Small Business Development Centers

This continues our series about programs designed to help you grow your business

When the Small Business Administration found too many of their guaranteed loans failing, they recognized business training for their clients would decrease the number of business failures. So, they partnered with educational facilities in all 50 states to create Small Business Development Centers (SBDCs).

Any small business owner, or potential small business owner, qualifies for services from an SBDC. Small Business Development Centers provide their services free of charge, though they may charge a small fee for workshops or seminars.  You can find an SBDC in all 50 states Puerto Rico, and all U.S. territories using the locator on the SBDC association's web site.

Services You Can Receive at a Small Business Development Center

Each SBDC advertises their services on their web site or through other means. Use the locator to find the SBDC nearest to you to find the exact times, dates, and availability of services. SBDC’s provide

• Coaching and Counseling in several areas of assistance: capital acquisition, loan package preparation, market research and plans, business operations, accounting, contingency planning, and much more.
• Entrepreneur training through live classes, online classes, and web based training. They offer full college courses such as StartSmart, CreditSmart, and others. They also sponsor single attendance workshops on finding funding, marketing, business foundations, and other topics. Some of the training requires no charge, others require small fees.
• Mentor/Mentee programs connect successful business owners willing to nurture growing business owners.
• Information & Publications remain available to any person. Many SBDCs maintain a library of legal forms, research materials, books, export guides, tools for feasibility analysis, and business plan forms.
• Government Procurement counseling and access to government contracts.
• Women’s and Minority Business Centers offer collaboration, training, counseling, and training to people who meet the requirements.

I hope that you can connect with the Small Business Development Center nearest you. I remain convinced that you can find the help you need to grow your business.

Join us on Tuesday to learn more about the Small Business Administration.

Share your experience with a Small Business Development Center?

Service Corps of Retired Executives

This begins a series of blogs on programs designed to help you grow your business

I refer to the Service Corps of Retired Executives (SCORE) many times in my blog on business. I personally benefit from their service. I know hundreds of businesses who also received excellent service from SCORE.

SCORE was formed by the federal government 40 years ago. It partners with the Small Business Administration (SBA) to help small business owners improve their business. They provide

• Mentoring: You can arrange for two versions of mentoring:
  • You can meet face-to-face with mentors in your community. The SCORE web site provides an easy link to set an appointment with a SCORE counselor. Counselors, either retired or currently working, meet with you multiple times to mentor you on an area of their expertise. You may request different mentors depending on the needs of your business.
  • You may also arrange for email mentoring through the SCORE web site. The web site lets you choose the mentoring skills you need, or the industry experience that will help you the most.
• Workshops: Once again workshops come in two versions You can find live local workshops by typing in your zip code. You may also attend online workshops offered through the same link.
• Blogs: SCORE recently began hosting an exceptional blog on small business success. They use multiple bloggers with different expertise. I suggest you follow them.

All of SCORES services are free. Please take advantage of them.

I’ll share the benefits of Small Business Development Centers on Saturday. Join us then.

Other Sources to Fund Your Business

This concludes my series on financing your business

We already discussed how you can use angel investors, venture capital firms, and loans to finance your business. This short blog will outline a few other sources to fund your business.

• Personal Savings provide the safest, and most difficult way to fund your business. Business News discusses pros and cons from using savings. Unfortunately, inflation prohibits the money saved from growing faster the cost of money during the time saved. WAHM.com shares some good advice suggesting several advantages of using savings including using the funds as needed rather than in a lump sum. Using savings also entice bankers to lend money. WAHM also shares four things to remember.
• Family and friends provide most funding for startups. Tim Berry shares his insights on using family funds. He cautions family members from investing money they cannot afford to lose. He also cautions business owners to never spend money that was promised, but has not been delivered. Dunn and Bradstreet discusses that when taking money from family or friends you must decide whether the money is a loan (finished upon payment) or equity investment (the family member retains an ownership, the money is not returned, and the investor receives cash from the profits.)
• Credit cards also provide funds to many startups. This relatively new source became fashionable in the last 50 years. Credit cards remain easy to acquire even during the latest credit crunch. Credit cards continue to award high credit limits to most people. Dunn & Bradstreet offers several cautions about using credit cards including hidden costs, high interest, and difficulty in paying off the cards.
• Funding with Your 401K appears to be gaining popularity in spite of the high risks. The Wall Street Journal recently cited several concerns about using your 401K including losing your nest egg for retirement and having to pay the high penalties associated to early withdrawal. I especially appreciated Inc. magazine’s article in 2010 outlining both the process and risks of using your 401K.
• Financing with Home Equity, long a stalwart of business funding, became more precarious as home prices plummeted during the last few years. The SBA provides an excellent article. Too many people owe more on their home than the value of the home. Therefor, you could not get any home equity for your business.

This blog cannot cover all the sources of funding for your business. I have tried to share the most significant sources. I hope you found it helpful.

Please share the sources you have used, or share some that I missed.

Join me Thursday when I ex[;pre services from the Service Corps of Retired Executives SCORE

Financing through Business Loans

We return to our series on financing your business with a discussion on loans

Banks, credit unions, and a few other financial institutions loan funds to businesses. While news organizations report credit declines, many smaller institutions, regional banks, and credit unions still have money to lend.

Business Loan Types

Collateral loans require something equal value for the loan. Inc. Magazine published 5 Tips for Using Collateral to Secure a Business Loan. The company forfeits the collateral if the business defaults on the loan. The collateral may be physical assets, cash in hand, property, equipment, and guaranteed contracts. The collateral must equal the value of the loan.

Guaranteed loans do not require collateral. Typically someone else guarantees the loan. In these situations, an organization negotiates for the loan money and guarantees that the loan will be repaid if the business defaults. The Small Business Administration remains the most common guarantor. Most states also provide organizations that guarantee business loans under $10,000 or more than $10,000. The US Treasury Department also offers the Small Business Lending Program and  State Small Business Credit Initiative. Agricultural businesses qualify for special loans.

Process for Applying for Business Loans

Competition for the funding remains fierce. Potential borrowers must present impressive reasons to loan them the money. They must also provide financial statements, background, and business plans. The SBA provides a nice checklist you may wish to review. Resource Nation also provides good information about the loan process. You can receive expert counseling, at no charge, from the Service Corps of Retired Executives (SCORE) on applying for loans. Call the chapter nearest you to arrange for coaching from SCORE.

While I recognize the simplicity of my blog. I try to link you to others sources of details that I lack. I hope that you find it helpful. Please let me know.

Join me on Tuesday when we review other sources of financing your business

Growing Your Business!: A Must Read

I interrupt our series on financing for this special suggestion

Some friends recently suggested I read Growing Your Business! What You Need to Know What You Need to Do by Mark LeBlanc, CSP, CPAE. The author was coming to my home town to speak to the Mountain West chapter of the National Speakers’ Association.

I bought a copy of this small (4”x5”, 77 pages) book for $8.00. I read it through the first time in about two hours. My second reading of the book took longer because I stopped and did every exercise he suggested. He calls the exercises From the Idea File. They impressed me. I completed the exercises directly into my business plan. They improved my business plan.

I gave my copy to a friend who wants to grow his business. I bought a second copy and gave it to another friend. I bought 4 more copies. I gave one to my son who wants to start a business. I gave 3 to colleagues who are starting a business. I’m keeping the fourth for myself to reference to grow my own business.

I hope you sense from my comments how much I regard this book. Mark LeBlanc boils the essence of business development into simple, concise activities. He asks questions that stimulate thinking and a number of “aha” moments. I hesitate to share his concepts for three reasons.

1. I want you to read the book for yourself
2. I would not know where to start or end without giving away the whole book
3. I respect Mark LeBlanc’s work and don’t want to plagiarize it

Instead, I encourage you to buy Growing Your Business!, read it, and complete the suggestions from the idea file. Your business will benefit from it. You will benefit from it.  Your business will grow.

I will return to my series on financing your business in Saturday’s post.

Please share your impressions of the book in the comments section below

Venture Capitalists Beware?

This continues our series on funding or financing your business

The term venture capitalist (or VC) refers to people who provide capital (money) to business ventures. Whereas, angel investors invest without wanting to assume a strong ownership or day-to-day operational responsibility, venture capitalists will quickly step in to correct a  struggling business.

Differing Perceptions of Venture Capital Investors
Many people possess bad ideas about venture capitalists. Most heard stories of VCs forcing founding business owners out of office. People hear that VC's look for businesses they can take over. Many know stories of venture capitalists that changed the direction of the business, expanded for global markets, or spending money the business owner never envisioned budgeting.

A closer reality exists. Venture capital investors look for businesses they perceive can give a good return on their investment. In other words, they put their money into companies that will give them back a lot, and I mean a lot, more money than they invested. They do whatever they need to do to get the business showing significant profits. Sometimes, that means changing management that will not, or cannot, make the changes needed.

In addition, venture capital firms focus on firms that can generate a large return. Therefore, they look for businesses looking for $1+ million investments, rather than smaller investments.

How to Find a Venture Capital Investor
The good news: you can find venture capital investors easier than you can find an angel investor. Like many small business resources, you can start with the Small Business Administration (SBA), your local Small Business Development Center (SBDC) and SCORE. The SBA also offers their  New Markets Venture Capital Companies. The SBA also maintains a list of Small Business Investment Companies (SBIC). You can also use business magazines like Entrepreneur or Inc. They frequently publish articles analyzing venture firms. Your local economic development agencies also provide information about Venture Capital firms. In addition, even Wikipedia lists major capital firms.

I suggest that you talk to former clients of any venture capital firm to explore their experiences both bad and good. Also, talk to the SBA, SBDC, and SCORE to identify any concerns.

The Venture Capital Process
The Small Business Administration summarizes the venture capital process into the following steps (follow the link to read the details):

• Submit Business Plan: the venture fund reviews an entrepreneur’s business plan and talks to the business if it meets the fund’s investment criteria.
  
• Due Diligence: If the venture fund is interested in the prospective investment, it performs due diligence on the small business
  
• Investment: If at the completion of due diligence the venture fund remains interested, an investment is made in the company in exchange for some of its equity and/or debt.
  
• Execution with VC Support: Once a venture fund has invested, it becomes actively involved in the company.
  
• Exit: While venture funds have longer investment horizons than traditional financing sources, they clearly expect to “exit” the company.

Read Saturday’s posting about bank loans guaranteed by SBA or other loans.

Have you had an experience with a venture capitalist? Please share!

Angels with Checkbooks? Perhaps

Note: Larry on Business now offers shorter blogs (easier to read) more frequently (Tuesdays, Thursdays, & Saturdays).
Today we continue our exploration of funding sources for your business. Please share your experiences.
Definition of a typical angel investor: (1) a successful entrepreneur, (2) that sold their business, (3) with money to invest, that (4) does not want day-to-day operational responsibilities.
Angel investors provide funding to ventures they feel will succeed and give them a high return on their initial investment. Unlike Venture Capital groups angels usually do not want to own or operate the company. They may serve as advisors using their own entrepreneurial experience to guide business owners. You can learn more about angel investors through a series of articles in Inc. Magazine, through Gust, and angel networks.
How to Find Angel Investors

• Angel investors tend to network together. Google “angel investment network”. You will find geographic networks “newenglandinvestmentnetwork.com”, special groups “minorityangelinvestornetwork.com”, or industry “Startup Nation’s Food Section”
  
• Talk to your local Small Business Development Center (SBDC), SCORE,  Chamber of Commerce,  or Center for Entrepreneurship at your local college or university
  
• Google “angel investors in (your state)”

Convincing Angels to Invest in You
Typically, you will present your business idea  to a group of investors (remember they like to network). Watch the television program Shark Tank to see real presentations (though they like to be slightly more contentious for the ratings). Most angel groups schedule a certain day each month, quarter, or year (depending on the size) to review presentations. You submit a written proposal for them to review prior to the meeting. You will be given 5-10 minutes to make your pitch. They will interrupt you with questions as they occur to them.
The Tri-State Private Investors Network provides 10 Tips to Appeal to Angel Investors. In addition, you can also find great tips on YouTube for presenting to angels. Carolyn Brown quotes Mike Levinson as he outlines four questions you must answer in How to Pitch to Angel Investors:

1. Is the business idea simple enough for me to understand and buy into?
2. Does it solve a problem or meet a need?
3. Is it a big enough market and customer base for the idea?
4. Does the entrepreneur have the right people on the team to pull it off.

You can get the angel’s money if you answer those questions better than the other entrepreneurs.  Good luck. I hope you get what you want.
Join me Thursday when I review the pros and cons of Venture Capital investors.

Finding Funding & Financing

Please share funding sources that helped your business
Finding funding remains one of the prime needs for many business owners. News reports over the last few years describe the problems American business owners face obtaining credit or funding. A lot of credit disappeared when CIT Group a commercial lender entered bankruptcy. CIT customers included “a wide swath of the nation’s small and midsize businesses who rely on the company or financing”.
The Small Business Administration provides loans to small-business owners. They offer a variety of programs depending on the needs and qualifications of the business. The SBA does not loan the money themselves. They guarantees loans on behalf of qualifying small-business owners. They require a lot of paperwork.
Business lending continues even though less money and credit remains available to business owners. Interestingly, small or regional banks and credit unions appear to possess money to lend. Check your local or regional banks. However, upcoming problems in the commercial real estate loans may create a new tsunami of problems for regional banks.
Angel Investors usually consist of former entrepreneurs who made a lot of money and now want to invest in other startups or small businesses. Unlike Venture Capital investors, Angel Investors seldom want to own or manage the business. They seek a turnover and high return on investment. You can find angel partners by using Gust.com.
Scalable businesses currently receive 98% of the funding currently awarded to business startups and small-businesses because they offer extremely fast growth and return on investment. I discussed that in an earlier post called Can Your Business Idea Succeed. You can also discover more about funding by reading Steve Blank, author of The Four Steps to the Epiphany, offers amazing tools, books, and other resources to startups.
Our next blog will explore angel investors more deeply.
Help others by sharing funding sources that helped your business

Steve Jobs: We Will Miss You

Steve Jobs passed away this week. The story circulated worldwide through mediums he helped inspire. Thousands of messages flooded the Internet, news, Twitter, and Facebook. His vision impacted so much of what we use today: mobile phones, movies, music, personal computers (though he would not like me using that term), laptops, tablets, and software development.
He inspired computer users to a fanaticism Bill Gates only dreamed of. To this day, my father reacts to some saying “Would you please close the window?” with “Bill Gates stole that concept from Apple.” Apple users stayed loyal.
For three decades he, with Bill Gates, defined an economic revolution the equivalent of the industrial revolution of the century before they were born. They may not have invented the Internet, Al Gore did. They didn’t invent social media. They created the engines that social media utilized.
Finally, the legend of Steve Jobs and Steve Wozniak creating Apple in a garage inspired a generation of business start-ups.
My eloquence does not match the millions of people who reported the life and death of Steve Jobs. I merely join with them in saying “Steve Jobs: We will miss you.”