Trizle

Small business loans, also referred to as debt financing, is a good way to finance your business if you don't have enough cash. Unlike equity financing where you give up a stake of your company in return for cash, debt financing lets you keep control of your company. You must promise that you'll pay back the principal and interest rates in time.

How Good is Your Credit Score?

Obtaining small business loans will be one of your most toughest tasks when starting out. That's why it's imperative that you first have a clean credit report. The amount of loan you get will depend on how good your credit score is. If you don't a good credit score, be prepared to explain why to your banker. Check your credit history, and be sure you don't have any discrepancies. Occasionally, the bank may mess up your records unintentionally. Make sure this is not the case, or the bank will limit your loan size. You can check your credit report from the three well-known credit companies: Equifax, TransUnion, Experian for a small amount (usually around $10). Remember, make sure you have a clean credit report before you apply for a business loan from a lender. It will make the entire process a whole lot smoother.

What Lenders Want

Your lender will want to see if you can repay your loans. They want to see evidence of future achievement. They'll check your management experience, expertise, prior successes, your references, and personal resume to determine your credibility. They'll scan through your financial statements to study your past figures, and determine future projections. They love to see guaranteed revenues, such as any contracts with customers you have in place. To increase your chances of getting small business loans future, you should have at least a personal owership of 25% equity in your business. This indicates to the lenders that you're a serious small business owner.

Don't Borrow Too Much

We don't encourage you to go too much into debt financing. It will hurt your credit score if you use too much of it, and can impair your company from reinvesting its retained earnings because it has to repay the loans. You will have to dive into your own pockets to pay back the high interest rates if a downturn erupts in the future. Limit long-term debt financing as much as you can. A good debt-to-equity ratio should be between 1:1 and 1:2.

The Different Options

To learn more about the different small business loans, visit the following links. Banks: Commercial banks are good sources of capital. SBA Loans: A second option if you can't get commercial bank loans. Friends, Family, & Acquaintances: If you don't need that much capital, it's the easiest. Interest rates are always low. For Women: A good SBA program for women.

We won't kid you; winning small business start-up grants or business grants in general is hard work. You'll have to go through mazes and obstacles to even be considered for a grant. But, like anything in business, winning a small business grant is still possible. Grant donors include foundations that specialize in your industry, corporations that complement your business, and even the U.S. government. You may think the government only gives to nonprofits, but this is not the case. It's actually one of the best places to find a grant because it knows a business like yours will contribute to its economy. Keep in mind that your company will be analyzed by a team of experts looking for any flaw that will keep you from the grant. More information on getting small business grants from the government can be found at http://www.grants.gov.

We won't kid you here. Finding a venture capital source is hard to get. You'll need a proven track record, top-notch management, and be in a business where high growth is more than probable. Venture capital (VC) firms have an affinity for the high-tech sector. If your company isn't in high-tech, don't lose hope just yet. VCs, especially those outside Silicon Valley, do work with non high-techs. First though, they must believe your potential for growth is strong.

Hard Money

The dot-com boom has taught venture capitalists to be extra careful when lending their money. The days of free-giving-before-doors-open are over. A venture capital source wants to know your company management and systems will be able to sustain rapid growth to achieve gigantic financial returns. After their dot-com lesson, VCs now focus on established companies. If you're still in start-up mode, you'll need to prove to them that you have a great history in building successful startups.

Be Prepared

Dealing with VCs is not like dealing with your Uncle Marco. They'll scrutinize every financial figure, employee backgrounds, your own character, your knowledge, and your drive. It's vital that you know your stuff, and you can convince them that you're better than the ninety-nine other applicants. Normally, VC firms will want your company to have an exit strategy within five years. It can come by going public, or through an acquisition.

Build Your Company First

Remember, very few applicants get considered. From that, even a smaller percentage gets capital. Even if you're in high tech, we don't recommend this source of funding when you're just starting. It will take time away from more important matters. Instead, focus on building a great small business first. When you've done a great job, a venture capitalist source will come knocking on your doors.

You'll need to be on the right side of the small business legal issue because your small business can't afford big court fees to defend it. We frequently see businesses close because of a few simple steps they could had easily done. Items you must be aware of include your company's corporate structure, company name trademarks, and required business licenses. Corporate Structure You can choose your company structure as a sole proprietorship, a partnership, a limited liability partnership, a limited liability company, or an S or C corporation. The different structures have separate legal and tax consequences. Most small businesses start as sole proprietorships, meaning that you and your business act as one entity. If you get sued, your company and your personal assets will be in jeopardy. Eventually as you get further along, you'll want to separate your business from your personal assets to prevent that from happening. Action step: Choose one: Sole Proprietorship Partnership Corporation S Corporation Limted Liability Corporation. Write it down on a scratch paper. Company Name If you're a sole proprietorship, technically your company name is your birth name. If you do business under a name that's not your birth name, you will have to file a fictitious name or a "doing business as" (dba) with your county or Secretary of State -- depending in the state you live. If your business is operating as a separate entity from you (i.e. not a sole proprietorship), then you don't have to worry about the above. You'll be able to choose your name as you file for your business structure. Make sure that your company name is not trademarked, or it won't be registered. Action step: Choose a name that's meaningful to you. Next, do a search at http://www.uspto.gov/ to be sure no one's using it. If someone is, choose a different name, and repeat process. When done, write it on your scratch paper above. Business License The next step in the business legal issue process is to get your business license at your local county government, so you can do business in your county. The license is not free, but it's not expensive either. Make sure to bring all the legal paperwork required as the county office will need it to grant you your business license. Action step: Bring the above scratch paper with you to the county registrar office. Fill out the appropriate information to get your business license. Your county will then show the the proper steps to register your business name. Following these steps is one basic approach in making sure you're on the right side of the business legal issue. You should contact an attorney for more in-depth legal advice.

If you don't want all of the headaches associated with starting a small business, consider buying a small business. There are many advantages to do this. You'll have established customers, and importantly a steady cash flow. You can sleep better at night knowing that cash will be coming into your business. The downside of buying a business is you will need an enormous upfront capital. Good businesses don't sell for a cheap price. Also, you'll need to involve a lot of professionals. There will be legal fees, accounting fees, and potentially consulting fees, that will cause a burden on your wallet. It's important to have somebody by your side who has already bought a business. They can show you what to do, what not to do, and how to spot a great business. If done right, buying a business can be a great option.

How do you know if you have the characteristic of entrepreneurs? Start with yourself. Entrepreneurship requires more than a dream, and much more than a desire to have independence from the workplace. Be sure you have the right traits to make your business succeed. Ask: Am I a self-starter? Entrepreneurship requires you to get clients, organize details, and complete projects. No one will make you accountable for what's accomplished. If you're good at follow-through, and making good on your promises, you've passed the first test. Can I work with different people? You must be able to work with different personalities from customers, to professionals such as accountants, lawyers, and bankers. All will want to be treated a certain way. If you're a people-person, you'll do well. Can I think fast? You must be good at making decisions quickly, intelligently, and under pressure. You won't be given all the details, and if you wait, you'll could lose a huge customer. Understand that you must be comfortable with your decisions without having all the facts. Am I good at planning and organizing? Most businesses fail because of poor controls in financials, inventory, schedules, and production. Most set goals, and fail to achieve them. If you're good at planning and organizing, you're a step ahead of 99% of people who start their businesses. Most importantly, am I driven enough? Building and running a business can require you to work 80-hour work weeks. It can take a toll on your psyche if you lack the ambition required; but if you do have the drive, it will pull you through barriers and periods of burnouts. If you did well on all of these tests, you have the needed characteristic of entrepreneurs to make your business succeed.

Most people think you can't learn how to become an entrepreneur. Other people think you can. So what's the right answer? It's a little bit of both. Great entrepreneurs use experience plus knowledge from others. They surround themselves with people who have already invented the wheel. Why start from scratch when you can learn from other people's experiences? The best thing to know on how to become an entrepreneur is to first find out what you want to accomplish in five years. Now go out and do it. It's as simple as that. When you're on your journey, grab tools along the way. Get as much knowledge as you can. Learn from experiences of successful entrepreneurs. Get help from organizations such as SCORE (score.org), or through mentors or advisers who are capable of bringing your company to where you want it to be in five years.

Trash everything you learned about how to start a small business. This guide is a collection of everything that we've learned from our experiences and with helping our clients to help you start your business quickly, efficiently, and effectively. It's intended for those who want to build a great business--not just a good one. Don't get too caught up in planning, as you'll soon figure out plans will change when you start your business. To start, make sure you're cut out to be an entrepreneur. Then, how to start a small business begins by asking:

• Step 1: What makes you tick? What business idea suits you?
• Step 2: What's values will your business hold?
• Step 3: What are your business plans?
• Step 4: What are you naming your business?
• Step 5: Are all of your legal information in place?
• Step 6: How are you financing your business?
• Step 7: Go do it!

We've provided a snapshot to each of the above steps below.

Step 1: Discover What Makes You Tick

The first step in how to start a small business begins with a proper and upfront truth of who you are. When you're passionate about something, you'll do some pretty good things with your business. Start by asking yourself: What excites you in life? What are you so good in that you're a "natural" when you do it? To build a successful company, it starts with answering these questions. Learn More

Step 2: Get Preliminary Business Idea

As you'll soon find out, finding that -- great idea' will waste your time. Yes, you will need one to start your business, but don't get too stuck here if you can't find a "perfect" one. Simply find something that you enjoy, and you know you can make a profit with it. For this part, we highly recommend you pick a business type that has already proven profitable - such as a coffee shop, a computer repair store, an auto shop, etc. It rids you of the guessing game, and ensures you have a proven market. The more important step on how to start a small business begins in Step 1, and asks: What industry excites you, and can you succeed in it? Leave those 'great ideas' for the future. Learn More

Step 3: How to Start a Small Business Plan

Again like in Step 2, don't get too caught up in your business plan. As General Dwight D. Eisenhower said on D-Day as he landed his troops, and threw out his plans, ""Planning is priceless, but now that we're moving, plans are worthless." It's a good idea to receive a sense of where you're going, but don't be bounded to it. These plans will change as you run your business; if it doesn't, something's wrong. Some key things to prepare for include how much money will be required, the sources of investment, and the obstacles you will face as you start the business. The only time when you will want a formal business plan is when you want to attract lenders or investors. Learn More

Step 4: Name Your Business

Find a name that fits your business, and one that will stand out in people's minds. Don't go with the generic sounding names, as this may illustrate that you're just another generic company. Strive to be different, and your customers will appreciate it for you doing so. What name would you proudly represent to the world? If you're starting an online business on the other hand, it's better to stick with names that are keyword-focused. This helps you with the search engines -- the greatest traffic-building tool by far. Learn More

Step 5: How to Start a Small Business Legally

This is the driest part when you're starting your business, but unfortunately, it's required. You set up your company with the proper business entity -- whether it's a sole proprietorship, corporation, or partnership. You must be aware of your licenses and permits required of your business type. You must also make sure you're not violating anyone else's trademarks, copyrights, or patents. Learn More

Step 6: Get Money

You'll need investment up front. If you're starting a service business, you can get by with spending modestly; but if you're a brick and mortar business, you'll need a good amount. Learn more

Step 7: Go Do It

Get the supplies and insurance, and go do it. You could start with this step, and all of the other steps will take care of itself as you're building your business. Suffice to say, this step is the most important. Don't get stuck on the planning stages in this guide on how to start a small business. Too many entrepreneurs do the first six steps, but never get to this step. Planning is nice, but you must execute. Set a goal for where you want to be in five years, then start venturing to it.

Pick Up Useful Tools Along the Way

As you're on your road, pick up some Leadership and Management skills to lead your team to greatness. The Finance section will keep your financials are strong. Use the Marketing tips to build and grow your customer base. The Technology section will let you use the most of what you'll need, and the Resources part will offer you more tools to build your business. And don't forget the visitor favorite: Life Skills. We promise you that this section alone will put you ahead of the competition. We constantly update this guide on how to start a small business with the latest practical tips and advice for your company. So please stay in touch by subscribing to our journal, Learn Stuff.

Naming a business is something most entrepreneurs overlook. Know that the most important marketing element is your business name. Make sure your name illustrates the essence and uniqueness of your company. Then run it through a trademark check to see if you can use the name. You don't want to build your brand, and find out five years down the road that you're infringing on someone's business name. Get an Objective Opinion Usually, it's a good idea when naming a business to run it across somebody who can provide you with an objective opinion. They will be less biased, and can give you some quality input. The following are some other pointers. Action step: Ask a friend about your proposed business name. Done? Ask 10 others. For a Brick-and-Mortar Business Create a generic name, and customers will think you're a generic company. Create something unique name that goes against industry norm, and you'll stand out from the crowd. Be careful when coining names though, because it may have negative connotations in different languages. If you're using a coined name, make sure you run it by your associates first before you file your business name. For an Online Business Like brick-and-mortar businesses, you want to stick with names that are easily brandable. It used to be that search engines would heavily rely their rankings on the domain's words. This is not the case anymore. Now, engines will be more focused on the theme and the keywords contained within your pages, than on your domain name. Some More Naming Tips Choose a name that appeals to your and your customers. Pick names that have positive associations if possible. Avoid corporate names (e.g. Davis Lewis Enterprises). Choose a name that a four-year old can pronounce. Don't try to be witty (e.g. Jooce Station). Pick a name that stands out from your competitors. Say it loud. Is it easy? Most importantly, make sure your name is legal. You can check it at http://uspto.gov, under the trademark search. Remember, naming a business will be the most important marketing job you do, so spend quality time on it.

Thought abuot getting small business insurance for your assets? Every small business is, to some extent, unique and different from the rest. It is certainly true that every industry is different and the businesses within each industry represent that fact. A manufacturing business is different to a retail business that, in turn, is different to a business consultant. Where each business differs from the rest a different type of small business insurance will probably be required. You should consider your business as being different to every other business. Property Insurance You need to consider exactly what property you need to cover and also the amount of coverage you will require. As well as the building and any attached structures and outbuildings you should consider whether you need to insure any fences, walls or other external structures. As well as buildings though you should account for all other property involved in your business. This should include the computers and other items as well as accounts and similar paperwork. General Liability Insurance Liability insurance covers employers and companies against all sorts of eventualities where the company can be held liable. The level of liability insurance that a company requires will depend on the company and the type of industry that company works in. Liability insurance can also include credits due to customers because of unsatisfactory work or failed delivery. Specialized Liability Insurance There are specialized forms of liability small business insurance that cover a company for specific forms of liability. The most common of these and one you should consider looking into is worker's compensation. This protects a firm against employee's claims against the company for personal injury or accidents. This is a form of insurance that could prove especially important to businesses that work within a manufacturing industry. Getting Business Insurance Quotes Property insurance and general liability insurance can usually be combined in what is known as a Business Owners Package Policy but insurance like specialized liability insurance will need to be paid for separately. You are best getting all of your insurance policies through one broker. By getting to know your broker well they will already have a very good idea of exactly what your business is likely to need and they will be able to offer you advice and the service you require. Arranging your own small business insurance can be a risky game and regardless of whether you use a broker or not you should always know exactly what you require from each policy. A broker with a little knowledge in your industry will be able to help you with this information but it is important that you do some research of your own. This is especially important if you decide to go it alone.