Mo Money, Mo Problems
No Money, Real Problem

Do you have the capital to start your business?
For most aspiring business owners, the answer to this questions is usually no. Sure, there are some who will pursue entrepreneurship after a successful career in another area where they were able to build a war chest to use to fund their new dream. But, for most aspiring business owners, there is no war chest available. So what now? Well, since you don’t own a money tree, you need to learn about the options available to you.

Education:
One of the most critical factors to the success of any business is access to capital. Capital refers to financial resources available for use. Capital is different from money. Money is used simply to purchase goods and services for consumption. Capital is more durable and is used to generate wealth through investment. In this case, the investment is a business.
In today’s lesson, we will continue discussing the merits of business owners as a path to wealth. In Lesson #59, I introduced the business plan. One of the purposes of a business plan is to provide a document of your capital needs. Once you have an idea of the amount of capital that you will need to get started, the next step is to – find the money.
There are many ways to raise capital – traditional sources and non-traditional sources. The chart below lists the sources that are currently available to aspiring and established business owners.

*Beware – Investors are not free!

Common Misconception about SBA Loans

One common misconception is the you can get a loan from the Small Business Administration (SBA). Let’s be clear, the SBA is not a lender and does not lend money. The SBA is a guarantor, which means that they guarantee loans (up to a limit) made by other approved lenders.  Access to capital is the bedrock of business growth and viability. From the ability to satisfy working capital needs, to expansion, to exploring new business opportunities, to hiring employees, the availability of capital is the predictor of the business’ ability to thrive. Use the chart to learn about the different financing options available to you.

Resources:
Newtek (thesba.com) – The Small Business Authority offers SB loans from $50,000 to $10 million.

Kabbage.com – Kabbage provides working capital to small businesses. From online sellers to brick and mortar stores, Kabbage services every type of small business. Banks take weeks to decide on an advance and merchant cash advance companies take days. Kabbage delivers funds in 7 minutes.
Ondeck.com – Ondeck delivers small business loans using the OnDeck Score™ technology,
which focuses on the health of your business – not your personal credit score.

Important terms from this lesson:

Action Step: Go through the chart of Traditional vs. Non-traditional sources and find out which option works best for you. Refer to the Resources and Important Terms sections for assistance.

“He who fails to plan, plans to fail.”

A roadmap, or now GPS, is required to reach a new destination in your car.  Say you live in New York and you decided that you wanted to drive to California.  You would not jump into your car and just start driving because you could potentially end up in Texas.  A business plan is like roadmap.  You need to plot your journey to ensure safe passage to your desired destination.  While a spirit of fear and anxiety may strike the moment that you think about putting together a business plan, this is a very important step for aspiring business owners.

Education:

Create your yellow brick road!

In today’s lesson, we will discuss the importance of a business plan for entrepeneurs.  A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.  Moreover, it articulates your vision by communicating how you will get from point A(where you are) to point B (where you want to be).  It forces you to formulate a strategy and to think critically through the first three to five years of business.  In addition, a business plan will help you figure out the following factors.  A business plan is part of your due diligence; it tests the vitality of your idea.

An effective business plan will contain the following information.

1. Identify the WHY
2. Market analysis
3. Financial projection
4. Trend analysis
5. Industry information
6. Cash flow needs
7. Break-even point
8. Capital expenditures (budgeting)
9. Capital or capitalization needs
10. Start up costs
11. Financing needs and the cost of capital
12. Personnel needs
13. Location
14. SWOT Analysis (See Lesson #58)
15. Marketing plan
16. Competitive Analysis

For many, the feelings of anxiety will creep in right about now, but there are great resources available to assist you.  There are companies who specialize in providing this service.  There are numerous, industry-specific templates available on the web. There are mentors who have come before you and who can provide valuable assistance (maybe an old plan that you can pull from).

Finally, your business plan should be clear and simple.  Excessive language, poor research, unrealistic projections, or an uninspired plan will not help you succeed.  Put yourself in the shoes of the reader. If you were coming to YOU with this business plan, would YOU invest in YOU?  It does not matter if you have a great idea, if you cannot communicate effectively.

Here’s a look at three apps that can help get your business plan rolling (source: Entrepreneur.com):

1.  Enloop
2. StratPad
3. Business Plan Premier

Do not skip this step.

Do not be intimidated.

Do not underestimate the value of a well written business plan to your success.

Resources: 

Entrepreneur.com –  Website and magazine for today’s entrepreneur.

Important terms from this lesson:

Action Step:   SBA Webinar – Develop Your Business Plan with Tim Berry

http://www.youtube.com/watch?v=tEL_l7klIY8

There is an old cliché which states that there are two kinds of people – those who do and those who do not.  Since you are reading this lesson, it means that you are a “those who do” kind of person.  One of my favorite quotes of all time is from Thomas Edison and it goes, “Vision Without Execution is Hallucination”.  I am absolutely in love with that quote because it means that vision alone will not help you to achieve the success and wealth that you long for.  To win, you actually have to be in the game.  Today’s lesson is to teach you how to get into the game.

Education:

Per the following illustration, there are four paths to becoming a business owner.

1.       Direct investment (alone or through an investment group)

2.       Franchise Opportunities

3.       Monetize a unique skill, specialty, trade or expertise

4.       Purchase or assume an existing business (through cash or leverage)

Either path will allow you to see your desire come to fruition.  The trick is to choose the right path, which will maximize your potential to succeed because other factors (e.g. capital availability) will play a major role in your analysis.  One way to accomplish this is by preparing a SWOT analysis on yourself.  SWOT analysis (strengths, weaknesses, opportunities, and threats analysis) is a framework for identifying and analyzing the internal and external factors that can have an impact on the viability of a project, product, place or person.

As its name states, a SWOT analysis examines four elements:

• Strengths – internal attributes and resources that support a successful outcome.
• Weaknesses – internal attributes resources that work against a successful outcome.
• Opportunities – external factors the project can capitalize on or use to its advantage.
• Threats – external factors that could jeopardize the project.

After you have completed your SWOT analysis (see Action Step below), determine which path is best for you.

Resources:

Mindtools (www.mindtools.com) – Essential Skills for an Excellent Career

Important terms from this lesson:

Action Step:  Prepare a SWOT Analysis on yourself.

http://www.youtube.com/watch?v=S2GZOsemVNk

What comes first the chicken or the egg?

In the last lesson, we began our discussion about entrepreneurship as a path to wealth.  However, in my experience as a small business tax advisor, many people incorporate or organize a business prematurely, which can costs money, time or both.  In the last lesson, I asked you to determine if entrepreneurship is for you.  Well, what did you decide?

Education:

I saw this picture on a friend’s Facebook post and I thought that it would be perfect for today’s lesson because people tend to romanticize entrepreneurship and end up circumventing many vital steps in an effort to achieve quick success.  While I agree that a business can be a great path to wealth, it has caused many others to literally lose the shirts off their backs.  According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months.  Ignore those staggering statistics at your peril.  The good news is that you can succeed.

One of the primary factors that separate a successful business from a failing business is INFORMATION.  There are so many valuable resources on the web and in your community.  Before you start a business, it is imperative that you educate yourself before jumping into the deep end.  This may mean taking a college course or seminar.  It may mean reading books on business start-ups.  It may mean finding and spending time with an experienced mentor.  It may mean seeking out a great advisor.  Do whatever is required for your particular situation, but educate yourself before attempting to start a business.  I have compiled a list of sources that provide valuable information for aspiring business owners.

• BusinessUSA – http://business.usa.gov/
• State Economic Development Center – check your state’s website
• Local Economic Development Centers – check your local government’s website
• Goldman Sachs 10,000 Women Initiative – http://www.goldmansachs.com/citizenship/10000women/index.html
• Small Business Administration (SBA) – sba.gov

SBA Development Centers

Women’s Business Centers

Score Mentors – SCORE members are trained to serve as counselors, advisors and mentors to aspiring entrepreneurs and business owners

• Chambers of Commerce
• Trade and Professional Organizations
• Khan Academy
• Community College
• National Federation of Independent Businesses (NFIB) – nfib.org
• Apple iTunesU – view college lectures from great B School programs like the Duke University Center for Entrepreneurship
• YouTube
• American Express Open Forum (Your Business)  – https://www.americanexpress.com/us/small-business/openforum/yourbusinesstv/

Most of the organizations listed above offer free services, including seminars, training videos, financing assistance, materials and counseling.

To recap, in the last lesson we decided if entrepreneurship was right for you.  In this lesson, we identified resources to help aspiring business owners.  In the next lesson, we will discuss some of the ways to start a business.

Do not forget that INFORMATION is power!

Resources:

SBA Local Assistance (http://www.sba.gov/tools/local-assistance) – Locate resources in your home state or the states that you wish to conduct business.

Important terms from this lesson:

Action Step:  Click the Start a Business Wizard

Are you thinking about starting a business of your own? This wizard will guide you through aspects of starting a business and finding information you need to succeed.

Is Entrepreneurship For You?

Given that today is April 15^th for Corporations, it made sense for today’s lesson to center around the concept of entrepreneurship and how a business can be used to create, sustain and pass wealth.  According to the book, One Minute Millionaire, there are roughly four ways to create wealth – investments, real estate, internet and business.  That’s great news for the majority of us who lack the resources for investments and real estate and the technical skill required for internet or technological creations.  No, most Americans will create wealth through sheer hard work, effort and determination, which does not require any prerequisite other than desire and will. 

Education:

While entrepreneurship may not for everyone, many will choose this path to build wealth. As a result, this week will be dedicated to discussing the merits of entrepreneurship and how creating a business can lead to wealth for you and your family.  There are many benefits to owning a business.  One of the most important aspects of business ownership is understanding that your business is a TOOL.  If used property, a business can help you achieve the following goals.

1. Tax Shelter Tool
2. Retirement Planning Tool
3. Education Planning Tool
4. Investment Tool
5. Money Saving Tool
6. Bill Payment Tool
7. Family Planning Tool
8. Job Creation Tool for Family Members

I will stop there, but I certainly hope that you get the picture.  A business is a TOOL!  It’s just like a hammer or wrench to a carpenter.  An informed business owner can use this powerful TOOL in a transformational way that will forever change his or her life and the destiny of others. As a small business tax specialist, it is my primary job to teach my clients how to use their business to accomplish many of the above, enumerated goals.  Let us examine if you have what it takes to start a business.

Is Entrepreneurship For You?

Starting your own business can be an exciting and rewarding experience. It can offer numerous advantages such as being your own boss, setting your own schedule and making a living doing something you enjoy. But, becoming a successful entrepreneur requires thorough planning, creativity and hard work.

Consider whether you have the following characteristics and skills commonly associated with successful entrepreneurs:

• Comfortable with taking risks: Being your own boss also means you’re the one making tough decisions. Entrepreneurship involves uncertainty. Do you avoid uncertainty in life at all costs? If yes, then entrepreneurship may not be the best fit for you. Do you enjoy the thrill of taking calculated risks? Then read on.

• Independent: Entrepreneurs have to make a lot of decisions on their own. If you find you can trust your instincts — and you’re not afraid of rejection every now and then — you could be on your way to being an entrepreneur.

• Persuasive: You may have the greatest idea in the world, but if you cannot persuade customers, employees and potential lenders or partners, you may find entrepreneurship to be challenging. If you enjoy public speaking, engage new people with ease and find you make compelling arguments grounded in facts, it’s likely you’re poised to make your idea succeed.

• Able to negotiate: As a small business owner, you will need to negotiate everything from leases to contract terms to rates. Polished negotiation skills will help you save money and keep your business running smoothly.

• Creative: Are you able to think of new ideas? Can you imagine new ways to solve problems? Entrepreneurs must be able to think creatively. If you have insights on how to take advantage of new opportunities, entrepreneurship may be a good fit.

• Supported by others: Before you start a business, it’s important to have a strong support system in place. You’ll be forced to make many important decisions, especially in the first months of opening your business. If you do not have a support network of people to help you, consider finding a business mentor. A business mentor is someone who is experienced, successful and willing to provide advice and guidance.

Resources:

SBA (Small Business Administration – www.sba.gov) – The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation

Important terms from this lesson:

Action Step:  Answer the questions below to determine if you have what it takes to start a business.

20 Questions Before Starting

1. Why am I starting a business?
2. What kind of business do I want?
3. Who is my ideal customer?
4. What products or services will my business provide?
5. Am I prepared to spend the time and money needed to get my business started?
6. What differentiates my business idea and the products or services I will provide from others in the market?
7. Where will my business be located?
8. How many employees will I need?
9. What types of suppliers do I need?
10. How much money do I need to get started?
11. Will I need to get a loan?
12. How soon will it take before my products or services are available?
13. How long do I have until I start making a profit?
14. Who is my competition?
15. How will I price my product compared to my competition?
16. How will I set up the legal structure of my business?
17. What taxes do I need to pay?
18. What kind of insurance do I need?
19. How will I manage my business?
20. How will I advertise my business?