Gaizer.com Tips for Business Start-ups

One of the most difficult business loan scenarios occurs when a commercial borrower is rejected for either a commercial mortgage or commercial loan. There are five specific reasons that account for a healthy majority of business finance rejections. These common business financing application problems are particularly applicable to commercial real estate investment property financing.

Commercial borrowers are likely to be confused when their commercial loan application is turned down and will probably be unsure as to why it happened and what to do next. For each of the five major reasons that a bank might decline a commercial mortgage, a practical strategy is provided for converting the declined commercial real estate loan into an approved business loan.

Two reasons (tax returns and business plan requirements) could impact virtually all businesses. Many business loan officers will begin their business loan and commercial mortgage review process by stating “We will need to see at least three years of tax returns” and “Can you show me your business plan?” before proceeding. (more…)

This blog was written to help entrepreneurs find the “technical” information to help them start their own business. This post will be the index of this blog, and it will be updated as I ad more information.

Business Structures

Pros and Cons of each Business Structure

Sole Proprietorship

Sole Proprietorship Introduction
Managing Your Sole Proprietorship: Taxes
Business Insurance for Your Sole Proprietorship
Financing Your Sole Proprietorship

Partnership

Partnership Overview
Business Partnership, Safety Nets: Buy/Sell Agreements, Partnership Agreements
Partnership Taxes
Partnership Insurance (more…)

Women often have the perception that acquiring small business loans is a painful, complicated and lengthy process. However, the truth is quite the contrary. A businesswoman will have to spend more or less the same time and efforts as a businessman to get a loan.

Loans are available for women entrepreneurs in a variety of fields such as catering, consulting, beauty care, bed & breakfasts, photo studios, pet supplies, greeting cards, etc.

Things to Keep In Mind While Applying for a Business Loan

Loans applications mainly focus on your character, credit, experience and reliability rather than assets.

Following are a few necessary details you should take care of before putting in a loan application:

Clean credit card score- A clean credit card score would definitely get you low interest rates on loan. The best thing is to pay off your credit card debt. If you have accumulated debt, your credit worthiness takes a beating.

Business plan- Keep your business plan handy, you can also hire a professional writer to write or proofread your plan. Without this, no bank would consider you for even a small business loans. You must clearly outline the organizational structure, asset base and targets you have for your business and all of this should be included in your business plan. (more…)

Small business startup loan, let’s keep this simple. If you are trying to get a larger loan (one over $100,000), then you will probably need collateral. You probably already knew that. But what you may not know is that for some smaller loans, you may be able to get by with several other alternatives—home equity and unsecured loans. You may even be able to negotiate your accounts receivable as a form of collateral if none of the other options work. The government provides several programs to help you as well.

USE THE MONEY IN YOUR BACKYARD If you have no collateral and your lenders require it, you may be able to convince them to use your home equity as collateral. This should be exciting news for all of you homeowners that are starting businesses with less than sterling personal credit. However, this tactic will not work if you have already borrowed significantly against your home equity.

TAKE THE THIEF APPROACH (LIKE BANKS DO) You may not understand why you need collateral for smaller small business startup loan amounts when you are already paying interest for borrowing the money. This is a perfectly good question. And the answer is simple: for small amounts, they don’t. So either find a lender that provides unsecured small business startup loans or convince traditional lenders to give you money without requiring collateral. If you are looking for $15,000 or less and your preferred lender will not do the deal without collateral, make like a thief and run (to the next lender.) Just don’t do anything illegal on your way out.

TAKE THE MONEY FROM (more…)

Business Start Up Funding

Startup companies often get frustrated when they can’t find investors willing to fund their new idea. What they don’t realize is that in order to get an investment, they need more than just a good idea and the promise of future profits. What investors are looking for is a “silver bullet” in the business that ensures their small investment will yield a huge return.

Business Start Up Funding - You Need a Silver Bullet

The silver bullet is the aspect of your business plan that proves your company can grow quickly. For example, perhaps you’ve proven that 100 customers are willing to pay $99 for your newly developed product. If all you need is additional cash to build 1,000 more items to sell more at that price, you’ve got a silver bullet.

Investors are compelled to make investments in startup companies that have proven some aspect of their business model “works” and that what they really need is more capital to make it work better, or to sell more products.

Many entrepreneurs, on the other hand, wander around in search of business start up funding to find the silver bullet in their business plan and that’s a less attractive proposition. In this case you’re asking an investor to put money into a treasure hunt, and not into a business. Until you demonstrate you can sell something (at a profit), you don’t have a business worthy of investment. Therefore you need to re-focus your efforts on finding your silver bullet.

Investors Love (more…)

If you’ve ever pitched your new business idea to a venture capital angel investor, only to be tortured with an endless list of reasons your idea will never work, my sympathies go out to you. The rejection of being told your business idea sucks can be incredibly painful.

That said, I think you need to keep one thing in mind while you’re being told what a buffoon you are for presenting your idea – maybe this venture capital angel investor has no idea what they hell he’s talking about!

It’s true, most venture capital angel investors don’t know jack. Don’t get me wrong – they think they know it all, but the truth is that most investors have a lot to say, and very little to deliver. The problem for entrepreneurs is that they tend to think that because venture capital angel investors can write a check, they must be experts on investments. That’s like saying that because you can buy a few shares of Gillette that you might be Warren Buffet. Not quite.

Consider the Source

When you’re listening to the feedback from anyone, investors included, you should evaluate the credibility of that feedback with healthy skepticism. You should be asking yourself “What makes this person qualified to validate my business idea?” (more…)

You’ll almost certainly need to raise money to start up your company, unless you already have sufficient capital yourself. The typical costs of starting up are in obtaining premises, manufacturing your product if you have one, buying materials, stock or equipment, marketing and fees for external consultancy such as legal help, accountancy etc. Then when you’re off the ground, you’ll need working capital to keep you afloat in the gaps between paying your own invoices and receiving payment from customer invoices.

Again, your business plan is essential at this stage of setting up your business. In it you will already have scoped out what your money needs are and how you plan to raise the capital, and you’ll be using it to persuade potential investors and lenders of the benefits of funding your company. Your financial calculations in your business plan therefore need to be thorough and accurate and presented with confidence.

Everyone expects that they’ll be able to stick to their plans and only need to borrow the absolute minimum, but more often than not something unexpected crops up to throw a spanner in the works. It therefore makes good business sense to include a contingency element in the amount you request. It’s better to do that now and have the extra cash as a safeguard than it is to have to return to your lender or investor not far down the line to ask for more money. If it wasn’t in the original plan they are likely to be concerned about your financial ability and your request may be rejected. (more…)

Loans

Loans are a time-tested way of raising capital for your business. Unfortunately is not as easy as going to the bank and asking for money. The following steps should give you an idea on how to raise the right amount of capital to get your business going.

Step 1: Decide how much money you need.

This is an obvious statement but often overlooked. Entrepreneurs, particularly start-ups, when budgeting for their business often focus on the amount that is absolutely necessary to start their business without accounting for working capital or cash for contingencies. This is dangerous because lack of working capital can mean the death knell for the business.

On the other hand, some entrepreneurs, again start-ups, drastically overestimate their costs. This will make lenders not only question the entrepreneurs’ assumptions, but also question whether they know what they are doing.

Assuming that you did your research and decided on an amount, lets focus on the lender that is right for you.

a) If you are a start-up:

Loan amounts below $25,000 are considered smaller, micro-loans. Not all banks will be interested in doing a SBA guaranteed loan for small amounts (more below). Micro-lenders and Alternative-lenders are better equipped to handle this type of loans. These lenders usually make smaller loans and have a community focus. Look to credit unions, local development corporations and other non-profit lenders. (more…)

When investors evaluate the opportunity you present, they will look at the following factors:

The people who will manage the company; this includes your management team and your advisors.

The concept value. This is the opportunity you present to them. It includes many of the following:

What need does your business satisfy? What is your business model? What is the size of the market? Who are your potential or actual customers? What external problems (economy, industry, regulatory, or technological) may affect your estimates?

The price that you put on the deal. How much equity is the angel going to receive for the investment? What are the terms of the investment? This will include operational information such as salaries, costs, ownership control, or other information that may affect the return on investment.

Deal Structure. What are the terms of the investment? Are the investors going to provide debt or ask for equity? Are the angels going to be active or passive investors? (more…)

Although most of the venture capitalists in the United States invest in technology companies—and the industry gets a lot of attention for these investments—they also invest in business services, construction, industrial products, restaurants, retailing, and socially responsible companies. The following are different stages of a company development that VCs will invest in and why:

Early-Stage, Expansion, and Mezzanine Financing

Venture capitalists can be general investors or they can concentrate in a particular industry, sector, or development stage of a company. Not all venture capitalists invest in start-ups; some of them invest in different stages of a company’s life cycle, such as early-stage financing or expansion financing.

Early-Stage Financing

Seed Financing: Here, venture capitalists fund entrepreneurs in the idea stage, when a company has not yet produced a product or service and is building its management team. You should expect to receive capital under $50,000. In this stage, businesses should look for private investors. Outside investors may look to negotiate for a larger share of the company or require other people to join your management team. You will be sharing confidential information about your company with prospective investors, so research those people thoroughly before entering into negotiations.

Start-Up Financing: This capital is reserved for companies that are in the product-development stage. This funding includes the initial marketing for the product.

First-Stage Financing: This capital is earmarked for commercial development, production, and sales. It is for companies that have already developed a sellable product, proven their business concept, and have assembled a credible management team. At this point, your business is ready for the market and investors will take a passive role in comparison to either seed or start-up financiers. Investors will look to your business plan for: (more…)