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Changing directions in a new economy

So with my shiny new degree in my hand I have started my search for a career. Gone are the days of taking any job that comes along to pay the bills, now I am looking for the career that makes me happy to get up in the morning. So how does a person go about finding that ideal position, the one that makes you feel fulfilled, makes you happy to participate in the rat race of life.

My journey begins with an ending. A job that I have had for a while is no longer there and my hunt for a career begins quicker than what I had expected. I had planned on enjoying the summer, and then taking the time to figure out what I really want and what sort of occupation I was looking for. Now I have to compete with the thousands of others that are looking while not having a real backup or plan. Well my schooling should have prepared me for this exact situation right? So off I go, trolling the online job sites for anything that sounds remotely interesting and trying to correlate the similarities between them to find something new. Why do all these job offers sound like scams? How are they supposed to fall in love with my charming sense of humor and great personality from me filling out a form online and praying someone gets back to me.

Ahh the frusteration…. I feel like a girl waiting for that one boy to notice her and ask her to the dance…. why are businesses not running to me offering me a great job with tons of benefits and a big fat paycheck? Apparently I have been missled by the professors and advisors that told me all I really needed was that nice piece of paper that said “Yes I attended college, I showed up, put in effort, and was rewarded with all these skills and expectations”… Why ohh why do I have such high hopes and expectations? Especially in an economy that has an educated labor force that has over 10% unemployment. I blame my mother and the notion in youth soccer that everyone gets a trophy. Did I really work hard? Do I deserve a job? Well the anwser in yes. But I dont really remember having the coach tell me that yes I am a good player and yes I performed well but due to budget cuts there will be no trophys. Therefore I expect the jobs to be throwing themselves at me like a Justin Bieber fan in a mall.

With my balloon sufficiently deflated I begin the journey to discovering what career will benefit most from my skills. We shall see where this goes…

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The Last of the Financing

The last few types of financing available are a little out there but if you attain them you are really in business. If you are beyond the startup phase, have initial revenues coming in, a quality team in place, and a clear path to eventually sell the business or go public in an IPO, you could be ready to approach the funding pros – venture capitalists (VCs). But because they funded the dot-com and biotech bubbles and were badly burned, VCs now have higher standards than ever. Still, they remain a serious player in the investing world. Keep in mind that their funding is very time-sensitive. VCs look to get their money and profits out as quickly as possible. They are a great source if you are planning for meteoric growth and will require further business financing in the future to achieve it. The upside is that they typically have millions to spend and more where that came from. Also they can use networking to continue funding. The downside is that it must be a fast growing and popular business, however millions could be at your fingertips.

If you need to get to market quickly or perhaps short-circuit the “no name, no credibility” game, strategic investors can help. These equity financiers get their name because they come from within the industry you are targeting and find what you are selling to be “strategic” for their business objectives (such as somehow complementing or enabling the products or services they sell). But beware! They can swamp your business with opportunity, seduce you into reallocating your companys’ resources in a lopsided way, restrict you from dealing with their competitors as your customers, and even cancel their business relationship with you on a whim! Be sure you know what you are getting yourself into. These are what big money lawyers make their bread and butter off of. However, they enhance your credibility in the industry and the money can have access to manufacturing and marketing. On the downside the dependency can be tricky and they can prohibit you from selling to their competitors.

Just like Goldilocks, you will have to make a choice. Some small business financing options will be too complicated and some too risky. Others will offer too little or too much. But if you do your homework and ask for the right amount from the right source at the right time, you will secure the financing for your startup that is “just right” and be well on your way to business success! There are many different free state agencies that can help you to both learn about financing and about how to develop your business.

Next time we will be discussing theses different areas that you can find help.

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Equity Financing

While debt funding is most common, there are still tens of thousands of companies financed each year by private or “institutional” investors in exchange for an equity ownership stake. They range from the less sophisticated “friends and family” type, to high net-worth private investors known as “angel investors,” all the way up to the sophisticated professional investors called venture capitalists.

When you are not able to borrow from the banks, consider asking your rich Aunt Mildred for a little help. As a jolt of startup funding for many a family-run business, small business financing from friends and family typically comes in small amounts without a lot of hassle or legal expense, but be careful. Always stay professional and remember to be in constant communication. Even little brief daily notes on the progress of your business. Depending upon your priorities, realize that business has risks, and preserving your relationships with friends and family is at least as important as your business opportunity. The upside is that there is less paperwork and it is usually available quickly. The downside is that it can be very difficult when you combine work and personal life and the possibility of losing all that money.

Do you believe in angels? I do. With approximately 250,000 high net-worth private investors in the US who fund over 30,000 small companies each year, you might be seeing wings yourself. “Angels” have earned their name by typically being friendly and patient about their investments and by providing their business wisdom and valuable relationships along with their money. They often like to invest in groups, each taking a piece of the deal. You can expect to get around $25,000 to $1 million. The upside is that most are relatively patient about their investments and they often invest in business smarts and networking opportunities. The downside is that they can be quite elusive and it may be difficult to manage the divergent interests of a large group of angels

Check in next time to see about some additional forms of small business investing live venture capitalists…

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Tips For Applying For Grants…

The process of finding a small business grant program and reviewing the requirements is time-consuming. Eligibility can be based on location, sales revenue to date, years in business, sex, race, and purpose of funding. Should your business embark on a small business grant seeking mission? Answer the following questions:

1. Do you have the time and resources to search for a small business grant program and apply?

2. Can you hire a consultant or learn the grant application process by yourself?

3. Does your business need the money now for expansion or can you wait up to a year?

4. If you do undertake the grant process, will it hurt your business taking away time from selling and marketing?

If you want to take a look at the small business grants available, the best place to start is the Catalog of Federal Domestic Assistance (CFDA). The CFDA lists thousands of grants from all government agencies for free. Many business grants will be geared towards minority business development or rural business opportunity grants. Do not overlook the other assistance programs available such as surplus equipment and training.

If you do find a small business grant program available for your business, be ready to go through a lengthy, approval process. With funding cutbacks and high competition be prepared with the following grant tips:

Small Business Grant Tips

  • Provide complete and accurate information in the application. An incomplete application may not make the review process or can add delay to approving your grant.
  • Get to know your grant officer and their constraints, budget and concerns with approving your grant.
  • Stand out among the crowd with a well-prepared business plan if required. Demonstrate your understanding of the business. Show how the money will bring the benefit the government agency wants.
  • Bring in outside experts if necessary. An accountant or consultant can add credibility to your application process.
  • Keep in touch. Make regular contact with the grant office in a professional, non-intrusive manner.

The task of locating and applying for a small business grant is not for the faint at heart. Take an honest look at alternative sources first, such as loans, personal credit lines, friends and family. Many successful companies today were grown the old-fashioned way…hard work.

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The All Mighty Grant

Free Money

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There is something in the business world that keeps the hopes of every small business owner hoping, the grant, also known as free money. Investors love to give them and business love to receive them. The only problem is finding out how to apply for grants, what type to apply for and what qualifications your business needs to get them.

The most common grants are ones provided by the federal or state government. These are often high dollar grants and have many different requirements to enter the bid process. While there are still no direct small business grants available from the federal government, many state development agencies offer direct small business grants and other types of financial assistance designed to encourage and assist entrepreneurs in starting or expand a small business.

Small business financing incentives are an important part of the economic growth plan of every state in the nation. Some states even offer small business grants. Other small business incentives could include subsidized rates on SBA loans as we previously discussed, tax breaks which we will get to and participation in business “incubator” programs also soon to come.

Businesses that get government grants are subject to strict government oversight and must meet detailed government performance standards during the duration of the project and funding period of the grant.

All project expenditures must be strictly accounted for and detailed audits are conducted by the government at least annually. All granted funds must be spent. Any money not spent goes back to the state. Detailed program goals must be developed, approved and carried out exactly as specified in the grant application. Any project changes must be approved by the government. All project phases must be completed on time. And, of course, the project must be completed with demonstrable success.

Failure on the part of the grant recipient to perform under the requirements of the grant can result in penalties ranging from economic sanctions to prison in cases of improper use or theft of public funds.

By far, most government grants are applied for and awarded to other federal agencies, states, cities, colleges and universities, and research organizations. Few individuals have the money or expertise necessary to prepare adequate applications for federal grants. Most active grant-seekers, in fact, employ full time staffs to do nothing but apply for and administer federal grants.

The plain truth is that with federal funding cutbacks and competition for grants becoming more intense, seeking a federal grant always requires a lot of time and potentially a lot of money up front with no guarantee of success.

I know that this may have just burst your bubble a little however, knowing the difficult process you may be encountering is always a good idea. Check in next time for when we discuss the exact process for applying for a grant.

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Money From a Money Tree

Most people today know that unfortunately money doesn’t grow on trees and as I keep trying to tell the Macy’s Collection department, “I can’t just print money” Especially in today’s economy it can be very difficult to have enough capital to even get your business started. My next few blogs will discuss some very different but all viable options for starting to fund your small business.

We will begin with the most common ways and move forward to the more difficult but perhaps more wallet friendly options available.  

Debt financing is financing from a bank or other institution that you must pay back. Traditional financing through a bank has become almost non existent. If you pass muster, banks can provide you with a loan or line of credit that comes with a repayment schedule and an interest rate. They will look carefully at your company’s cash flow, collateral and the liquidity of your assets. You need to have a sensible, written business plan, and you must know your financial situation inside and out.  

Some banks that are still lending money have shifted a portion of their lending to federal Small Business Administration loans, which are set up to help small business owners obtain business financing so that they can continue to manage their small business resources when they can’t otherwise qualify for conventional small business loans, and carry less risk for the banks if the borrower defaults. This is a great option if you can get it because you don’t have to give up equity and it is available to companies that can’t get equity funding. As with anything there is always a downside as well which includes that you must pay interest, there is limited networking or “business savvy” value and it may require personal collateral such as a home.

Stay tuned for next time when we discuss grants and equity financing.

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Obtaining a Business License

Legally operating a business in the United States requires some paperwork and documentation for your business. Most of these forms and licenses are just formalities that make the state and the IRS aware that you may be operating and you may be making some money. “What does my small business need?” Well depending on the size and type, at a minimum a business license. This just says to the world ” I am here and I can do this”. 

Every business needs one or more federal, state or local licenses or permits to operate. Licenses can range from a basic operating license to very specific permits, (e.g., environmental permits). Regulations vary by industry, state and locality, so it’s very important to understand the licensing rules where your business is located. Not complying with licensing and permitting regulations can lead to expensive fines and put your business at serious risk.

To obtain a business license with the state that you are located in is a simple jaunt down to the Secretary of States office or checking out their website for forms online. You should have these things in mind before heading down to the Capitol or logging on. Do you want to be a Limited Partnership, Limited-Liability Partnership, or Limited-Liability Limited Partnership only. For the purposes of this article we are only focusing on small locally owned business., therefore there will be no discussion of corporations. There are a few important details that make all the difference, like who is in the business and who will be responsible for the debts and taxes. Once these decisions are made you will need to fill out a few forms, of course and pay some money. (About 20 dollars) Most of these forms can be found online at the Secretary of States website. Then you must file for a state business license, which must be renewed every year with a list of current partners and any other pertinent information. Once your license has been approved you may legally begin operating your business within your state.

Stay tuned next time for information on how to begin funding your small business…

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Starting Up Right, The Business Plan

You have finally done it! You have made the decision to start your own business. Now what? The myriad of red tape and legal paperwork is a mountain that you are standing at the bottom of and looking up in wonder thinking ” What was I thinking ? I need the comfort of the corporate world!” Doing things legally and correctly the first time is one of the most important and time-saving activities that you may ever do for yourself and your business. “But what does my small business need?” you ask. A business plan. Now that you’ve decided that you’d like to open a small business, you should put your thoughts down on paper. This way, your business idea is expressed in a plan – a living document that outlines every critical aspect of its operation. This step might sound intimidating, but it’s important.

A business plan should be a work in progress. That’s because your business will evolve over time, and be influenced by outside factors such as the economy and local conditions. Even successful business owners should maintain a current business plan to ensure they remain knowledgeable on the elements that can affect continued success. The executive summary is  the most important section of your plan. It provides a concise overview of the entire plan, along with a history of your company. This section tells your reader where your company is and where you want to take it. Included in the Executive summary should be:

  • The Mission Statement — The mission statement briefly explains the thrust of your business. It could be two words, two sentences, a paragraph, or even a single image. It should be as direct and focused as possible, and it should leave the reader with a clear picture of what your business is all about.
  • Date the business began
  • Names of the founders and the functions they perform
  • Number of employees
  • Location of the business and any branches or subsidiaries
  • Description of plant or facilities
  • Products manufactured/services rendered
  • Banking relationships and information regarding current investors
  • Summary of company growth including financial or market highlights (for example, your company doubled its worth in a 12-month period; you became the first company in your industry to provide a certain service)
  • Summary of management’s future plans.  With the exception of the Mission Statement, all of the information in the Executive Summary should be highlighted in a brief, even bulleted, fashion. Remember, these facts are laid out in-depth within the plan itself.

You must also include a company description in the Business plan. The company description section should include information about the nature of your business as well as list the primary factors that you believe will make your business a success. When defining the nature of your business (or why you’re in business), be sure to list the marketplace needs that you are trying to satisfy. This should include the ways in which you plan to satisfy these needs using your products or services. Finally, list the specific individuals and/or organizations that you have identified as having these needs.

The money situation is next…  in the financial plan for your company you will propose the request of the amount of funding you will need to start or expand your business. If necessary, you can include different funding scenarios, such as a best and worst case scenarios, but remember that later, in the financial section, you must be able to back up these requests and scenarios with corresponding financial statements.

You will want to include the following in your funding request: your current funding requirement, your future funding requirements over the next five years, how you will use the funds you receive, and any long-range financial strategies that you are planning that would have any type of impact on your funding request. When you are outlining your current and future funding requirements, be sure to include the amount you want now and the amount you want in the future, the time period that each request will cover, the type of funding you would like to have (i.e., equity, debt), and the terms that you would like to have applied.

Last of all, make sure that you include any strategic information related to your business that may have an impact on your financial situation in the future, such as: going public with your company, having a leveraged buyout, being acquired by another company, the method with which you will service your debt, or whether or not you plan to sell your business in the future. Each of these are extremely important to a future creditor, since they will directly impact your ability to repay your loan.

This business plan will help you to take a realistic look at your business plans and set up some goals… check back for the latest info of how to file all the proper paperwork with the state to make your business legit.

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Small Business Start Up

Why would now be a good time to go out on your own and start a small business? I am going to tell you why… because you can only rely on yourself and your own creativity to get you through life. Together we will go through the maze of developing and maintaining a business in this new economy. For the last year I have been helping business develop with my expertise in many fields including policies and ethics. The time for entreprunership is upon us again! We will discuss the foundations of a business plan, the legal process involved with developing and registering the business and even the proper ways to fund your new endeavors.

Begining a new business is a journey…. are you ready?

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