeking a loan or a revolving line of credit from a financial institution. For some service based businesses, they are very strong candidates for an equity investment from a small private investor. Typically, most larger investment firms like venture capital groups in private equity groups typically stay away from smaller service based businesses and as they have a very unique way of operating. This is especially true if the service based businesses is technology focused.

In closing, service based businesses are great for people that have highly specific skills or have received a significant amount of educational training for a specific profession. The barriers to entry can be considered to be extremely high especially among professional services such as physicians, attorneys, dentists, and certified public accountants. Trades people also have very high barriers to entry given the extensive amounts of experience and licensure required to operate independently.

Business Plan for a Bank

Writing a business plan specific for a bank loan is a pretty straightforward process. This is due to the fact that the primary concern of the bank is that your business is going to be able to make the monthly principal and interest payments on any debt instrument that you obtain. Usually, a significant portion of the business plan specific for a lending institution is focused significantly on the tangible assets that we purchased with the capital required. Although service-based businesses typically do not need very many tangible assets, a banking institution and its respective loan officers are going to want to see that they have a significant amount of collateral backing the debt obligation.

In many cases, the bank will also require a personal guarantee from the borrower. This puts homes, retirement accounts, bank accounts, vehicles, and other assets that are owned by the individual as part of the overall collateral that is used for the business loan. As such, a significant amount of attention should be paid as to whether or not the entrepreneur wants to undertake such a substantial financial obligation given that all of their personal assets are generally put at risk as well.

The key to showcasing a business plan to a lending institution is also the focus on the fact that the business is economically viable. Most importantly, the business plan needs to very clearly show that the business is able to produce a highly predictable revenue so that monthly payments can be made without question. In some cases, especially for businesses a take a little bit of time to ramp up, a financial institution may allow for interest-only payments or reduced payments during the first six months of the life of the loan. However, this is something that is usually subject to negotiation as banks want to see that they are going to receiving their interest payments quickly once the loan funds are disbursed.

On a side note, it should be mentioned that many banks and financial institutions will directly disburse the funds to companies that are selling the business its tangible assets. Usually, for any purchase that is over $10,000 – the bank is going to want to make this payment on their own given that they want to make sure that the funds are actually going to where they have been allocate, and they want the proper documentation for the underlying asset. There are exceptions to this rule, but vendors should be sourced prior to applying for a loan so that the bank can very quickly make a disbursement to vendors if they decide to make a disbursement directly to the asset selling company. In many cases, this works similar to a real estate transaction would occur with the bank itself disburses funds to the property seller.

One of the other things at the bank is going to want to see as well as a substantial amount of market and industry research as relates to the business. This includes having an economic overview in regards to how the economy is doing, the interest rate environment, and other important factors that are occurring as relates to the economy as a whole. Industry research should include information regarding how the industry is growing, the growth rate, aggregate revenues, aggregate payrolls, and any potential regulatory trends that may impact the way that the industry does business. This is especially true in areas where there is a significant amount of regulation guiding the way that these businesses conduct business on a day-to-day basis. One of the nice things about the Internet these days is that industry resource can be sourced very quickly from a number of different reputable sources. Our website uses a number of publicly available information sources when sourcing its industry research. Typically, the section of the business plan can range about two pages should provide clear overview of anything major regarding the specific industry in which the company will operate. The section of the business plan also outlines the demographics of the customers at the business will have all concurrently showcasing major competitors of the business will face once it begins revenue-generating operations.

The bank is also going to want to see a significant marketing plan so that they can understand exactly how the business is going to reach customers at the very onset of operations. In this section, many entrepreneurs will also put in information regarding how they will promote the business prior to revenue generation. This is important so that a major grand opening can occur and that revenues can be produced very quickly. This is especially important for retail businesses as they need to have revenues commence immediately so that he can pay for all the underlying operating costs in addition to any debt obligation.

As it relates to the financial projections, a business plan specific for a lending institution should always include a three year to five year profit and loss statement, cash analysis, balance sheet, breakeven analysis, and business ratios page. Special attention should be paid to the common size income statement and the profit and loss statement so that these figures are developed in line with industry standard figures. Almost all financial institutions will verify the financial model provided by comparing it to similar companies within the industry.

Of course, any businesses every business is different and certain things need to be adjusted in order to reflect this fact. If an individual entrepreneur is having a significant amount of trouble developing the financial model than they can work directly with the business plan writing firm or a certified public accountant that can assist them in developing this financial model. One of the things that many entrepreneurs make a mistake about is not having a complete understanding of how a profit and loss statement, cash analysis, and balance sheet operates. There are a number of great resources on the Internet and through this website that can help an entrepreneur understand exactly how these three financial statements work together. One of the things that an entrepreneur can often miss if they don’t understand the statements is how their liabilities can change depending on how sales occur. A certified public accountant can be an invaluable source of information not only is it relates to tax matters but also general accounting matters as well.

One of the things that should also be included within the business plan that is going to be presented to a bank is any critical risks and problems of the business may face as it progresses through its operations. As we discussed before, it is unpleasant have to think about all the negative scenarios that can occur to a business – however, it is important to the bank understand that the entrepreneur knows that not everything will always go as planned and at specific matters will occur and the business we need to deal with them appropriately. In fact, most business plans that go to the bank have a requirement they have a critical risks and problems page.

Finally, most business plans also include a SWOT analysis. This analysis focuses on the strengths, weaknesses, opportunities, and threats. A bank is going to want to see a detailed description of each of these four matters for any specific business. Usually this is done in bullet point format, but can also be written in paragraph format.

Asset Based Lending

Asset-based lending has become very popular over the past 10 years given that it is a low-risk form of investment for many financial institutions. There are a number of different businesses that are very heavily asset focused including real estate businesses, retail companies, automotive businesses, and other enterprises that are actively engaged with the buying and selling of actual tangible goods or property. Most lenders are very receptive to providing capital for these types of businesses given that they are able to almost fully collateralize their loan with the assets that are being purchased. As such, many businesses that are in the startup phase of their operation are able to receive a significant amount of capital support from a bank, credit union, or similar financial institution given that this is considered a low-risk form of lending for these companies. Of course, a business plan is going to still be required given that these companies are going to want to see the types of assets being purchased and sold on an ongoing basis.

This business plan should be a comprehensive document that follows a three-year to five year time frame in order to showcase exactly how these funds will be used as the principal balance is being paid down. The interest rates that are associated with asset-based lending are typically lower than that of a company that may need just a working capital line credit in order to develop or expand their operations.

There are a number of independent asset-based lenders that operate not in the capacity of a bank or traditional financial institution. These lenders often acquire a large-scale line of credit and in turn provide loans to individuals who are looking to purchase specific types of assets. These types of lenders are very popular among automotive lenders as well as companies that engage in the buying, rehabilitation, and sale of real estate. Given again the low-risk nature of this type of lending – a number of independent agents have entered the market with these types of financial products. These companies typically make their money not only from the interest charged on an ongoing basis, but also from upfront fees that are associated with originating loan.

Of course, a certified public accountant should always be brought into the loop when determining whether or not these types of debt instruments are appropriate for any specific type of business venture. Most importantly, the CPA can also provide the entrepreneur with a depreciation schedule in order to make sure that the tax consequences and tax liabilities associated with buying and selling the assets using an asset-based loan are appropriate even with the entrepreneur is seeking to accomplish. The CPA should always be involved with any major business decision as it will provide a significant amount of insight as to the day-to-day operations of any business and any tax liabilities that may be accruing due to entrepreneurial activities.

For startup business – an asset-based loan may be the way to go given the relative ease in which they can be acquired. Additionally, many asset-based lenders will provide capital against an established asset such as a home in order to provide capital for startup business that is not necessarily going to be doing a lot of trading in tangible goods. Other alternatives include using a home-equity line of credit in order to fund entrepreneurial ventures, but this does come with some risk.

After the Business Plan is Completed

One of the frequent questions that we often receive here is what to do with the business plan once it is complete. At this point you are probably invested tens of hours if not hundreds of hours into the development of your business plan in regards to showcasing what you’re looking to do, how much money you’re looking to raise, and with the anticipated financial results of the business will be over a three-year period. You have put your blood, sweat, and tears into this document and now you are about to begin the capital raising process. This is usually one of the more anxiety provoking parts of the of starting a business given that you are actively seeking funding in order to buy the assets to start your company’s operations.

First, once the business plan is complete it is imperative that is what is reviewed by a certified public accountant. This professional will review the business plan, make notations regarding the financials, and make sure that any financial statements within the document or in line with generally accepted accounting principles. This is important to note as many banks as well as investors are going to want to thoroughly review the financials before they render a lending or an investment decision for your business. One of the important things that the CPA will do as well will be to make sure that the financial model that you developed falls in line with industry standards. Many banks will often compare financial models produced by individual entrepreneurs to existing databases of similar companies. As such, it is important to showcase any potential revenues, expenses, and profits that are in line with other companies that operate within identical or substantially similar industries. If you are having trouble with this aspect of your business plan then you can hire a consultant that will allow you to see sample financial statements of similar businesses within the market. The United States Economic Census provide this information for free on their website. A CPA will properly advise you as to what potential changes may be needed once they have reviewed the document. This professional can also compare your company to other similar businesses in the market.

If you are raising capital from an investor and you are also going to need to retain an attorney in addition to your CPA. Your attorney can review any terms that you outlined in regards to the business plan as it relates to an equity share or profit share. Additionally, your attorney can also develop the investment contract that will be needed between you and any potential funding source. This is often where many people get themselves into trouble given that many new entrepreneurs will raise capital from friends and family via alone or as a small investment. Even if you are raising capital from people close to you – it is important that you have an attorney develop the contract so that any discrepancies or issues that arise can be remedied through appropriate legal means. If you’re looking to raise a substantial amount of money from a number of different investors and an attorney can also draft a private placement memorandum for you as this may be required by your state as well as the federal government. Only a qualified attorney who has extensive experience in the field of securities law can make a determination as to whether or not your business is going to need to have a private placement memorandum. These documents are usually used when individual shares are going to be sold directly to investors on a private basis. This is important to note as there are also companies known as private placement brokers that can assist in entrepreneur with raising the capital they need once the private placement is complete. On a side note, a private placement memorandum or PPM is expensive. Most entrepreneurs report that they have spent somewhere in the neighborhood of $4,000 to $10,000 on having a qualified securities attorney develop this documentation on their behalf. As such, it prior to developing a business plan specific for a number of investors and entrepreneurs to determine whether or not they are prepared to take on the expense of having a private placement memorandum drafted in order to raise capital from a number of different investors. If the entrepreneur is planning to raise capital from a venture capital group or a private equity group as a single investor and usually a private placement memorandum is not needed. However, and again – only did qualified attorney can make this determination for you.

Once you have submitted the business plan to a CPA as well as an attorney, you may want to hire a business consultant to review the business plan so that they can read as if they were the investor. This individual can provide you with substantial notes as to what they see is a strong aspect of the document as well as what some of the negatives are. It is important to get as much feedback as possible from qualified business consultants, other entrepreneurs, and executives that have familiarity with the industry and that they will able to provide you with advice that appropriately guides for business development. Of course, any advice should be taken with a grain of salt. This is especially true among colleagues that may be reviewing the business plan alongside you. One of the other things that you may need to know within when having the business plan reviewed is whether or not you’re coming off with a good sense of clarity as to what your business is looking to achieve with the capital you are looking to raise. This is one of the common issues that many people have when they are developing their own business plan. As such, it is important that a number of people read it so that you get as much feedback as possible. At times this can be discouraging for many entrepreneurs as they will often receive feedback that they don’t want to hear regards to business risks for the overall business climate. However, if taken appropriately then this criticism can be reviewed constructively and improvements to the business plan can be made on an ongoing basis.

There are also a number of not-for-profit organizations that can assist you in developing your business plan or keeping the business plan once it is done. SCORE is a popular organization of retired entrepreneurs and executives that helps newer entrepreneurs and younger entrepreneurs with the development of their entrepreneurial activities. While these executives and entrepreneurs are a very good source of feedback in regards to a business plan they can operate a little bit slowly as it is done for free, part-time basis only. A paid consultant typically will provide you with much more in-depth insight as to what made be needed to your completed business plan.

In short, capital raising is an extremely difficult process and you’re going to need to remain very diligent as there can be heartaches and setbacks throughout the process. It is important to note that only you can make the appropriate determination as to whether or not your business is economically viable and should seek funding. The above the professionals can only advise you as to whether or not the business plan is appropriate to reviewed by a potential funding source.

A Bank Loan Versus an Investor

One of their frequent questions that we get is what are the primary differences between sourcing capital from an investor force versus sourcing capital from a banking institution. First, as it relates to banks these companies are in the business of providing loans. They want to see that the amount of money that they are going to lend to the individual is going to be repaid and will be fully collateralized by assets are being purchased. A very common example of this is a mortgage where a bank lends an individual money to purchase an income producing property with the intent of having the property service collateral and the income generated from rental serving as the income to repay the financial instrument. At the end of the day the bank is not receiving an equity interest in the business and they will not participate in the capital appreciation. For instance, if a real estate investor seeks to purchase a one million-dollar property then they will typically put $200,000 down and borrow the remaining $800,000 via a 30 year mortgage. As the mortgage is paid down and as the property appreciates in value the bank only continues to receive the monthly interest and principal payments that was agreed to by the borrower.

Conversely, if that same real estate investor wants to source the money from a private investor and typically the investors going to want a percentage share of the equity based on how much money they are contributing. In this case, an investor could put the hundred thousand dollars and set up a mortgage and they would receive an 80% ownership stake in the business. One of the reasons why many people will source capital for a bank rather than investor is simply so that they are able to control the amount of income that they are receiving. Additionally, the conservative use of borrowed funds allows for the amplification of a return on investment. Returning to our example above, let’s assume that the real estate investor has the entire $1 million of capital on their own. A generous capitalization rate for income producing property is about 10%. As such, in a scenario where the entrepreneur purchases the billing out right they will receive a 10% return on investment each year. However, by borrowing the funds with a significant down payment this return on investment is amplified four times given that the income produced is not only covering the mortgage but it’s also producing a significant amount of income as it relates to the down payment. This is one of the reasons why many individuals will seek to borrow funds before they approach a private investor. Of course, one of the key elements to borrowing funds that the individual must have an appropriate down payment as well as a credit score that satisfies the bank. These days a FICO score of 700 is typically the minimum credit score that is accepted by most financial institutions as it relates to lending.

As it relates to credit scores, most investors do not care too much about this aspect of an individual’s personal life. However, some investors do want to see that the individual is not marred with debt or has significant other financial problems before they provide the capital necessary to launch or expand a business venture. An entrepreneur that has significant financial issues typically will be focusing significantly on that and not the continued expansion of their business operations. As such, if an individual is approaching investors for a project and they can expect that a financial partner would one understand the personal financial situation before going to business with them.

One of the other things that needs to be made aware of is that when you are working with investors is that they are going to want a significant amount of equity as well as a significant amount of control over the business. This is especially true when working with investors like venture capital firms and private equity groups that almost always taking majority interest in the business. In the event that things do not go as planned these organizations will typically take control of the business and throw out the original entrepreneur. This is one of the ongoing risks associated with working with a private equity group or venture capital firm. Additionally, for very large investments it will typically want to have several seats on the board of directors. This ensures that they are able to continually oversee their investment and make any adjustments to management as needed if things are not going as planned. As such, it is important that an entrepreneur that is seeking venture capital for a in injection for private equity group retain a qualified attorney so that the entrepreneur is aware of all the clauses associated with the investment. This is one of the key issues that entrepreneurs can have when they are so hungry for the actual money that they forget that they need to be able to make sure that what they’re doing is economically viable. If one venture capital group is likely to put up funding for a specific project and it is also likely that several others are willing to as well given the very low capital rate of successfully raising money.

In closing, it is far easier for an entrepreneur to work with a lending institution given that the terms of repayment are usually flexible and are easy to deal with. Investors have significant expectations as it relates to returns on investment and expanding operations. As such, all these factors into aide when determining whether or not to raise capital from bank or from a private funding source.

Acupuncture Clinic Business Loan

Acupuncture clinic business loans are moderately easy to obtain given that it is a healthcare associated business. In some cases, and to a limited extent – some private insurance companies do provide for the reimbursement of acupuncturist services. One of the nice things about owning and operating one of these businesses is that a license in order to provide the services to the general public is usually required.

The moderately high barriers to entry to provide a certain level of economic staying power for most of these often times, acupuncture services are rendered in conjunction with chiropractic services and related allied health professionals in order to provide non-pharmaceutical approaches to certain medical conditions. Acupuncture has gained a significant amount of notoriety and popularity among people that are looking for more holistic ways to treat specific medical conditions. As such, these businesses are generally able to remain profitable and cash flow positive in any economic climate. However, there are a number of areas that do not provide for the medical reimbursement of acupuncturist services. As such, the patients are required to pay for the services on an ongoing basis.

Startup costs are associated with an acupuncture clinic are generally considered to be low. Equipment required typically ranges anywhere from $10,000 to $20,000 and most of this is specific for furnishing individual patient treatment rooms. As such, the primary financing needed in order to own and operate an acupuncture clinic is specific for working capital purposes. Most of the ongoing expenses regarding an acupuncture clinic are pretty low. In fact, most acupuncture clinics operate simply with the practitioner rendering all services and handling all incoming patients. In more established practices, a receptionist or practice manager may be hired when the acupuncturist time is completely dedicated to rendering services to patients.

For these types of businesses, and acupuncture clinic business plan is going to be required and submitted to the bank. This business plan should feature a three-year to five year profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. Most importantly, a thorough demographic analysis is going to be needed within the business planning top banker understands the demographics are to be targeted from the onset of operations. The demographic that should be examined include median household income, median family income, population size, population density, as well as the number of people that carry private insurance that would cover the reimbursement of acupuncturist services. A marketing plan should also be included within this document which should focus substantially on developing relationships with physicians, dentists, physical therapists, as well as allied health professionals that can provide ongoing referrals to people that are seeking specialized holistic treatments is, many acupuncturists have developed ongoing relationships with oncologists as some studies have indicated that the practice of acupuncture can assist with cancer treatments,

As it relates to to acupuncturists in order to assist with very specific medical ailments. Currently, the economic climate is strong and patients are willing to pay for the services even during times of economic recession given that they consider it a necessity for their well being. As more people from the baby boomer generation reach their senior years – it is also expected that these individuals will want to turn towards holistic treatments in order to reduce the number of pharmaceuticals and you to take for day-to-day pain. There is really nothing that is going to change about this given the this service. However, more acupuncture schools are starting and the competition among individual acupuncturists may increase over the next 20 years especially as demand increases as well.

Overall, receiving a acupuncturist clinic business loan is a pretty straightforward process and should be met only with minimal difficulty for someone that possesses a valid license to provide these services to the general public. Again, the key is that you are going to need to provide a significant amount documentation to a financial institution while concurrently showing how the practice will become cash flow positive as quickly as possible.