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Business Cards- Prolific, Inexpensive, Powerful

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There is little more needed to start many businesses than a cell phone and a business card. The exceptions could be retail, restaurants, manufacturing, etc. But even there, I have heard of manufacturing companies that have gotten orders before they even had equipment (some used advances/deposits to buy equipment/materials). How do you get business? By meeting people. The most accepted and ubiquitous method of business information delivery - the business card.

Yet, the lowly business card is treated with such disrespect. The most prolific and most viewed marketing effort of a business is not given its due regard. Business cards can be and should be more than a glorified scribbled napkin of contact information. They present the image of the business, as much as any other part of business. They say who someone is, what they do, and how get hold of them in a form that everyone likes- brevity.

The Measure Of A Card

I use a very hard standard with business card designs; you do not have a acceptable business card unless the person who receives it responds unexpectedly. That could be a non-verbal change of body or facial expression, a comment, or a noise. Whatever it takes, move people with your card. You can use a slogan, quote, picture, format, cut of a card, and any number of elements to get a response.

xriot_front_card

A Few Tips

Use Full Color. Also, spring the extra few dollars for full-color. The old days when everybody had to walk to school in the snow everyday, uphill both ways, printers charged by the color. Each color brings an additional charge. Those were the days of one color on a white business card. With digital printing that is no longer true. Therefore, use the full spectrum of colors and maybe a photo. It can be a picture of the owner’s mug, but only if it would bring a response. So, unless the owner is unusual looking, better to choose a photo that represents the business’s unique selling proposition. Security company should have a criminal in handcuffs, a restaurant studio quality of specialty plates, computer repair someone despondent at a computer.

Use The Back. That is valuable real estate that rarely gets used. For not much more a print can be added to the back of a business card. This space can be used to list offerings, add a special incentive/discount, propose secondary service, co-brand another business; the options are amazing.

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Upon Delivery. When presenting your card, personalize it. Quickly jot nickname if you go by one rather than a given name, put your cell number on it, best hours available, or a quick discount for next service/purchase. The personalization keeps the card special in the eyes of the receiver, they saw and heard the presenter write something on it for them. This will differ the card from hundreds of other business cards they may receive this month. Consider that millions of others will not do this small five second exercise, this would be that little extra that will set one part, bringing a manifold return.

An Internet Offer

They have been seen throughout the Internet, VistaPrint has an offer for 250 free business cards. OK, nothing is “free”, have to pay shipping & handling ($5.45) and VistaPrint will put their logo on the back. Still, I use the free cards to promote a web site of mine. It is a very specific site but business cards allow me to precisely target viewers who could be interested in the site. These business cards are personally transferred in conversation or dropped in mailings like invoices. As the measure of my success is the number of visitors per cards, I have a better than 100% return on these cards. Meaning that everyone who receives a business card visits, and a few either forwards the business cards or web site to others to view. For two cents apiece, using the free business cards to promote a second offering cannot be beat.

Oklahoma Is NativeVistaPrint Back


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Money Doesn’t Knock - Financing A Business (Part 3)

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This is the final installment in a three part series of options to start or finance a business.
Part 1- Conventional and SBA Loans
Part 2- Unconventional finance methods
Part 3- Self-finance (pay as you go)

Starting a business is always easy, the catch is making Return-On-Investment (ROI) quick enough that the business (and business owner) can survive. Most businesses take two years to get established and making steady revenue to pay for itself and support the owner. Also note, a third of all businesses fail within the first two years. Being capitalized to make it the first two years is important, still many have been able to survive without start-up capital and live tell the tale.

Financing a business is key. Having capital in the form of debt can help a business survive the first two years but can also be the heaviest burden. Covering the monthly note plus regular business expenses may not be possible initially. Unless the business is retail front oriented and manufacturing, starting at home (or a very modest office) with little as possible maybe the best option. Funding the business with revenue as it is earned has the benefit of keeping a business fit from conception. Every expenditure will be analyzed for value and necessity, the disciplined developed will be vital throughout the life of the business.

Taking Care of The Home Front

Maslow’s hierarchy of needs dictates that physical survival is the most basic need, and without that foundation other needs cannot be achieved. Therefore in business, making sure one has a home and food is basic survival. With age comes added responsibilities of family, mortgage, car note, etc. and indispensable luxuries. Everyone will have a different definition of basic survival for himself or herself. Regardless what that definition may be, to pursue a business venture that definition must be measured. That is exactly how much are monthly basic living expenses?

One of my mentors in his rookie year sat down and established just how much he needed to live. He was not conservative with his estimate either. He was sure to include savings, entertainment, dining out, etc. When sitting and establishing a personal budget there will be a temptation to be conservative, and with the quiet of a pen on paper there will be unrealistic sacrifices planned. Do not think a daily meal of military MRE’s is possible when the truth is the planner currently eats out every night. Best to measure current living expenses.

It has been said that every person has a standard of living that they are comfortable with and will do what is needed to maintain. With that in mind, I suggest that one measure their past month of expenses if that month could be considered an average month, a comfortable month. It is very important to be realistic about what the expenses will be. Also, measure quarterly and yearly expenses like oil changes, or taxes, car insurance, etc. Depending if they are quarterly or yearly, divide by three or twelve, and add that portion into each month’s expenses.

Once that living expenses are measured, the self-financier will know exactly where ROI begins. Should $3,000 a month be necessary for living, then you know to live you must not only bring in $3,000 but be able to bring out of the business $3,000.

Profitability

Just as living expenses need to be measured so do business expenses. This will be harder than living expenses because as a new business there may not be a past to measure. This leaves one with speculation and that is never good. Just like living, do not be overly conservative. However, it has been my experience that most new business owners are too liberal in the expected experiences. They can do with much less than expected. Without experience they have a perception what being in business is. In their minds being in business means having a $60 per month business landline, when they will never be in the office to take a phone call. A $30 per month cell phone (with unlimited calling) would be more cost effective. They run to Office Depot to buy a box of Bic pens when they have drawers full of give-away pens at home. Understand that as an entrepreneur, the owner will ultimately be paying the bills. That means excesses or “necessities” seen/learned in corporate, governments, or education institutions will take on a new perspective. A stocked office supply closet doesn’t seem so wise when the owner is writing a check.

Ultimately:

Living Expenses- be moderately liberal in your measurements
Business Expenses- be very conservative with your estimates

Profit=Revenue - (Living Expenses + Business Expenses)

Hey I Have A Profit!

If after paying business expenses and living expenses, money is left over, that is profit. The biggest question poised to will be what to do with it? Only options are a variation of either spend it or save it. Which does one choose? The best answer would be to have an answer before the question is asked. That is developing a plan now, before business is begun, what will become of profits?

There is nothing to say that a business cannot both spend and save profits. First, designate a percentage that will be paid to the owner. Perhaps ten percent or half of all profits will be withdrawn from the business and given to owner. Nothing wrong with this, and is a strong motivator, keeps a reminder why one is working so hard.

However, I do feel that a lion’s share should be reinvested into a business. Saving cash in a business is not good idea. This not to say that building capital reserves is not a necessity. There will always be unexpected expenses that a reserve fund can cover. However, in good times establishing lines of credit with banks will be in order. These can be used for those unexpected expenses. Keeping the cash working and not sleeping. Profits should be used to grow the business in a detailed and planned manner. That may include new equipment, marketing campaigns, and additional employees; this is forward looking progress for a business. Stashing funds, just because something might happen, will stunt business growth.

Money Doesn’t Knock - Financing A Business (Part 2)

Financing A Business
This is the second installment in a three part series of options to start or finance a business.
Part 1- Conventional and SBA Loans
Part 2- Unconventional finance methods
Part 3- Self-finance (pay as you go)

Conventional financing and the SBA aside, there are other options for financing a business. For many businesses these are more likely to be opted for to get a businesses going.

Community Development Organizations

All urban areas will have a community development organization with a focus on developing small businesses. States will have a rural equivalent, often regional if not statewide. Many are funded through various government grants, but my experience is that the best community development organizations are those that are privately funded. Like business versus government for efficiency, non-profits privately funded work harder. They work harder to make an impact, to get small businesses funded, and of course to finance themselves. Government funded organization usually do more to justify the grant and get it renewed.

Regardless, a business may be limited to what is at hand. These organizations will offer microloans. Microloans are classified as loans under $35,000 or less. These loans are also very often provided by the organizations themselves. Others may guarantee the loan and use a bank to be the loan provider. I have even heard of some that will forgive the last portion (up to a third) of the loan if payments have been timely and credit established. Interest hovers between 7%-10% and loan terms may be months to years, depending on the size of loan. Collateralization varies, again because of the diversity and structure of the different organizations. I have seen signature loans to a pawn shop style collateralization; a storage room full of bicycles, TV’s, stereos, golf clubs, etc. to secure small loans. These loans will offer a number of times one can renew the loan. After a set number of loan renewals, loans can be made without collateral.

These types of loans are good for home-based businesses. So, called cell phone businesses- a business based upon a phone number and some advertising. Even though the loans are small, much of the same requirements as conventional loans are required such as a business plans and collateralization. What is often waived are credit requirements and equity investment. Unless, I had high capital requirements for real estate and/or inventory this would be my preferred method of financing a business.

Venture Capital

The mystical venture capitalist while no myth, is rare. Venture capitalists are looking to essentially flip a business. Invest, pump up quick value, and then sell at a premium. For real sophisticates, that sale may be in the form of a big-time public stock offering (IPO). Venture capitalists are not nice visionaries look to help a guy with an idea. They are sharks looking to use big dollars to make obscene dollars. A founding business owner will be marginalized in their business, so expect it. May even be replaced. This form of financing is best if one has the next MySpace, needs dollars to take it to the next level, and are willing to sell-out. Most likely, a huge profit will be made (VC only bet on sure things, unless there is a tech bubble happening), but do not dream of staying and being the next Larry Ellison. However, because of the mere genetic material of venture capitalists, they will have major connections to make the a huge sale happen. Pursue this form of financing only if the business has the next big idea and the owner plans on selling-out for big dollars as soon as possible. Think Mark Cuban.

Partner

Bringing in a partner(s) has many benefits. First the risk of the business can be spread, and not have to carry everything on just one person. Second, everyone having a role one can bring in needed expertise or money. That is if the business owner is a expert in a field, they could bring in a partner for the financing. Splitting profits, usually more heavily to the financier initially to repay his investment, but more equitably later. An initial equitable investment in the business has the benefit of utilizing everyone’s expertise in their arena, while agreeing upon major changes or directions. This helps tempers impromptu decisions, which could hurt business.

Stocks

A business does not have to be listed on the New York Stock Exchange to issue stock. As a matter fact it doesn’t have to be listed on any exchange. Stock issuance is just saying that each share of a stock has a certain fraction of ownership. Stocks are fractional ownership of a business, or having a multitude of partners. The structure of the business can be done almost anyway the business desires to be a public company, but the business does have to be above board with all plans and dealings. Especially as the stock is sold. The business is incorporated in the local state and have to follow the laws of that state. If the state is not business friendly, the business may be incorporated in a business friendly state like Nevada and sell stocks as a business from Nevada. Disclosure that the business is Nevada (or which ever state) based is necessary, but most people won’t care.

Selling stocks has some strong advantages. First it is essentially getting people to loan your business money, except there is no repayment until there is profit (dividend). Another advantage is that it is could be easier to get fifty people to give loan (buy) $1,000 than finding one person who will give $50,000. And it is easier still for someone to buy 1,000 shares of stock at $1.00 than one share at $1,000. Set it at $1.00 a share, people can get their minds around it. Set it at $1,000 barriers come about. People feel good they are just “in” for a steal ($1 a share), and are sure to get as much as they can.

Downside is one is giving up full ownership forever. The only recourse is to buy back the stock later, probably at a premium. Also, it is probably best if an attorney got involved to help set the structure up in the beginning. IMHO that is a major downside (cost and, well, dealing with lawyers).

Creative

This is where one gets to use their creative juices to find methods to fund a business. Have heard everything from gambling (research the history of FedEx) to maxing-out credit cards. Most of those methods are not an option. A familiar story is asking family for funding, and that is an interesting point. Mixing family and money aside, the real question is if one’s family has it to offer. Mom, dad, or grandparents do they have $50k+ to give over to business enterprise, to invest? It is also asking people who know one best if they would put some serious trust into that person’s hands.

One creative method that I throw out there is social lending. This is a relatively new method of looking for funding. People looking to make a return on their dollar will lend money for ventures through an online broker. Often one develops a pool of lenders and makes set payment to them through an intermediary web site. The advantage is one could take a number of off-line loans and add them to the social lending sites, so every gets paid in one payment, at one time. Would help administratively, while also leveraging numerous smaller loans he may have been able to secure through friends and family. No single friends or family member may have (or be willing to risk) $50,000, but he may be able to secure $1,000 from fifty friends or family (refer back to stock sales). Be sure to attend the next family reunion!

The business owner is not limited to their our own network either. One may also appeal to the online people for funding of business ideas. This returns one back to credit, business plan, etc. But it does open the number of possibilities. Since collateralization is difficult online, credit scores take a special importance. However, the fact that people are looking to loan money online for a return means they are willing to hear one’s proposal- willing ears are ready to hear. Some social lending sites are Lending Club, Prosper, and Loanio. Loanio has announced it will help troubled credit with a higher rate ad a co-signer.


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Money Doesn’t Knock - Financing A Business (Part 1)

Financing A Business
This is the first installment in a three part series of options to start or finance a business.
Part 1- Conventional and SBA Loans
Part 2- Unconventional finance methods
Part 3- Self-finance (pay as you go)

Funding a business is never easy. Thankfully in the U.S. we have the Small Business Administration (SBA) for help. One good government program I hope we never lose. The SBA exists to support small businesses, and with very noticeable big businesses failing, will become all the more important. The SBA does have lending programs available.

7(A) Loan - up to $2 million

The 7(a) SBA loan is the flagship loan product available with the SBA. The most important take away is to understand the 7(a) is not lent by the SBA. The SBA guarantees a portion of the loan between 75-85% (but max guarantee amount is $1.5 million), and a SBA approved lending institution provides and administers the loan. There are plenty of banks who are “SBA approved lending institutions,” that finding one will not be a problem. A 7(a) loan is between 2.25%- 2.75% plus prime. Length of loan is between 5-25 years (real assets on high end, working capital on low end).

Before running to your local bank getting a $2 million dollar loan, know that few actually get a 7(a) loan. The reason is that loan comes with plenty of requirements to complete before approval. Being that this is a government program, you know there will be plenty of paperwork and waiting for approval. Then the bank can add its terms to the loan requirements. Together (bank and SBA), the most likely reasons people do not get a small business loan is the lack of credit worthiness, ability to manage a business enterprise, acceptable business plan with adequate (realistic) pro forma, ability to collateralize the loan, and the coup de grace, 30% equity investment. Meaning that the business owner(s) must be able to place 30% of the required capital shown in the pro forma into the business. Finally, another shut-off of SBA loans, the requirements are so stringent and paperwork so nightmarish that if a business would qualify for loan, the bank will just lend you the money regardless. Remember, the SBA is only guaranteeing the loan, and has plenty of back-up with a mandatory life insurance policy to cover the loan and the required collaterizing of the loan, most banks will just do away with the SBA part and fund the venture themselves (at a slightly higher rate). My belief is that many banks only get SBA approved lending status to draw people. Then they can cull the best, and if need be push the others through the approval process if they (the business owners) have the stamina to wait it out.

504 Loan – up to $4 million

The loan is for long-term investments in a business- land, building, and machinery. The benefits of the 504 over the 7(a) is much lower equity requirement of only 10%, below market rates, fixed rates, collateral can be assets financed (leaving other assets free for other financing), even soft costs like (fees, legal, appraisal, environmental) can be financed, and extended payment terms (10-20 years). There isn’t much downside to this loan except the narrow scope of purpose. Therefore, if your business is looking at buying a building or new construction, the 504 is something you definitely want to explore.

Also, understand your local bank will probably not tell you about this program as it is below market rates. For this loan you will have to seek out a Certified Development Company (CDC) in your area.

SBA Express and Community Express Loans – up to $350,000

With a SBA Express Loan the SBA guarantees 50% of the loan amount. Interest is negotiable but may not exceed 6.5% or 4.5% above prime depending on loan amount. The SBA allows the lenders to make the eligibility requirements and requires no further paperwork. This loan product may also be used to establish revolving lines of credit, up to 7 years. Approval time is usually 36 hours (hence express). Lenders do not need to collateralize up to $25,000 and may use their own collateral policy for loans between $25,000 to $350,000.

The SBA Community Express is very similar to the Express Loan. Differences are max loan amount is $250,000, guaranteed between 75% to 85% depending on loan amount, extended repayment period, and lower rates. It is the lower interest rates that are the appeal of the Community Express Loan set at 2.25% to 2.75% above prime (there some 1-2% additional points for smaller loans under $50,000). For the lower rate, the business must be located in a Community Express designated area and the lender must make sure the business receives “appropriate technical assistance”. This is a technicality the lender will give the business and place in the loan file.

The value of these loans are the requirements are very minimal compared to the 7(a) and the approval time is quick. These are good loans to pursue for an infusion of working capital.

Microloans – up to $35,000

The SBA Microloan is unique in that the SBA gives funds to non-profits to then lend out. Most are community economic development programs, and they make the credit terms and loan decisions. The max term for the loan is six years with a rate set by the lender (averaging 8% to 13%). Again the term “technical assistance” appears and the program must provide business training and technical assistance to the borrowers. The lender may also set a training completion as a requirement.

Typically, even that the loan size is small, these are not loans for quick financing. These loans are usually used for small start-ups. Think self-employed and verifiable home based businesses. They are good if a business has been operating without capital (except for revenue), have developed a track record (with projected growth), and are looking for capital improvements that will assist the business to grow.

The SBA and conventional financing cover the bulk of business financial needs. In part two, unconventional methods of financing will be covered.


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411 On Chambers Of Commerce

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“I got nothing for it.” Colloquialisms aside, I have heard that refrain numerous times from varied sources. Have heard it across geographic regions, across races, and across differing entities. This is line is most heard about Chambers of Commerce.

First, let me state there are in any area, any number of Chambers of Commerce. Some represent the state or region, some national, some the local municipality; others represent by race, gender, sexual orientation, and that segmented by geography again. Regardless, there are commonalities among them all. Because of that, let me give some best practices for using Chambers of Commerce to grow your minority business.

Ticket To The Dance

Like many marketing endeavors, your membership in a chamber is only your permission slip to participate. You will not increase your business by merely joining a chamber. You have to have face time at the events. Be the first one there and the last one to leave. Plenty of business cards and making sure everyone knows you. Come alone, the last thing you want to do is be with people you know. Get out and meet new people. Then repeat continually. Just like joining, attending one time will not bring you much business. After continued activity, you become familiar, people ask each other about your business, that is when the residual effects of your attendance begins to make an impact.

Event tip: when at a chamber event provide a door prize. For $20-50, you get a splash and your business mentioned in front all attendees, giving you another chance for everyone to know your name. Plus, this is when people are most attentive to the podium (everyone likes to win schwag).

Entre Into New Markets

As a minority (or not) business, chambers are advantageous to opening new markets. If you are new to the location, municipality chambers provide another opportunity to reach out. In urban areas, don’t just focus on the metro chamber (which could be saturated) but also look toward to suburban chambers. They are smaller but more ready to highlight your business. Cheaper, too!

Minority chambers also provide opportunity to new markets. Have not met a minority chamber yet, that does not accept people of other races in their chamber. There are reasons of course, 1). green is the only color that counts when in business (more people, more membership dollars), 2). chambers will pursue corporate sponsorship and donations, to acquire them they have to be open to everyone. Therefore, cross over to every chamber, attend the Latino/Hispanic, African-American, Asian, Native American, Indo-china (locally that is our Eastern Indian [India] chamber name), and find new markets. Added benefit to minority businesses is that they will have talks and discussion at times about minority contracting and opportunities. Example: Mrs. Purchasing at Fortune500 Corp is Latino and will be speaking at the Hispanic Chamber luncheon about the Fortune500 Corp Diversity Purchasing Program. You are not Hispanic, but because you attend regularly you get 1). to hear her talk and get information, 2). get an appointment because one of the Hispanic Chamber employees gave you a glorious personal introduction, 3). you made impression because you were the provider of a beautiful speaker’s gift.

To Join Or Not To Join

Actually joining a chamber can be significant to a small business. Multiply that by the number of chambers, and we get into thousands of dollars quickly. Everything you spend should be about ROI, and will joining bring ROI? Simply by filling out an application and sending in a check, the answer is no. You have to decide if you can and will make the commitment to attend (or your employees with sales/marketing skills will) regularly. If that is the case, let me give you another pause before joining. The value of chambers is attending the events and getting known. Most events have a fee to cover the event and make the organization a few dollars. Typically, there is a member’s fee and non-member’s fee. If the difference between fees times twelve (a year of events) is greater than the membership fee then definitely join. If no, then simply pay the non-member fees, knowing you are saving dollars by not joining but getting the benefits of attending.

Another factor to consider is if by being active can you get on committees or get in line for awards by joining? A small business committee or minority committee can garner strong ties with other committee members, securing their business could easily exceed annual member fees. Maybe even business with just one could justify all the chamber fees and activity. Winning chamber awards always get press; thereby your business could be in the press. Businesses pay public relation firms thousands just for that.

Chambers Are Not For Every Business

As encompassing as chambers can be, they are not for everyone. I have a client who has a high-dollar software program for utility companies. Meaning one utility company may cover a whole state, then the next opportunity for the software is the next state. For them, joining the chamber would not bring any ROI, regardless how much face time they put into chamber events. Their market does not attend chamber functions. Therefore, evaluate if you market is local. If no, or if the local market is limited, do not consider chambers of commerce for your marketing efforts.

Marketing using the Maestro Method says to do only one form of marketing at a time until you achieve mastery. Only when you achieve mastery, do you tackle a new form of marketing. With chambers of commerce the final consideration is if this will be your new form of marketing? If it is, throw yourself into it and master it. If not, don’t join and mumble “I got nothing for it.”


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