SCORE a Meeting

SCORE “Counselors to America’s Small Business” is a nonprofit association dedicated to educating entrepreneurs and the formation, growth and success of small business nationwide. SCORE is a resource partner with the U.S. Small Business Administration (SBA).

Anyone considering starting, expanding or purchasing a business should avail themselves of this free service.  SCORE councilors are very experienced, retired business men and women who give wonderful advice.  Before taking the leap to start the business visit a SCORE office.

After you take the advice of the SCORE corp of professionals it is time to check out a lendr to get an SBA loan.  Remember that SBA doesn’t actually make the loan.  The loan is made by a participating lender.

When starting a business you will need a lender that closes SBA 7a loans and when expanding a business you will need a SBA 540.  To get information on how to get your SBA loan started just ask Mortgage Answer Guy.  http://mortgageanswerguy.com then click on Ask?

Small Business Finance Basics – Part 3

Let Them Eat Cake

“Let them eat cake…” were the words supposedly spoken by Marie Antoinette when she was told that the peasants were in such a terrible state that they had no bread to eat and they were starving.  This one misstatement helped to fuel a revolution which would eventually lead to Lady Marie losing her head! …literally! Yikes!

However in our little example here on MortgageAnswerGuy.com, “Let them eat cake” has an entirely different connotation.  In order for the masses to experience our wonderful and delicious culinary delights, we must first finish our journey from baker to bakery!

We are close, just one more step and we are on our way.  We need funding for our little venture and that funding will come in the form of a loan, and good old Uncle Sam is here to help us on our way. Everybody needs a rich Uncle right?

SBA and the American Way

Many years ago the government realized that small business in America employees more people than all of the major corporations combined.  As a matter of fact, large conglomerates actually employee less than 40% of the population.

In order to keep the American economy fueled and growing our government decided to create a loan guarantee program for small business start-ups and to help small businesses grow.  The two main types of small business loans are the SBA (7a) and the SBA 504.

If you are staring a business then you will need the SBA (7a).  The 7a is designed as a loan guarantee program and works similar to the VA guaranteed for American veterans when they purchase a home.

How It All Works

The SBA does not actually fund the loan.  You will make application with a lender and then the lender will determine if you are qualified to receive a loan.  If you are qualified to receive the loan, then the lender will apply to the SBA for the guarantee.

This guarantee protects the lender in cases where borrowers default on the loan.  If the borrower does not pay the loan back then the SBA will pay the lender a certain percentage of the loan back to mitigate the lenders loss.

This type of guarantee program encourages lenders to make loans to start-ups at favorable rates!  It is good for the baker because it can give him the money he needs to buy the ovens, put a down payment on a lease, and have money for buying the flour, eggs and other items he needs to start the business.

The funds from the loan also give the business owner money for market, as well as a cushion to pay employee salaries.  And remember, employee salaries include a little money for the baker, the owner of the business!

So Let Them Eat Cake Already!

So how do you get started?  The first thing you have to do is contact a lender that works with the SBA.  You can do this by sending us a request at The Mortgage Answer Guy!  He does SBA loans in all 50 states!

So let’s get that bakery, that shoe store or that auto repair shop going.  It is time to leave that corporate behemoth behind and let your entrepreneurial spirit sore!  And SBA 7a is the loan that can get you there!

Make your request here:  http://www.mortgageanswerguy.com/Ask_.html

Small Business Finance Basics – Part 2

Bake Great Cakes, don’t Cook the Books!

So you are off and running.  You have decided that you are a great baker and you have someone that can handle the business side of things.  This ‘business’ minded person will be your partner.

Or, you’ve decided you can bake the cakes and handle the books.  The next thing you need to is to make an assessment of where you stand financially.  The bank will require some reserves if they are going to loan the money for the start up.

 Here’s what most banks want to see.  They want to see a business plan that includes enough money to stabilize the business.  Many people think; ‘Oh, I’ll just go without a paycheck until the money starts rolling in.’

Admirable, but unacceptable!  The bank wants you to have income.  You see, they know that you need the income to survive and they want to know that you’ve planned on paying yourself until the business is stabilized and able to support your salary. 

Why do they care if you get paid as long as they get theirs?  Because they know that if you don’t get paid then at some point you will be forced to take a paying job somewhere else.  Then your focus will not be on the business they just financed and eventually they will end up losing!

So don’t cook your own goose and don’t cook your chances of getting the loan.  Make sure your plan includes enough money in it to pay salaries through the stabilization period.

Last Things First!

Which brings us to another very good point, the last thing you want to do is to run out of money or to start a business that will not pay you what you want to make.  While most people decide how much the business can make and then try to determine how much of that money can be received as income, I say switch it around.

Decide how much you need or want to make and then develop a business plan that will pay you what you want.  Many peoples final thought is how much can I make out of this plan when it should be the first thing you should think.

You may be a great baker of cakes, but can you really make the kind of money you want to make being the owner of a bakery?  That’s a great question, who makes more money, the owner of the bakery or the guy that develops the recipes and sells the ingredients to the baker.

Is it the owner of a single retail bakery or the owner of a wholesale bakery with one retail outlet who sales mostly to other stores that resale his baked goods.  Owning the bakery might be the most profitable, I don’t know.  The point here is that you have to ask these questions in order to determine if the business you are choosing is going to meet your minimum income requirement.

So even though the responsible business person takes a salary last because he’s paid his employees and his vendors first!  He or she should consider their salary first when deciding what type of baking business they will go into.

Hope this all makes since… If you’ve gone this far and are still interested then now its time to talk about that financing!

Proceed to Small Business Finance Basics – Part 3

Small Business Finance Basics – Part 1

You Bake a Great Cake, but Does That a Business Make?

In the past when business laid off workers they started at the bottom and worked their way up.  However, today’s business world has been turned upside down.  Now days the layoffs start at the top and flow down.

Because of this, many of the people that are unemployed right now are actually executive level employees.  If you find yourself agreeing with this then you may just be one of those executives that is wondering; ‘what’s my next move?’

Well maybe the answer is a business of your own!  The best way to get started is probably not what you think.  Most people start putting together complex business plans and start looking for angel investors to fund their grand idea for the next revolutionary item that will take the market place by storm.

What should really take place fist is a true assessment of skill sets along with an evaluation of one’s own strengths and weaknesses.  It’s great to say you don’t want to go back to the corporate grind, but it’s a complete other thing to understand the self-motivation and discipline it takes to go it alone.

Once a person realizes his or her strengths and weaknesses, then he can begin to seek opportunities that are compatible with their personal profile.  For instance, someone that isn’t outgoing wouldn’t want to tackle a business that had a large outside sales component.  Similarly, a person with a lot of creative talent shouldn’t go into a business that has a lot of mundane and repetitive processes.

It is only this self analysis that can prepare an individual to choose a path to success and it is critical that brutal honesty is applied when being introspective.  Most people that are good at what they do are only good at a portion of their job.

For instance, someone working in a grocery store baking cakes may be a phenomenal baker with immense individual talent.  However, they may have very weak people skills and may end up being a horrible manager.  Or, they may have no detail orientation and have no idea how to manage inventory or money. 

Failing to recognize these weaknesses could spell disaster for someone leaving the grocery store to start their own bakery.  So, step one on your way to starting your own business is to sit down and make a list of your strengths and weaknesses, only then will you be prepared to take the next step.

Proceed to Small Business Finance Basics – Part 2 to continue your journey!