Build Your Small Business Credit

Building credit for a small business is quite simple. The credit market has been paralyzed by the recent economic turmoil. Businesses that plan ahead can still build up their credit history with the credit bureaus and acquire the financing that they require.

First it is important that your business have some type of formal structure. This could be either an LLC, S-Corp, or Corporation. Being a sole-proprietor allows for unlimited liability. In addition one may be criticized for not spending a small amount of money on the business structure before going into business. Make sure to have a physical address whether it be a home office or an office building. Also register a land line phone for your business so that an account is started with the phone company.

Second begin to spend. Ideally you should be able to acquire a small loan backed by capital. When you are attempting to build small business credit you should attempt to receive the loan from a major business credit reporting agency. The major credit reporting agencies for businesses include Dunn & Bradstreet and Experian. These agencies will build the credit that you need in order to make larger purchases in the future.

There are some businesses that say that they specialize in selling references or credit histories for businesses. Do NOT purchase these. Any company that sells anything related to credit references is most likely committing fraud. The credit bureau will investigate these false credit files and will purge them from your credit history if they are discovered.

The best method to build small business credit is to first take out a small secured loan. This loan should be only one or two thousand dollars. The lending institution may or may not be willing to distribute this loan without any collateral. When you attempt to acquire small business credit try to contact the financial institution you already do your banking with. They may be more interested to work with you than a bank that you have never had an account with before.

Finally make sure that you have a written business plan. A well written business plan can allow a lender to see where you would like to take your business. Small business credit does not have grow overnight. It takes a period of time as well as a large amount of energy. A business that is successful will receive a better credit rating.

Discover The Shortcut To Getting Access To The Money You Need To Start And/Or Grow Your Business and Build a New Credit History. If you've been struggling because you don't have the money and credit you need to make your business succeed, get this Free Report on the 3 Steps To Building Business Credit Fast.

Build Your Small Business Credit

By E. Santos

How to Build Your Business Credit

When you first start your business you may want to stay as far away from debt, loans and credit as possible. Many new business owners are trying to fund their ventures on their own, devoid of any credit what so ever. However, this is not always the best idea, especially as your business grows. Many people are starting businesses for conscious reasons and are very committed to advancing their causes, due to the passion behind it. For these business owners, money usually does follow and quite quickly. You may now need to consider more space, more employees and more money, to help advance your cause. What if you are in business to be a millionaire, well you too will definitely want to build your business credit. Let's look at some ways you can do this.

First you should recognize that your personal credit and your business credit are and should be two different things. If you are a sole proprietor working under your own social security number, you'll want to change that as soon as reasonably possible. This is the first step to differentiating you from your business and letting your business establish credit on its' own. You can do this by forming an LLC or a Corporation of one type or another. A bit of research on the governments website irs.gov can also be very helpful in doing this. Make sure to read up on processes you can handle yourself and never pay someone else to complete these services for you.

Now you'll want to make sure that you streamline your debtors to the bare minimum. What does that mean? Well your business may be able to function quite successfully without the latest and greatest in new software and technology. Make sure that anything you buy on credit or lease is an absolute necessity. This is important because the fewer bills you have, the more bills you can pay on time. This is key to build your business credit toward the positive end of the spectrum. It might seem like a no brainer, but often times new business owners are so enthused about their new endeavors and success that they want to purchase everything someone recommends, which can put you in debt to many vendors. This can make it hard to pay all your bills on time when times are slow and as any business owner will tell you, there will be slow times.

You'll want to make sure that you register your business with the credit reporting agencies that play a key roll in lending. Many business owners don't know that they need to take this step. Especially if you have a business office and pay utilities and other bills you'll want to make sure that the major agencies such as: Equifax, Experian, D&B and TransUnion, are aware of how promptly you pay your bills. Don't take this for granted. You may be hesitant, thinking that registering your business will put in the line of fire when things may not be going well. Don't be fooled, whether you know it or not, these agencies may already have a file on your business.

Make purchases that show your fiscally responsible and have a great head for business. Buying vacations with your business card is not a good idea. Follow these few rules and you'll have a great business credit score in no time.

Discover The Shortcut To Getting Access To The Money You Need To Start And/Or Grow Your Business and Build a New Credit History. If you've been struggling because you don't have the money and credit you need to make your business succeed, get this Free Report on the 3 Steps To Building Business Credit Fast.

How to Build Your Business Credit

By E. Santos

Small Business Finance - Finding the Right Mix of Debt and Equity

Financing a small business can be most time consuming activity for a business owner. It can be the most important part of growing a business, but one must be careful not to allow it to consume the business. Finance is the relationship between cash, risk and value. Manage each well and you will have healthy finance mix for your business.

Develop a business plan and loan package that has a well developed strategic plan, which in turn relates to realistic and believable financials. Before you can finance a business, a project, an expansion or an acquisition, you must develop precisely what your finance needs are.

Finance your business from a position of strength. As a business owner you show your confidence in the business by investing up to ten percent of your finance needs from your own coffers. The remaining twenty to thirty percent of your cash needs can come from private investors or venture capital. Remember, sweat equity is expected, but it is not a replacement for cash.

Depending on the valuation of your business and the risk involved, the private equity component will want on average a thirty to forty percent equity stake in your company for three to five years. Giving up this equity position in your company, yet maintaining clear majority ownership, will give you leverage in the remaining sixty percent of your finance needs.

The remaining finance can come in the form of long term debt, short term working capital, equipment finance and inventory finance. By having a strong cash position in your company, a variety of lenders will be available to you. It is advisable to hire an experienced commercial loan broker to do the finance "shopping" for you and present you with a variety of options. It is important at this juncture that you obtain finance that fits your business needs and structures, instead of trying to force your structure into a financial instrument not ideally suited for your operations.

Having a strong cash position in your company, the additional debt financing will not put an undue strain on your cash flow. Sixty percent debt is a healthy. Debt finance can come in the form of unsecured finance, such as short-term debt, line of credit financing and long term debt. Unsecured debt is typically called cash flow finance and requires credit worthiness. Debt finance can also come in the form of secured or asset based finance, which can include accounts receivable, inventory, equipment, real estate, personal assets, letter of credit, and government guaranteed finance. A customized mix of unsecured and secured debt, designed specifically around your company's financial needs, is the advantage of having a strong cash position.

The cash flow statement is an important financial in tracking the effects of certain types of finance. It is critical to have a firm handle on your monthly cash flow, along with the control and planning structure of a financial budget, to successfully plan and monitor your company's finance.

Your finance plan is a result and part of your strategic planning process. You need to be careful in matching your cash needs with your cash goals. Using short term capital for long term growth and vice versa is a no-no. Violating the matching rule can bring about high risk levels in the interest rate, re-finance possibilities and operational independence. Some deviation from this age old rule is permissible. For instance, if you have a long term need for working capital, then a permanent capital need may be warranted. Another good finance strategy is having contingency capital on hand for freeing up your working capital needs and providing maximum flexibility. For example, you can use a line of credit to get into an opportunity that quickly arises and then arrange for cheaper, better suited, long term finance subsequently, planning all of this upfront with a lender.

Unfortunately finance is not typically addressed until a company is in crisis. Plan ahead with an effective business plan and loan package. Equity finance does not stress cash flow as debt can and gives lenders confidence to do business with your company. Good financial structuring reduces the costs of capital and the finance risks. Consider using a business consultant, finance professional or loan broker to help you with your finance plan.

Frank Goley works for ABC Business Consulting as a business success consultant. He has extensive experience in business finance and has over twenty years experience as an expert business planner.

Small Business Finance - Finding the Right Mix of Debt and Equity By Frank Goley

Small Business Ideas| Small Business Grant |New Business Ideas| New Business Grant | business ideas for beginners | business ideas for 2010 | business ideas for college student | business ideas for women | business ideas for small towns | business ideas from home

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Venture Capital & Angel Investing

FundingPost is the leading source for Angel Investors and has worked with 1,000's of Angel and Venture Capital Investors and Entrepreneurs representing over $91.32 Billion. In addition to matching capital-seeking entrepreneurs with business investors, FundingPost also hosts events nationwide and publishes a quarterly magazine.

As an entrepreneur, you can list your company and the capital that you are seeking on this highly active venture exchange website. FundingPost will then showcase your company's profile to 1,000's of potential angel investors and VCs.

Are you interested in obtaining capital for your start-up? Angel Investors reveal exactly what they look for in a business venture, how you should go about raising capital and how to reach them. Click here >> How to Raise Your First Million Dollars

The Small Business Administration
This government organization helps small businesses unable to get loans through normal lending channels. (including special interest loans, micro-loans and secondary market programs) Business financing information

Tip: Put together a business plan to make it easier to get financing). Microsoft also has a free letter you can download from their website called "Bank Loan Request for Small Business".

Grants, Venture Capital and Angel Investors

Grants, Venture Capital and Angel Investors

Are you interested in finding a grant for your business? Grants can be hard to come by, and there are many "government grant" scams out there, so be careful. According to the Small Business Administration, the Federal government does not provide grants for starting or expanding a business.

Yes, state and local groups do offer grants, as well as non-profits and other organizations, but this is generally not "free money". Keep in mind that a small business grant may need to be combined with other financing or funds matched.

Business.gov has a small business grant/loan/financing search tool on their website that you can use for free to help you find money to help finance your business: Grant, Loan & Finanancing Search Tool for small businesses.

If you need to find a grant writer, Allied Grant Writers is a Better Business Bureau Accredited Company that offers business grant writing, non profit grant writing and federal grant writing services. They also write mini grant proposals and offer several other grant related services.

Need Money? Rates As Low As 7.89%

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Small Business Loans

Small Business Loans: In a struggling economy, it may not be as easy to get a loan with your local bank, especially if you have bad credit. However, if you need financing to start your business or grow it bigger, there are lenders out there willing to help you with funding.

Whether you need money to purchase equipment, pay down debt, fund new projects or something else, America One Funding is a great resource for small and home-based business loans and financing.

Small Business Financing is Changing:

I'm hearing all over the news that business credit cards are the new small business loans. Some business credit cards are even offering attractive short-term low interest financing that you can use to launch your start-up. Even if small business financing is tight in today's economic climate, you still have options to start your business, and you can always start small and grow your company over time.

In addition, American One Funding offers multiple financing options for small businesses and entrepreneurs. They make it easier to obtain financing even in a "finance-challenged" market. You can even apply online, get a loan quickly and easily and have money in your hands before you know it.

Apply here: Business Start-up Loans to $250,000

Predicting Expenses

Part of making your business plan is to predict your expenses in the upcoming months. These costs may vary throughout the different stages of your business. Some companies may require a large investment at the start because of inventory or equipment costs.

It is essential at your startup to spend money only on necessities. Laying out extra cash for luxuries you don't need is a waste and can only lead to strains on your budget. For example, it may be cheaper to rent a cargo truck instead of purchasing one. Sacrifices and risks need to be taken in order to obtain a reward in the end.

In your budget will be generally two types of expenses. Those that are fixed and usually at a constant rate. This includes things such as utilities, rent, insurance, and administrative costs. The other type is the kind that will be constantly changing in some small proportions. This includes things such as shipping and packaging, inventory, employee paychecks, and prices associated with sales. Try to separate these two different expense types. Fixed expenses will be much easier to predict the cost of, while the variable costs can range.

http://www.businessloan.org/7.html

Predicting Expenses - part 4

Understanding Risk

In any form of business there will always be risks you will have to take. Whether it be to make a certain investment, or to promote an employee to manager. The hard part is not knowing whether or not you are making the correct decision.

When you first started your business, you were taking one big risk. You didn't know if you were going to go bankrupt, or prosper in wealth. But the chance that you might succeed existed. For that reason you established the company, and worked your hardest. It is important not to dwell too much on the bad consequences that may occur while taking a risk. This will only slow one down. Taking chances and feeling positive about them is key.

If things do not turn out the way they were planned, do not fuss. Make the best of the situation. Be prepared for things not always going perfectly, so you are not surprised when a plan fails. Handling situations in a calm and organized manner will get you the farthest. Being stressed, angry, and confused will get a person no where.

Take a look at the two following people in the following scenario. Decide which person handled the situation best:

Bob wanted to help his jewelry business grow by investing some money into advertising. He contacted a jewelery magazine, and bought 5 full pages to place his ads on. Before purchasing the ad space, Bob did not monitor his sales very well. He spent a very large amount of money for the advertising, and afterwards he didn't even know if it had helped. In the end Bob felt frusterated and felt he had thrown out a large sum of funds for nothing.

Dave was also in the jewelry business, and interested in advertising. He wanted to see how well and efficiently it would help his company. For the past 6 months Dave had been monitoring his sales closely. He then contacted a jewelry magazine, and purchased 1 page for advertising. During and after the campaign, Dave kept close track of sales. He felt happy when he found out his investment had paid off.

In the above example you read about two businessman dealing with their ad campaigns. Hopefully you came to the conclusion that Dave handled the situation in a much better fashion. He was organized, prepared, and successful. Bob jumped into a situation he was not too familiar with. When Bob found out he didn't know what he was doing, Bob became stressed and did not handle the situation properly.

Keep in mind that risks can either greatly help you, or greatly harm you. It is the positive that we strive for and hope to obtain. The bigger mistake people make is not taking risks at all. This limits the way a business can expand and grow. But be cautious that too much risk-taking with little experience can be bad. With a great understanding of risk, you can make the proper decisions.

http://www.businessloan.org/8.html

Predicting Expenses - part 3

SBA - Small Business Administration

Taken from http://www.sba.gov

The U.S. Small Business Administration (SBA) is an independent Agency of the Executive Branch of the Federal Government. It is charged with the responsibility of providing four primary areas of assistance to American Small Business. These are: Advocacy, Management, Procurement, and Financial Assistance. Financial Assistance is delivered primarily through SBA’s Investment programs, Business Loan Programs Disaster Loan Programs, and Bonding for Contractors.

SBA’s Business Loan Programs
SBA administers three separate, but equally important loan programs. SBA sets the guidelines for the loans while SBA’s partners (Lenders, Community Development Organizations, and Microlending Institutions) make the loans to small businesses. SBA backs those loans with a guaranty that will eliminate some of the risk to the lending partners. The Agency's Loan guaranty requirements and practices can change however as the Government alters its fiscal policy and priorities to meet current economic conditions. Therefore, past policy cannot always be relied upon when seeking assistance in today's market.

Federal appropriations are available to the SBA to provide guarantees on loans structured under the Agency's requirements. With a loan guaranty, the actual funds are provided by independent lenders who receive the full faith and credit backing of the Federal Government on a portion of the loan they make to small business.

The loan guaranty which SBA provides transfers the risk of borrower non-payment, up to the amount of the guaranty, from the lender to SBA. Therefore, when a business applies for an SBA Loan, they are actually applying for a commercial loan, structured according to SBA requirements, which receives an SBA guaranty.

In a variation of this concept, community development organizations can get the Government's full backing on their loan to finance a portion of the overall financing needs of an applicant small business.

SBA’s Investment Programs
In 1958 Congress created The Small Business Investment Company (SBIC) program. SBICs, licensed by the Small Business Administration, are privately owned and managed investment firms. They are participants in a vital partnership between government and the private sector economy. With their own capital and with funds borrowed at favorable rates through the Federal Government, SBICs provide venture capital to small independent businesses, both new and already established.

All SBICs are profit-motivated businesses. A major incentive for SBICs to invest in small businesses is the chance to share in the success of the small business if it grows and prospers.

SBA’s Bonding Programs
The Surety Bond Guarantee (SBG) Program was developed to provide small and minority contractors with contracting opportunities for which they would not otherwise bid. The U.S. Small Business Administration (SBA) can guarantee bonds for contracts up to $2 million, covering bid, performance and payment bonds for small and emerging contractors who cannot obtain surety bonds through regular commercial channels.

SBA's guarantee gives sureties an incentive to provide bonding for eligible contractors, and thereby strengthens a contractor's ability to obtain bonding and greater access to contracting opportunities. A surety guarantee, an agreement between a surety and the SBA, provides that SBA will assume a predetermined percentage of loss in the event the contractor should breach the terms of the contract.
http://www.businessloan.org/16.html

Predicting Expenses - part 2

Applying for the Loan

In order to be successful in acquiring a loan, you must make a written proposal. Your goal is to convince the loaner as best you can. Failure to do so may result in not getting the loan and jeapordizing your company.

The best start with your written proposal is to start with an introduction, such as a cover letter. In a concise manner, introduce yourself, your business, the amount you wish to be loaned, the purpose of the loan, and how you plan on repaying the money. Imagine that someone is coming to you asking for a large sum of money. Would you be willing to loan money to someone who will waste the funds and have a low chance of repaying it?

The loaner may not be as familiar with the business as you are. Be prepared to answer questions and show that you know what you are doing. You need to make a good impression as a capable and understanding entrepreneur.

You will want to present a number of information to your loaner. Be prepared to show them things such as:

• Business & Personal Financial Statements
• Business & Personal Tax Returns
• Business Plan with Projected Budget
• Plans of Repayment

Also be prepared to show some means of collateral. This includes any assets and property. It is very unlikely that a loaner will agree to a loan without some form of collateral. Collateral is property acceptable as security for a loan or other obligation. If you for some reason cannot pay the money, collateral will be taken instead.

Communication is key when dealing with loaners. Keep them updated with how your business is fairing. Bring them good and bad news. Especially when you are not able to make a payment. Explain the reason why you are having trouble and any actions you are going to take to fix the problems. Many lenders are flexible, they want to see that you are actually planning on
paying them back.

Lastly remember to make a good impression on the people you are dealing with, you may not get a second chance. Dress nicely and have a neat appearance. Your educational or other background may be looked at by the potential investor. They want to know that they are dealing with someone that is trustworthy and professional.

Predicting Expenses - part 1

A business plan is a plan that sets ou the future strategy and financial development of a business. This plan precisely defines what your business is, its goals, and is the equivalent to a personal resume. The plan usually covers a period of several years to show the progression of a business from startup to profitability.

The use a business plan is of paramount importance in obtaining a business loan. Without having done the proper research to show that your business can reach profitability, almost all avenues of business loans will turn you down for a loan. Since the plan provides specific information about your company, and presents this information in an organized manner, including information on how you intend to repay debt, a good business plan is a crucial part of a loan application. Furtehrmore, it also shows that you are serious about your business.

Personal Financing

A great way of funding your business is through personal expenses. It can mean a real strain on your personal cash. Your business can take over six months before providing a real source of income. This is why it is good to keep your personal finances organized.

Write out your monthly source of income and expenses. Try to be as precise as you can because you would only be cheating yourself. When calculating, see how much money you have left over extra. This is the money that you will want to invest in your business. Until your company gets flowing, you might want to avoid buying personal and optional luxuries. Do not mix up money from your business into your personal funding. Money made should be used to maintain and invest into your growing business.

Until you establish a solid business credit, you will want to make sure your personal credit is well maintained. Lenders and suppliers will be looking at your personal credit to get an idea of how creditable you are. Remember, that business credit and personal credit is different. Keep your credit in order and fix any errors that may arise. This can be vital to obtaining a loan.

We discuss more about where to get a loan.

For immediate cash, you can always try a payday cash advance. It is a quick way to get $1000 to help jump-start your business.

where to get business Loan - 4

Venture Capitalists

Venture capital lenders can be very useful when starting up a company. They are unlike banks, which look heavily into a business's past, and into its immediate future. Venture capitalists like to look deep into a company's future, seeing how good they think it will do in the long run. Basically, venture capitalists like to invest money into a company, in return for some equity and stock ownership when the company develops. Venture capitalists generally like to invest about $250,000 to $1,500,000. Smaller companies that require below $250,00 are usually not considered. This is because the amount of time and money required to investigate a business is substantial. Firms receive thousands of proposals every year, and only about 10% are accepted. Background checks are deep, and consultants may be hired to analyze your company. They look at things like your financial background, market size, competition, and production costs

where to get business Loan - 3

Commercial Lenders

Commercial lenders are a great choice for business loans. They can provide a very good amount of money. Commercial lenders are very flexible in the types of loans they give out. This includes for things such as real estate acquisitions, construction, renovation, business acquisitions, debt refinance, purchase of machinery, equipment, furniture, or fixtures, and for additional working capital.

If you need help getting a loan from a commercial lender, the SBA (Small Business Administration) has many different loan programs to help you get accepted. When dealing with commercial lenders it is sometimes important to have a good credit history, so you can impress your lender. While banks remain the least expensive for loans, commercial lenders can make a good alternative.

where to get business Loan - 2

Banks

Banks are generally the best place to get a business loan, but also the hardest to qualify for. One of the reasons banks are so popular is because they are one of the least expensive. They usually offer around 6-9% interest, and lend $50,000+. Banks offer both short-term and long-term loans. For more information about banks, please see "Applying for the Loan."

where to get business Loan - 1

Financing Companies

As the business loan industry is quite profitable, there are many financing companies that will be more than happy to provide you a loan. Many of these companies provide provides loans, retail financing and other credit programs. Popular offerings include:

• Consumer lending (secured and unsecured)
• Mortgages (first and second mortgages)
• Home equity lines of credit
• Retail sales financing
• Credit insurance

Provided that one has a sound business plan, it can be a wise decision to obtain a loan through such a company.

5 Resources You Need To Succeed To Start A Business - part 4

The last of the five resources you must have to start a business that will be successful is a good support system. When you're thinking of business support, look first to the home front.

It’s no coincidence that most successful small business operators are married. While we like to talk about “going it alone” and “running our own show”, you can’t start and run a successful small business without the support of other people. And who better than a supportive spouse to listen to your ideas or problems, and provide the encouragement or advice that keeps you going?

In Entrepreneurship: A Profile For Canadians, (available from the Canadian Foundation for Economic Education), William E. Jennings points out that the successful entrepreneur usually has an exceptionally supportive spouse.

He adds that these exceptional spouses don’t just provide love and stability, but also specific support for the business, such as helping to provide the capital needed to start a business, or working in the company without pay to keep costs down. Spouses who contribute financially by working outside the business are also a common small business scenario.

Having a supportive spouse is especially critical if you want to start a home-based business. As Barbara Mowat and Ted James say, “in reality, you don't start a home business, your whole household does” (Right From Home; Starting A Successful Home-Based Business). You can’t start a home-based business without considering what your family members think about the idea, what role(s) your family members might play in your business, and how your business is going to affect your home life. Without the active support of your family, your home-based business will fail. Talk out these issues beforehand and explore how supportive your family is before you start a business.

Other business people are another valuable source of business support. No matter what kind of business you’re thinking of starting, someone has been there and done that. Talking to other business people who have already established a successful business can go a long way towards avoiding pitfalls and provide insight into what works and what doesn’t.

I’ve always found that other business people are willing to share their knowledge with others; if you can’t find someone locally to talk to, there’s a ever-growing network of business communities online (like this one!) where you can get the information you need, and sometimes good advice, too. You're always welcome to post your questions and comments on the Small Business Canada forum. And my Business Support library has links to Canadian organizations where you can get advice, find a mentor, or just talk to someone.

Are You Ready?

All five of these resources are necessities for starting a successful small or home business. And all five of these resources need to be in place before you start a business. Are you a “Type D” person willing to fully commit to starting and running a successful business? Have you figured out where to get the business start up money you need and secured your financing? Do you have the business knowledge and the support system to help you do what you need to do to be successful? Then go for it! You’re already well on your way to small business success!

5 Resources You Need To Succeed To Start A Business - part 3

Find Adequate Business Start Up Money

Unless you personally have deep pockets, such as inherited wealth, figuring out where you’re going to get the money to start your own business and getting the financing in place beforehand is going to be one of the most important components of planning your business.

Finding adequate business start up money is especially critical because there’s no guarantee that your business is going to make money right away, and certainly no guarantee that your new business will bring in enough money for you and your family to live on. You can’t start a business without start-up capital, the total amount of money you need to open your doors for business, and to keep them open until sufficient revenue can be depended on.

You’re also going to need operating capital to start a business, the amount of money it takes to keep the business going. Operating capital includes expenses such as salaries, wages, rent, expenses, supplies, utilities, advertising, depreciation, and interest payments. Small business advisors recommend that start-up expenses include at least six months operating capital.

If you don’t have deep pockets of your own, where do you get the business start-up money you need? According to a 1998 study of small- and medium-sized enterprises by Thompson Lightstone and Company, fifty percent of small- and medium-sized business owners report that they currently borrow from a financial institution, such as a bank. Twelve percent of SMEs finance their companies through private loans from friends or relatives and three percent by loans from non-related individuals. Forty-one percent use personal credit cards to finance their businesses.

Personal assets, such as savings, (including RRSPs, pension funds, severance allowances), remortgaging property, credit cards, and personal property, are the most common initial source of business start up money for small businesses. This may be because people starting new businesses have no alternative; if you don’t have much collateral or an established credit history, getting a small business loan can be difficult. (See my article, "How To Get A Small Business Loan", to learn how to increase your chances of making a successful small business loan application.)

In Right From Home: How To Start a Successful Home-Based Business, Barbara Mowat and Ted James state that money borrowed from family, relatives and friends makes up more than fifty percent of the loans to home-based businesses. They advise avoiding misunderstandings and bad feelings by always getting agreements about loans in writing and making sure that all loans are set up with proper security, any terms or conditions, and a payment schedule. This is sound advice to follow whenever you borrow money.

What else do you need to start a business with staying power? Support. Click to continue reading...

5 Resources You Need To Succeed To Start A Business - part 2

Get The Business Knowledge You Need

Many people have tried to start their own businesses without bothering to acquire the business knowledge they need to make their business a success - and their businesses have failed.

To start a business, you have to be knowledgeable about many different aspects of business and have many different skills… or at least have done the research to find and hire the people who have the skills you lack.

If you aren’t knowledgeable enough about accounting to keep your own books, for instance, you’re going to need to hire a bookkeeper and/or an accountant. If your business is Internet-based, you’d be wise to hire a company to design your web site and handle the back end, unless you personally are an expert in site development.

When you’re creating your business plan, one of your first steps needs to be a frank assessment of your skills and expertise. What aspects of the business are you qualified or willing to handle, and which aspects will necessitate either more learning on your part or calling in outside help?

Managing people is only one skill set you’re going to need to start a business that's going to be successful. You also need to be knowledgeable about sales and marketing. For example, suppose you’ve developed a better mousetrap. Who are your competitors? What are the mousetraps they’re offering like and how are they priced? What makes your mousetrap better? Is there even a need for a better mousetrap out there? Where is “out there”? Do you have the skills needed to identify and contact customers? Are you good at selling mousetraps? Can you develop a feasible marketing plan and promotional material?

And what about business operations? Do you have the business knowledge to manage inventory and fill orders? Where all you going to store all your mousetraps and how are you going to get them to your customers? Have you found the suppliers you need and developed relationships with them? Have you set up a customer support policy?

Business knowledge before you start a business is critical. All the drive and determination in the world isn’t going to help you if you don’t have the knowledge to actually run a successful business and don’t bother to research and plan for your success appropriately. A friend of mine had long dreamed of opening a bookstore. So he did. Unfortunately, he hadn’t bothered to study the competition or the demographics of the market in the area. It took less than a year for his bookstore to fail. He had the desire and the drive, but didn’t have the knowledge he needed to apply them.

So let's assume that you are a Type D Personality with all the business knowledge necessary to start a business. Are you a shoo-in for success? Not unless you have the money you need to start a business. Continue on to the next page to learn about finding start up money.