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Business Loans 101: 4 Ways to Make Your Business Attractive to Banks
Posted By Sarah on Wednesday 25 April 2012
Business loans are not given to people simply for their great ideas. If you’ve got a great business idea, congratulations! But this doesn’t make you unique, and it doesn’t make anyone want to give you money.
So what sets a real entrepreneur out from the crowd of idealistic dreamers in the eyes of a bank loan officer? The entrepreneur is serious about the business (and there is, yes, an actual business). The entrepreneur is willing to take on risk, get some “skin in the game,” and come up with a serious plan based on real research, not just hopes and dreams.
Is your business attractive to bank loans?
While bank loans are few and far between, they are out there. Here’s how to prove that your business is worth the bank’s investment.
1. Have a business plan.
Your business plan isn’t just for your banker, of course—it’s a key tool for planning your business and projecting gains and losses. It will prove to anyone reviewing your loan application that you’re more than just a great idea, that you’ve thought this through, and that you’ve done the research.
Tip: Business plans are, by definition, long. Give yourself a fighting chance by including a brief summary of the business plan to entice your potential loan officer to continue reading.
2. Show that you’ve got some buzz—or at least some solid potential.
Let me repeat myself: Bank loans are not given for great ideas alone. Can you show that you’ve taken that great idea to the next level?
It helps, in these planning stages, to personalize the banks a little—after all, every decision made by any institution really boils down to the people with the decision-making power in that institution. Ask yourself, If I were in their place, would I put my own money at risk to support someone else’s unproven idea based on their assurances alone?
The best loans aren’t used to start a business; they’re used to help out a business that already has some forward momentum. The more you can prove that you’ll be successful by already being successful, the more confidence you’ll inspire in your loan officers.
3. Show that you can survive without an income.
It’s a little like when the top car manufacturers were in trouble and they showed up in their private jets to ask for help—it reeeally doesn’t make a very good impression.
Any potential loaner is doing so because they believe the business can succeed, not to put a salary in your pocket. Obviously, you can’t be expected to live forever without an income—but showing that you had the foresight to take care of your personal details so as not to detract from helping your business get off the ground can only help the banks’ impression of you.
4. Share the risk.
This is a good time to put yourself firmly in your loan officer’s shoes. Imagine someone comes to you and asks you to invest in a new project. You notice that this person, however, isn’t putting up any of his/her own money—a huge red flag! Why aren’t they contributing to their own project? Do they lack the confidence in their ability to succeed? Would they just rather put the risk in someone else’s lap? What about this situation is supposed to inspire your confidence?
Nothing, of course. If you’re putting a modest amount of your own money toward your goals, your institution’s loan officer will get the sense that you believe in your business and that you’re serious about seeing it succeed—serious enough to put your money where your mouth is, so to speak.
If you’ve followed the steps above, you’ll be miles above those starry-eyed “entrepreneurs” who turn out to be all talk and no substance. Best of luck!
Have you been successful in obtaining a business loan? How did you do it? Tell us your story in the comments section below!
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This week, we’re all about e-commerce! As usual, we’ve collected some amazing blog posts from around the interwebs for some light weekend reading. Come back to work Monday morning refreshed, rejuvenated, and ready to rake in those online sales!
- “Six Ways to Grow Your E-Commerce Site” by Noobpreneur
From site-to-site collaboration to foreign expansion, this excellent post by the Noobpreneur team has some great ideas for any online business looking to increase sales.
- “Use Scarcity Tactics to Increase Sales” by Small Biz Viewpoints
Are your margins shrinking because your prices are too low? Take a cue from infomercials, auctions, and other out-of-the-box sales strategies to foster a spirit of competition among your customers—with your business as the prize!
- “How to Design a Killer Mobile E-Commerce Website That Will Boost Sales” by MyWifeQuitHerJob.com
It’s the Age of the Smartphones, and guess where many consumers are doing a growing amount of their shopping? Take Steve’s down-to-earth advice and develop a solid mobile version of your website for this set of savvy shoppers—or they’ll find a competitor that does!
- “5 Things You Can Do to Start Driving Traffic to Your Site Fast” by Small Biz Bee
The title says it all—and best of all, most of the online tools recommended here are free!
Image courtesy of M Reza Faisal; some rights reserved.
Happy weekend!
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Is My Small Business Ready to Incorporate? Five Clues That it Might Be Time
Posted By Sarah on Tuesday 17 April 2012
Incorporating a business can be time-consuming, costly, a hassle to keep in compliance, risky—and it just might be the best small business decision you’ve ever made. Here are five clues that it might be time to take your business to the next level.
Ready to incorporate and add this to your business name?
1. You’re taking out a huge loan.
While incorporating doesn’t give you free license to take out irresponsible loans with no intention of paying them back (the corporate veil doesn’t protect shady business dealings), it does allow you to breathe a little easier knowing that you’re not personally liable to repay the loan if things go awry.
Many businesses, especially those with little tied up in overhead costs, can comfortably remain unincorporated. But if you’re taking out a very large loan on behalf of your business, if you incorporate, the legal separation between owner and corporation may help set your mind at ease.
2. Your chances of being sued have increased.
For instance, you might be getting along just fine as a reseller of pet supplies, but if you’re considering bringing in a local vet a few times a week to offer walk-in checkups, consider whether you’re comfortable being personally liable for any lawsuits that may come out of the pet care you provide, or whether you’d prefer your business to assume this liability.
Incorporating allows you to operate your business statewide.
3. You want to do business statewide.
In many states, a Sole Proprietorship DBA or Assumed Name (an unincorporated business) is registered at the county level—or even at the city level—which means that registering a business only gives you the right to operate your business in that county or city.
But it’s not as simple as that: most, if not all, counties and cities require you to hold a physical location within their borders in order to register there. This means, to run a business statewide in some states, you’d need to open a storefront or have an office in every single county . . . or incorporate!
4. You want exclusive rights to your business name.
Rules on DBA/Assumed Name name availability from state to state vary wildly; while registering a sole proprietorship DBA in one state might provide exclusive rights to that name in that state, another state might allow an infinite number of DBAs to be registered in that state under the same name.
However, once you incorporate, all states grant you some level of exclusive business name protection. While the strictness of the naming rules does vary a bit from state to state, some states being more lenient than others on what is considered “confusingly similar” to another business on file, you can rest easy knowing that once you register Martha’s Baked Goods, Inc., you will be the only one!
5. You want your business to live on after you’re gone.
Incorporating allows your business to live on long after you're gone.
If you operate a sole proprietorship, the business is tied to you directly; if the owner of a sole proprietorship dies, the sole proprietorship dies with it.
A corporation, however, is its own entity. It exists outside of its owners, so it can exist for perpetuity, ownership can be transferred—and your corporate bylaws will lay out provisions for what’s going to happen to the corporation should the unthinkable happen or should any other issues arise.
What are you waiting for? ClickAndInc can help you incorporate your business today!
Employee or entrepreneur? With the unemployment rate what it is, many people are asking themselves what the best move is: work for an existing business as an employee, or go the entrepreneur route and start their own businesses.
While there’s no simple right answer to this, we’ve collected information and insights from around the blogosphere throughout the week to bring you the tools you need to make the right decision.
- How To Decide If A Job Or Entrepreneurship Is Right For You by Young Entrepreneur
This great post by Adam Toren looks at goals and personality traits to help you determine whether starting a business is the right decision for you, or if you might better excel at a traditional company job.
- Why Being a Successful Entrepreneur Takes Practice by Startup Professionals
Don’t make the mistake of thinking that starting a business is a fast-track to success. Think climbing the corporate ladder takes patience? Try starting a business from scratch. Just make sure to do it with reasonable expectations in mind.
- When Will You Start Your Business? by Small Business Trends
This post contains a wealth of information from all over the internet on nearly every topic you can think of: sales, business ideas, tricks of the trade, and more. Make sure you’re considering all aspects of your business, and get your entrepreneurial journey off to a good start!
Entrepreneur or Employee? How to decide
Happy journey!
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Angry Customers: Customer Service for Small Business Owners
Posted By Sarah on Wednesday 11 April 2012
Angry customer? Here's how to deal.
If you’re a small business owner, you may or may not have an actual “customer service” team. Odds are, you’re wearing many hats in your organization, as might your employees, and customer service is likely just one of those hats. And sometimes it’s easy to get so wrapped up in product development and business plans that you’re completely flummoxed when faced with an angry customer.
It’s tough enough to find new customers—make sure you’re doing what you can to keep the ones you already have! Here’s how.
- Find out what happened. Make sure you understand the whole story first; is that “difficult customer” actually being difficult, or do they have a legitimate problem? Or could they simply be reacting to a negative customer service experience? Make sure to interview all of the relevant parties, including your own employees who may have been aware of or involved with the situation, so you have a solid understanding of what’s going on, where the problem originated, and what caused it.
- Ask what you can do to help. This simple question can go a long way toward smoothing down ruffled feathers—sometimes, just the act of listening with a sympathetic ear when the customer is expecting you to go on the defensive can work wonders. And staying calm and collected when you feel attacked will help the customer stay calm as well.
- Offer a solution. If a product arrived broken, offer to replace or fix it. If the customer considers services unsatisfactory, a partial refund might be in the cards (or a full refund, if it comes to that). If the customer has an issue with how they were treated, consider offering a discount on future services (and consider meeting with your team to reinforce the importance of good customer service!). And remember: a heartfelt, handwritten letter of apology can help turn a disgruntled customer into a happy one.
These three simple steps apply regardless of whether the customer is blasting you on social media networks, sending you angry emails, or yelling at you to your face. If you can show that you’re sympathetic and that you’re actually working toward an equitable solution, however specific cases are resolved, you’ll create a reputation for your business of providing good customer service—and, in general, when you’re competing against big-box corporations who straight up have you beat on prices, good customer service is an area where your small business has the opportunity to excel.
What about you? How have you resolved difficult customer service issues in the past—or, if you’re the customer, what actions has a business taken to address your concerns and make you feel valued?
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Regardless of your situation, everyone can stand to take a step back and do some big-picture thinking. Here are a few great resources we’ve come across this week to get the gears turning!
- 5 Lessons From the Recession for Young Entrepreneurs by Young Entrepreneur
Young or old, entrepreneur or veteran business owner, everyone can benefit from the money-saving and sanity-preserving tips that Martin Zwillig has extracted from Donna Fenn’s new book.
- Why Ignoring Feedback is Critical to Blogging Success by The Sales Lion
This characteristically sound advice from Marcus Sheridan is applicable to both business and blogging—while feedback is important, it’s important to keep in mind that what pleases one person to no end might infuriate another, and it’s important to keep in mind that you can’t be everything to everybody.
- Small Biz Case Study: Expansion Options – Invest or Acquire? by BizCompare.com
It’s the age-old question: you know you’re ready to grow, but how? Take a look at how Geoff Vincent breaks down this case study so that you can make sure you’re asking the right questions and drawing accurate conclusions in your own case.
- Blinded By the Light—The Epiphany by Steve Blank
If you don’t think epiphanies and business have anything to do with each other, think again. Business plans aside, when you take a step back and let the pattern recognition part of your brain have a chance to take over, you could be struck by the epiphany you’ve been waiting for! Give yourself a chance, and take notice of great ideas when they come to you. It could be the best decision in your entire career.
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