Small Business Loan Proposal
by: Rebecca Game

Loan Proposal

Applying for a small business loan can be exciting and yet stressful at the same time. For the best results and to heighten your level of confidence, be prepared when you visit the lender you've chosen for your business loan interview. After you have your business plan prepared, start preparing for the loan by writing a loan proposal to present to the lender.

The loan proposal should state some crucial information, and many details, about both yourself and your business or business idea. It should state who you are, how much money you need and where the money will be spent, how you intend to repay the loan, and what you plan on doing in the even that you cannot repay the loan.

The following are key elements to include in your loan proposal.

1. Summary.

This should be listed first in your proposal, but will be written last. It should contain clear, concise, accurate, inviting information about your business or your business ideas. It should summarize how the proposed loan will be used, how it will be repaid, and how it will benefit your business. Remember your competition in the summary of your loan proposal, and point out features of your business that are different from your competitors.

2. Management Profiles.

The management profile section of the loan proposal should explain, most importantly, who you are. Be prepared to reveal everything about yourself and your experience. Have a current resumŽ included as part of the loan proposal, as well as a summary of your skills, qualifications, and other credentials for yourself, as well as for all other owners and key members of your management team.

3. Business Description.

It's not necessary to state the same information mentioned in your business plan as in your loan proposal. However, you do need to present a solid description of the business. Include a brief history of the business in your loan proposal, and detail the current activities. If it's a new business, explain the details of the business that will be developed. Your goal will to be to clearly demonstrate that you fully understand your markets, your competitors, and the industry, including current trends or risks and how you plan to overcome those potential dilemmas. If the loan is for an existing business, include literature that details your products or services, such as current sales sheets, brochures, or catalogs. Include attachments to your loan proposal for this section, such as letters from suppliers, customers, or other business references. Demonstrate through these letters that you provide excellent customer service, and that you pay back your creditors.

4. Business Projections.

Create at least two years' worth of projected income statements and cash flow statements. Your projections should be clearly stated and, most importantly, realistic in nature. Generally, you probably won't need to present the "worst case" or "best case" scenario unless the lender asks for you to write the projections that way. You should, however, be prepared to answer questions pertaining to what you'll do if some of your projections don't work out as planned. For example, if you anticipate obtaining a large, new contract or customer based on improvements made with the business loan, and that contract never goes through, it could change your loan proposal projections drastically.

5. Financial Statements.

Your loan proposal should include both business and personal financial statements. Be aware that the lender will fully analyze the history of your financial statements, calculating all ratios. Be prepared to point out any significant trends you've shown in an introductory paragraph.

6. Loan Purpose.

One of the most important parts of your loan proposal is a detailed description of how you will use the loan proceeds. Have a good understanding of the type of loan that you need, and remember to include the proceeds of the loan in your cash flow projections, as well as the interest in your projected income statement.

7. Repayment Plans.

Repayment plans should also be stated in your financial projections section of the loan proposal, but details of repayment plans should be detailed separately. Propose the terms you want, and prepare for negotiations with the financial institution. The lender will consider a number of factors as they review the overall risk of lending you the money. Understandably, this will impact the repayment terms that they are willing to offer for your business.

Especially if your credit is good, and even if your credit is not so good, remember that in your loan proposal, you are offering the bank a deal that will make them money. Don't go in asking the lender for an "allowance." Instead, enter the interview with your loan proposal objective in mind; namely, focusing on how much money you'll need, and remove the idea of going into the meeting wondering how much they're willing to lend. Never go into a meeting asking for a loan, wondering whether or not they'll lend to you. If this first lender won't approve your loan proposal, have confidence that a different will.

Five Strategic Management Tasks for the Small Business Owner
by: Marjorie Geiser

You have been considering starting up your own small business for some time, now. You have read books and perhaps subscribe to some magazines that focus on small business. Maybe you have started to investigate what exactly you would like to do or offer, and perhaps even started working on your business plan. Then you get stuck.

In order to successfully get a business up and running, you have to have a plan, and a strategy to make that plan become reality. Working through the difficult and insightful steps to set up that strategy is what will make the difference between your dream continuing to be just a dream and making that dream turn into reality.

When you create your business plan, you create your company mission and vision statements. From there, you need to create all the details on how you will implement strategies to accomplish your mission. Your strategic plan, I like to call marketing plan, will be your game plan for how you will run your business, how you will strengthen your competitive position in your industry or location, how you will best satisfy your customers or clients and how you will achieve your performance targets you set up.

In creating your strategy, you will answer three big questions:

• Where are you now?
• Where do you want to go?
• How will you get there?

We are going to look at the five tasks involved in creating your strategic plans to answer these questions, which include:

1. Define your business, create your vision and mission statement
2. Set measurable objectives
3. Craft your strategies to achieve your objectives
4. Implement your strategies
5. Evaluate the results of your strategies and take corrective action

1 - Define your business, create your vision and mission statement

What do you want to do? What do you have a passion for? Who do you want to be known as? Where do you want to be in 10 years? These are all questions to help you determine your vision and mission. I offer a one-hour audio course on how to look at your unique brilliance to answer some of these questions. The advantage of becoming very clear about who you are and what you have to offer is that it will help you avoid going in so many different directions that people will be unclear exactly what it is you excel at. Every potential client or customer wants to see the person who is best at what they have to offer. If you offer everything to everyone, you won’t stand out. Once you set up long-term goals, you will also have a template that will keep you focused and on the right path to achieve those goals.

2 - Set measurable objectives

The purpose of setting objectives is to create a yardstick with which to track the performance targets set up in the mission statement of your company. These objectives should be challenging but achievable, so that you have to stretch yourself in order to be innovative, creative and focused. You can’t succeed by just ‘going along with the flow’. When you create your objectives, you need to focus on financial objectives and strategic objectives. With both, it is necessary to set up specific goals, such as ‘increase earnings growth rate by 10% per year’, or ‘increase market share in my area by 5% this year’.

3 – Craft your strategies to achieve your objectives

Working with clients, I see this as the most difficult part of the process. Yes, people find it difficult to really pinpoint who they are and what they have to offer, and they spend time struggling with narrowing down objectives, but quite often they get bogged down on determining how they want to achieve those objectives. It’s like a block wall, but once they have successfully chipped a whole in the wall, it quickly falls away. Often, if you have made the right choices about what you really want to do, this step starts to develop quickly and easily. It goes from being the hardest to the most inspiring step. After all, this is the essence of how you will run your business. This is the ‘how’ of how you will make it all happen; the action steps. Your strategies will include such things as how you will grow your business, how you will satisfy customers/clients, how to capitalize on new ideas or services, and how to respond to changing industry and market conditions, just to nam!

e a few. This is where the ‘entrepreneur’ in you will come into play.

4 – Implement your strategies

Implementing your strategies involves making sure there is a good fit between what you want to accomplish and how you’re going to make it happen, AND making sure to do this with excellence, and in a timely manner. It’s important to be sure that ample resources are allocated to the activities outlined in the plan, and there are adequate rewards and testing procedures to keep track of how you’re doing. How will you know when a strategy has been successful? If it is, what do you plan to do, then?

5 - Evaluate results and take corrective action

Because conditions and goals change, setting up strategies and evaluating them is an ongoing process. Throughout the entire process, it’s important to constantly evaluate and monitor performance to see if things are going as planned, or if there may be a better way to accomplish an objective, and make adjustments accordingly. This may even mean making major adjustments to your company’s mission or vision statement!

The steps listed above are the basics on how you will put together and run your company. It is as simple as that! Once you have created your goals and objectives, and have set up your strategies to achieve these goals and objectives, the rest is just the making of history.

Finding Free Advice For Small Businesses
By: Joe Hanoa

If you are starting a small business or presently operating one, then you know seeking professional advice can cost you a bundle. You already have limited means to get your business going, the added the stress and expense of hiring professional help can sink your business faster than almost anything else. Well, there is good news for the business person who needs help but can’t afford to shell out the dollars to pay for it. The following information will help you uncover some nifty options to point you in the right direction.

SCORE – The Service Corp of Retired Executives (SCORE) has been established to help small business owners just like you. As a nonprofit entity recognized by the US Small Business Administration, SCORE consists of successful retired executives who have already been there and done that. Chapters are located all across the country and low cost seminars are helpful too. You can find one to one counseling with a former CEO, a VP of banking, a furniture store owners, etc. So many people volunteer to help ease the burden of business owners. Google a search for SCORE and you’ll find what you want.

Business Expos – Chambers of Commerce, business associations, and local governments will sometimes organize a business expo to attract business owners. Most people know that the U.S. was built on the backs of small businesses and it is these small businesses which help to propel our economy. The success of businesses such as yours is critical to helping new ventures get started, inventions to come to market, new ideas to be brought forward, and so much more.

Trade Associations – Depending on your field of expertise, your affiliated trade association can help you empower your business. Some associations work closely with small businesses to help them get established with their local, state, and federal government; write up a business plan; offer tax counseling; discuss the hiring and management of employees; and so much more. Whatever field that you are in, it could pay to join the association created to help you succeed at your business.

So, if you have a small business or are contemplating starting one, then any or all three of these choices can help you out. Your taxes and knowledge helps the economy and it is to the benefit of many that you succeed at what you do. Seek expert help, but do it through an established and proven entity that can deliver to you cost effective results

Don't Let Your Excuses Stop Your Small Business Ideas! By: Ove Nordkvist

The world is full of people dreaming about realizing their small business ideas. Unfortunately the majority have a lot of excuses why they can't have their own business. The group who turn their ideas into viable business are in minority.

Now, anyone have a choice, you can choose to stay in the big group and just make excuses, or you can choose to actually start your own business. You need to say to yourself, " I can do it", I can achieve my goals".

It doesn't matter what excuses you can come up with, they are not valid! How do I know? Because there are so many people who have had the same difficulties as you have, still they have been able to overcome all the obstacles and move on to a better future. If they could succeed with their small business ideas, so can you.

You have to understand that to be able to accomplish your goals, you need to temporary sacrifice some of your comfort habits.The mission to realize your small business ideas, will not be a finger snap, if it was a piece of cake, the world would be full of wealthy small business owners. You'll have to work hard and you have to be very determent. So, why would you do this in first place? Because the reward will be the life of your dreams, including freedom and financial independence.

Let's have a look at your future as it may be if you stay at your current course. You turn 65, get your social security check. What kind of life would you be able to live? Could you afford to buy new glasses when you need a new prescription? Would you be able afford to go out having a drink with your friends? What about the cruise you always dreamed about?

You have the possibility and ability to change your life. More and more people grab their small business ideas and convert them into a real business. They do it because they want to both secure their financial future, and because they want to be able to work with something they really enjoy. They have realized that it's more secure to run their own show, than being dependent of someone else.

It would be wise to convert your small business ideas at your own pace, do it before you might be forced to, by unforeseen reasons, such as job cut downs. If you go ahead and do it a side of your salary job, you can make it a smooth transition. You would have the possibility to start part time, and learn as you go. In the moment it will always seem to be easier to just go on with what you have. That will however never lead you to the life and lifestyle you want.

You need to invest time work and passion into your business, you don't want to waste these deposits. Therefore you must be very cautious when you choose your business. If you choose the wrong thing, you may find out, one year and many working hours later, that it was all for nothing. Keep that in mind, stop your excuses and make your small business ideas prosper

Small Business Blog Writing Tips
By: Jim Degerstrom

You launch a new small business blog, and then writer's block kicks in. What to do? Here are some tips to help you with ideas for new posts to your blog. Your blog writing style does not have to be textbook perfect, so informal writing is suitable as long as you check grammar and spelling. It's okay to entertain as you provide information, too. Visitors will not expect literary works suitable for a Nobel prize when you create blog posts, so relax.

Write short paragraphs and cover one aspect of what you present in each. Visitors want information quickly; so long paragraphs should be avoided. Short posts of 1-2 paragraphs are fine, too. Most website content is quickly scanned, so headlines and the first few words of each paragraph may be all that most visitors view before deciding to read details, or exit. Include key words relative to your subject, and place some near the beginning of sentences for each paragraph, so your visitors get the general feel as they scan your post. Search engines will visit and index your blog content, too, so key words are important for attracting the search engine crawlers.

Google Alerts and blog labels are two techniques to help you generate new blog post ideas. Each will be presented in the report Blog Your Way to Fresh Content from my series of free PDF SEO Reports about do-it-yourself small business website promotion that I began to release during 2007.

Some of my clients could not wait, so this article is a preview of how to use these two techniques to come up with post ideas for your blog:

1. Google Alerts is a free service that delivers links to content by email. Once set up, you automatically receive a collection of current news stories or related content by email with summaries and links to the information.

2. Your blog labels are the filing system for your blog that cross references your posts by subject category, so visitors may click a label and view all posts about that subject on one page. Use them to brainstorm ideas for posts.

Google Alerts Search for Google Alerts to find the main page, and then sign up for a Google account if you don't have one. You don't need an account to use alerts, but managing your choices is more convenient from one page, and creating, editing, or deleting alerts will be easier. To begin you create individual alerts for search words or phrases relative to your business, and then your options are type and how often. Type means the source, and the selections are from news, the web, blogs, groups, and comprehensive (all). The how often is the frequency of emails you receive from Google and include once a day, as it happens, and once a week.

Once you create the alert, emails arrive automatically with lists of sources for content related to your selected subject, and a summary of each. Follow the links of interest, and perhaps you will decide to write about the same subject with a different slant. Never copy another author's content verbatim or claim it as your original writing. That would be plagiarism. However, quoting other sources is acceptable, and snippets or excerpts are often all you need.

Outsourcing and the Small Business
By: Ken O'brien

Many basic IT services are very general and not business specific. Services such as anti-virus protection, data backup and IT support can benefit from the economy of scale an outsourcing organisation offers. For a small business taking care of these areas effectively may prove difficult. While there is a cost associated with outsourcing there is a far higher cost to not maintaining and looking after IT services.

The main benefit outsourcing can offer is expert support without the associated inhouse costs. It can take care of systems security, data backup or even provide complex system support. For small business the key attraction here is that expert support. Even in organisations with their own IT support there may be some benefit through the outsourcing of selected IT services.

A further advantage of outsourcing is that a business can choose which individual services to allocate to an outside provider. Different services can be provided by different suppliers, although this may involve extra management.

A potential downside of outsourcing can be the loss of control over IT systems and possible loss of expertise to the business. This is true if there are key systems that the business depends on. This may not be what the business wants, especially if it has invested heavily in technology.

One way to overcome this possible loss of control is for an organisation to agree levels of service with their outsourcing partner.

These should include

- Guarantee of service

- Specified service hours

- Level of support provided

- Security policies for customer systems

- Data Protection policies

IT outsourcing is not a panacea and for some SMEs it may not provide any immediate solutions, but given the growing complexity of IT systems, it is something that should be considered. Just because a business is small it doesn’t mean it’s not entitled to quality support.

Feeding the Small Business Ecosystem
By: John Jantsch

Forgive what may seem like a bit of a theoretical argument today. Sometimes you have to step back and get a sense of the biggest picture in order to understand how all the simple, practical parts relate.

Small business is often held together with sweat, creativity and a heavy use of duct tape. (In case you ever wondered where I came up with the term Duct Tape Marketing.) That's the outer reality of small business. The inner reality, the part that most don't see and even the owner of the business might not understand, is more like a living breathing ecosystem.

I didn't really excel in science in school, but to me the parallel is obvious. In an ecosystem, the many parts are dependent upon each other for success. In a small business, this is equally true and just as hard to measure and control.

There are lots of small businesses out there that appear healthy and happy on the outside but are being held back by some component of the overall system. The very first thing you must do is acknowledge this idea of dependant parts. If one isn't thriving, isn't even noticed, others will suffer.

It's very hard to have a healthy business if the employees don't feel appreciated. It's very hard to have a healthy business if clients don't know how your business is unique. It's very hard to have a healthy business if your referral partners don't know who makes an ideal client for your business.

There are countless examples of growing businesses that ignore what I'm suggesting, but I wonder if they are fun places to work and do business with?

Thinking strategically about your own small business ecosystem requires understanding who all the players are, the experience you want them to have with your business, and the tools you need to employ to make this integration happen.

First let's take a look at the major players in the small business ecosystem.

You may have some combination of:

Suspects - folks you've identified that might need what you do

Prospects - those who have responded to your lead activities

Clients- someone who has purchased something

Advocates - purchases lots and tells others

Associates - your staff

Vendors - companies you might purchase from

Partners - companies that might help you produce a product or co-create services and clients

You can define what each of these is in your business, but the strongest businesses understand that they need to embrace, feed and sell each - sometimes in order for one to thrive. For instance, your clients will become stronger advocates or referral sources the more they feel connected to your community of clients, associates and partners.

One of the ways to create these connections among all of the members of your ecosystem is to have and communicate in no uncertain terms your firm's unique core message. That message should contain a clear statement about your brand and how it's unique and who should care. The goal then becomes finding ways for your clients, advocates, partners, and associates to connect to this brand in a way that feeds them.

Technology and a host of new media tools have made the important task of feeding and integrating all of the parties in a small business world much easier.

Let's cover a few examples:

Blogs allow you to produce frequently changing content and interact with clients and prospects

Websites allow you to give access to a great deal of educational content

Web apps like Basecamp allow you to collaborate with clients and partners in real time

Online meeting tools like WebEx give you the ability to hold instant virtual sales presentations and peer-to-peer client conversations

Podcasting can open up doors to new media and give a true voice to the people in your firm

RSS technology allows you to create dynamic content that can be personalized to the individual

CRM systems give you the ability to track a prospect's education process and know when they need more

Social software can give your clients the ability to generate marketing content for you and about you in an environment of trust

Autoresponders can provide education and training whenever it's requested

Intranet styled offerings and even chat platforms make remote and virtual communication with your suppliers and associates simple and seamless

Content management systems can give your firm's employees and clients access to your entire searchable library of documented knowledge

Streaming video and video screen capture makes providing simple help and training a snap

I suspect you get the point from the list above, but, of course, technology itself isn't the answer. It is the beautiful way in which you tap the power it possesses to help meet and exceed your client's expectations, build a thriving community of partners, associates, and advocates around your business, and generate and close more deals, more profitably.

To do this you must embrace new tools, new media, and new technology and figure out how to bend them to serve the goals of feeding your unique small business ecosystem.

How to ‘Start’ Starting your Own Business
by Audrey Burton

Most people in very small businesses start their businesses from a passion. This an excellent place to start – assuming there is a need in the marketplace for what you are selling.

A business associate of mine is a residential real estate agent in the San Fernando Valley area of Los Angeles, California. She told me recently that there are 14,000 real estate agents in the San Fernando Valley!! Holy cow that's a lot! Anyone considering starting a real estate business in this geographic area should do a lot of research and hard thinking before getting their license.

When you are deciding to start your business, the absolutely most important question you need to answer is: Is there a market for this? Big companies spend sometimes hundreds of thousands of dollars on market research answering that question before introducing a new product. You have a fabulous tool at your disposal that is almost totally free – the internet. That can give you a good start in your research.

The next very important question that requires an answer is: Who is your target market? In other words, who, specifically, will pay for what you are selling? If your answer to this question starts with "Anyone who…" that's not a target and your chances of success are very limited.

If you try to appeal to "Anyone who…", it will be almost impossible to make an emotional connection of any kind or to build any kind of relationship with prospects with your message. What will ultimately happen is you will water down your benefit statements and marketing copy to try to appeal to as broad an audience as possible, which will result in boring, mediocre marketing that leaves no lasting impression on anyone.

One more basic requirement for success in starting a new business is – mo'ney! That really tired statement, "It takes mon'ey to make mon'ey" is actually true. I suggest having at LEAST 24 months of living expenses saved, plus your start-up costs, before starting your business. If you have already committed to it without that kind of savings, you can expect to incur some debt. This is normal!

So, in summary, to start a business, it is important to have a passion, a need in the marketplace for your product/service, a clear, narrow target market and some start-up mon'ey. Can you make a success without these? Of course! It is just a lot more challenging!

Advantages of a Business Franchise Opportunity
by Naz Daud

A Franchise Opportunity has numerous benefits over starting a business on your own. The major reason why it pays to become a franchisee is that you are much more likely to still be trading profitably after five years of trading. Over eighty percent of new start ups fail within the first five year!

When one buys a business from a franchisor they receive a detailed training programme. This covers all aspects of running a business. The training programme is critical in ensuring that your business runs smoothly.

It is the franchisors interest for the franchisee to succeed as then they receive a higher royalty payment. This also serves to attract new people to their franchise system. The more that succeed with the business the easier it gets to attract quality people.

The franchisee also benefits from all the logos, stationary, brochures and websites that have been created. Someone starting a business on their own has to spend a huge amount of time in just creating a brand image.

Most lenders are willing to offer a higher percentage of funds required to start a business to potential franchisees than if they were starting a business on their own. This is because they recognise the potential of buying a franchise. They also have to protect their investment in the business and realise that their money is much more likely to be repaid by someone buying into a franchise.

The franchisor even assists the franchisee with the territory. Usually this advice is free unlike when one starts a business on their own. The market research and advice on territories likely to succeed might have cost the franchisor a serious amount of cash but is yours for free if you buy into his systems. The franchisor will even help the franchisee to secure planning permission using their knowledge acquired through years of experience. Trying to tackle this maze on your own without paying for specialist advice is a minefield. Paying for specialist advice costs a small fortune which is why most new business owners do not do it.

By buying into a franchise business almost nothing is left to chance. Your stock levels are predetermined by the franchisor and have been based on years if not decades of experience. Starting a business is only the first phase in achieving profits. This is where the ongoing support and further training if required comes in. Most franchisors provide further training at favourable prices. They only usually try and recuperate their costs without trying to make a profit on their training programmes. When it comes to advertising on a national scale the franchisor can achieve true cost savings. They can negotiate national rates and then spread the costs throughout their franchise network. The franchisee does not need to worry about the logistics of creating an advertising campaign and benefit from the expert knowledge of the franchisor.

The downside is that even though you are running a viable business that generates a decent profit, it is unlikely that you will ever create a new empire. Starting a business on your own has huge risks but the potential upside can be huge if you enter the market at the right time and in the right place.

In my opinion though, the benefits of buying into a franchise far out way the risks in starting a business on your own. If you are seeking to reduce the risks associated with going into business on your own then a franchise business might be right for you.

7 Cash Stashes for Small Business Start-Ups
by Susan L Reid

The number one question I get asked as a small business start-up coach is: Where do I get start-up cash?

I'm always glad when my clients ask me this question. If they are asking this question, it is a sure sign that they are serious about taking financial responsibility for start it.

Not All Money Is the SameThere are two types of start-up financing: debt and equity. Consider what type is right for you.

Debt Financing is the use of borrowed money to finance a business. Any money you borrow is considered debt financing.

Sources of debt financing loans are many and varied: banks, savings and loans, credit unions, commercial finance companies, and the U.S. Small Business Administration (SBA) are the most common. Loans from family and friends are also considered debt financing, even when there is no interest attached.

Debt financing loans are relatively small and short in term and are awarded based on your guarantee of repayment from your personal assets and equity. Debt financing is often the financial strategy of choice for the start-up stage of businesses.

Equity financing is any form of financing that is based on the equity of your business. In this type of financing, the financial institution provides money in return for a share of your business's profits. This essentially means that you will be selling a portion of your company in order to receive funds.Venture capitalist firms, business angels, and other professional equity funding firms are the standard sources for equity financing. Handled correctly, loans from friends and family could be considered a source of non-professional equity funding.

Equity financing involves stock options, and is usually a larger, longer-term investment than debt financing. Because of this, equity financing is more often considered in the growth stage of businesses.

7 Main Sources of Funding for Small Business Start-ups

1. You

Investors are more willing to invest in your start-up when they see that you have put your own money on the line. Therefore, the first place to look for money when starting up a business is your own pocket.

Personal AssetsAccording to the SBA, 57% of entrepreneurs dip into personal or family savings to pay for their company's launch. If you decide to use your own money, don't use it all. This will protect you from eating Ramen noodles for the rest of your life, give you great experience in borrowing money, and build your business credit.

A JobThere's no reason why you can't get an outside job to fund your start-up. In fact, most people do. This will ensure that there will never be a time when you are without money coming in and will help take most of the stress and risk out of starting up.

Credit CardsIf you are going to use plastic, shop around for the lowest interest rate available.

2. Friends and Family

Money from friends and family is the most common source of non-professional funding for small business start-ups. Here, the biggest advantage is the same as the biggest disadvantage: You know these people. Unspoken needs and attachments to outcome may cause stress that would warrant steering away from this type of funding.

3. Angel Investors

An angel investor is someone who invests in a business venture, providing capital for start-up or expansion. Angels are affluent individuals, often entrepreneurs themselves, who make high-risk investments with new companies for the hope of high rates of return on their money. They are often the first investors in a company, adding value through their contacts and expertise. Unlike venture capitalists, angels typically do not pool money in a professionally-managed fund. Rather, angel investors often organize themselves in angel networks or angel groups to share research and pool investment capital.

4. Business Partners

There are two kinds of partners to consider for your business: silent and working. A silent partner is someone who contributes capital for a portion of the business, yet is generally not involved in the operation of the business. A working partner is someone who contributes not only capital for a portion of the business but also skills and labor in day-to-day operations.

5. Commercial Loans

If you are launching a new business, chances are good that there will be a commercial bank loan somewhere in your future. However, most commercial loans go to small businesses that are already showing a profitable track record. Banks finance 12% of all small business start-ups, according to a recent SBA study. Banks consider financing individuals with a solid credit history, related entrepreneurial experience, and collateral (real estate and equipment). Banks require a formal business plan. They also take into consideration whether you are investing your own money in your start-up before giving you a loan.

6. Seed Funding Firms

Seed funding firms, also called incubators, are designed to encourage entrepreneurship and nurture business ideas or new technologies to help them become attractive to venture capitalists. An incubator typically provides physical space and some or all of these services: meeting areas, office space, equipment, secretarial services, accounting services, research libraries, legal services, and technical services. Incubators involve a mix of advice, service and support to help new businesses develop and grow.

7. Venture Capital Funds

Venture capital is a type of private equity funding typically provided to new growth businesses by professional, institutionally backed outside investors. Venture capitalist firms are actual companies. However, they invest other people's money and much larger amounts of it (several million dollars) than seed funding firms. This type of equity investment usually is best suited for rapidly growing companies that require a lot of capital or start-up companies with a strong business plan.

Fixed Or Variable Rate For Small Business Loans?
by Charley Hwang

Small businesses are known for problems, including the prospects of getting a loan with flexible terms and low interest rates. One of the biggest questions faced by business owners is whether to choose between a fixed rate and a variable rate loan. Can you even choose? Many lenders require one type of loan for a small business, making this choice at their discretion. Both offer benefits, but both fixed and variable rate loans have their cons as well.

For starters, most people would say that fixed interest rate business loans seem to make the most sense. Variable rates come with pros as well, like market influence and how interest rates can plummet lower than fixed rate loans. However, variable rate interest loans can skyrocket as well, making this type of loan a gamble. Businesses generally want to limit their risks and avoid nasty surprises. Given this fact, we would make the suggestion of going for a fixed rate loan rather than a variable rate loan.

There are other reasons for going with one over the other. If your business loan interest rate never goes up and down, planning can be made simpler knowing how your monthly payments are going to turn up. On a mortgage or personal loan, this advantage is pretty important. It becomes even more important when what you can do two months from now depends on how much you’ll have to pay next month. Personal finances depend heavily on planning, which is vital for a business. Business loan interest rates that skyrocket and plummet and skyrocket again makes planning harder and inconsistent. For this reason, it is best to go with a fixed rate interest loan.

It can be quite confusing and frustrated seeing so many sources of information on business loans. Keep in mind that this topic has a lot written on it and there are many different points of view. It is best to collect all you can to be fully informed on the interest rate of business loans . We believe we are giving you the best information that can currently be found today on this subject as we sort through a lot of out of date or irrelevant findings in order to stay in the loop.

Tips, advice and solutions are what we are always seeking. Because you are searching for interest rates we hope we can provide you with that. By scouring the internet, we've collected information to answer questions on this to assist you.

Intenet Marketing For Your Small Business
by: Brandt Stohr

A decade ago, the internet wasn’t considered an important part of a small business marketing strategy. Today, it’s paramount. That doesn’t mean that your small business marketing strategy has to include a lavish 25-page website with sounds, flash movies, and thousand-dollar graphics. It doesn’t mean that you have to spend $5.77 per click to advertise under the keywords “small business marketing” on Google. It does mean that you need to understand, at the very least, what the internet can do for your small business marketing.

To gain that understanding, you’ll need to learn about the four most fundamental pillars of internet small business marketing:
1) websites;
2) search engine optimization;
3) pay-per-click advertising; and
4) affiliate marketing.

Websites

Websites are the foundation of the Internet. So the logical first step in developing your internet small business marketing strategy is to set up a website. Unless you’re incredibly tech savvy or have a large budget to spend on your internet small business marketing, you’d be better off starting simple.

To begin, think about what small business marketing goals you want to accomplish with your website:

•Do you want to tell potential customers about your products or services?
•Do you want customers to be able to buy directly from your site?
•Do you want to offer visitors valuable information?
•Do you plan to use your website to reach outside of your current network or primarily to communicate with the contacts you already have?

No matter what small business marketing goals you want to accomplish with your site, at the very least you’ll have to register your domain name (your website “address”) and sign up with a web hosting service.

Search engine optimization

The cheapest way to optimize your small business marketing website strategy is through search engine optimization (SEO). To understand SEO, first think about how visitors will find your site.

There are three principle ways:

1. They’ll know your web address already (perhaps they got it off your business card or other small business marketing materials) and they’ll simply type it in on the address line

2. They’ll find your website through a link they found somewhere on the Internet

3. They’ll search in one of the major search engines (Google, Yahoo, MSN) for a keyword or key phrase that relates to your business.

In internet small business marketing, the trick lies in getting your website to rank on the first (or even second, or third) page of results that come up when a visitor runs a keyword search. Search engine optimization is the art of doing just that. The most powerful way to improve your search page rankings (and, thereby, your small business marketing results) is to have relevant keywords embedded throughout your site’s content.

Pay-per-click advertising

Strategically placing relevant keywords in your site content and having other pages link to yours are called “organic” ways to improve your search engine ranking. Another way to maximize the effectiveness of your internet small business marketing strategy is to pay for advertising on the search engines.

The principle behind pay-per-click advertising programs (like Google’s AdWords) is that you pay to have your website address and a brief ad displayed with the organic results of web visitors’ searches. For example, for $5.77 per click you can have your website address and ad appear on the first, second or third pages on Google when users type in the key phrase “small business marketing.” As with all advertising, the most popular keywords are more expensive than the less popular ones.

Affiliate marketing

Where pay-per-click advertising is a non-organic way to get your website listed on search pages, affiliate marketing is a non-organic way to get other sites to link to yours. The principle behind this small business marketing tool is that you advertise your site on other websites and each time someone clicks through to your site from that other site, you pay your “affiliate” site a fee. Affiliate marketing works both ways, too: you can allow related businesses to advertise on your site and earn a commission when viewers click through.

Whatever method you choose for your online small business marketing strategy, it’s becoming increasingly important that you have an online presence. Those businesses that don’t may well get left in the dust.

About The Author
Brandt Stohr, the Small Business Marketing Genius has brought startup one man operations to billion dollar corporations by using creative marketing techniques rather then investors and capital. Brandt has been helped hundreds of entrepreneurs to get their small businesses exploding with sales without the use of expensive traditional marketing techniques. For more information and a free report on the ten deadly mistakes most small businesses are still making visit Brandt Stohr's site at http://www.smallbusinessmktng.com/.

Intenet Marketing For Your Small Business
by: Brandt Stohr

A decade ago, the internet wasn’t considered an important part of a small business marketing strategy. Today, it’s paramount. That doesn’t mean that your small business marketing strategy has to include a lavish 25-page website with sounds, flash movies, and thousand-dollar graphics. It doesn’t mean that you have to spend $5.77 per click to advertise under the keywords “small business marketing” on Google. It does mean that you need to understand, at the very least, what the internet can do for your small business marketing.

To gain that understanding, you’ll need to learn about the four most fundamental pillars of internet small business marketing:
1) websites;
2) search engine optimization;
3) pay-per-click advertising; and
4) affiliate marketing.

Websites

Websites are the foundation of the Internet. So the logical first step in developing your internet small business marketing strategy is to set up a website. Unless you’re incredibly tech savvy or have a large budget to spend on your internet small business marketing, you’d be better off starting simple.

To begin, think about what small business marketing goals you want to accomplish with your website:

•Do you want to tell potential customers about your products or services?
•Do you want customers to be able to buy directly from your site?
•Do you want to offer visitors valuable information?
•Do you plan to use your website to reach outside of your current network or primarily to communicate with the contacts you already have?

No matter what small business marketing goals you want to accomplish with your site, at the very least you’ll have to register your domain name (your website “address”) and sign up with a web hosting service.

Search engine optimization

The cheapest way to optimize your small business marketing website strategy is through search engine optimization (SEO). To understand SEO, first think about how visitors will find your site.

There are three principle ways:

1. They’ll know your web address already (perhaps they got it off your business card or other small business marketing materials) and they’ll simply type it in on the address line

2. They’ll find your website through a link they found somewhere on the Internet

3. They’ll search in one of the major search engines (Google, Yahoo, MSN) for a keyword or key phrase that relates to your business.

In internet small business marketing, the trick lies in getting your website to rank on the first (or even second, or third) page of results that come up when a visitor runs a keyword search. Search engine optimization is the art of doing just that. The most powerful way to improve your search page rankings (and, thereby, your small business marketing results) is to have relevant keywords embedded throughout your site’s content.

Pay-per-click advertising

Strategically placing relevant keywords in your site content and having other pages link to yours are called “organic” ways to improve your search engine ranking. Another way to maximize the effectiveness of your internet small business marketing strategy is to pay for advertising on the search engines.

The principle behind pay-per-click advertising programs (like Google’s AdWords) is that you pay to have your website address and a brief ad displayed with the organic results of web visitors’ searches. For example, for $5.77 per click you can have your website address and ad appear on the first, second or third pages on Google when users type in the key phrase “small business marketing.” As with all advertising, the most popular keywords are more expensive than the less popular ones.

Affiliate marketing

Where pay-per-click advertising is a non-organic way to get your website listed on search pages, affiliate marketing is a non-organic way to get other sites to link to yours. The principle behind this small business marketing tool is that you advertise your site on other websites and each time someone clicks through to your site from that other site, you pay your “affiliate” site a fee. Affiliate marketing works both ways, too: you can allow related businesses to advertise on your site and earn a commission when viewers click through.

Whatever method you choose for your online small business marketing strategy, it’s becoming increasingly important that you have an online presence. Those businesses that don’t may well get left in the dust.

About The Author
Brandt Stohr, the Small Business Marketing Genius has brought startup one man operations to billion dollar corporations by using creative marketing techniques rather then investors and capital. Brandt has been helped hundreds of entrepreneurs to get their small businesses exploding with sales without the use of expensive traditional marketing techniques. For more information and a free report on the ten deadly mistakes most small businesses are still making visit Brandt Stohr's site at http://www.smallbusinessmktng.com.

Fund Raising is Easier with Small Business Loans
by: Michael T. Brian

Business without finance is like a fish without water in the desert which can’t survive for long. Finance or capital is something which a business requires at every stage to run smoothly. A small deficit of this capital can be the cause of big losses.

Small business loans can help you in letting your business run on the right tracks with apt financing at the right time. Small business loans are the loans for financing the commercial needs of small business. These loans are conveniently available in the loan market and are for variety of business requirements like:

• The purchase of real estate to domicile the business
• Construction, renovation or leasehold improvements
• To purchase the furniture, fixtures, machinery, or the equipment
• For the flooring of inventory and for working capital.

Your business plan shows outside small business loan lender what you want to achieve but just as importantly will help you keep your long-term objectives in mind while still dealing with the day-to-day issues of running your own business. So, it is always beneficial to do prepare a business plan before you go for a small business loan.

Being a homeowner or property owner you can place your asset or home as collateral to the lender for getting a secured small business loan. This is preferable when requirement is huge. But collateral-less borrowers are welcomed for small business loans in form of unsecured loans. Also, these loans ensure faster approvals so you don’t have to wait too long to get the money.

You can borrow from £50000 to £1000000 with secured and from £1000 to £25000 with an unsecured business loans. You can also get small business loans if you are a bad credit holder but for this you need to do some research among the online loan lenders to get a good deal. These loans can give a boost to your credit score, when you make the repayments for the loan on time.

Online loan websites offers you large number of free online quotes which you can easily compare with the help of comparison tools. Also, there are tools such as debt and repayment calculators, repayment tables and budget planners to help you out. You can select the quote which suits you and apply for the same. You need to mention your personal details, name and nature of business, place of business, loan amount required along with the necessary documents to the lender. You will get the approval quickly after all the formalities have been completed for small business loans to serve your commercial ideas.

About The Author
Michael T. Brian is the author of this article. He is Masters in Business Administration and expert in finance. He writes about various finance related topics. To find Online Business loans, business start up loans, Secured business loans, unsecured business loans, small business loan, flexible business loans visit http://www.find-business-loans.co.uk/

CMS Websites for Small Businesses
by: Maggie Galloway

More and more people have come to realise that you cannot stand still in business and companies are now recognising that having a website can add real value to their business.

Buying a business website that you cannot update yourself just simply doesn't make sense and until now, the management of a website has been both daunting and expensive but not anymore!

The ultimate solution to running your business online is a Content Management System website, which will allow you to create, edit & delete content anytime without any web skills. The ability to carry out changes to your own web site is as easy as editing a Word document and means an end to expensive web designer services. A CMS system is ideal for businesses that want to sell goods on line. To be able to add new lines, change prices, insert photographs and edit descriptions as well as having a shopping cart facility is invaluable in the fight to keep up to date with your competitors.

There is little point in having a business web site if your customers cannot find it.

Bearing in mind that you will not be automatically listed in the search engines and that there are over 1100 search engines and directories, the simplest and easiest way to ensure that your site is found on all of the most popular search engines is a Search Engine Optimisation service or SEO. The internet is vast: there are billions of web pages, with millions of new ones added every day. Unless your business is an established global brand, you will face enormous competition trying to attract people to your site.

Research has shown that only 10% of web users will look past the second page of results on a search engine. This means that if your website is not rated as one of the twenty best matches for someone’s search, you stand little chance of attracting visitors to your site. In fact, for search engines to deliver a significant mount of visitors to your site, you really need to be one of the top five matches.

You should also consider using an agency to help boost your positioning and improve your rating on the major search engines. http://www.britnett-carver.co.uk/carasolwebsolutions/

About The Author
Maggie Galloway Married for 28 years with 3 children, worked for many years in retailing.

Small Business Web Hosting, How To Choose
by: Ove Nordkvist

The best choice of small business web hosting is not only about a storage space for your content, it has to include a comprehensive tool kit to allow you to build your own web site. It must also include the tools and services You need to maintain a small business web site.

The best web hosting providers give you easy to use web site builders and user friendly interfaces. This kind of service providers are targeting small business owners for whom a high standard web site is essential. Since you pay your host for their services, it saves you workforce for your web site maintenance and upkeep.

You don't need to worry about server crashes and technical issues. You can relay on your web hosting provider to make sure your visitors has easy access to your web site.

Here are a few things to keep in mind when you choose web site host for your small business. This will help you to get efficient services. The main thing, will be to choose a reliable web hosting service that provides you with enough server space to host your web site.

You want to see that the technical support are top notch. And the web site builder have to be user friendly. What kind of special features are included? and what features do you need at your website? Your web site host should also offer you some flexibility to move around and grow with your business and the traffic at your site.

Some of the best web hosting providers also offers web design services. Professional web hosting designs are user friendly, ready made templates that give your web site a professional look and feel. These are custom made by the provider and you can choose from a variety of templates. there are different templates for specific business purposes.

Once you choose a design template, all you need to do is upload your content. Sit back and enjoy the effect of an eye catching web site.

To create your web site with a template, is a good way to avoid falling in the trap of create a flashy site with a lot of graphics and slow navigation. People don't like to wait, keep your site lean and mean.

Small Business Ideas, Success By Faith!
by: ove nordkvist

You have to believe in your small business ideas. What you believe truly and with feeling will become your reality. When you change what you believe, you can change your reality and your performance.Your thoughts and beliefs can either help you achieve your goals or keep you from achieving success.

People with a negative approach to life and the naysayers says : “I don't believe it until I see it!” In fact, it's the other way around, it is not until you believe it, you'll see it! And it doesn't matter what "it" is.

To limit your self by your thoughts is the worst thing you can do. That will for certain keep you from achieving the success you want. There is an old saying : whether you think you can or you can't, you're right.

Once you adapt, how powerful your mind is, it can help you to manifest the things you really want. You need to have a clear vision on what you want to achieve. Form a solid plan to get you there. Truly and full heartedly believe you are destined to achieve your goals. During your journey, you must stay focused and believe in your small business ideas.

One of the biggest challenges you will face, is to persevere and maintain focus on your goals, when you reach seemingly impossible to get through setbacks or obstacles. What we can learn from the past, is that we normally approach an obstacle with the feeling that this is a negative setback. In fact, obstacles will help you to grow and can be positive! Sometimes things go completely wrong, you struggle through it, and when the difficulties are behind you, you can look back and see what you have learned from the experience. You can see that you have become a stronger and wiser person, thanks to that obstacle.

A person who give up and turn around at the sight of an obstacle, will not have much of a chance to reach the destination.By maintaining believe in your small business ideas, you will be able to achieve your goals. It might be that you reach your destination from a slightly different direction.

Once you have gained the ability to stay persistent through all obstacles and setbacks, you will be able to realize your small business ideas and create the reality that you desire. Start today, believe that you're destined to be a successful small business owner. Get your focus very clear, aim for your true desires. Make a plan how to get to your goal, believe with all your heart, that you will get there.

Make it an habit to act like you have already accomplished your goals. Act as the successful person you want to be. This new behavior will influence your beliefs, which in turn will help you to achieve your goals! To achieve success is no mystery, it is available for anyone. The first step is to believe that you will succeed with your small business ideas.

About The Author
Ove Nordkvist is the Founder of the web site http://small-biz-ideas.net/ where you can get help with ideas, tools and resources to start a small business. You can download free Masters Courses for a variety of small business ideas at http://www.small-biz-ideas.net/.

Top Ten Small Business Mastermind Advisers All Small Business Owners Need To Have to Succeed
By: Chris Le Roy

The statistics on small businesses going broke in the first 12 months of operation are nothing short of obscene and seriously scary. In Australia and other western countries such as the United States 70% of all small businesses fail within the first 12 months of operation but let me tell you from experience, surviving after that 12 months is no less harrowing.

After 10 years of running four small businesses and creating them from scratch I can tell you with some authority, that I did not do this on my own. In fact, I reckon I have made every mistake in the book on how not to run a small business, but yet I have still survived. The secret to staying in business is all down to being able to talk to my ten Small Business Mastermind Advisers.

My ten Small Business Mastermind Advisers are there as my support team in helping me make the right decisions. See often when we make a decision in small business, it might be right at the time but down the track it can do you a lot of harm. Having your small business mastermind advisers on call, you can simply call them and ask them the consequences of the choices you are about to make.

For example, having the right business structure and putting your business assets in the right structure will play a major roll in the success of your business when you decide to exit the business. Se e most people who go into business only ever think of the business as a job they do not look at it from the perspective of how they will exit the business when they have built it into an enterprise.Those ten small business mastermind advisers will help you to ensure that you have met your obligations and that there are no hidden issues that might come up in the future for your business. For example, we recently chose to sell off our car cleaning business as my wife wanted to pursue something different. Because of the way I had structured some of the trademarks in my company that related to hers, when we went and sold the business it created a number of headaches in the sale process. Essentially we had to shift ownership of those trademarks to her company prior to the sale which created a number of financial costs that we have had to endure even though my company never made any money. This issue arose simply because in the early days, I did not have my 10 Small Business Mastermind Advisers to tell me how my choices would impact on me in the future.

Adviser 1: Accountant

In business today, with the complexities of superannuation, sales tax or GST, income tax and all the other taxes out there an accountant is a must. As a small business owner you need to find an accountant that is a small business specialist and is proactive in working with you.What I have found is that some accountants will only do what you ask them to do and will not step in and give you advice if you do not ask. You want an accountant that if they see you are doing something wrong then they will tell you without you asking.

The other thing you will need to ensure is that you hire an accountant that outlines where all of their hours are going. It is very easy for you with accountants and solicitors to end up with 5 or 6 figure bills.

Adviser 2: Solicitor

The solicitor is another important Small Business Mastermind adviser. Just like the accountant you need to make sure that the solicitor is a small business specialist. The role of the solicitor is to help you with all legal issues like what structure suits what you want to achieve, do your forms and policies meet your legal obligations, like your privacy policy, recruitment policy etc.

They can also help you protect your assets and in particular your intellectual property like trademarks, copyright etc. Often small business owners do not do the basics of trademarking their business name and logos to stop other business predators using their identities.

Adviser 3: Marketing and Advertising Expert

A Marketing and Advertising Expert is a must in today's market place. I have found that with the various media types, people in the industry can get better deals than if you dealt with the media owners. For example, recently I chose a new advertising specialist to join my small business mastermind advisers because their company was able to negotiate lower television advert placements, than what I could dealing directly with the station.

Your marketing and advertising expert should have some experience in your industry and be able to show real statistics of adverts and marketing campaigns that actually achieved results. More so, they should also have a mantra of test and measure to ensure that your campaigns are giving you value for money and more so, are making you a profit.

Adviser 4: Bookkeeper

Some accountants have their own bookkeepers, but I have found that quite often they are more expensive than bookkeepers not tied into an accountant. Further to this you should always check to make sure the bookkeeper is certified. In some countries, including Australia, bookkeepers can be certified through the National Bookkeepers association or the CPA.Your bookkeeper must be prepared to work with your accountant and if they have questions you must give them permission to speak with your accountant and more so, you need to make sure that they document all communications with your accountant.

Remember one thing, it does not matter whether your Bookkeeper or your accountant makes a mistake, ultimately, you as the business owner are responsible for your books. If they get it wrong, it will be on your head, so always make sure that you understand what they are doing.

Adviser 5: IT Person

Everybody hates computers and I am a 20 year veteran of the industry and I still hate them. Having a good IT person is essential. Most businesses today are now totally reliant on their IT Technology and if your technology goes down, the question you need to ask is, "could your business still operate?" If the answer is no, then you need to hire an IT person who will be there in an emergency.

When choosing an IT Person or company make sure they are qualified in the technology you are using. For example, if you are using Microsoft Windows technology in your office, then your IT Person should have at the very least the Microsoft Certified Desktop Support Technician qualification.

Adviser 6: Website and Search Engine Expert

If your business is not on the web and you are not selling products to the global market then you are making your life incredibly difficult and you are missing out on lots of opportunities. The internet is a fantastic tool for doing business but be warned there are lots of crooks out there, especially in the search engine optimization industry.

Before choosing a web builder and search engine expert ask to speak with some of their existing clients or talk to other business associates and find out who they use. I will say you should expect to pay anywhere between $1,500 to $5,000 per month for this service depending on your business and what sort of income you want to derive from the internet.

Adviser 7: Business Coach

Business Coaches, are like website and search engine experts, there are a lot of snakes out there who have no real small business experience. Before choosing a Business Coach ask them if they have ever owned a small business or if they had been a principle small business manager. If you have been in small business for a while, then it will be very obvious to you as to which business coaches have owned businesses before going into business coaching. Their approach will tend to be more practical then something out of a book. Once again before choosing a business coach, talk to your business colleagues and see if they can recommend someone.

Adviser 8: Financial Planner

Managing your money is a major issue and most accountants will not give you Financial Planning Advice. A good financial planner will be able to help you where to put your business money, to get good growth but also to be easily accessible.

You should also have a good financial planner for your personal 401k or superannuation policy but also if you are managing an employer superannuation program. Most small business owners forget to build their own 401k or superannuation policy as they are building their business and when they get to selling their business they find they do not have enough to live on once they retire because once the business debts are paid off, nothing is left.

Adviser 9: Business Banker

Finding the right bank and right business banker is essential to succeeding in business. You definitely need to build a constructive relationship with your business banker as they will be your life line in a dire cashflow situation or if you need money for a deal you just could not let go by.

Business Bankers can also help you with other issues like leasing and hire purchase accounts, but also other facilities like merchant facilities, sales tax bank accounts etc.

Adviser 10: Insurance Broker

I learned the hard way on how important an insurance broker is to your business. The previous insurance company I dealt with did not advise me that none of the glass in my building was covered if I was broken into. I have extensive insurance, but because Glass was an optional extra, the previous insurance company did not tell me this and when we were broken into, even though I pay over $5,000 per year in insurance, I still had a $4,000 bill for all the glass damaged during a break and enter.

This particular experience really drove home, how a good insurance broker, whilst upfront might cost you more, in the future will save you more.

Just like any employee when you are putting together your Small Business Mastermind Advisers you need to interview each adviser and ensure that you are able to work with them. Further to this, to get the best advice from your Small Business Mastermind Advisers you must be 100% honest and open with them, even when things are looking dire. If you are not totally honest, then they cannot give you the advice that will help you get out of trouble.

Would you like to learn more on developing your own Small Business Mastermind Adviser Group or how to implement the Thirteen Secret Steps all millionaires know in the path to becoming an obscenely wealth and successful person. Then find out how with a copy of our Think and Grow Rich book by Napoleon Hill and our audio package. Check out our Meditation Music to help you master this important program.

All the things you need to know about franchise affiliation... Eyes wide open You’ve met with sales representatives of a franchise to determine whether affiliation with the system might benefit your company. But it’s a big step. Taking it requires you to make a major upfront financial investment—in franchise fees, new signage, maybe even a different color on your office walls—and it commits you to payments going forward, including monthly royalties and contributions to an advertising fund.

Then there are the low-probability but high-impact events to consider. What if the franchisor becomes embroiled in a high-cost, high-profile lawsuit? Even if the matter doesn’t directly involve you, you’re affected. For good or ill, your company’s brand identity is now linked in the minds of consumers and your business partners to that of the franchisor.

Given the high stakes of affiliation, you must enter into a franchise agreement with your eyes wide open, something federal and state regulators want to make as easy as possible. The Federal Trade Commission and some states require franchisors to provide you a wide array of information upfront—an accounting of pending and closed lawsuits against the company, for example, and details about your initial investment and ongoing fees—to help you make an informed decision about purchasing a franchise. Franchisors are also required to provide the information in a standardized format, in a document known as the uniform franchise offering circular or UFOC.

But knowing a franchise brand intimately is easier said then done. The UFOC is an imposing document that, with attachments, can run hundreds of pages. What’s more, some of the key operational information you need to conduct your due diligence—what are the franchisor’s rules on record keeping, what are its policies on signage?—might be hidden away in the company policy manual rather than in the UFOC. Since companies can change the policies in their manual at any time, these changes can impact your bottom line if they result in unforeseen costs to you. What’s more, companies aren’t obligated to show you their policy manual because it’s an internal document. Some will let you look at it but not take it with you, making a thorough review difficult. So, how do you cover your bases before entering into a franchise agreement? First, know the principal question you need to answer: Does the value I receive from affiliating with the franchisor’s brand identity, advertising muscle, training program, and business process offset the economic investment I’ll make and the operational control I’ll give up? Second, do your due diligence. You can’t answer that question without first digging into the UFOC. All UFOCs include a table of contents to help you review the document by section. 10 due diligence steps Review the UFOC with an eye toward the issues affecting your financial investment and the amount of control you’ll relinquish.

Among the issues to consider:

1. Entry and exit costs.

How much will it cost to convert your office? The UFOC requires disclosure of these costs, but franchisors typically provide a broad range—in real estate, a spread as wide as $21,000 to $250,000—making it hard for you to know what your costs will be. The reason for the range: Your costs are unique. At the very least, you’ll need to change your signs and letterhead and pay the initial franchise fee, among other things. But you may also need to add or upgrade equipment or hire additional staff. Then there are exit costs. How much will you incur in “de-identification” and other conversion costs to leave the system? Exit costs aren’t included in the UFOC, so you have to estimate them yourself.

2. Ongoing value.

You face monthly royalty payments; other regular fees, such as for referrals (independent companies can choose whether to belong to a third-party referral group—in a franchise, belonging to the referral group is part of the affiliation); and indirect costs. If the franchisor imposes mandatory training on you, for example, you might have to absorb your travel costs if the training is off-site. For all these ongoing costs, what value will you receive? Are the referrals worth the fees? Is the training worth the cost? Will the franchisor’s affiliated businesses—perhaps it owns a financial services company—drive customers to you that you otherwise wouldn’t get? Conduct a cost-benefit analysis, examining your additional monthly costs against the additional income you expect to receive to get a picture of the value of joining the brand.

3. Earnings claims.

Franchisors aren’t required to disclose how much they think you’ll earn; nor are they required to give you historical data on their franchisees’ earnings. If the franchisor doesn’t report its franchisees’ earnings in the UFOC—and most don’t—ask why it doesn’t. After all, the franchisor requires its franchisees to report their earnings, so it has the data available.

4. System growth.

Is the number of franchisees growing or contracting? Is the number of company-owned operations increasing or declining? This may be the most important information you review. A declining or stagnating number of franchisees (and a growing number of company-owned offices) may suggest that the system isn’t healthy. A high number of terminations or non-renewals may also be troubling. The UFOC requires franchisors to disclose this data for the three most recent years, but it can be hard for prospective franchisees to identify turnover rates in the system because the numbers are disclosed in aggregate for the entire franchise network. If, in a given year, a franchisor loses one franchisee in an area but gains a replacement franchisee, for example, the data would show no change for that year, suggesting a stable picture. But is the system really stable? For your purposes, it might be more important to know why that one franchisee left.

5. Franchisee input.

The most valuable research you can do is to talk with existing and past franchisees, whose contact info the UFOC requires franchisors to disclose. The best question to ask them: If you had to do it all over again, would you do it? In general, franchise agreements contain confidentiality provisions that restrict franchisees from talking about matters proprietary to the system, such as internal business processes. What you’re looking for, though, is a subjective assessment from the franchisee that the system’s value proposition is sound—that is, the benefits you get from affiliating exceed your costs to belong. Seek input from past franchisees, too, but be aware that brokers who’ve left the system tend to be those most unhappy with it. So weigh what they say with that in mind. Also, if the franchisees have an association or if the franchisor maintains a franchise advisory council, talk to the leaders of those bodies. Very often, they’re among the most widely respected and long-standing franchisees in the system, and they bring historical knowledge that may surpass even that of some of the franchisor’s employees. One important point: In real estate, unlike in many other industries, franchise agreements tend to come without post-expiration non-compete clauses. That’s good for franchisees because, if they opt not to renew their franchise agreement, they can convert identities and continue operations without skipping a beat. Franchise systems in many other industries don’t permit ex-franchisees that same freedom. Given this flexibility, you can expect real estate franchises to have higher turnover rates than franchises in other industries, all else being equal.

6. Litigation.

The UFOC requires the franchisor to disclose all its pending and resolved lawsuits for the last seven fiscal years. Compare its number of lawsuits (those it has initiated and those against it) with its number of franchisees. There’s no rule of thumb for what constitutes a high ratio of litigation. But it’s probably safe to say that a franchisor with 1,000 franchisees and three pending lawsuits isn’t overly litigious. Also look at how the franchisor responds to lawsuits. Does it settle quickly or does it tend to go to the mat each time? A reading of the UFOC will show you how the franchisor approached each suit because the UFOC requires the franchisor to provide a narrative for each. How the company responds can tell you something about its character and culture. Note what the lawsuits tend to be about. Is there a pattern? As a general matter, many lawsuits are initiated by franchisors against franchisees for non-payment of royalties and fees. But look below the surface. In some cases, franchisees don’t pay their fees because they feel they aren’t getting the value they were led to believe was there. The narrative describing each suit should provide the argument for any counter-charges by the franchisee. To supplement that information, talk to former franchisees.

7. Franchisor personnel.

Look at who the franchisor’s top executives are. That information, usually in the form of short biographies, is required to be in the UFOC. Pay particular attention to executives who’ve come from other industries. Some systems are historically more litigious than others. One sandwich chain, for example, is generally recognized as highly litigious. It’s helpful to know if an officer comes from such a system. If so, that officer might be quicker to resort to litigation to settle a matter than another officer. To learn about other franchises, contact a franchisee association, attorney, or accountant.

Other things to look for:

1) Nepotism.
Are franchise operations managed by family members? If they are, the best people might not be in management positions.

2) Bankruptcies.
Have any of the top executives been involved in bankruptcies in other systems? Contact franchisee associations, attorneys, or accountants to find out.

8. Exclusivity.

How much protection do you have from encroachment into your territory? Does any exclusivity you have extend to Web site marketing and relocation referrals? You know you’ll be competing with other brokerages, franchised and independent. But could the franchisor you’re considering joining be among your competitors as well?

9. Financials.

The UFOC mandates disclosure of franchisor financial statements for the previous three years. Show these to your accountant. One thing to look for: Where is the franchisor getting the bulk of its income? If it’s from initial franchise fees rather than royalties, that could signal turnover among franchisees. A more promising picture is a company whose lifeblood is royalty income. That signals income from ongoing operations.

10. Sloppiness.

For franchisors, complying with UFOC requirements can be costly. These pre-disclosure documents are complicated and extensive. Signs of sloppiness—miscalculations, misspellings, internal inconsistencies—should raise concerns that the franchisor isn’t devoting proper resources to a very important task, one with legal ramifications.

Besides typos, look for inconsistencies. For instance, a franchisor might disclose the number of franchisees in as many as three different parts of the UFOC. These numbers should be the same in each case. If they’re not, what does that say about how careful the company has been in preparing the UFOC and how much in the way of resources and competence it brings to its operations in general?

The title page of the UFOC pointedly recommends that prospective franchisees review the UFOC with an adviser, such as an attorney or accountant. But take time to conduct your own careful due diligence as well. Proceeding with your eyes wide open can make the difference in how much your company benefits from a franchise affiliation.

Franchise Opportunity – 5 Considerations
by: Andrew Adama

In addition to the many questions that you should pose to a potential Franchisor, and the many questions they should pose to you, there are several other considerations for you to determine your compatibility with a particular Franchise system. If you are going to be getting into business with someone with the goal of creating an outstanding future together, you should cover more bases than just the basic questions to understand how the business makes money. That will be ultimately important of course, but several general considerations will be imperative for you to analyze as well, if you really want to understand your potential ‘strategic-partner’.

Franchisor’s Qualification System

One of the initial things you should strive to understand is the level of development that the Franchisor’s Candidate qualification system has reached. Your first reaction to that might be ‘Why do I care about a Franchise Qualification system – I only care if I get a Franchise or not?’ I would suggest that you should care a great deal.

After all, if the Franchise Candidate qualification system hasn’t been well developed, it may be a reflection on the business of the Franchise itself. The most important asset of any Franchise system will be its people, including both Franchisees, and Franchisor staff. Almost all companies will confirm that to be the case. They say it even if they don’t believe it. They say it even if they don’t actually put systems in place to ensure they add the best people, and nurture their development over time. So how do you determine if the statement matches the execution?

If people are the most important asset, it would follow that the system of finding, qualifying, and granting Franchises to the best Franchisees would be a well thought out and well developed system. If there is no formal step-by-step system to provide information to both parties then it may be an indicator that there is something amiss.

A good system will be able to provide you regular information to help you make an informed business decision about joining as a Franchisee. It should also provide the Franchisor with information about you to help them make an informed decision as well. That decision should be whether you qualify as someone they can describe as one on their ‘most important assets’.

If the system doesn’t allow for a step-by-step, give and take, system of information flow, then perhaps the other business systems within the Franchise aren’t as well developed as represented either. The information system shouldn’t be so fast that you are overloaded, but it should be steady enough that you can continue to assess, and deliver information, at a pace that makes sense for both parties.

If the system is too fast, for example if you are given Disclosure Documents within the first week of the due diligence process before many other things are assessed, I would suggest there is something wrong. To rush is to err. On the other hand, if the system is too slow, you won’t get a true flavor for the company because of the sporadic nature of the flow. Culture is important, and a steady flow of data will give you a better feel for the culture of the business than trading information every three weeks for a six-month period. If you are not looking to make a decision with 30 to 120 days, I would suggest that you wait until you are to that point before you engage fully in a Franchise Qualification system. That doesn’t mean that you need to be in business in that timeframe, only that you would like to make a decision in that timeframe.

Some systems will include a step-by-step system where you will receive information from the Franchisor, and then you will be required to provide some information to them. Once you provide the information, then the Franchisor will send you additional data to help you gain more intimate knowledge…and so on. The reason for that type of system, which I would judge to be ideal, is that each of you is illustrating commitment to the process. This is an important factor for the Franchisor to determine because it is a great indicator to them that you will be able to follow and use a good system to your advantage. That’s what Franchising is all about. The Franchisor has invested a significant amount of time and money to develop a proven system that is designed to earn all stakeholders a maximum return. Therefore the Franchisor must determine that each new Franchisee is willing and able to follow a good system. What better place to start than the basic evaluation system.

In today’s world, that system should use various media to communicate with you including email, telephone, mail or courier, Internet, in person etc. Again, this will demonstrate the Franchisor’s use of current technologies and methods to really get to know you, and to stay current in an ever-changing global environment.

If the Franchisor does not have a good step-by-step information flow and due diligence system then that alarm bell in your head should go off.

Communications with Existing Franchisees

One of the most important sources of valuable information will be the existing Franchisees. The Franchisor’s system should include available exposure to all of the Franchisees. First of all, in most jurisdictions where Disclosure Documents are required, one of the required disclosures is a full list of all Franchisees, including contact information.

If you get a feel that a Franchisor is discouraging you from communicating with certain Franchisees – well, there’s that alarm bell again.

That’s not to say that all Franchisees will be happy, or that all will be great operators. In fact, most systems have disgruntled or unsuccessful Franchisees. It will be important for you to speak to the top echelon, the middle range people, and the poor performers. The test should be to identify the factors that differentiate the groups. Then determine how you are more like the successful people, and how you are not like the unsuccessful people.

The most important point is that the Franchisor has a system to allow efficient access to all Franchisees. Some Franchisors will provide email questions to send to all Franchisees plus ask you to call your own sample from the complete list. Others will provide for conference calls with several Franchisees. Others will provide for Discovery Days including existing Franchisees. Of course, conference calls and Discovery Days will include ‘favorable’ Franchisees. That doesn’t mean those processes aren’t very helpful – you just have to realize who you’re dealing with.

Other Franchisors will ask you to talk to people in your geographic area. Or people with a similar background. All of these things make sense, but you must ensure that you also have the ability to communicate with any existing Franchisee, and not just the suggested sample. You will be able to judge the Franchisor’s openness through their reactions in this process.

Responsiveness

This one is fairly simple but very important. If the Franchisor responds to your inquiries quickly and efficiently, it’s probably a good indicator of the type of responsiveness the company executes as a whole. Of course, that becomes very important when you require support once you become a Franchisee.

If a Franchisor takes several days to get back to you after your initial inquiry, you should take that as a warning sign. If they don’t respond in an efficient and professional manner to your email and telephone inquiries as you go through the process, it probably means they are not running a tight ship.

A system that responds almost immediately, and then starts you on a step-by-step information flow, including personal contact, should be what you are looking for in terms of responsiveness.

Face-To-Face Meeting

The system of evaluation for both parties should include a face-to-face meeting. After all, you are trying to determine if you want to get into business together for 5, 10, 15 or more years. If a Franchisor wants you to join the system without a face-to-face meeting, it doesn’t really make sense. Would you start a partnership business without meeting your partner? A Franchise is not an actual partnership, but the same criteria should apply. It should actually apply to the Franchisor every bit as much as to you. So if that meeting is not part of the process, the system is incomplete.

There are several ways for the face-to-face meeting to take place. Many Franchisors have development personnel that will meet you in your community or a convenient location for both parties. Some Franchisors require a head office visit. Others will host Discovery Days, either at their head office or on a regional basis. All of these methods are fine, as long as you have some time for some one-on-one interaction.

I once asked a mentor of mine when our company was first beginning to offer Franchises, about the best method to determine that ‘right’ match. He said to me that the ultimate test is whether you would be willing to have the person over for a barbeque in your backyard. Of course, there are many other factors, but his point was that it should be someone that you would like to be in business with, and would enjoy their company.

The face-to-face meeting should also include an invitation for your spouse to participate. In fact, some systems require the spouse to be in attendance. Again, it is sensible to include spouses at the discovery stage because the ultimate decision to start a new Franchise business will be focused on building family dreams, and providing family security for the future. If a spouse is not fully aware and comfortable at the decision-making stage, it could create difficulties down the road as you build the business.

The main point is that if a face-to-face meeting is not a part of the process, and your spouse is not welcome to attend, the process is faulty.

Unified Thinking

I’m not going to spend much time with this point at this stage, other than to say that the entire process of due diligence, for both parties, should be about determining whether there is unified thinking. My counsel is to step back at the end of the process and ask yourself the following question: Did the process help both parties to determine if they have unified thinking about the business at hand? If the answer is not yes, then you’ve either got more work to do, or something with the system is not right and you should examine alternatives. Franchising is about finding the right strategic-partnerships to allow both parties to prosper at a higher level together than they would if they were not to enter into an agreement to do business together.

You must be comfortable with the Franchising concept itself. It’s the Franchisor’s strategy to penetrate and dominate a marketplace. You’ve got to be comfortable with the Franchisor’s strategies to do just that. If they make sense to you, it can be a great ride in achieving success together.

You should assess your needs, wants and desires to make sure that they can be met with a successful Franchise in the system. You should bring to the surface all of your fears, uncertainties, and doubts to determine if you can solve them with the business and the future you can create. The worst thing you can do is leave them buried.

Finally, can you see yourself reaching your goals, dreams and objectives by operating a successful business in the Franchisor’s system? Will the Franchise help you to achieve those goals and dreams?