Tag Archives: money

Managing Your Personal Credit and Your Business Credit – #SmallBizChat QA

by on October 13, 2011 in Cash Flow & Finance, Q & A Interviews, SmallBizChat

Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wed on Twitter from 8-9pm ET. This is excerpted from my recent interview with Iris Carter @idCarter. Her company, Corporate Fast Track, helps small business owners separate their personal credit from their business credit. Iris Carter is an accountant and IT professional with an in-depth understanding of debt negotiation, business credit, loan packaging and managing your banking relationship. She specializes in providing sound financial strategies to small business owners that will maximum funding opportunities for their businesses. http://www.corporatefasttrack.com


Smallbizlady: What does it mean to separate personal credit from business credit?

Iris Carter: Separating your personal credit from your business credit means that you formally establish business credit. Any credit cards, loans, and/or lines of credit that pertain to your personally are listed with the 3 major credit bureaus Experian, Trans Union and Equifax. Establishing business credit means any credit cards, loans, and/or lines of credit that you are using for your business would be listed in the business bureaus such as Dun & Bradstreet, Experian Business and Equifax Business. When you run a personal credit report, you will see no evidence of any of the creditors you use on a business basis.

 

Smallbizlady: Why is it important to separate my personal credit from my business credit?

Iris Carter: You need to separate your personal credit from your business credit for several reasons. The first has to do with comingling funds. For accounting purposes you need to keep business credit separate to be sure to take advantage of all tax benefits afforded you. The second most important reason is that your personal credit has a credit score. This score can help you acquire things you want in life or it can hinder you depending on how low or how high the score is. If for example, you have too much debt /credit on your personal credit report, this can hurt your scores. You don’t want add business debt on your personal credit, especially if the debt/credit belongs to your business. This will increase your debt ratio and lower your personal credit score. Other creditors can also lower your available balances, and even your insurance rates may increase. Your business is suppose to be a separate entity from you, standing on its own.

 

Smallbizlady: How to do you establish business credit?

Iris Carter: The only way to establish business credit is to start by separating your personal credit from your business by incorporating your business and getting a federal ID number for your business. Then you want to apply for credit in the name of your business.

Continue Reading →

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How to Set Your Price to Achieve Your Profit Goals #SmallBizChat QA with Nicole Fende

How to Set Your Price to Achieve Your Profit Goals #SmallBizChat QA with Nicole Fende

by on July 14, 2011 in Q & A Interviews, SmallBizChat

small biz chat with melinda emersonEvery week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9pm ET. This is excerpted from my recent interview with Nicole Fende @BizFinanceForum Nicole is President and Chief Numbers Whisperer of Small Business Finance Forum. Nicole is a credentialed actuary with experience as a Chief Financial Officer, Investment Banker, and successful entrepreneur. Her forthcoming book, How to be a Finance Rock Star, is an easy, practical guide to mastering small business finance.

SmallBizLady: What is the first step in pricing any product or service?

Nicole Fende: You need to set your profit goals. In other words, you need to determine how much money you want to earn in a given period. Think of profit and pricing like a road trip. First you need to know where you are going, then you can get directions. I recommend starting with your annual profit goal. Think of it as the salary you are paying yourself.

SmallBizLady: What is the difference between revenue and profit?

Nicole Fende: This distinction is crucial. Revenue is the total funds you bring in the door. Whether you are paid in person or online, by cash, check, credit or even barter, this is the total amount of money the business has received in a given period for providing goods or services. Profit is the money that is left after all your expenses are paid. It is the money you are able to take out of the business and deposit into your personal bank account. Think of it as the salary your business pays you. Would you rather have a business that generates a million dollars in revenue and $50,000 in profit, or a business that generates a half million dollars in revenue and $100,000 in profit?

SmallBizLady: Establishing a profit strategy sounds like a lot of work. Can you create one quickly and easily?

Nicole Fende: Actually creating a profit strategy is really easy! You only need to answer four questions:

1) How many hours a week do you want to work?

2) How many weeks in a year do you want to work?

3) What is your target income (i.e. your salary) for the year?

4) What percentage of your time is spent on revenue generating activities? Continue Reading →

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Finding Alternative Funding Sources for Your Small Business – Q&A with Tom Gazaway

Finding Alternative Funding Sources for Your Small Business – Q&A with Tom Gazaway

by on June 2, 2011 in Cash Flow & Finance, featured, Q & A Interview, Q & A Interviews, SmallBizChat

small biz chat with melinda emersonTom Gazaway is the President of Hawkeye Management. Tom is a certified Business Finance Consultant. He was personally trained by the #1 credit expert in the United States, John Ulzheimer. Tom is an advocate for entrepreneurs and small business owners. His company, Hawkeye Management, provides loans & lines of credit to help business owners start, build, and grow their businesses more effectively through having access to loans and lines of credit.

Smallbizlady: What would you say are the biggest challenges small businesses face today with credit & financing?

Tom Gazaway:

1 – Knowing their options

2 – Credit Challenges

3 – Borrowing the RIGHT way

4 – Choosing the correct lender(s)

Smallbizlady:  Please explain the 2 ways you can raise capital for a business?

Tom Gazaway: Yes.  You can only raise capital through debt or equity.  Explain each briefly.

Smallbizlady: Credit is still really tight. What are the lending solutions for small business owners in today’s economy?

Tom Gazaway: At this point, there’s nothing new about credit being tight.  Loan options for small business owners are primarily a function of credit, collateral, and the revenue and profit of the business.  Of course, it does eliminate a lot of people if you need lots of revenue, good profit, valuable collateral, and great credit so this is a big reason why banks deny approx. 90% (or more) of the applications they receive from small business owners.

If you’re part of the 90% that won’t get approved by the bank then you’ll want to find someone who works with small business owners on non-bank financing solutions.

Smallbizlady: In my book, BYOB stands for Be Your Own Bank, but give me your opinion, Can a start-up get a loan?

Tom Gazaway: We do financing for start-ups all the time but that doesn’t mean it’s easy.  HELOC’s used to be the most popular form of start-up financing and now we’ve seen that dramatically shift to credit cards.  According to the Meredith Whitney Advisory Group 82% of small business owners use credit cards.  The problem is that most people end up using those credit cards the wrong way and they miss out on several benefits.  Keep in mind that 30% of our FICO scores are determined by the balances on our personal credit cards so if you use your credit cards the wrong way like most people do then you’ll hurt your credit scores, miss out on tax benefits, increase your risk of losing your credit lines, and pay too much in interest.

Smallbizlady: How can a small business obtain an unsecured loan?

Tom Gazaway: Your best bet for unsecured money is either through credit cards or a peer to peer loan.  Some banks offer unsecured personal loans but the one’s that are approved (less than 10%) are usually for less than $10,000 so they are pretty small.

Smallbizlady: What credentials should a small business owner have in place to qualify for loan?

Tom Gazaway: It does depend on the kind of loan they are looking for but it does go back to understanding your lending options and it’s normally pretty important to either have good credit or to work on making it better.  Credit is such a foundational component of most small business lending solutions that I can’t emphasize its importance enough.

Smallbizlady: What is a conventional business loan vs. a line of credit and how should they be used?

Tom Gazaway: A loan is a fixed installment loan that you can only use once and a line of credit is something you can use over and over again.  Loans are generally for long-term purposes of 2-5 years and lines of credit are traditionally best for short terms purposes (30 days to 12-18 months).

Smallbizlady: Your niche is getting loans and lines of credit for businesses without collateral and – many times – without financials? How is this done?

Tom Gazaway: For us we’ve worked with hundreds of small business owners and we’ve done thousands of applications with all the top banks across the country so when you do this you learn what’s best, what works and what doesn’t, and you learn to match people with the lenders that are best for them.  We have found some good ways to get people between $25k – 100k with good terms and without needing collateral or financials.

Smallbizlady: There’s lots of scams out there so how can small business owners find a trustworthy vendor to help get them secure financing?

Tom Gazaway: First of all, you should check out any companies thoroughly before dealing with them.  Check out their record with the Better Business Bureau and also, be careful if they charge up-front fees.

Smallbizlady: I’ve heard of programs where you can buy a shelf corporation or build your business credit separate from your personal credit and you can obtain loans and lines of credit without any personal guarantees…is that real?

Tom Gazaway: No.  We have never sold a Shelf Corp and we’re intimately familiar with the strategies involved in building business credit.  Although I would love to be proven wrong, it’s just not a reality to think that you can have or get a “cash line of credit” as a small business owner without a personal credit check and without personally guaranteeing the loan.  The exception to this are the vendor tradelines…explain.

Smallbizlady: What are the biggest challenges you face in dealing with people who are looking for financing?

Tom Gazaway: It’s kind of tough to answer because we get so many applications from so many good people all around the country.  There’s the obvious answer of some people not having good credit but for the 75% of our Pre-Quals that we can work with I would say that the answer has to do with what I call the “trickle-down effect”.  Let me explain.  We all know that we’re in a tough time with the economy.  We also know that the credit and lending markets are right at the heart of the challenges we’re facing.  Lending has not shut down but it has seriously slowed down compared to a few years ago.  We are offering a pretty nichey solution where people can get between $25-100k in loans or lines of credit and we can do it without collateral and without financials.  There are sometimes 2 extremes that we face with this.  One, is that some people who realize how tough the credit markets are simply don’t believe we can even do it.  We simply tell them that we can, we do it all the time, and remind them that we don’t charge any up-front fees so if they only have to pay our fees after they get their approvals then what is there to lose?  Then the other extreme are people who sort of long for the “good-ole days” and they think that it should be easy to get the money since they have such good credit.  I remind these people that the pendulum has swung from one side to the other side and that until we get the pendulum somewhere in the middle that we can only pursue the options that we have as of today.  Let’s not be-labor the point and do what we can in todays economy, move forward, and position ourselves even stronger for the future when we hope the lending markets will open back up a bit.

If you found this interview helpful, join us on Wednesdays 8-9pm ET follow @SmallBizChat on Twitter.  Here’s how to participate in #Smallbizchat http://bit.ly/S797e

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, SmallBizLady, is one of America’s leading small business experts. She is an author, speaker and small business coach whose areas of expertise include small business start-up, business development and social media marketing. As CEO of MFE Consulting LLC, Melinda develops audio, video and written content to fulfill her mission to End Small Business Failure.  She publishes a resource blog, www.succeedasyourownboss.com and hosts a weekly talk show on Twitter called #Smallbizchat for emerging entrepreneurs.  Forbes Magazine named Melinda Emerson one of the Top 20 Women for Entrepreneurs to follow on Twitter. Melinda has been featured in the New York Times, Wall Street Journal, The Washington Post, Fortune and Black Enterprise. She’s the author of the bestselling book “Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works.” She writes a column for www.secondact.com, and is an instructor for the Black Enterprise Small Business University.

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Getting a Financial Game Plan For Your Small Business

Getting a Financial Game Plan For Your Small Business

by on March 31, 2011 in Q & A Interview, Q & A Interviews, SmallBizChat

small biz chat with melinda emersonEach week as Smallbizlady, I conduct interviews with small business experts on my weekly Twitter talk show #SmallBizChat. This is excerpted from my #SmallBizChat interview with @DorethiaConner Dorethia Conner, MBA, is president of Conner Coaching. Dorethia provides results-oriented personal finance and business coaching services to small business owners . Known for her no nonsense approach and charismatic personality, Dorethia is passionate about helping entrepreneurs successfully manage their money and increase their bottom line. For more information on her coaching services  www.connercoaching.com.

Smallbizlady: Why is it important for small business owners to develop a financial game plan?

Dorethia Conner: Without a plan you won’t know the potential for your business. It’s important that you reach your growth goals and know where you stand financially.  Every business should have a revenue goal to reach each year that is more than the previous year, along with a strategic plan outlining how they will reach that number.

Smallbizlady: What is the first step to creating a financial game plan?

Dorethia Conner: The first step is to evaluate the previous year’s finances and initiatives. You want to look at your marketing, operating processes and expenses. For example, what marketing campaigns worked? How much did they cost and what % of sales can be attributed to each campaign? Does your business flow smoothly? Is there a more efficient way to run it by adding technology or processes? Did you have to hire new staff or contractors and how did that help your bottom line? Is it working? Did you invest in machinery, buildings or other expenses, did this increase or decrease your bottom line? What is the expected return on investment for the next year, 3 years, etc.?  Essentially, you want to fairly evaluate where you are spending your money and eliminate what isn’t generating income in a reasonable amount of time.

Smallbizlady: What would a strategy for the current year consist of?

Dorethia Conner: It will involve:  1. Setting your sales/revenue goals 2. Developing and implementing a marketing strategy to meet those goals  3. Having a plan in place for allocating the revenues that come in.  After you’ve paid your monthly business expenses – including your salary, it’s necessary to have a specific place for additional revenues

Smallbizlady: Is there an effective way to manage business banking?

Dorethia Conner: Number one is to keep personal and business banking separate. I know we’ve all heard this, but it never fails that a client comes in who is mixing the two.  I also can’t stress enough the importance of good accounting software that links with your bank accounts.  Online banking saves the day in that it allows you to pay your expenses, transfer money, etc. without leaving the office. Also, all transactions can be downloaded into the accounting software. This makes reconciling and record keeping must easier.

Smallbizlady: What is the best way to set up business bank accounts?

Dorethia Conner: Business Checking – General Monthly Expenses

Business Savings 1 – Allocate quarterly, annual, etc. business expenses  ie. taxes, licenses, insurance, etc. Business Savings 2 –– Lean times – an emergency fund for your business

Business Savings 3 – Growth, new development, etc.

Smallbizlady: What are some strategies small business owners can use to scale back expenses?

Dorethia Conner: Re-evaluate  office space, is it too big or too expensive, what alternatives do you have? Can you operate effectively in a cheaper space or allow employees to work from home? Do you need to warehouse your products or will using a fulfillment center help slash your overhead and other costs?  Consider equipment as well, do you have gas guzzling trucks where more economical vans will serve the same purpose? This will not only save you money on gas, but maintenance as well. Are you paying for expensive monthly advertising that isn’t yielding any results?

Smallbizlady: What role does business debt play?

Dorethia Conner: Business debt can hinder your financial game plan, especially if you are overextended. Make sure you have a handle on what you owe and are current on payments. Develop a debt payoff plan.  Here are a few action steps you can take:

  1. List all your business debts so you can know how much money you will need to pay it all off. Include the money you borrowed from your rich uncle. I tell my personal and business clients to attack their debt paying off the smallest amount to the largest. This gives them a sense of accomplishment.
  2. Develop an attack plan – what will you have to bring in financially to cover expenses and have extra to pay down your debt. Is there a contract or big deal you can go after?
  3. Determine what you are willing to do to make it happen, stick to your goals.  What sacrifices are you willing to make in your personal and business life, to get out of debt? Continue Reading →

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Finding The Money To Start Your Small Business

by on September 14, 2009 in Become Your Own Boss Tips, Before You Start, Cash Flow & Finance

The following is an excerpt from my forthcoming book: Become Your Own Boss in 12 months or Less! A Month-by-Month Guide to Start a Business that Works! Scheduled to be released by Adams Media in February 2010.

If you are ready to take the leap into entrepreneurship, you must get really focused on your finances. It will be a real test to get back to only the bare necessities. Are you willing to reduce your lifestyle down to just basic living expenses? Most of the time, the initial capital to start your small business will come from you. Here are 8 tips you may not have considered to find money to start your small business.

Pay your mortgage twice a month to reduce payments. It is the accelerated payment program. Your mortgage company or a third party vendor offers this service for a low or no fee. The money will be automatically debited from your bank account. An extra mortgage payment is made each year; you can reduce a 30 year mortgage to a 22 year mortgage.

Go cash only. If you don’t have the cash, you don’t buy it. If you stop using your check card or credit cards to pay for everything, it’s much easier to stick to a weekly budget for yourself.

Avoid 90 days, 6 months or 1 year – same as cash deals. If you do not have the money the day you are making the purchase, chances are you will not have it in 90-days, six-months or a year from when it’s due. Keep in mind if you can’t pay, the interest rate is hefty and is compounded back to your original purchase date.

Cook at home and bring your leftovers to work for lunch. You’ll save money, get a healthier meal, and spend more quality time with your family. Look for free recipes online and start cooking!

Keep driving your car. Drive your car until it stops running. As a new business owner, you can no longer afford to upgrade your vehicle every two to three 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 five years old.) Try to plan your days so that you can do lots of major errands on the same day to minimize gas and parking expenses.

Grab a sweater. Turning down your thermostat five degrees and keeping a throw blanket nearby to save money on heating costs. The American Council for an Energy-Efficient Economy (ACEEE) says that for every degree you lower your thermostat, you’ll save about 3% of your heating bill. Putting your thermostat on a timer during the workday or while you are asleep will have an even greater effect on your heating bills.

Turn down the hot water heater. Heating water is the third-largest portion of the typical family’s energy bill. Heat water to 115-120 degrees to reduce power consumption.

Cut back on trips to Starbucks, Dunkin’ Donuts, Dairy Queen and Blockbuster. The money you spend each week on unnecessary extras can really add up. Treat yourself only once in a while. You’ll be shocked how the money you save will add up.

When you get started in business, you need three pools of money – an emergency savings account for your household, 12 months of budget to run your household, and 12 months of operating expenses to start your business. If you employ these simple money management tools, you will have the money you need in no time.

Comment on this blog if you have any other money saving tips to share.

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 Expert and Social Media Coach who hosts #smallbizchat on Twitter. #Smallbizchat is the trusted resource Twitter to discuss everything entrepreneurs need to know about launching and running a profitable small business. Melinda’s first book, Become Your Own Boss in 12 months or Less! A Month-by-Month Guide to Start a Business that Works! is scheduled to be released by Adams Media in early 2010.

For more tips on how to start or grow your small business visit http://succeedasyourowboss.com and subscribe to Melinda Emerson’s blog.

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