How To Get On The Fast Path For Small Business Loans For Your Start-Up

So many people have excellent ideas for starting their own business, and you may very well be one of those people. But most of the time, the problem many entrepreneurs run into when trying to start their business is that they just don’t have the money.

Getting small business loans is not easy – I am just going to tell you that up front. If you don’t have a large amount of funding yourself, a successful track record in the field of your business, good credit, and a top-notch business plan, you are really going to find getting small business loans difficult.

OK – so enough with the bad news! Let’s get to the good news of some simple steps you can take to greatly increase your chances of receiving that small business loan.

Create an Amazing Business Plan

Your business plan is the first impression lenders will have of you and your business idea. Your business plan is basically your resume or application for money. The more thoroughly you have thought out your business and explained it in your plan, the better chance you have of receiving the loan you want.

Now we won’t go into a lot of detail about what all is needed in a business plan because the subject is too large, but here are some highlights.

1. Executive Summary – this is a high-level overview of your business. The executive summary lets the lender know what your business is and where you plan to take it. Notice the keyword ‘plan.’ This isn’t just where you ‘want’ to take your business, but where you ‘plan’ to take your business.

The rest of your business plan is proving that you have a plan, explaining that plan, and convincing the lender your plan will work.

2. Market Analysis – this is where your knowledge and experience in your industry will come in. In this section, you have to describe the industry, its current growth, challenges, and expectations. You have to describe your target market, how you plan to reach that market, and the results of any market tests.

You also need to analyze your competition, their advantages, and how you plan to overcome their advantages. Finally, if there are any regulations, patents, or laws that you have to deal with, those will need to be described in detail.

OK – so as you can see, there is a lot that goes into writing a business plan. What I have mentioned so far is probably around 25% of what is required.

But don’t give up just yet. While you are going to have to put a large amount of effort into your business plan, there are ways to speed up the process – you can hire a consultant, you can buy business plan templates, or you can even purchase business plan software to give you a head start.

Get Your Personal Finances In Order

You have heard that it takes money to make money? Well, this is the case with receiving small business loans.

First of all, your finances have to be healthy? Lenders will scour your personal finances to find reasons not to lend money.

Do you have bad credit? That’s a problem.

Have you had a recent bankruptcy? Also a problem.

Do you own your house? That is very good!

Do you have liquid savings to invest into the business? Even better!

Your personal credit means a whole lot. Lenders (usually correctly) suppose that if you can’t manage your finances well, that you won’t be able to manage a business’s finances well.

Also, the more collateral you have, the better. Lenders want to know that if you fail, they will get something for their money.

Try Various Lending Options

Don’t put all of your eggs in one basket, so to speak. There are several lending options you have based on your needs.

1. Small Business Administration loans (SBA)

Naturally, when most people think of a business loan, they think of going to the bank. Many business loans from the bank are backed by the Small Business Administration (SBA), and the SBA has the final say whether you get lending or not. But once you realize all of the competition you are against for SBA loans, you will understand why you need to have a plan B.

2. Get a line of credit – a line of credit is easier to obtain, but only if you have sufficient collateral to back it up. Generally a line of credit will work if you have assets (i.e. house, rental properly, etc) but can’t spend the money because it is not liquid.

3. Venture capitalists – these are the big-time private lenders. They usually won’t lend less than $1 million, and they expect you to be able to turn a profit fairly quickly. If you have a great plan, great experience in your industry, and a game-changing idea, a venture capitalist might be the way to go. After all, just about every major company (Google, Microsoft, Wal-mart) received some money from venture capitalists at one time.

4. Angel investors – Angel investors usually lend less than venture capitalists. They certainly want to make a profit, but they also want to help others. For example, perhaps someone gave them a hand at the beginning of their careers that really gave them a head start, and they may want to help the next generation.

5. More private lenders – there are all types of private lenders out there. Some specialize in certain industries, some will lend you money for almost anything but they charge outrageous interest rates, and others are looking to invest in long-term businesses. It will just be a matter of you doing some legwork and finding the dancing partner that you need.

Finally, one more note on lending options for small business loans – you can mix and match lenders. Sometimes you might have to get a little from here and a little from there, but when you put it together, it gives you the money that you need.

Summary

So we have talked a great deal about getting small business loans and the steps you have to take. There is intense competition for this money; after all, if you were to lend someone money, you would want to have a pretty good idea you would be getting it back. So jump in there with both feet, start planning, and see if you have what it takes to start your very own business.

How To Overcome Business Failure By Planning For The Worst, Yet Hoping For The Best

If you had ten thousand dollars and I were to offer you the opportunity to invest in a situation that required: 10 hours of your work day (and some weekends), large amounts of additional stress, the potential to lose your family, friends, and your peace of mind – all with a 90% chance that you would fail, would you invest in it?

Probably not.

Then why in the world do entrepreneurs invest so much in a small business?

Thriving in Failure

The greatest lesson that real life can teach us is that, when it comes to a business enterprise, many of our attempts will fail, while a very few will succeed.

Now, this article is not only about the prevention of business failure, but also about how to overcome business failure – because it is bound to happen at times.

There is an essential principle that exists that can enhance the lives of business owners even if they fail. And that is:

“Great businesses plan for the worst, yet hope for the best.”

By hoping for the best, yet preparing for the worst one can prepare for and even survive the devastation of business failure and become all the better and smarter for it.

You see, if an entrepreneur can survive failure, they will only be smarter, more experienced and more determined the next time around. Since it is in the nature of business leaders to continually create new ideas, it will only benefit them to fail, and to learn valuable lessons from their mistakes.

History is full of business entrepreneurs that had countless failures before the idea or idea that propelled them to greatness was finally discovered. Yet, this is only possible if an entrepreneur can survive the devastation of failure.

What are the ways to survive and thrive even in failure? Though there are many I will focus on the most important ones which include, managing expectations, limiting liability, avoiding personal guarantees, and having adequate cash reserves.

Managing Expectations

What expectations should a business leader have in their mind? The reality is that there is a very great chance that their enterprise will fail. By accepting this fact, one is less likely to cross emotional boundaries by investing an unwholesome amount of time and energy into an enterprise.

One would be less likely to skip a child’s birthday party, or be late to a dinner appointment with a spouse. One would be less likely to invest the family’s life savings on an idea that may or may not be successful.

Yet, one would be more likely to be prepared for the forces beyond ones control, such as an economic downturn, or a new and stronger competitor – and be able to make the best decisions that will prepare the organization to overcome whatever challenges that come against it.

Limiting Liability

I believe this simple step can practically save a business owner from the vast majority of headaches and heartaches that those who do fail have to endure. The idea is to structure the business enterprise in such a way as to protect the owners from the potential liability that exists when dealing with the public.

The first method is to obtain sufficient liability insurance, to transfer all of the organization’s liability to a third party (insurance company) for a portion of the cost. The additional legal and business assistance of large third party insurers can also benefit an organization when facing challenges brought about by the consequences of liability.

The second method is to take on a legal form designed to limit the liability of the organization due to its structure. Establishing the organization as a C-Corp, S-Corp or Limited Liability Company automatically provides liability protection to the owners, for most situations with few exceptions.

A third method is to create multiple corporations in order to separate the assets of the organization from the entity that do business with the public. If ever a liability issue arose with the entity doing business with the public, it will not be legally entitled to go after the assets because they are owned by a separate entity.

Avoiding Personal Guarantees

There will be many opportunities in a business life when the business leader will decide on a course of action and will be required to put up collateral. He or she will be asked to pledge assets to guarantee a loan or other agreement to secure the arrangement for the lender by making it less likely of default. Usually those assets will either be business assets, personal assets or both.

The truth is that if there is a potential for default, then most likely, it will happen. In order for the business leader to avoid bringing the pain and challenges home, they will do well to avoid giving any personal guarantees.

Now this may mean that you may not get the loan, for the lender does not want to take a chance on a deal unless the business owners give a personal guarantee. So be it. To best protect for the worst possible situation, it is best for the owners to never personally guarantee any loan, or any arrangement that will bring recourse against the business owners in case of default.

Is it worth losing your house over an idea that had a slim chance at succeeding anyway?

The truth is that if a loan cannot be acquired, or an arrangement cannot be made without personal guarantees, then a wise business owner would patiently wait for safer and more lucrative opportunities to arrive without selling their soul to the devil to do it.

Having Adequate Cash Reserves

The main cause of the failure of most businesses is that they run out of money. The truth is that this happens because of a lack of proper money management by the organization’s leader.

The main area that can tip an organization in either direction is the efforts the business leader makes to have an adequately funded cash reserve. As a matter of fact, a sustainable business enterprise should not be started until an adequate cash fund of at least six months to a year’s worth of business expenses is held in reserve.

As the organization operates, additional funds are added to the existing cash reserves. Then reserves are invested to continue growing the organization’s cash position, so that in case of emergencies, the cash reserves can be utilized and replenished by the returns on its investment.

During difficult economic times, or if new opportunities are available, the cash reserves would be able to adequately meet all of the organization’s financial needs.

The other result of having adequate cash reserves is the less dependence on debt. An organization with a well funded cash reserve can also better determine the optimal use of debt in its financial strategy to obtain the optimal capital structure that will maximize its potential to better achieve its organization’s mission.

In conclusion, failure is an inevitable progression of business ventures, but business greatness can be maintained in the midst of failure. As a matter of fact, business greatness grows from the ashes of business failure if an organization is properly prepared in attitude, structure, and its cash position.

The business leader must accept the reality of the challenges of the marketplace – and though he or she hopes for the best outcome from their endeavors, they need to diligently prepare for the challenging realities that surrounds the environment of business.

The more small business owners accept that failure is an option, the more the option for greatness comes closer and closer to them.

Best Business Opportunities for Small Businesses – A Quest for the Holy Grail?

Finding the Best Business Opportunities for Small Businesses is often thought of as being almost as difficult as the quest for the Holy Grail. While there may be a certain amount of truth in this view of things some up-front research and planning usually helps to get going with a reasonable degree of success.

The best business opportunities are often derived from the simplest of profitable business ideas but unfortunately not all of them are feasible. In fact, a large number of business ideas are doomed to fail because of the lack of business skills on the part of the new business owner. In most instances there would have been a much better chance for success if the new business owner had taken the time to follow a small business course or some kind of structured setting designed to plan out precisely how a new business can and will succeed.

Owning your own business can be exhilarating but at times it can also be quite difficult and downright frustrating. You can however make the choice to spend a little bit of effort and learn the ropes by following a small business course. Taking this very important first step will help to make the entire process of building a new business much easier and it will also offer a particularly critical element i.e. organizational skill.

Starting from scratch and getting to the top owning your own business can be an almost insurmountable task. It is essential that you have everything planned out from a business feasibility study through to a well-ordered business plan that will be your blueprint to help you keep on track as you grow your business.

Doing a small business course can also be the perfect solution for a business owner looking for more profitable business ideas to take an existing small business to the next level. Even if you have done quite well during the first stage of owning your own business, business expansion requires additional skills that are best learned up front if you want to avoid the bad mistakes that others have made. One of the most important issues is that the best business opportunities for expansion often require additional capital. Any business owner who has been in this situation and had to try to get a small business loan to support this expansion will agree that funding is almost impossible to get without a good business plan to support the application.

Being successful owning your own business is really a matter of motivating yourself enough to keep a positive mindset that leaves little room for self-doubt and discouragement. Now, no one is saying that keeping a positive attitude is the secret to success but when you really sit down and think about it, you’ll soon realize that it has a lot to do with driving yourself towards your goals and staying on track.

Many people unfortunately lose touch with their goals when things become too difficult but, if you learn how to plan to succeed you’ll discover that it is a strong element in motivating yourself to not give up on your business dreams. A small business course provides a great opportunity to learn plenty about self motivation, goal driving tactics and much more about the change in mindset needed to truly succeed with almost any business. Some may even go as far as to say that you would have a hard time making the most of even the best business opportunities for your particular situation without the help offered by a small business course.

All in all, owning your own business will require many steps to be taken and taken correctly including designing that all too important business plan. You will without doubt be amazed when you find out that success can happen when you learn how to plan to succeed. The best business opportunities are really simple to find if you take the right approach to developing your personal business skills.