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Where to Find the Money to Start Your Small Business

By sss4success on April 18, 2011 in Become Your Own Boss Tips, Cash Flow & Finance, Starting A Small Business, Your Small Business

One of the most common questions that I get as SmallBizLady is about start-up financing. ”Do I know where people can get a grant to start their small business?”. Now Hear This: BYOB doesn’t just stand for Become Your Own Boss! BYOB also stands for Be Your Own Bank! There are NO grants! When you are starting out in business you must come up with your own money to invest into your brilliant idea. You also need to have resources to maintain your household while you are building your business. You are your business’s credit and debt. Now there are micro-loan programs when you may be able to borrow up to $25,000, but you better have a great business plan to get it.

If you are ready to start your business, you must develop a plan for yourself to save more money and become debt free. Now, I am not talking about paying off your mortgage, but I do mean everything else. I am talking zero debt—meaning no credit cards, no car payments. Basic living expenses only. Eliminating your debt will allow you to always make decisions that are in the best interest of your business. You also need to establish zero debt to free up your credit capacity. When I realized that I wanted to leave my job to start my first business, I took out a home equity loan (which you need to do while you are still working and can prove income) and paid off every bill I had, even my car. I used home equity because you can write off the interest paid against your income taxes.

Getting your house in order financially will be one of the first milestones on the road to starting your own business.

To find the money to start your business, take these steps:

Develop a plan to eliminate all debt. Make a list of all debt, the balance owed and the interest rate. It is best to start with the credit card with the lowest balance, while you continue to pay the minimum fees on the others cards to keep them current. By starting with the card with the lowest balance you will boost your confidence about your personal finances. Next, should be the card with the highest interest rate. Keep working your way down the list.
Make of list of what you need at the store. To avoid impulse buying, take a list with you to the all stores and do not deviate from it! Be careful not to go grocery shopping when you are hungry. It is very hard to stick to your list that way.
Keep driving your car. Drive you car until it stops running. As a new business owner, you will no longer be able to afford to upgrade your vehicle every two years. Buy a reliable car and take care of it, so you can ride without a car payment as long as you can. (I still do this! My car is more than five years old).
Cut back on trips to Starbucks, Dunkin’ Donuts, and cut your cable bill. The money you spend each month on unnecessary extras can really add up. Treat yourself once in a while to a pay per view, but the pay channels need to go. You’ll be shocked how the money you save will add up.
Check out the library. You can borrow books, magazines, and the latest DVDs from the library. You can also make requests and they will order things for you. If you’re a serious book junkie like me, find a good used bookstore or buy used books on Amazon.com. The books will still be new to you.
Drink at home. Stop drinking alcohol in bars and restaurants. If it’s beer, wine, or mixed drinks that you like, they are much cheaper when you pour them yourself. Pick up a six-pack or a few bottles invite over some friends and hang out at your home.

You will start your business if you develop the ability to control your spending and cut costs. Follow this advice. I promise you will find money you never realized that you had. You cannot kick your addiction to your paycheck all at once. It will be a gradual step-by-step process, but you can do it!

Do you have any other cost saving suggestions for start-up entrepreneurs?

Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of MFE Consulting LLC, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine recently named her one of the Top 20 Women for Entrepreneurs to Follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs, and publishes a resource blog at: www.succeedasyourownboss.com. Melinda is also the author of the national bestseller Become Your Own Boss in 12 months: A Month-by-Month Guide to a Business That Works. (Adams Media 2010)

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Can You Afford to Become An Entrepreneur?

By Melinda Emerson on March 29, 2010 in Become Your Own Boss Tips, Cash Flow & Finance, How to Start, Mompreneurs, My Recommendations, Pink Slip Entrepreneurs, Solopreneurs, Starting A Small Business, Women in Business, Your Small Business

Everyone has good ideas. Some of them may even be million dollar ideas, but if you live from paycheck to paycheck or way beyond your means, you may never be able to quit your job and start a business.

As the Smallbizlady, often I get emails, facebook messages and DM’s on Twitter from people asking me to help them start a business. My first three questions are usually something like this.

What is your business idea?
How much money do you have saved?
How much money do you think it will take to launch this business?

If question two brings on a case of stuttering, I start shaking my head.

You should have three pools of money before your start a business.

An emergency fund for the household
12-24 months of budget to run your household
12-18 months of money to launch and operate the business.

Now hear this, “Your ability to save has everything to do with your ability to start a business!”

Money is not everything. It’s just a tool, but it is certainly the beginning of a business plan. Banks rarely, if ever, loan money to start-up businesses. Banks will typically not deal with you for a loan or line of credit until you’re been in business 2-3 years and can show growth in the business with your financial statements and business tax returns.

There are some franchising opportunities that will provide some working capital, but 30-50% of the money will still come from you. And by the way, you will need to have significant net worth and assets to collateralize the loan. Think of it this way, no credit = no business. When you are first starting out in business, you are your business’s credit.

So what do you do if you have a great idea and no money? There are other sources of funds to start your business. There’s the 3 F’s Family, Friends, Fools. Your family loves you and hopefully believes in you enough to invest in your business. If you are fortunate enough to have a family that can afford to invest in you– you are fortunate, but beware. Your rich Aunt Sally may think she’s your boss and might call you up every 30 days to check on how her $50K is doing. You may not want that kind of pressure in your new business.

Then there are your friends. Nothing can kill a friendship faster than borrowing money that you can’t pay back. I have a rule. I do not loan money to friends, I give it to them. I make sure that I do not give away any money that I can not afford to lose. Would your friends do that for you? If so, they could be an option.

Every once in awhile, a hungry entrepreneur will come across a rich guy who’s an idealist about business, who falls in love your idea but doesn’t wish to run the business. That is an angel investor— who will invest money in the company for an equity stake and lend his or her network to help you. Do not get your hopes up about finding an angel investor in this economy. It can happen, but let’s just say you are better off using your own funds that you save to start your business. Family, friends or an angel investor can be fools for investing in a half-baked business idea. Invest your time, to make sure you have a sound business plan before you take anyone’s money. And do have a plan to show them—for when and how you think you’ll pay it back.

If you do have assets, you are in a different situation. You can borrow against your 401K, you can take out a home equity loan, you can sell your home or rental property, you can cash in a Roth IRA. The money must come from somewhere—its best when it comes from your own coffers.

It’s essential that you start your business from a position of financial security. Otherwise, you’re finished before you get started.

WANT TO USE THIS ARTICLE IN YOUR EZINE, E-NEWSLETTER OR WEB SITE? You may, as long as you include this complete blurb with it:

Melinda Emerson “SmallBizLady” is a Veteran Entrepreneur, Small Business Coach and Social Media Strategist who hosts #SmallBizChat on Twitter. #SmallBizChat is the trusted resource on Twitter to discuss everything entrepreneurs need to know about launching and running a profitable small business. Melinda also publishes a resource blog on small business best practices at www.succeedasyourownboss.com Her first book, Become Your Own Boss in 12 Months was released by Adams Media in March 2010.

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How is Your Entrepreneurial Literacy?

By Melinda Emerson on February 22, 2010 in Become Your Own Boss Tips, How to Start, My Recommendations, Starting A Small Business, Your Small Business

This is National Entrepreneurship Week Feb 20-27, 2010. This year‘s theme is Entrepreneurial Literacy Empowers Everyone. This is a theme that I truly embrace.

Whether you are still working in corporate America, running a nonprofit, or leading the charge in your own small business - being able to evaluate things from a business perspective will always enable you to be more successful.

So What is Entrepreneurial Literacy?

The organizers of this week-long celebration in honor of Entrepreneurship in America define it as having some basic knowledge of how a business is created and managed.

I have a slightly different definition. When you are entrepreneurial literate, you are a student of small business. You do not just rest on your idea and marketing efforts. You constantly work to refine your business model. You are someone who makes sure your passion has a profit center.

Entrepreneurial Literacy is important because too many people who want to start small businesses lack critical understanding about financial matters including budgeting, taxes, balancing a checkbook, managing credit cards or lines of credit, and developing sales projections.

Here’s a fact: if you do not manage your household with a budget you are far less likely to manage your business with budget. The best business owners make business decisions based on up-to-date financial information that is tracked against a budget.

Your journey to become an entrepreneur starts from real experiences that test your knowledge and skills and motivations.

Pursuing entrepreneurial literacy is about the research you do as you prepare to start your business. The more you learn and grow, the better business leader you will be. Real entrepreneurial skills come from your work and industry experience, and your willingness to continue learning.

Entrepreneurial Literacy is a real necessity if you have plans to Become Your Own Boss. These are the skills that empower everyone to succeed in business and fuel the American economy with 60-80% of the net new jobs.

Here are 15 Questions for All Would-Be Entrepreneurs

Do you have the career skills and experiences to become a successful entrepreneur?
What personality traits are more likely to lead to success as an entrepreneur?
What taxes do entrepreneurs pay?
What items are part of a firm’s operating costs?
How can an entrepreneur learn about what his/her customers want?
How can computer skills help with business operations?
How do small business owners deal with risk?
How does personal financial literacy relate to business financial literacy?
What factors determine where to locate a business?
Why is branding important?
How does competition affect entrepreneurship?
What percent of American firms have no employees working for them? Why is this important?
What are some sources of funding to start a business?
What should you do if business drops off?
What should an entrepreneur consider when hiring employees for the business?

National Entrepreneurship Week is sponsored by The Consortium for Entrepreneurship Education which believes that ”Entrepreneurs are not born….rather they ‘become’ through the experiences of their lives.” (Albert Shapero – OSU) For more information http://www.nationaleweek.org/

Are there any other questions that need to go on this list? Please leave a comment.

WANT TO USE THIS ARTICLE IN YOUR EZINE, E-NEWSLETTER OR WEB SITE? You may, as long as you include this complete blurb with it:

Melinda Emerson “Smallbizlady” is a seasoned entrepreneur, professional speaker, and small business coach. Her areas of expertise include small business start-up, business development and social media marketing. Melinda hosts #Smallbizchat, a weekly talk show on Twitter. Melinda’s first book Become Your Own Boss in 12 months; A Month-by-Month Guide to Start a Business that Works is due out in March 2010 by Adams Media.

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#SmallBizChat Live Telesummit Recap (Part 2)

By Melinda Emerson on November 13, 2009 in Business Inspiration, Cash Flow & Finance, Grow Your Business, Mompreneurs, Pink Slip Entrepreneurs, SmallBizChat, Social Media, Solopreneurs, Starting A Small Business, Telesummit, Women in Business, Your Small Business

(Dear readers: this is the second part of a two part post. Click here to see part one.)

Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. This past week, I presented the first annual #SmallBizChat Live Telesummit. The goal was to give the audience the information to create a new plan for their business in 2010. After nearly a year of communicating in writing on this blog and using Twitter, LinkedIn and Facebook, I wanted to interview small business experts over the phone. I also wanted our followers to have access to some experts who do not use Twitter, but who have fantastic information to share. In today’s blog post, I have prepared a recap of three key points that each expert shared with us.

Allyson Lewis @allyson7minutes is a renowned motivational speaker and business coach whose focus is on productivity, specifically developing systems to change your life. Her book, The Seven Minute Difference, grew out of the workshops she has been teaching for the past five years. For more information, please visit Seven Minutes Inc. Allyson talked to us about getting more out of your day as a business owner.

Here are Allyson’s key takeaways:
1. Use a daily written plan of action. The average adult has a 7 minute attention span. Take 7 minutes to write down your top priorities for the day. Regain your passion by doing what is most important to you.
2. Get 7-8 hours of rest a night. Stop watching late night TV and sacrificing a good night’s rest.
3. She introduced the 5 before 11am rule. Allyson advises us all to make an exhaustive list of everything in our personal lives and business lives that needs to get done. Then she suggests tackling 5 tasks per day before 11am, if that’s too tough try do 5 a week. Just get rid of the list.

Michelle Villalobos @mivi is a business turnaround expert who teaches busy entrepreneurs how to improve their sales approach through networking skills, personal branding and word-of-mouth marketing. For more information, please visit MichelleVillalobos.com. Michelle talked to us about turning contacts into contracts.

Here are Michelle’s key takeaways:
1. Reframe the typical “elevator pitch” into an “elevator teaser.” Instead of a rapid fire 30 second commercial that describes everything you do, find the core of what you do and develop a tagline that encompasses your entire brand (if you can). Done properly, it will elicit the follow-up question, “that sounds interesting, tell me more.” One therapist who helps people get over their fears and anxieties described herself as “the couchless therapist,” which makes people want to know more.
2. Business card etiquette – Avoid “premature solicitation” – which is the act of handing out business cards before even saying hello. When you give someone a business card, it is all about timing. Your goal is to develop rapport and to connect with someone. The time to exchange business cards, more appropriately, is after interaction.
3. Follow-up is important. Michelle suggests offering a free newsletter signup to people in a follow-up email. And in the monthly newsletter have valuable tips and info, all focused on the needs of the customers.

Paul B. Brown is a long-time contributor to the New York Times and author of more than two dozen books, including the international best-seller Customers for Life. He is the author of Publishing Confidential: What it really takes to land a non-fiction book deal. Paul spoke with us about becoming a published author to build your business.

Here are Paul B. Brown’s key takeaways:
1. Once you have book idea, the first thing to do is to try developing an outline for the book, and then writing 2-3 sample chapters.
2. The title of your book should tell people exactly what your book is about. Do not be afraid to talk to potential readers about the book topic to get the right words to use in your book title.
3. A book proposal is what you need to approach an agent or editor to pitch your book. It’s fine to send a query letter first, but if there’s any interest, the next request will be to send a book proposal which is typically a 30-page document. Start working on the proposal before sending query letter, so that you can respond to interest.
Paul made a special offer to Telesummit participants – he will give out a copy of a book proposal that sold. You should email Paul at paulbbrown@aol.com and use “Melinda’s Telesummit” in the subject line. His offer ends 11/13/09 at 5pm Eastern.

Lisa D. Sparks @lisadsparks is an email marketing expert with nine years of experience developing and implementing marketing solutions for small business owners. Lisa taught us how to become email marketing rock stars. For more information, please visit lisadsparks.com

Here are Lisa’s key takeaways:
1. Typical open rate on email marketing is 22%. Be sure not use language in your emails that are triggers for spam filters such as: FREE, space available, special offer, only today, !!!, and ???
2. You should have multiple ways to build your email list for your business. Using an email sign-up for your newsletter/blog on multiple pages of your website is one strategy. You can also offer a special report in exchange for an email address. Conducting free monthly conference calls is another great technique to build your list. When you go to a networking function, be sure to ask someone who gives you a business card if you can add them to your mailing list.
3. Develop an editorial calendar for your e-newsletters and all of your auto-responders. Consider writing a year’s worth of e-newsletters all at once. Email should not be the only way that you communicate with your list – using video and/or audio and are nice ways to break it up.

If you missed the SmallBizChat Live Telesummit, do not worry! We are editing and packaging the calls to make them available shortly… so stay tuned.

I hope that after you read what these experts had to say, you will be ready to tackle 2010 with some inspiration and new tricks up your sleeve. Being in business is a spiritual marathon. Hang in there.

My co-host Cathy Larkin @cathywebsavvyPR and I presented the 1st Annual SmallBizChat Live Telesummit because it is our mission to end small business failure. We will be back November 2010 to do this again.

Please follow us at @smallbizchat and join us for #SmallBizChat every Wednesday from 8-9pm Eastern on Twitter. #SmallBizChat is the trusted resource on Twitter to discuss everything entrepreneurs need to know about launching and running a profitable small business.

How to participate in #SmallBizChat: http://bit.ly/S797e

For more tips on starting or growing your small business subscribe to Melinda Emerson’s blog at www.succeedasyourownboss.com

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#SmallBizChat Live Telesummit Recap (Part 1)

By Melinda Emerson on November 9, 2009 in Business Inspiration, Cash Flow & Finance, Grow Your Business, Mompreneurs, Pink Slip Entrepreneurs, SmallBizChat, Social Media, Solopreneurs, Telesummit, Your Small Business

(Dear readers: this is the first part of a two part post about SmallBizChat Live Telesummit. Part two will post on Friday, November 13, 2009.)

Mike Michalowicz @TPEntrepreneur kicked off our Telesummit. Mike is small business expert who is known as the Toilet Paper Entrepreneur. For more information, please visit toiletpaperentrepreneur.com Michalowicz talked about using social media a build your business.

Here are Mike’s key takeaways:
1. Use a 4 to 1 ratio in your content posted on social media sites. Only promote yourself once in every four times you communicate. Always seek to add value to your audience.
2. Take a non-traditional position to stand out among other experts in your field.
3. Blogging and participating in forums is a great strategy, but using Google ad words can be effective as well.

Karyn Greenstreet @kgreenstreet was our second guest. She’s a self-employment expert who runs thesuccessalliance.com. Her website has all the resources a business owner needs to start or run a mastermind group. Karyn talked to us about mastermind group best practices.

Here are Karyn Greenstreet’s key takeaways:
1. Being involved in a mastermind group is something successful entrepreneurs do.
2. Think about the other skills you need in your business when you want to recruit members to start a mastermind group. Mastermind groups are typically four-to-ten people.
3. Develop set procedures for how your group will operate and get all participants to sign the agreement. Using an agreement is one of the best ways to get participants to commit to the terms and then fully participate.

Dr. Mel Gravely @melgravely kicked off day two of the Telesummit. Mel is the founder of the Institute for Entrepreneurial Thinking, the leading think tank on issues related to business development. For more information, please visit entrethinking.com Mel talked about how to retool your business in tough times.

Here are Dr. Gravely’s key takeaways:
1. It is more important than ever to focus on your niche market and your value proposition. Gone are the days of the generalist consultant.
2. Do not launch any new marketing initiative that you can’t afford to keep up for at least a year.
3. Business shouldn’t always be a struggle. If you have been struggling in your business for more than four years, and it’s never been profitable; it might be time to move on from that business or that business model.

Tim Berry @Timberry is president and founder of Palo Alto Software the makers of Business Plan Pro, and founder of bplans.com. He’s the author of The Plan-As-You-Go Business Plan, Entrepreneur Press. Tim talked about Managing Cash Flow in a Tough Economy.

Here are Berry’s key takeaways:
1. Make sure you know how your clients process invoices. When you can, build a relationship with someone in accounts payable. When evaluating a deal with a major corporation, make sure you’ve got enough cash reserves to wait on your money, or don’t do the deal.
2. Would you walk a city-block blindfolded? Well that’s what is it like to run a business without up-to-date financial statements. You must have a current statement of cash flow, profit & loss statement, and a balance sheet every month.
3. Do not use your line-of-credit to finance marketing efforts to generate sales. Use you line of credit of finance business you have already won.

(NOTE: This is part one of the #SmallBizChat Live Telesummit recap. Part two will post live on Friday, November 13, 2009.)

If you missed the SmallBizChat Live Telesummit, do not worry! We are editing and packaging the calls to make them available shortly… so stay tuned.

How to participate in #SmallBizChat: http://bit.ly/S797e

For more tips on starting or growing your small business subscribe to Melinda Emerson’s blog at www.succeedasyourownboss.com

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8 Things Small Business Owners Can Do NOW to Save Money!

By Melinda Emerson on June 2, 2009 in 10 Things Lists, Cash Flow & Finance

1. Track Expenses Using a Budget.

Budgets are about planning and tracking spending -you need financial information to make business decisions. Track business expenses by month or by quarter. Ideally, you should have a twelve month budget, but at the very least, make a three-month budget.

2. Eliminate Unnecessary Expenses.

Club memberships or services with monthly fees can add up over a twelve month period. Evaluate whether you actually use the private dinning room, the postage meter, the online credit alert service, or your merchant services account. Sometimes a private memberships club will allow you to park your membership for a reduced fee.

3. Relocate to Cheaper Office Space.

Overhead is one of the largest monthly fixed expenses for a small business. If you have a long term lease, start first with trying to renegotiate with your existing landlord. If that doesn’t work, look for other space or consider retreating back into your home. Contact the county where you are located to seek out HUB Zone space or see if they offer any tax abatement for locating in a certain area.

4. Lower Interest Rates on Loan Payments.

Work with your bank to arrange for automatic debit payments. Your bank will lower your interest rate if you agree to automatic debits.

5. Investigate if You Are Eligible For a Reduced Fees For Shipping.

I recently learned that my membership in the National Association of Women Business Owners (NAWBO) made me eligible for discounts for shipping and with rental car companies. Check member benefits with your local chamber of commerce and any other small business organization where you’re a member.

6. Lease or Buy Used Equipment.

Unfortunately, there are many businesses large and small going out of business theses days. There are plenty of opportunities to pick up gently used office furniture and equipment. You might also be able to pick additional office supplies. Try second hand furniture stores, too.

7. Consider Bartering Services.

You never know who might need your services. Start with business contacts, but do not overlook your personal day care provider, law professional, hair stylist or mechanic. You can also join barter network organizations. The key to bartering successfully is good verbal or written communication between the two parties. Whatever you agree to, be sure to communicate it in writing.

8. Comparison Shop for Everything.

Just as large companies require three bids to make a purchase, so should your business. Search the internet for deals, but beware of shipping fees. Sometimes the cost with shipping is not a better deal. Use the internet price to haggle with your local vendor for a better price for services, such as free delivery and installation.

If you make these simple changes I guarantee that you will begin to see more money in your bank. If this blog post was helpful, please subscribe to this blog’s RSS feed to keep up with the lastest information from succeedasyourownboss.com

WANT TO USE THIS ARTICLE IN YOUR EZINE, E-NEWSLETTER OR WEB SITE? You may, as long as you include this complete blurb with it: