How to Finance Your Small Business

Tuesday, November 20, 2007

If you have a great business idea or plan, or you would like to expand your existing business, don't let a lack of funds stop you in your tracks. There is a wide variety of financing available for small businesses. Let's take a look at the financing opportunities that small business entrepreneurs can take advantage of.
While the financing sources comprise diverse institutions, such as banks, government sources, venture capitalist and "angel" investors, it is useful to look at what all lenders, regardless of category, want when they loan money or invest in a business enterprise.
When you seek money for an already existing business, lenders will be interested to know about the history of your business; whether it has a track record of good management and good performance. Lenders will be keen to know whether you have the ability to repay a loan and will look at your present cash-flow to see whether it is sufficient to enable you to meet your current obligations as well as to take on extra debt.
Your credit history will also be under scrutiny. A good credit history will help you to get a loan. If you have had problems in the past, it is best to bring these to the attention of the lender yourself and explain how you have turned the situation around.
You can also bolster your chances of getting a loan by putting up collateral. This reduces the risk for the bank in case you default. And finally, if you can show that your own personal money is invested in your enterprise then lenders will have more confidence in the proposition.
Many small business loans are turned down due to poorly presented proposals, inadequate collateral, insufficient cash flow and a lack of management experience.
These are the general points that lenders and investors are interested in, now let's look at the main sources for small business financing.
1. Traditional Lenders: Banks, credit unions, and finance companies are the main source of loans to small businesses. Many of these institutions have a small-business department and are experienced in handling small-business loans. The most logical place to start is with the institution which handles your business and personal banking. You should do your best to get to know the manager and personnel at the bank. So don't try to save time at the ATM! Being friendly with the bank staff will not guarantee you a loan but it will make it easier for you to make your loan presentation.
2. Government Sources, the Small Business Administration (SBA): The programs of the SBA work in conjunction with the traditional lenders, as they are mostly loan guarantee programs that reduce the risk to lenders in case of default. Some of the popular SBA programs are as follows
a. The 7(a) loan guarantee program: This program helps businesses which lack sufficient collateral, by providing repayment guarantees ranging from 75-85% depending on the size of the loan.
b. The SBA LowDoc loan program: There is only one form to fill out for these loans and approval time is rapid (within 36 hours from when the SBA receives the applications. These loans are only for amounts up to $15,000 but they can be used for start-up businesses.
c. The SBAExpress loan program: This is another quick-procedure loan guarantee program, but it covers loans up to $250,000. The SBA guarantees 50% of these loans, and interest rates in this program may be higher than in the other SBA programs
d. Microloans: These are loans for amounts up to $35,000 which are made by non-profit community based organizations.
3. Venture Capitalists: These are typically firms that are seeking investment opportunities in companies with a high profit potential. Usually when you take money from a Venture Capitalist firm it means that you have to give up some ownership and control to the investors. If you are thinking of going in this direction, then it is imperative to investigate the VC firm, and make sure that it has good references.
4. Angel Investors: These are individual investors who are looking for good opportunities in a wide variety of businesses. You don't have to be a high-tech company to attract these funds. Angels have smaller sums to invest than venture capitalists, and their investments range from $100,000 to $1 Million. There are a good number of angel investors in the U.S. and Canada, with at least 170 investment groups or angel networks spread around both countries. You can find the angels by making a search on the Internet, looking for angel associations in your particular area of business. You can also inquire with your local small business librarian, the chamber of commerce, your local SCORE office and with other non-competitive businesses.
As you can see from this brief survey, the money for small businesses is out there. Prepare your proposal carefully, and approach the institutions or individuals that best match your needs and capacity.

Robert Moment is an innovative business strategist and author of , "It Only Takes a Moment to Score" and upcoming book "Invisible Profits: The Power of Exceptional Customer Service". Robert show entrepreneurs how to successfully build and grow profitable service-based small businesses. Visit http://www.howtostartyoursmallbusiness.com and download the FREE Special Report "17 Profitable Ways to Turn Your Ideas into Wealth".

How to Cultivate The Trust Factor in Business
In today's highly competitive economy, it is difficult to maintain a significant market advantage based on your professional skills alone. Developing trusting relationships with your clients is vital to your business success as well. No matter what business you are in, the most powerful value-added contribution you can make to any business relationship is the trust factor.
The trust factor is even more critical in today's business climate with the level of trust in Corporate America continuing to be at an all-time low, and suspicion of "all things corporate" remaining on the rise. To make matters worse, large corporations and small businesses alike continue to use antiquated techniques, such as gizmos and gadgets, to try to win over new clients. When instead, they should be trying to address the heart of the matter by utilizing trust-building techniques that will most effectively resonate with consumers and new prospects.
Clients and prospects are in search of trust in their business relationships, but building trust and credibility does not happen overnight. To cultivate trust, it takes the risk of being open with clients and prospects. This enables them to perceive you as a real person—one with strengths and weaknesses that come into play as the relationship develops. When trust is reciprocal, you will find that your confidence in others is rewarded by their support and reinforcement of what you also stand for as a business entity.
What is Trust
What is trust? Trust can be defined as a firm belief in the honesty of another and the absence of suspicion regarding his motives or practices. The concept of trust in business dealings is simple: Build on an individual's confidence in you and eliminate fear as an operating principle.
Letting Go of Fear
Let go of fear, which restricts your ability to relate to others. Letting go frees you of behavioral constraints that can immobilize your emotional and professional development. Fear of rejection, fear of failure, fear of success, fear of being hurt, fear of the unknown—all these are roadblocks to developing and growing a trusting relationship with clients. Let go of your fear of losing an account or not having the right answers. Leave all your fears at the client or prospect's doorstep.
Other critical steps in cultivating trust are knowing who you are and knowing your potential value to your clients. The relationship that forms because of this can have a tremendous impact on your sales. People don't just buy from anyone. They buy from people they can trust. The rapport and credibility you can establish with the trust factor go a long way toward building a client's confidence in your ability to meet his business needs.
Trust has both an active and a passive component in a business relationship. The active feeling of trust is confidence in the leadership, veracity, and reliability of the other party, based on a track record of performance.
The passive feeling of trust is the absence of worry or suspicion. This absence is sometimes unrecognized and frequently taken for granted in our most productive relationships.
Building Trust With Care
So how do you build trust with clients? First, you need to care about them. Obviously your clients care about your knowledge, expertise, and accomplishments. However, they care even more about the level of concern you have for them. Successful trust building hinges on four actions: engaging, listening, framing, and committing. The trust factor can be realized once we understand these components of trust and incorporate them in our daily lives.
Engaging clients and prospects occurs when you show genuine concern and interest in their business and its problems. Maintain good eye contact and body posture. Good eye contact signifies openness and honesty. And your body language and other forms of nonverbal communication speak volumes about your attitude toward them. By the same token, you want to be cognizant of your client's or prospect's eye contact and body language.
Listening with understanding and empathy is possible if you think client focus first.
Let the client tell his story. Put yourself in his shoes when you listen to his business concerns, purpose, vision, and desires. Show approval or understanding by nodding your head and smiling during the conversation. Separate the process of taking in information from the process of judging it. Just suspend your judgment and focus on the client.

Framing what the client or prospect has said is the third action in trust building. Make sure you have formed an accurate understanding of his problems and concerns. Confirm what you think you heard by asking open-ended questions such as "What do you mean by that?" or "Help me to understood the major production problems you are experiencing." After you have clarified the problems, start to frame them in order of importance. By identifying the areas in which you can help the client, you offer him clarity in his own mind and continue to build his trust.
Committing is the final action for developing the trust factor. Communicate enthusiastically your plan of action for solving the client's problems. Help the client see what it will take to achieve the end result. Presumably, what you have said up to this point has been important, but what you do now—how you commit—is even more important. Remember the old adage "Action speaks louder than words." Show you want this client's business long term. Complete assignments and projects on budget and on time. Then follow up with clients periodically to see how your partnership is faring.
In the final analysis, trust stems from keeping our word. If we say we will be there for our clients, then we should honor that commitment by being there. Trust results from putting the client's best interest before our own, from being dependable, from being open and forthcoming with relevant information. It is impossible to overestimate the power of the trust factor in our professional lives. Truly, trust is the basis of all enduring, long-term business relationships.

Robert Moment is an innovative business strategist and author of "It Only Takes a Moment to Score". Robert's next book " Invisible Profits : The Power of Exceptional Customer Service will be published in Fall 2006. Visit his website http://www.howtostartyoursmallbusiness.com and download the FREE Special Report "17 Profitable Ways to Turn Your Ideas into Wea

7 Phenomenal Small Business Follow-up Techniques
In business, it's sometimes not what you do that matters – it's how you follow it up. Getting clients is one thing: keeping them, however, is another, and turning new customers into repeat business requires phenomenal follow-up.
1. Keep your promises
You may have heard the phrase "under-promise, over deliver" in business circles. What it basically boils down to is "never make a promise you can't keep". If you tell a client you'll do something for them, no excuses are acceptable. A customer will never forget a broken promise: by over-delivering on your promises to them, though (i.e. by giving the client just a little bit more than they were expecting) you'll make sure that they not only remember you, but come back for more.
2. Develop consistent and reliable routines
Your customers need to know they can rely on you, and if your business is managed in a disorganised and slap-dash manner you'll find building trust difficult. Put in place systems and routines which ensure that your business runs like clockwork – and that your clients know about it. That means implementing systems to help you effectively deal with everything from answering mail to managing stock and deliveries. Clients come back to businesses they trust, and they trust businesses that are consistent and reliable.

3. Offer customer innovation ideas
If your clients view you simply as a retailer or service provider, you may do well: if they also view you as an expert in your industry, however, you'll do much better. Provide your clients with expertise as well as service: allow them to view you as an essential resource and they will reward you with more business.
How you do this is entirely up to you. Publish informative articles on your website, offer an email newsletter or just give clients your expert advice for free: your clients won't be the only ones who'll benefit.

4. Communicate effectively
Communicating effectively is a huge part of successful business follow-up – and can be the difference between success and failure.
Effective communication means following-up telephone calls and emails; answering your customer's queries as quickly as you can and always responding to their questions and complaints.
5. Quick Turnaround
In this day and age, customers don't want to have to wait for anything. Don't keep them waiting: respond quickly and be accessible at all times. Remember, your business transaction isn't complete until you've done the follow-up, and that means providing a quick turnaround.
6. Make friendly visits or calls to your customer's business
Most customers appreciate the personal touch. By following-up their sale by popping in to say hello, you both remind them of your business, and reinforce your interest in them and your ability to help.
7. Always say thank you
It sounds simple, but then the best business follow-up techniques often are. In a time when manners are too often forgotten, a simple "thank you" goes a long way.

Summary:
Truly successful businesses recognize the importance of using phenomenal follow up techniques in order to retain clients. In this article we walk you through seven of the best methods to make sure that your follow-up techniques are geared towards keeping your customers happy, and making sure they come back for more.
Robert Moment is an innovative business strategist and author of , "It Only Takes A Moment to Score" and upcoming book "Invisible Profits: The Power of Exceptional Customer Service" published in Fall 2006. Visit http://www.howtostartyoursmallbusiness.com and download the FREE Special Report "17 Profitable Ways to Turn Your Ideas into Wealth".