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8 Ways to Finance Your Startup with Debt: Part 1
Jan 21st
There’s good and bad news to share about startup financing for a small business. Keep in mind, we are only looking at debt options so think of loans and lines of credit that you pay back to a lender. We are not looking at any equity solutions such as angel investors, venture capital, etc. The good news is that there are options. The bad news is that nothing is easy nowadays and if you have damaged credit or you’re looking for several hundred thousand dollars it’s much less likely to happen purely with debt.
I have split these 8 solutions into two parts based on the likelihood and value factors. Simply put, likelihood just asks the question, “How likely is it that this type of financing can be obtained by a higher percentage of people?” Value is all about how much value would each form of financing bring to business owners who utilized this form of financing. So let’s get started.
Here are the 4 most likely forms of debt financing for small business startups:
Credit Cards
This is absolutely, positively, without doubt the most common form of financing for small business startups. Additionally, credit card financing – when it is done right – is arguably the least expensive form of financing. From a benefit perspective they also do not require collateral like many other forms of financing. The problem is that when credit card financing is not done correctly – and normally it is not – you will hurt your credit profile, pay too much in interest, you will not properly separate your personal & business credit, and you’ll likely miss out on some good tax benefits.
ROB’s
Technically known as Rollovers as Business Startups – are only an option for people who have saved up some adequate retirement funds. It’s also much more risky than most other forms of financing. This is a very popular form of financing for new franchisees. The downside is you’re risking your future basically since you’re tapping your retirement savings. The upside is that you can access a sizeable amount of capital if you have a nice nest egg waiting for you.
Trade Credit
Maybe it’s not as popular but it is very common. Examples of trade credit – which is also referred to as vendor credit – would be a line of credit at Staples, or Dell, or any other company where you need to purchase their goods or services for your business. There are many forms of trade credit where you can obtain loans and lines of credit that are revolving in nature…meaning the balances are not due in full and can be spread out over several months or several years. However, the most common “terms” attached to trade credit are Net 30. So there is not the same value or ability to finance nearly as much since you’re only delaying the purchase by a month or maybe two.
Equipment Financing
Most startup companies need some type of equipment. Ideally, if the goal is to use your capital in the best way possible, you wouldn’t use a working capital loan or line of credit to purchase equipment. Sometimes it is necessary but, often times, you can get a loan or lease specifically for your equipment and then leave your cash, working capital loans, and credit cards available for other uses.
With over 15 years of small business lending experience, Kris Roglieri is the Founder of Commercial Capital Training Group and President of a national commercial finance company. According to Roglieri:
“In the last 4 years, the number one characteristic of defaulted loans or leases in a lenders portfolio were companies that had less than 2 years time in business so most lenders only finance companies that are more than two years in business or their underwriting requirements are very tough and stringent. If you’re seeking to finance equipment as a startup you should have good personal credit, some experience in your industry, and hopefully at least 6-12 months of liquidity.”
In Part 2 we’ll discuss the other 4 most common debt solutions for startups.
Credit Card Photo via Shutterstock
8 Ways to Finance Your Startup with Debt: Part 1
View full post on Small Business News, Tips, Advice – Small Business Trends
SEO Business Startup Kit
Dec 23rd
Our SEO Business Startup Kit Provides Freelancers With A Complete Turnkey Business In A Box Solution. It Includes A Comprehensive 217 Page Ebook Along With Over 80 Ready To Use Contracts & Document Templates. The SEO Industry Is Absolutely Booming.
SEO Business Startup Kit
Best StartUp Books
Dec 11th
What is it that drives people to start their own business? An economy that isn’t hiring; the desire for flexibility in your schedule; or the drive to achieve a long-held dream of building a business that’s bigger than us personally — these and many more reasons drive us into startup mode.
Whatever your reason for starting a new business, you’ll need to do your homework — before you start and while you are growing your business. A good place to start is to read some books about what you need to know when starting a business. The following books are a good start on your reading list, to guide you through the ups and downs of the entrepreneurial journey (in no particular order).
“Become Your Own Boss in 12 Months: A Month-by-Month Guide to a Business that Works” by Melinda F. Emerson and Michael C. Critelli
A good start-up book needs to have more than just motivational advice about following your dreams. After you’ve made the big step to go out on your own, the myriad lists of things to do and pay attention to can get overwhelming. This is when you’ll want to read Become Your Own Boss in 12 Months . This start-up book is written using a month-to-month timeline that includes specific action items that you can use to get your successful business off the ground. Don’t miss the companion workbook!
Read our review of “Become Your Own Boss”
“The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses“ by Eric Ries
Author Eric Ries shares applies the principles of lean manufacturing to software startups. This start-up book contains many stories and case studies from Ries’ experience during the dot com boom as well as with dozens of other companies. It’s an ideal choice for someone who is starting a software or technology-based business and doesn’t have a lot of experience in creating and measuring processes. This book is valuable for anyone looking to drive innovation inside of their new business.
Check out “The Lean Startup” at fine booksellers.
“Escape from Cubicle Nation” by Pamela Slim
The target market for this book is clear. If you are currently employed in a corporation somewhere, silently wishing as you sat in endless meetings that you could be your own boss but are not sure how or where to get started, then get this book. If you’ve recently left the corporate world to start a business you also will enjoy it because it will reinforce your commitment and re-energize you. This book explains things that those who are used to being employes need to know about starting a business — everything from how to get health insurance, to how to get clients.
Read our review of “Escape from Cubicle Nation.”
“Flying Without a Net: Turn Fear of Change into Fuel for Success” by Thomas J. DeLong
Business owners tend to be high-achieving professionals. And with that, comes a series of personality traits that can often sabotage the very success you are looking for. Flying Without a Net isn’t a book about how to start a business. It’s a book about how you “BE”. Thomas DeLong explains how to draw strength from vulnerability. First, understand the forces that escalate anxiety in high achievers and the unproductive behaviors you turn to for relief. Then adopt practices that give you the courage to “do the right things poorly” before “doing the right things well.”
Read our review of “Flying Without a Net”
“Startup from the Ground Up: Practical Insights for Transforming an Idea into a Business” by Cynthia Kocialski
If you have a great idea for a business, but aren’t sure where to begin, then listen to Cynthia Kocialski, author of this practical book for startups. This book is for the entrepreneur who is ready to build a business and not just a job. You’ll learn how to take your product or service concept and translate it into a successful business model. Kocialsko also spends time going over how to recruit and hire a great team as well as how to seek funding.
Read our review of “Startup from the Ground Up”
“It’s Your Biz: The Complete Guide to Becoming Your Own Boss” by Susan Wilson Solovic, Ellen R. Kadin, Edie Weiner
Susan Solovic’s advice is targeted to people who have been thinking about starting a business, but haven’t yet taken the plunge. She gives honest, straight-up advice that includes not getting overly influenced by people trying to convince you to start a business or those trying to dissuade you. She brings up issues that are often ignored or difficult to deal with in the early stages of starting up and then shows you how to deal with them. One example is to build your business with the end in mind and building for being bigger rather than adding on.
Read our review of “It’s Your Biz”.
“The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything” by Guy Kawasaki
This Guy Kawasaki startup classic will not only prepare you for business ownership, but will give you insider advice on everything from raising money to motivating your staff. Even though this startup book is written from the perspective of a venture capitalist evaluating new businesses, it’s an excellent read for any small business owner or manager. Readers will gain valuable insights into bringing entrepreneurial thinking into their organizations and entrepreneurs will get time-tested ideas for bootstrapping. But it’s particularly valuable to those who are seeking investors and external financing.
Read our review of “The Art of the Start.”
“The Barefoot Executive: The Ultimate Guide for Being Your Own Boss and Achieving Financial Freedom” by Carrie Wilkerson
The author, Carrie Wilkerson, explains how life circumstances practically forced her into working from home. If you are a solo-preneur running a home-based or online business, you will find the business models with tables and charts easy-to-understand and implement. Chapters include such subjects as finding a target markets, developing marketing strategies, and brand development. Especially important are the common pitfalls listed to avoid in starting a business from home. This book is ideal for those in “soft” services, such as online marketers, professional business service providers or consultants, who plan to work from home.
Read our review of “Barefoot Executive”.
“Rework” by Jason Fried, David Heinemeier Hansson
There aren’t too many shortcuts for starting a business, but Fried and Hansson, from 37 Signals have created one. This book distills all the essentials of starting a business and condenses it into a short and comfortable format for any new business owner to read. Rework is the ideal read for small service businesses who are looking to focus more on doing business and less on the paralysis of planning. Rework takes basic business fundamentals like positioning your niche, choosing the right people, doing what works, being more efficient, etc. and spins them in an interesting way.
Read our review of “Rework”.
“The Six-Figure Second Income: How To Start and Grow A Successful Online Business Without Quitting Your Day Job” by David Lindahl and Jonathan Rozek
Most of us don’t think of ourselves as being an expert, but if you did an inventory of your life and what you know, you just might be surprised. The Six Figure Second Income is a book about how to start an online information business. Don’t worry, this isn’t a get rich quick book. It’s a roadmap for how you can harvest the expertise you have in a niche area and sell it online. This book is full of simple, easily understood, and easy-to-follow advice on how to get started with little or no cost.
Check out “The Six Figure Income” at fine booksellers.
“Million Dollar Consulting” by Alan Weiss
This is what many people call the consultant’s bible. Alan Weiss has a global firm specializing in management and organizational development. Known as “The Rock Star of Consulting,” he has written 32 books that have been translated into 9 languages. Million Dollar Consulting is a handbook for any professional who is selling themselves into the C-Suite. Weiss covers the basics of setting up your office, networking, writing proposals, pricing and most importantly, becoming an indispensible resource to your clients.
Check out “Million Dollar Consulting.”
If you’ve been dreaming of starting your own business, this list will give you the ins and outs of the process from ground up to growth. Even seasoned entrepreneurs can pick up a few pointers as they get into the process of growing their business or starting out in another industry.
Looking for other business books to read? Here at Small Business Trends you will find:
225+ business book reviews (a new one every weekend)
View full post on Small Business News, Tips, Advice – Small Business Trends
Business Startup & Operation Manual
Nov 30th
With Millions Of People Unemployed Or Underemployed, This Manual Provides All The Info Needed To Start And Operate A Business Either Part Or Full Time. Bonus Plan! Affiliate Info Http://www.bizstartupmanual.com/af.html
Business Startup & Operation Manual
Startup Infoproducts.
Nov 18th
Information Products For Small Business Startups, Internet Marketing And Online Advertising.
Startup Infoproducts.
Is Your Startup Story Worth $10,000?
Oct 19th
Something every entrepreneur or small business owner has in common is that they have a story. Whether you quit your job in the middle of the recession (like me!) or you went from garage to glory in three years, we all have a startup story that is unique and inspiring to others. And now we all have the chance to win $10,000 simply for telling it.
Oh, you’re paying attention now, aren’t you? 
Hiscox, the small business insurance specialists, are challenging entrepreneurs, SMBs and consultants to share their startup stories for the chance to win $10,000 and other prizes through their MyStartUpStory Contest. What compelled Hiscox to put together a contest like this?
Hiscox’s Director of Small Business Insurance, Kevin Kerridge, said:
“The stories we hear on a daily basis from our customers and prospects are inspiring, and we wanted a way to share these and hear from other small businesses about how they got started and overcame challenges along the way. The submissions we’ve seen so far show the sheer will and determination of the U.S. small business owner and offer some advice for getting over the challenges that are part of every new business.”
To enter the contest, entrants have the choice of submitting a 500-word essay or a 2- to 5-minute video describing their startup and offering small business advice. Entries will be judged on their responses to the following questions:
- What does your business do?
- Why did you start your business?
- What is the best advice you’ve received?
- What are the biggest challenges you’ve faced?
- How did you overcome these challenges?
- What is the biggest lesson you learned from these challenges?
All submissions will be featured on the Hiscox Small Business Insurance Facebook page during the contest. Small business owners can also check the company’s Facebook page to find inspiration from the startup stories of entrepreneurs like Pete Cashmore (Mashable), David Karp (Tumblr) and others.
In addition to the $10K grand prize, the second- and third-place winners are eligible to win business essentials like a possible iPad, printer/copier/scanner, an office chair and other small business tools, as well as a free ticket to an upcoming small business conference from a list provided by Hiscox.
While the prizes surely sweeten the pot, the contest represents a great way for small business owners to share their personal experiences running a startup and to motivate those reading them.
According to Kevin:
“The MyStartUpStory contest is an opportunity not only for businesses to win prizes, but also to publicize their business and share their advice through our Facebook page, small business blog, Twitter account and other marketing channels. I think entrepreneurs will benefit from seeing others who have come through the tough times and lived to talk about it and share their experiences through this contest.”
If you want a chance at the loot, the contest runs through November 7, and is open to all U.S. small business owners and entrepreneurs. Full details can be found on the Hiscox Facebook Page.
Good luck!
Is Your Startup Story Worth $10,000?
View full post on Small Business News, Tips, Advice – Small Business Trends
Want to Start a Business? Get NASE’s Startup Kit
Oct 1st
Any business owner knows there’s a lot involved in starting a business. There’s choosing what kind of business entity you should be; renting commercial property; paying payroll taxes; setting up a business bank account; marketing…The list goes on, and it seems like every time you master one thing, something else pops up. And while you certainly could spend years online researching everything a small business owner needs to know, you want the information now.
The National Association for the Self-Employed (NASE) has released its Startup Kit to help its business owner members quickly access a wealth of information in a single resource. “The NASE decided we would amass our 30 years of knowledge on starting a business into an easy-to-read and easy-to-follow resource, and that’s how our Startup Kit was born,” said Kristie Arslan, President and CEO of NASE.
The result is a substantial document covering 10 things new business owners need to know, such as:
- Choosing the right business structure
- Setting up a DBA (Doing Business As)
- Paying self-employment tax
- Funding a business
There’s a thorough checklist at the end of the kit that helps users make sure they manage all of the tasks necessary to get a business up and running.
Creating New Jobs, One at a Time
While the self-employed numbers aren’t climbing as much as you might expect, given the unemployment rate, Arslan feels confident that starting new businesses is the key to economic prosperity:
“We firmly believe that encouraging self-employment and nurturing startups will help us out of this economic downturn. We like to stress over and over again that someone who is self-employed does create a job – their own.”
Where to Get the Kit
Currently the Startup Kit is available only to NASE members (and everyone is invited to join), although NASE is offering a free preview chapter to people who like its Facebook Page.
Want to Start a Business? Get NASE’s Startup Kit
View full post on Small Business News, Tips, Advice – Small Business Trends
Startup America Partnership: It Takes a Village to Start a Business
Sep 21st
Last month I blogged here on about the progress of Startup America, a public-private partnership the White House launched in January to help Americans who are seeking to start businesses. My post focused on the progress that the public-sector side of Startup America has made. Now, let’s look at what going on with the private-sector component, the Startup America Partnership, which is an independent alliance of entrepreneurs, corporations, universities, foundations and business leaders.
Last week the Startup America Partnership’s CEO Scott Case (co-founder of Priceline.com) announced a new online platform and $330 million worth of product and service commitments to assist startup companies. Case told Reuters that the offerings are the result of listening to what startups nationwide want and need to succeed and create jobs, and that the web platform has been beta tested by several hundred companies.
So far, 14 providers including D&B and Dell Inc. are offering free products and services to small businesses that register on the site. Case told Reuters the goal is to register more than 100,000 small businesses by the first quarter of 2012.
Visit the Startup America Partnership site and you’ll be asked which of four categories you fall into—idea, startup, ramp up (growth) or speed up (rapid growth). Click on each category to filter the resource partners best suited to help at your stage of growth.
Small businesses that register will be able to access resources in five categories: capital, customers, talent, services and expertise. As the number of registered companies grows, investors will also be able to use the platform to find companies they might be interested in funding.
The Startup America Partnership site is easy to navigate. And bringing private-sector resources to bear on supporting entrepreneurship is a smart way to go, as we all know many entrepreneurs prefer not to rely on the government for help growing their businesses.
Now the only ingredient Startup America needs is you. To paraphrase a famous saying, it takes a village to start a small business. The Startup America Partnership site includes lists of events as well as opportunities to share your startup story, tell others about events of interest and alert others about resources they might be interested in. Check it out and get involved—even if you’re long past the startup stage, your advice and ideas can help others get going.
Startup America Partnership: It Takes a Village to Start a Business
View full post on Small Business News, Tips, Advice – Small Business Trends
Startup America: How’s It Doing?
Aug 24th
Back in January, President Obama announced the launch of Startup America, a national campaign to help “knock down barriers in the path of men and women in every corner of this country hoping to take a chance, follow a dream, and start a business.”
The initiative focuses on five areas (listed below) and included the launch of the Startup America Partnership, an independent alliance of entrepreneurs, corporations, universities, foundations and other leaders working to fuel innovative, high-growth startups.
Eight months in, how is Startup America faring? The Administration recently released a progress report. Here’s a closer look at some highlights for each of the five areas of focus.
1. Unlocking Access to Capital
- The SBA has committed up to $2 billion over the next five years to match private sector investment in promising high-growth companies. Specifically, the SBA is committing $1 billion to Impact Investment Funds targeting priority areas, including underserved markets and emerging sectors such as clean energy and education. The SBA just licensed its first Impact Investment Fund in Michigan. An additional $1 billion in Early Stage Innovation Funds is set to launch in 2012.
- To encourage additional investment in small business, the Administration has proposed permanent elimination of the capital gains tax on certain small business stock. This is part of the President’s Fiscal 2012 budget proposal, awaiting Congress’s action.
- The Treasury Department has also proposed reforms that would make it easier to invest in early stage startups in low-income communities.
2. Connecting Mentors
- The SBA, Department of Energy (DOE) and Advanced Research Projects Agency-Energy (ARPA-E) launched the Entrepreneurial Mentor Corps program, which funds four clean energy business accelerators that match mentors with clean energy companies around the country.
- The Department of Veterans Affairs (VA) launched two business accelerators focused on helping vets start businesses—one serving Wisconsin and another serving Virginia and Pennsylvania.
3. Reducing Barriers
- Immigrant entrepreneurs can be an important source of innovative business startups, and skilled immigrants are a resource for high-tech, high-growth companies. The Department of Homeland Security has proposed changes that would make it easier for both immigrant entrepreneurs and highly skilled immigrant employees to obtain visas.
- To help reduce barriers to funding innovative ideas, the SBA has revamped the SBIR.gov website so it’s simpler for small businesses to find funding opportunities across 11 federal agencies.
4. Accelerating Innovation
- The National Science Foundation has established the NSF Innovation Corps, a public-private partnership that connects NSF-funded scientific research with the technological, entrepreneurial and business communities.
- The Department of Commerce, together with 16 federal agencies, has created the $33 million Jobs and Innovation Accelerator Challenge, in which high-growth clusters from 20 rural and urban regions across the nation will compete for federal funds to help their regions’ entrepreneurial economies grow.
5. Unleashing Market Opportunities
The Administration believes health-care reform; the Recovery Act’s $80 billion investment in clean energy research, development and deployment; and the Race to the Top initiative and $650M Investing in Innovation (i3) Program will create new opportunities for small businesses in health-care information technology, clean energy, and educational technologies and services.
There are many more aspects to Startup America. You can visit the Startup America site to find out about specific initiatives and how well they’re progressing. What do you think of these initiatives? Will they have any effect on your business?
Startup America: How’s It Doing?
View full post on Small Business News, Tips, Advice – Small Business Trends
Small Business: The Startup Stage
Aug 18th
Starting a business is no simple accomplishment. It requires investment, both of time and money, imagination and more than a little bit of passion, drive and ambition. Here are some things you’ll want to consider when preparing to enter the startup world.
Financing
Things to think about when seeking funding. If you will be looking for investment in your new startup, there are a few things to consider which will likely influence investors and just about everyone else when it comes to your business and how you present it. Startup Professionals Musings
More tips for startup funding. There are many places to get the money needed to start your small business. The key is to locate the funding that will work best for you and to use it effectively and responsibly to create a business that will easily return on that investment. See the link for more helpful hints. The Frugal Entrepreneur
Will the Fed really help small business? Community banks say the Fed is holding up a program that could cost small businesses in this country $30 billion in financing aimed at existing small businesses and potentially startup. Start slow Bloomberg BusinessWeek
Self-development
What’s the best advice for your startup…or anything you do? Maybe it’s not to take the safe way. Could be that the best advice for startups is to leave yourself few options but success. Creating a business isn’t an easy thing at all. Taking your idea and carrying it to realization takes hard work and courage. Check out this link for some simple words of wisdom. Seth Godin’s Blog
What are the unexpected costs? Many entrepreneurs may prepare just fine for the big expenses when planning their startup business. But what about the expenses no one seems to think about? Have you really taken into consideration all the costs your company may face? Up and Running Blog
Preparing for the worst in your small business startup. Getting ready for your small business startup sometimes means preparing yourself for the worst possible scenario. It isn’t that you should be pessimistic when starting a venture? Just be ready. Bloomberg BusinessWeek
Tips & Tricks
Marketing your new business on a budget. Fortunately, marketing your small business can be cheaper than ever before. With a good understanding of your customers, a plan and some simple tools, you can create a bootstrapping marketing plan that will turn your business into a winner. Geek Wire
Startup tips for outsourcing your tasks. It’s no secret that small businesses must work on a tight budget. But it’s also true that as you get your company underway you will be in greater and greater demand. Outsourcing tasks can be a great way getting things done. 47 Hats
Planning & Growth
How to scale a startup. As your small business gains momentum, scaling your operation now becomes important. This can involve expanding your existing team to get more done and changing your focus as the founder and builder of the organization. Are you prepared for the challenge? Startup Professionals Musings
Preserving the equity in your startup. Whether you plan to take your startup public someday or to sell it or pass it down to the next generation, it’s important to understand that your equity stake in the business will, in some ways, be tied to the amount of outside investment you have received. Bloomberg BusinessWeek
Small Business: The Startup Stage
View full post on Small Business News, Tips, Advice – Small Business Trends
