In my religion we have a program to especially help the youth. It is called “Duty to God.” Youth are taught how they can serve God and how to be true Christians. As part of this Duty to God they are encouraged to Learn, Act and Share. There is much to be said about this program in relation to God, but the premises could very well apply to being an Entrepreneur.
Before becoming an entrepreneur you must LEARN a great deal about the product and service you are looking to get involved in. Is it a good product with some sustainability? The last thing you want is to start a business selling a product and have no demand for it. You get stuck with an inventory because the demand dried up too fast. Is it a product with a large or small public demand? If you customer pool is too small your business might not last because of the lack of customers. Are there multiple sources for you to buy the product? If you are only buying from one source and they quit selling to you product, you could be closed within days if not hours. Do you have the talents and skills to run a business? Look at yourself and be honest. Remember if you have the passion, you can learn and be taught most things about running a business. If you do not have the passion and drive to be an entrepreneur, that is OK for it is not for everyone. It is going to take a lot of work, so if you don’t have the passion to run your own business, don’t even try.
After you have LEARNED what you need to make a smart decision, then ACT. Too many people learn but never act. There are those that talk the talk and then there are those that walk the walk. Most of the time skeptical people have too much fear to act. The more information you can learn, the less fear you will have. But there gets to a point where you must act or nothing will ever happen. You will never get 100% of the information and if you think you need it, you will never pull the trigger on anything. I suggest once you have learned most of the important items about the business, make a decision and ACT. Be a doer and not a talker. If you never try, you will never succeed. Once you try, jump in with both feet and don’t look back, but only forward. Work hard and give great customer service and then work some more. Most businesses will not be an overnight success because it can take months or a few years. Once you become an Entrepreneur most will never go back working for someone else again.
The third part of this is SHARING. Once you are successful, reach out and help others. There are not many things more rewarding than sharing what you know and helping others succeed. Be part of the lives of those in need, either by being a mentor, trainer of small business start-ups or a financial contributor to organizations which encourage others to become entrepreneurs. Being able to share your knowledge or wealth is very rewarding personally. If you get help from a person, book, mentor or even a blog, you should “pay if forward”.
LEARN, ACT & SHARE are great principles to live by in church and it works very well for those looking to become entrepreneurs.
Saturday, August 27, 2011
Friday, August 19, 2011
Feeding the Entrepreneur
Most people don’t realize it but networking can be a key to owning a successful business in more ways than one. Entrepreneurs feed off other entrepreneurs. That is one of the reasons you find the most successful ones read self improvement articles and books about successful business owners. Their stories inspire.
If you are able to see how others have made themselves into winners, you will be able to see how you can make yourself a winner. If you believe, you can make it happen! If you do not doubt yourself, you can fulfill your goals and dreams.
Networking with other business owners and entrepreneurs will feed your soul. Not only is reading good books and stories important but talking with other successful people will help you grow into become one. We all have heard of the quote, “You are what you eat.” If you put in garbage, only garbage comes out. If you surround yourself with smart, successful people, you will become one.
If you want to become an entrepreneur, go to your local Chamber of Commerce meetings. Find the local Toastmaster, Dale Carnegie, Business Alliance groups, join and attend their meetings. Their excitement for business will rub off and you will find yourself in places you have in the past only dreaming about.
Success in anything takes work. It is NOT handed to you on a silver platter. If you want to become an entrepreneur, work at it and feed the “animal” good inspiring food.
About the only time you will see a true entrepreneur down is when they have not fed themselves the right food. Do not feed yourself garbage!
If you are able to see how others have made themselves into winners, you will be able to see how you can make yourself a winner. If you believe, you can make it happen! If you do not doubt yourself, you can fulfill your goals and dreams.
Networking with other business owners and entrepreneurs will feed your soul. Not only is reading good books and stories important but talking with other successful people will help you grow into become one. We all have heard of the quote, “You are what you eat.” If you put in garbage, only garbage comes out. If you surround yourself with smart, successful people, you will become one.
If you want to become an entrepreneur, go to your local Chamber of Commerce meetings. Find the local Toastmaster, Dale Carnegie, Business Alliance groups, join and attend their meetings. Their excitement for business will rub off and you will find yourself in places you have in the past only dreaming about.
Success in anything takes work. It is NOT handed to you on a silver platter. If you want to become an entrepreneur, work at it and feed the “animal” good inspiring food.
About the only time you will see a true entrepreneur down is when they have not fed themselves the right food. Do not feed yourself garbage!
Saturday, August 13, 2011
How can you get a SBA loan
Below is a test to see how much you might or might not know about SBA loan programs.
See how you do on this SBA (Small Business Association) Test
(True or False)
1. As you can imagine as with all government programs, there is a lot of red tape, paperwork, and time involved in obtaining an SBA loan especially compared to regular bank loans.
2. SBA loans are lower-interest than most normal business loans.
3. You must be turned down by a bank or credit union before you can obtain an SBA loan.
4. A SBA loan must be fully secured by collateral or it will be declined.
5. SBA business loans are designed to be longer term than traditional loans and do not allow “balloon” or other such call type features.
6. The term of the loan (length of the loan) is actually more important than the interest rate, especially concerning the impact on the cash flow of the business.
7. If I have an SBA loan, it guarantees my business will not fail.
8. Any bank or credit union can help me with an SBA loan.
Answers
1. False. Most SBA loans require about the same amount of paperwork as a regular bank loan. They will require collateral, good credit and probably personal guarantee’s, much the same as a regular bank loan. Banks like to give SBA loans because much of the loan amount is protected and if defaulted on will be repaid by the government.
2. False. Generally they are the same as regular bank or credit union loan interest rates. The SBA do not actually determine the interest rate on each loan and one particular program, the 504 loan program, offers a lower than market rate but many cannot qualify for this loan. Generally the interest rate will be the same or close to the normal rate charged by the bank or credit union.
3. False. Most SBA loans are just bank or credit union loans but are guaranteed by the SBA, therefore they must follow those standards set by the SBA.
4. False. Just like a regular bank or credit union loan, they do not need to be fully collateralized. Depending on the credit worthiness of the individual, 100% collateral aren’t always needed. If the finance company can get a person 100% of it collateralized, they will be happy to take it, but it isn’t always necessary.
5. True. There are stipulations on most SBA loans, so be aware of those stipulations and make sure you can live with them. Sometimes other non-SBA loans are better for a borrower.
6. True. Most of the time a borrower loan payment can be more important than the interest rate a person pays. A longer term of a loan can reduce the amount of the monthly payment and many times is a better deal. Cash flow for a business is very important to success or failure.
7. False. No one can or will guarantee the success or failure of a business. Having an SBA will give you some comfort because they require the bank and the borrower to follow proven steps in researching a business.
8. False. Only those financial institutions who have been approved by the SBA can give these type of loans.
See how you do on this SBA (Small Business Association) Test
(True or False)
1. As you can imagine as with all government programs, there is a lot of red tape, paperwork, and time involved in obtaining an SBA loan especially compared to regular bank loans.
2. SBA loans are lower-interest than most normal business loans.
3. You must be turned down by a bank or credit union before you can obtain an SBA loan.
4. A SBA loan must be fully secured by collateral or it will be declined.
5. SBA business loans are designed to be longer term than traditional loans and do not allow “balloon” or other such call type features.
6. The term of the loan (length of the loan) is actually more important than the interest rate, especially concerning the impact on the cash flow of the business.
7. If I have an SBA loan, it guarantees my business will not fail.
8. Any bank or credit union can help me with an SBA loan.
Answers
1. False. Most SBA loans require about the same amount of paperwork as a regular bank loan. They will require collateral, good credit and probably personal guarantee’s, much the same as a regular bank loan. Banks like to give SBA loans because much of the loan amount is protected and if defaulted on will be repaid by the government.
2. False. Generally they are the same as regular bank or credit union loan interest rates. The SBA do not actually determine the interest rate on each loan and one particular program, the 504 loan program, offers a lower than market rate but many cannot qualify for this loan. Generally the interest rate will be the same or close to the normal rate charged by the bank or credit union.
3. False. Most SBA loans are just bank or credit union loans but are guaranteed by the SBA, therefore they must follow those standards set by the SBA.
4. False. Just like a regular bank or credit union loan, they do not need to be fully collateralized. Depending on the credit worthiness of the individual, 100% collateral aren’t always needed. If the finance company can get a person 100% of it collateralized, they will be happy to take it, but it isn’t always necessary.
5. True. There are stipulations on most SBA loans, so be aware of those stipulations and make sure you can live with them. Sometimes other non-SBA loans are better for a borrower.
6. True. Most of the time a borrower loan payment can be more important than the interest rate a person pays. A longer term of a loan can reduce the amount of the monthly payment and many times is a better deal. Cash flow for a business is very important to success or failure.
7. False. No one can or will guarantee the success or failure of a business. Having an SBA will give you some comfort because they require the bank and the borrower to follow proven steps in researching a business.
8. False. Only those financial institutions who have been approved by the SBA can give these type of loans.
Wednesday, August 3, 2011
Are you Happy?
If you don’t like where you are at in life, try something new. The worst thing we can do to ourselves is live in a mundane existence. Whatever you do, be happy, for life is too short to do something you do not like. If it is your job, your education or the way you feel about yourself, if you don’t feel comfortable about who you are or where you are headed, change! It is never too late.
Almost every potential entrepreneur comes to a cross roads in their life. Do they stay the same or do they venture out and take a risk. The entrepreneur takes the risk. The successful risk taker, does their homework and then makes their decision. They know their chances of failure sky rocket if they do not do the research before taking the risk.
"The important thing is not being afraid to take a chance. Remember, the greatest failure is to not try. Once you find something you love to do, be the best at doing it."
Debbi Fields, founder of Mrs. Fields Cookies
We can sit around and wish for something that is not here, or we can go out and find it. As Debbi says, “The greatest failure is not to try.”
As Steve Jobs said, “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”
Most people will talk about it; the entrepreneur goes out and makes it happen.
Almost every potential entrepreneur comes to a cross roads in their life. Do they stay the same or do they venture out and take a risk. The entrepreneur takes the risk. The successful risk taker, does their homework and then makes their decision. They know their chances of failure sky rocket if they do not do the research before taking the risk.
"The important thing is not being afraid to take a chance. Remember, the greatest failure is to not try. Once you find something you love to do, be the best at doing it."
Debbi Fields, founder of Mrs. Fields Cookies
We can sit around and wish for something that is not here, or we can go out and find it. As Debbi says, “The greatest failure is not to try.”
As Steve Jobs said, “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”
Most people will talk about it; the entrepreneur goes out and makes it happen.
Wednesday, July 27, 2011
Buying a Farm or a Business?
I am sure you have heard about the best way to own a small fortune. Start with a large fortune, buy a farm, wait a few years and you’ll have a small fortune. Even though it is a little sad, it is mostly true.
Some people have always had a passion to become a farmer. They buy one, run it for a short time, find it almost impossible to make money and unless they have bought a large farm and are well capitalized they close down as fast as they had opened. Passion to be a farmer only takes you so far.
This is kind of like starting a small business, if you don’t do it right your the chances are you will be closed within a year. Did you know the US Commerce Department did a study and looked at independently owned small business owners? They found that 50% of small business owners were closed down within their first year. Even more alarming 80% of these independently owned small business owners were closed by year 5. When they studied the franchise small business owners, 95% were still open by the end of year one and 75% still open by the end of year 5. The power of buying a franchise is huge!
Almost as good as buying a franchise is buying a business which has been open longer than 5 years. They have gotten to the point where they can prove they have made it past the critical early stages of business development. With an existing business the seller can prove if they are making money and how much they are netting. They can teach the new owner about employee management, marketing, accounting, salesmanship and every other important aspect of running their business.
The longer the companies track record is the greater the information they can provide to the buyer. Knowledge is power. The more knowledge you have about the business you are buying, the better chance you will have to NOT make a mistake.
Starting a business from scratch is scary because of the lack of knowledge of the entrepreneur. That is one of the reasons so many fail. I am not saying, don’t try, but buying an existing business is normally much safer than starting a new one. In some ways it is even as safe as buying a franchise. Either way, do your homework.
Some people have always had a passion to become a farmer. They buy one, run it for a short time, find it almost impossible to make money and unless they have bought a large farm and are well capitalized they close down as fast as they had opened. Passion to be a farmer only takes you so far.
This is kind of like starting a small business, if you don’t do it right your the chances are you will be closed within a year. Did you know the US Commerce Department did a study and looked at independently owned small business owners? They found that 50% of small business owners were closed down within their first year. Even more alarming 80% of these independently owned small business owners were closed by year 5. When they studied the franchise small business owners, 95% were still open by the end of year one and 75% still open by the end of year 5. The power of buying a franchise is huge!
Almost as good as buying a franchise is buying a business which has been open longer than 5 years. They have gotten to the point where they can prove they have made it past the critical early stages of business development. With an existing business the seller can prove if they are making money and how much they are netting. They can teach the new owner about employee management, marketing, accounting, salesmanship and every other important aspect of running their business.
The longer the companies track record is the greater the information they can provide to the buyer. Knowledge is power. The more knowledge you have about the business you are buying, the better chance you will have to NOT make a mistake.
Starting a business from scratch is scary because of the lack of knowledge of the entrepreneur. That is one of the reasons so many fail. I am not saying, don’t try, but buying an existing business is normally much safer than starting a new one. In some ways it is even as safe as buying a franchise. Either way, do your homework.
Thursday, July 21, 2011
Buying an existing Business?
If you can afford it, sometimes the best way to be an entrepreneur is to buy an existing business. Many times buying an existing business can be the best deal, especially if you get it for the right price and you can make some good money from the investment.
Frequently I am asked, “What is a business worth?” There are many answers to that question but the simple answer is whatever someone is willing to pay for it. One book I read said generally it is 2 to 4 times the company’s net yearly earnings plus assets. The longer a business has been going, usually the higher the multiple someone is willing to pay. If the business has been running for 10 to 20 years and has a great track record of income, the more confidence the buyer will have that they can continue making that income. Sometimes businesses which have been in running for years can sell for 6 to 10 times income or more especially if it can be shown the industry and the company is going to remain strong.
If a business has only been open for a short time or is losing money, it might sell below what the owner has put into it. If an owner is desperate to sell for whatever the reason, they usually will be forced to sell below cost and sometimes much below. One candidate I am working with wants to open a franchise in the Phoenix, AZ area. It was going to cost him 225k to 275k to open a new franchise in the perfect industry for him. We found him a franchisee with the same franchise company and where the owner is willing to sell his 4 year old business for 115k. It already has over 300 steady paying customers and is making 40 to 50k a year. It seems the only negative is he will have to travel across town to get to his business.
It is almost a no brainer; buy a business for less than half the cost of a new one and it is already making an income. Even if he cannot increase the profits any by giving customer service (which the previous owners have not been doing) he will still payback his investment in just over 2 years.
It is important for anyone buying a business to do it the right way, making sure they are protected. Having professionals involved will be essential to prevent mistakes. Hiring a good business attorney and a CPA will be money well spent. If you are using a business broker (similar to a real estate broker but only sells existing businesses) to help you find a business, they can be of assistance. You need to be a little careful in using their advice too much for they only get paid, if you buy.
I will try to talk more about buying an existing business in my blog next week.
Frequently I am asked, “What is a business worth?” There are many answers to that question but the simple answer is whatever someone is willing to pay for it. One book I read said generally it is 2 to 4 times the company’s net yearly earnings plus assets. The longer a business has been going, usually the higher the multiple someone is willing to pay. If the business has been running for 10 to 20 years and has a great track record of income, the more confidence the buyer will have that they can continue making that income. Sometimes businesses which have been in running for years can sell for 6 to 10 times income or more especially if it can be shown the industry and the company is going to remain strong.
If a business has only been open for a short time or is losing money, it might sell below what the owner has put into it. If an owner is desperate to sell for whatever the reason, they usually will be forced to sell below cost and sometimes much below. One candidate I am working with wants to open a franchise in the Phoenix, AZ area. It was going to cost him 225k to 275k to open a new franchise in the perfect industry for him. We found him a franchisee with the same franchise company and where the owner is willing to sell his 4 year old business for 115k. It already has over 300 steady paying customers and is making 40 to 50k a year. It seems the only negative is he will have to travel across town to get to his business.
It is almost a no brainer; buy a business for less than half the cost of a new one and it is already making an income. Even if he cannot increase the profits any by giving customer service (which the previous owners have not been doing) he will still payback his investment in just over 2 years.
It is important for anyone buying a business to do it the right way, making sure they are protected. Having professionals involved will be essential to prevent mistakes. Hiring a good business attorney and a CPA will be money well spent. If you are using a business broker (similar to a real estate broker but only sells existing businesses) to help you find a business, they can be of assistance. You need to be a little careful in using their advice too much for they only get paid, if you buy.
I will try to talk more about buying an existing business in my blog next week.
Wednesday, July 13, 2011
No Easy Way!
"The quickest way to double your money is to fold it and put it back into your pocket!" (Will Rogers)
There are no quick, easy ways to double your money. If there was everyone would be doing it and the market place would be out of control. Starting a business is not easy. Just ask anyone who has started one.
If you have the desire to become an entrepreneur, get some help. Do NOT do it on your own. There are many ways to find FREE help. Reading a couple good books will get you started. Books like “E Myth Revisited”, “Street Smart Franchising” and “The Educated Franchisee” will get you started and teach you about starting a business.
Your local city, county and State have organizations set up to help those looking to begin a business in their area. Generally these are at little or no cost to the member of the community. In my county we have a Small Business Development Center (SBDC) whose main purpose is to educate, consult and mentor entrepreneurs in our county. The help with business turn around, business start up, business plan development, finance management, loan package preparation, market research and many other very important aspects of starting a business. Our county also has funds set aside to help start-up businesses.
There is an organization called SCORE whose sole purpose is to help people start small businesses. Here is a quote from their web site.
“SCORE is a nonprofit association dedicated to educating entrepreneurs and helping small businesses start, grow, and succeed nationwide. SCORE is a resource partner with the U.S. Small Business Administration (SBA), and has been mentoring small business owners for more than forty years.
SCORE is a valuable network of 13,000+ volunteers who offer small business entrepreneurs confidential business counseling services at no charge. SCORE volunteers have the knowledge and experience to help any small business owner get the help they need. Our dedicated volunteers represent over 270,000 years of experience across 62 industries.”
The U.S. government has the SBA there to help small businesses. Sometimes because of the red tape of government, they are not as helpful as they could be, but they are still a good resource. The SBA has helped many businesses get start and there is much to be learned from them and their web site.
Why wouldn’t a person use the FREE valuable resources around them? There are good people willing to give advice and help those in need. It is the smart business person who does their homework and uses the tools available to them.
There are no short cuts. Those that think there are, most of the time FAIL. Take the long way to business ownership, for it is the least risky path.
There are no quick, easy ways to double your money. If there was everyone would be doing it and the market place would be out of control. Starting a business is not easy. Just ask anyone who has started one.
If you have the desire to become an entrepreneur, get some help. Do NOT do it on your own. There are many ways to find FREE help. Reading a couple good books will get you started. Books like “E Myth Revisited”, “Street Smart Franchising” and “The Educated Franchisee” will get you started and teach you about starting a business.
Your local city, county and State have organizations set up to help those looking to begin a business in their area. Generally these are at little or no cost to the member of the community. In my county we have a Small Business Development Center (SBDC) whose main purpose is to educate, consult and mentor entrepreneurs in our county. The help with business turn around, business start up, business plan development, finance management, loan package preparation, market research and many other very important aspects of starting a business. Our county also has funds set aside to help start-up businesses.
There is an organization called SCORE whose sole purpose is to help people start small businesses. Here is a quote from their web site.
“SCORE is a nonprofit association dedicated to educating entrepreneurs and helping small businesses start, grow, and succeed nationwide. SCORE is a resource partner with the U.S. Small Business Administration (SBA), and has been mentoring small business owners for more than forty years.
SCORE is a valuable network of 13,000+ volunteers who offer small business entrepreneurs confidential business counseling services at no charge. SCORE volunteers have the knowledge and experience to help any small business owner get the help they need. Our dedicated volunteers represent over 270,000 years of experience across 62 industries.”
The U.S. government has the SBA there to help small businesses. Sometimes because of the red tape of government, they are not as helpful as they could be, but they are still a good resource. The SBA has helped many businesses get start and there is much to be learned from them and their web site.
Why wouldn’t a person use the FREE valuable resources around them? There are good people willing to give advice and help those in need. It is the smart business person who does their homework and uses the tools available to them.
There are no short cuts. Those that think there are, most of the time FAIL. Take the long way to business ownership, for it is the least risky path.
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