7 Keys in Securing Funds to Start a Business

In today's difficult economic time, a lot of potentially successful business ideas by aspiring entrepreneurs are either cancelled, put to hold or worst, never made possible not because they did not want to but because they never had a chance to secure funds to start their business. There are various ways for you to secure the necessary capital that your business you just have to think out of the box, prepare and do a lot of research if you are really determined to turn your business idea into reality.

While there are many sources of money for a small business, some are more accessible than others. Below is a list of 10 common sources of money:

1. Personal Savings

2. Release Equity in Your Home

3. Government Initiatives

4. Buying on Credit

5. Leasing

6. Friends, Relatives and Business Associates

7. Banks

8. Other Commercial Lenders

9. Venture Capitalists

10. The Seller of an Existing Business

When you think you are ready to start your business, the key is to "keep an eye on your pennies'. What that means is before you get all hyped and spend huge sum of your hard earned money, understand that you will need time to learn if your business is viable or not as it can be a mistake to pour in too much money at the beginning. It is a fact that a number of small businesses have failed, because they raised and spent a pile of money for an untested business. This could be an entrepreneur's nightmare especially if you are hooked up on borrowed funds. While engaging in business involves risks, there are ways you can minimize these risks by being wise. Even though some businesses require a great deal of cash, there are still a lot of ventures that do not. It would be better to consider about starting your business small and cheaply as possible. Think of it this way, that if your concept works, more funds will be available for you and if not, you can move on and take advantage of the lessons you've learned and you won't be burdened with a ton of debts.

Also, a good way to plan for your business is to make an accurate business plan; a well-made business plan will be your prediction tool and will project your business from start up to even 3 to 5 years from now. A professionally made plan with clearly projected income and cash flow statements with the needed financial data's such as furniture, fixtures, equipments, utilities, salary expenses, legal and professional fees, licenses and permits, taxes, rents, advertising, maintenance and repairs, accounting and all other expenses included could help convince and persuade investors, lenders, or any interested people that you have taken into consideration every detail of the costs of the business. Overall, the plan gives you a sense of security that you have the plan in your hands, you just have to execute the plan to make the business possible

When you already you have your plan, you now have to understand the various factors or keys for you to be able to acquire and secure funds not only to start but also the growth of your business. To make sure that you will be able to turn your business idea into reality, here are the 7 keys to Funding Your Own Business:

Character - Can you be investible or are you worth the investment? Do you give the impression you will make your plans a reality?. You have to make sure that you took everything into consideration, you have everything planned out and you will be reliable enough.

Ability - You may have the plan but not the money. But another factor that investors will look at is if you and your people have the right skills to make this plan possible. Are you experienced enough or do you have the potential to do what is stated in the plan?

Means - What are the business's assets what and your own personal assets? You must particularly specify what assets are owned by the business as they can be used as collateral for your loans.

Purpose - You then have to specify what is the purpose of the loan? Is it for a sensible cash-generating plan? Few lenders will lend money to pay debts or to give yourself a nice pay rise.

Amount - How much will you need? Your business plan will show you a projected amount so that you will be able to identify the right amount of money needed. What funds will you put in to reduce the lender's risk? Explain the business carefully, it is important to explain the risks, the threats and how you will be able to manage and reduce the risks for the business

Repayment - Prove you will be able to repay the money with a realistic cash flow forecast. Such as how much you will pay, either monthly, by quarter, semi-annually or annually. Identifying and calculating the costs or different payment methods will help you choose the right repayment method and also ensure great income for you & the business.

Insurance - Investors and lenders are wary of under-insured businesses. An uninsured loss could destroy you, your credibility and your ability to avail of future loans after all.

Understanding these factors and taking them well into consideration by preparing will give you a better chance at being able to secure funds not only for the start but for the future of your business. There are various ways to secure funds but always remember that it is advisable to start small from your personal savings, prove the model and then seek JV partnerships for growth and expansion. In business, an entrepreneur takes risks but a successful entrepreneur invests and risks wisely.

Top 7 Ways to Promote Your Local Business

Common ways to advertise include the newspaper, the yellow pages, billboards, direct mail, radio, and TV. The Internet offers the ability to advertise on other websites. Examples include your local chamber of commerce, the local newspaper, and other local websites that might be seeing a lot of traffic. Still more Internet options are pay per click advertising which can include text, image, and video ads. There's also email marketing and search optimization of your website.

For many businesses advertising is one of those many things that has to be done but is not given a lot of attention. It's understandable because often times businesses, especially small ones have so many different things to handle. The business owner can't be an expert in everything. So they agree with whatever advertising comes along. They do what everyone else is doing. They don't put much thought into it.

Businesses often look at their competition and do what they do. If their closest competitor advertises in the newspaper they do it too. If their competitor is on the radio they better do that too.

But how much thought is given to what works? A lot of money is spent on advertising. It's a large part of many businesses budgets. But the return on investment is often unknown. Part of the reason is simply that it's difficult to track some forms of advertising. Especially when multiple forms of advertising are in use at the same time. If a customer hears your ad on the radio 20 times and sees your newspaper ad 10 times even they don't know which advertising media was responsible for acquiring their business.

Let's go through 7 ways to promote a local business. I'll make the assumption that the business is seeking customers who are local. This means the customers are physically located within about 50 miles of the business. Most businesses fall into this category.

1. Newspaper

Your local newspaper offers many options with a wide range of prices. Newspapers are still very popular. Many people still read newspapers and will see your ads. This can be a quick and effective method to bring in new leads and customers.

2. Yellow pages

The yellow pages are still being used, but because of the Internet, the hard copy form is not as popular as it once was. The yellow pages are online too. You can have your business listed in both the online and offline versions of the yellow pages. The online version is one of the many online business directories that exist. You can have your business listed in it for free or you can pay for a more detailed listing with added features. My recommendation about yellow pages is to use the free listing.

3. Radio and TV

Radio and TV are certainly effective but usually more expensive than other options. When you think of radio and TV you think of branding your business. Using repetition to get your business branded in the minds of people. But this can be expensive because it takes a lot of repetition to brand a business. You can still use TV and radio to advertise in a more direct response method rather than trying to do branding. This would be more effective and efficient. For example, rather than just trying to get people to remember your business name so that they hopefully do business with you at some point in the future, have your ads directly ask for action. Ask them to call or visit and give them an incentive to do so.

4. Direct mail

Using direct mail is sometimes thought to be outdated. The Internet is the new way to advertise right? Actually direct mail is as good as it ever was. It may be even better now since fewer people are using it because of the Internet. Using direct mail in the right way can be extremely effective. The key is to mail to the people most likely to respond and to have your mail express a clear offer with a clear call to action.

5. Networking and referrals

One of the most powerful ways to acquire a new customer is through a referral. Referrals can be guaranteed sales. They pass trust to you from the person referring you. Local business networking groups are an excellent way to get referrals. Certainly friends and relatives are good examples of people who can refer your business to their friends. Events held by your local chamber of commerce are loose networking events that can result in referrals for business. Don't underestimate referral networking if you are looking for local customers.

6. Your Own Website and Online Directories

The Internet is another way to generate leads and customers. You don't need a website because you can still have your business listed in online directories. Some of these directories include the yellow pages, the Google business directory (Google Places), the Yahoo business directory, the Bing business directory, Merchant Circle, Yelp, Four Square, City Pages, and more. There are hundreds of online directories. It's wise to seek out directories that are relevant to your business. For example there are directories for women's health so if your business is a women's hair salon you could be listed there.

I mentioned that you don't need a website, but it's better to have one. A website strengthens your online presence and helps your other business listings rank higher in search results. It makes it easier for people to find your business when searching online. In most cases people expect businesses to have a website. It's a sign of professionalism to have a website.

7. Pay per Click Advertising

Pay per Click advertising involves setting up ads that show online, that when clicked on, bring a visitor to your website. For local businesses seeking local customers Pay per Click advertising is challenging. It also has its advantages. If set up correctly you can use it to target a geographical area. That's great for a local business! Your ads can be shown any time of day. You can put limits to how much you want to spend per click and per day. You can turn your ads on and off at any time. You can target people who are searching using specific search terms. You can get people who are ready to buy from you to come to your website! That's very powerful.

The challenge with Pay per Click advertising for local businesses is that it's difficult to get much activity. Especially if your local area has a low population. Part of making Pay per Click advertising work is testing. It's hard to test and make good decisions when you don't have much data to base those decisions on. However, if you can manage to organize your ads so that you're getting good leads that result in customers you'll have a great asset.

What you really need to know.

No matter what form of advertising you use there are a few things you must know. Your advertising won't work and will be a waste of time and money if you don't follow these tips.

1. You must aim your advertising at the right people. Aim it at your potential customers. Choosing the right advertising media helps.

2. You must catch the attention of those people you are advertising to.

3. Your advertising must include a call to action and a reason that someone should act.

4. Your advertising should not be confusing to its audience. It should be simple to understand.

5. Your advertising should not be the same as everyone else's. It should stand out and be different.

Top Tips On How to Start Your Own Home Based Internet Business and Work From Home

In the capitalist society we are today, nobody is comfortable being a mere employee who grabs only a percentage of what his/her employer earns. Everyone craves to start a lucrative business of their own. More and more management degree holders, and even novices, are raring to venture into the domain of independent business as the returns promise to be much higher. Today there are so many businesses which you can manage from the comforts of your home itself. Making money from home online is not difficult anymore. So, how to go about starting an easy work as a home business? Let us have a look on how this can be successfully accomplished.

First and foremost, we need to pen down a profound business plan as a blueprint to make things go around. Without that the very foundation of the business will not be proper as it involves the sensitive handling of money. If the monetary part goes wrong then nothing is going to be fruitful in the long run. Creating a proper legal structure and registering your organization with the respective authorities should be the next step. This aspect is very significant as it may land your company in shackles if not dealt with maturity. The next best thing is to launch an informative and engaging website for your business. In today's socially networked world, everything goes around through the Internet. Without proper marketing and awareness creation strategies through the Internet, today's businesses (especially legitimate work at home businesses) will not prosper at all. Therefore, as a business owner you need to hire a professional web developer to get it done for you as it requires the website to look professional, sassy, and attractive to the prospective clients.

In the initial stages of a business, the biggest challenge is to find investors. Who would be interested to fund a new business? Why should the potential investors consider you worth shelling money on, especially when you have your eyes set on work at home business opportunities? Obtaining a good amount of capital to kick-start the venture depends heavily on how clear you are about your business prospects. Try to pitch in your business plan in the edgiest way possible and this will essentially help you in impressing prospective investors. Hiring employees would be yet another concern. Which well-educated or experienced person would risk working with a company which is just starting up? Fresh graduates would not prefer that as they would not want to risk their career with something uncertain right in its beginning. As for experienced persons, they always look for better prospects, salaries, avenues, and stress-free work environments. A new company may not be able to ensure any of these as the capital would be less and work load might be concentrated on the small number of staff they must be having. Hence, it is quite an effort to convince potential employees to join your newly set up organization. One needs to put forward an impressive and alluring offer before the target individuals, in such a way that it tempts them to accept and take the 'risk'. The offer should be couched in such a way that the employees should feel that there is something in it for them. Perhaps, impressive offers such as 'work from home' might attract them towards your online business.

One aspect of business which most of the newbie business men get wrong is the pricing. The right strategy needs to be chalked out for pricing the products accurately in such a way that your business does not end up in failure in the start-up stage itself. Choosing and appointing a skilled accountant to handle your finances is the best thing to do. As the owner, you may get involved with various other aspects of the business. This is when an accountant's services would come into play. Conducting a market research prior to your plunge into the business is yet another thing that you must do. It will help you understand the market situation and what exactly the consumers desire.

Experts are of the opinion that marketing in today's business environment is even more important than the business itself. Considering the returns that it brings about through the Internet in particular, one needs to set apart a lump sum amount for the marketing purpose in particular. Also, designing a precise marketing strategy with the help of experts will be beneficial for your company. An important aspect of promotions, publicity campaigns, etc. is to find a catchphrase or jingle that would catch the attention of customers. Slowly and steadily, the product will zoom itself to become a formidable brand in its own right, provided that the quality of the product is commendable. The catchphrase should sum up what exactly the product is all about; in a precise yet profound way.

Calculating a gross margin is significant in case of legitimate work at home businesses, or for that matter, any business. You should always make it a point to maintain a relatively high gross margin. Filing a patent should also be a consideration in case of a new business, be it home business through the internet or the conventional ones. It will reduce the chances of any possible accusations, allegations, and disputes in future. Also, introducing a new idea to the market is always a way to boom or find a place for your business in this busy world. Working from home policy is also an attractive factor for many of the new business as it can reduce considerable amount of costs in transportation. Setting up a formal office can create a big hole in your wallet. The best way to fetch easy work from home businesses is by setting up a home office. Also, the right insurance policy is essential for your company.

Entrepreneurs Must Focus on Their Core Business

"You know me as a wine expert, but in another life I would have been a bishop or a dry cleaner, or a dry-cleaning bishop." Oz Clarke

Your core business

Now to take you through some concrete examples from the four business attempts mentioned in my earlier post, "Do what you do".

Importantly, all the businesses were started by guys who had at least five years' experience in the waste management industry. These entrepreneurs all had great experience in the sales and operational aspects of their employers and decided to go out on their own, within the same industry. Three of the employers were huge waste management companies that had existed for many years and still do. They held contracts for the waste management and removal of a variety of sites including office and business parks, restaurants and hotels, shopping centres, sports facilities and other venues.

The point of my short case studies is that your business should focus on what it does. Focus on core business. Sound simple and rather obvious? Read on...

The first business

"John" was off to a flying start and by focusing on sales of waste management service contracts, he was quickly able to keep his small truck occupied during all working hours. After approximately a year, he successfully bought another truck due to the increasing demand for his services. The business successfully serviced its clients and looked positive.

A few months after acquiring his second truck, and with the "green" movement burgeoning, it was suggested to him that he include on-site recycling in his services. He offered this additional service and soon found a keen following by shopping centres. They would have his staff on site in their refuse areas, removing recyclable matter (such as tins, plastic and cardboard) from the waste stream and then he would sell those recyclables entirely for his own profit, with no rebate to the shopping centre. John thought he had hit a gold mine.

He began to roll out this service to many new customers and was soon removing recyclables from a variety of sites. His customers were thrilled to be supporting an environmentally sensitive business and being able to "green" their waste stream. This removal of recyclables had the apparent effect of reducing the waste that needed to be removed and thereby correspondingly reduced the monthly waste removal charges.

Fourteen months later, he closed his doors. Bankrupt.

John had stopped focusing on his core business of waste management and expanded his services beyond what he knew to work. He had done no viability study on a substantial variation in the direction of his business.

John's small trucks were excellent for removing waste from tight refuse areas in office blocks, residential complexes and other difficult-to-access areas. Those same small trucks were terribly inefficient at transporting recyclables for resale, which is largely a volume-driven enterprise. His trucks now spent all day transporting recyclables to recover a small rebate on a small load and their availability to remove waste decreased. The business never recovered because his customers were loath to return to the more expensive service with which he had initially secured their business, namely the removal of all of their waste for a fee. They expected to be billed only for the removal of non-recyclable waste.

The second business

"Derek" worked for two years for John's business and when it was shut down, he essentially agreed with John that he would obtain a vehicle, take over John's customers and make a go of running his own waste management business. To a large degree, he founded his business (rather curiously) on essentially the failed business of John. Years later, Derek's business still exists.

John's customers' refuse areas had deteriorated into complete disarray with the demise of his business. Derek was able to take them over with relative ease, as the customers' need was desperate. However, in order to appease them for the disaster left behind by John, and the fact that they were now accustomed to smaller monthly waste removal charges, he was able to convince them to return to their original service only by discounting his price. This price was somewhere between their original fee and the reduced fee after John reduced their billing only for the removal of non-recyclable waste.

From the outset, Derek intended to make up this shortfall in the discounted price by continuing to remove and sell the recyclables to third parties who would collect those recyclables from each site.

So Derek removes their waste at a discounted price, subsidised by his sale of the extracted recyclables.

His business model is different to John's but importantly, he has been consistent in continuing to apply what works for him. This is not to suggest that any business should be stubborn and rigidly set against exploring opportunities. I merely suggest that many pitfalls and distractions from the core foundation of a business are disguised as "opportunities". Remember all the long-lost relatives that suddenly materialise when a wealthy person passes away? And all the "opportunities" that pop up as your business becomes successful? Do what you do and do not lose focus on your core business.

The third business

"Bob" was off to a humble and low-key start. He was realistic about where his personal abilities and strengths lay and decided from the outset to align his business with a small start-up waste removal business. The businesses effectively merged and became one entity, almost from the outset, and it was agreed that he would obtain the service contracts and the business partner would manage the physical removal service and operations. Bob was excellent at sales, while the allied business owner excelled at operations management.

Bob held a steadfast and single-minded view on his business - he was in the business of removing other people's rubbish.

As his success grew, he was presented with numerous opportunities, including one to remove and dispose of hospitals' medical waste. The contract was worth an enormous amount of money but at the time, he turned it down, categorically maintaining his approach: that he knew nothing about, and was not engaged in, the highly specialised business of medical waste. Slowly, but surely, his business grew and eight years on, it was thriving and Bob insists "I am just a simple dustbin man."

The fourth business

The last short case study is the famous exception that proves the rule.

"Roger" worked for over thirteen years for the second largest waste management company in the country. His experience ranged from sales, to marketing and operations until, for the last five years at that employer, he was employed as the general manager.

His attempt to start-up his own business was tainted by dubious and unethical approaches to many of his former employer's customers. On the back of that customer base, he initially made great strides forward before, in a rather karmic puddle of self-pity, his business fell flat.

A few years later, he made another effort at the same business, offering all sorts of additional services, specialised waste container bins and presumably the same nonchalant approach to business ethics. Despite a specific business plan, vast experience, resources and a specific focus on his core service offering, the business failed again. Roger was not distracted by "opportunities" and retained his focus on the core business, but he started from a compromised position - one in which his questionable business practices tainted his efforts like fruit rotting from its core.

Franchising, A New Way To Sell Your Business

Franchising is a new approach for selling mid size businesses that may otherwise be hard to finance in a traditional sale. Franchising in these situations allows each of the locations of the business to be sold as an independent business and to get financing on a piece by piece basis. Franchising your business in these situations can be very beneficial and help combat the biggest hurdle to the sale of many businesses, financing.

Without financing for a new buyer, the sale price of a business would often be adjusted to compensate. This has led to the necessity for vendors to carry back financing on the sale of their business to keep the value of the business. VR Business Brokers, Sunbelt Business Brokerage two of the main business Brokerages in North America and the International Business Brokers Association all refer to the necessity to take back vendor financing to help sell the business or gain a higher sale price for the business.

A business interested in selling should compare its new value based on franchising some or all of the enterprise against a current valuation if sold as one piece. While the initial reasoning is to explore a method to sell your business. Turning your business into a franchise has benefits; the value of the business can be increased when factoring in the estimated value of the business split up in parts and sold as franchises, plus the value in the resulting franchise system and ongoing revenue as well as the value in potential growth opportunities may dramatically alter the worth of the business.

So what do you do when thinking about selling your business and you think that franchising can be an option for you? Call in a franchising expert to check a franchising strategy for the business and compare the potential value as a franchise versus a valuation for the business as it now stands.

Think of the television show Income Property, on the show host Scott McGillivary evaluates a house for the potential of converting an area (usually a basement) to an income suite. He starts by calling in a Realtor to evaluate the value of a property, he presents two plans for an income suite to the home owner both with varying costs and potential revenue. The home owner decides on one of the two plans or not to go ahead at all. He then proceeds to call in a Realtor at the conclusion to give an updated evaluation once the suite is complete.

The evaluation for franchising is quite complex depending on the nature of the business and the structures in place. This evaluation needs an in-depth analysis to present a workable plan. In the case of the business, the resulting decision to franchise comes at a cost of time, effort and money with a resulting potential benefit once achieved. Armed with this information a business owner can then go ahead with knowledge.

Benefits to turning your business into a franchise system to sell out:

1. Increases the worth of the business: If you've built your business for years selling out is cashing out but at what multiple. Earnings multiples on businesses are generally low accounting for the risk. Franchising may dramatically increase the value of the business.

2. Spread the risk: Franchising in pieces increases the investor pool that would be putting in their own money and equity.

3. Financing: Getting financing for the sale of the company can be difficult in those situations achieving multiple smaller small business loans through the government guaranteed loan programs is sometimes the only method to fully cash out without carrying back loans to a new buyer.

4. Ongoing income: By franchising the business you are gaining an ongoing source of revenue. Alternately if the end goal is to completely sell out, selling the franchise system will yield extra revenue.

5. Continuation of your business: It's hard to give up something you have built, by franchising you do not have to give up your identity that had developed out of the business, if you choose to stay operating the system while selling off pieces as franchises.

Landing A Small Business Loan In This Environment

Banks are not currently and probably will not be lending to small, growing businesses anytime soon. They view these small firms as too risky and banks are just not taking on any risk (any risk at all).

But, that does not mean that your business cannot get the money its needs to start or grow. You just might have to go about it in a different manner which, in the long-run, may be a benefit to you and your business.

For most small business, banks are not lending as they don't want any loans with any risk on their books. While they do want your deposits and other account business, they are just unwilling to let money walk out the door.

They blame these small businesses for items like poor credit, inadequate cash flow or undervalued collateral but in truth, many of these banks are just not in a position to lend to what is deemed risky businesses. And, if your business does not really need a loan, then it is deemed risky.

What Can Your Small Business Do?

For established small businesses, if your banker is refusing to take your call (and most are) then you should be looking at some of the alternatives methods of financing that have been around for decades or that have recently cropped up to fill the lending gaps left behind by the banks.

Know that banks are not nor have always been the only and best options for small businesses. Banks tend to look at your overall business's profits before making a business loan decision. Alternative financing options tend to look more at the need of the business and its ability to covert financial assets to cash.

1) Look to factoring. If you have customers in the wings but lack the working capital to get these jobs started, factor those job orders for 100% of the cash you need to complete those jobs. Or, if you are sitting on a bunch of unpaid invoices, look to use them to get the working capital your business needs to meet immediate expenses or start that next order.

2) Look to SBA loans. While these types of government guaranteed loans still have to go through banks - the SBA's 504 program is leading the way in helping many local small businesses acquire and finance property and equipment. With the SBA's 504 program, your local community development corporation will work with the SBA and your bank to finance hard assets. As they all spread and share the risk, your chances of getting funded increase dramatically.

3) Let your business finance its own growing needs. There are a lot of growing businesses that tend to have a lot of sales but are still losing money (more cash out then in). This is not a reflection of the economy or any market but that of how the business is managed.

Look for ways to reduce costs while maintaining your current level of sales or if that is not possible then look for ways to increase prices. You should always be looking for ways to reduce costs - even if your business is highly profitable.

Keep shopping around for lower cost suppliers and vendors. Look to technology to improve processes or for ways to reduce staff expenses. And, constantly review your service providers - no sense in over paying for services like phone, internet, etc. If you can get your costs down and bring your profits up, you might not need outside financing at all. The best business loan is not having to get one in the first place.

Business is not easy and is getting harder the longer our economy remains stagnate. However, people and businesses still need products and services to get through their days. They look for products that either make their life easier or save them time and money. And, while many are being more selective in what they spend their money on, they are still spending - good news for your business.

Getting and keeping customers (letting them know who you are and what your business offers as well as keeping your business on the top of their minds) is always a challenge. But, successful businesses get out there and find creative ways to meet and overcome those challenges. The same is true in financing your small business.

If you need capital to either get your business off the ground or to finance your current growth, you might as well just forget about the banks and get creative. Banks are just not ready to take chances.

If you can't demonstrate (sell) your business's potential to the many different financing options out there (some that really want to work with your business) then you might start thinking about another career.

Finding new ways to capitalize your business is just one of the many challenges that all businesses face in their development. But, the good news is that it is not the most daunting challenge you will face. If you need a business loan to start or grow your company, then get out there and get one!