Building a Solid Business Foundation for Financing

The single most important thing a business owner can do for their business is to build their business to sell it.

Sell it you ask?

Yes. Build to Sell.

Every decision a business owner makes should be based on that thought. If an entrepreneur can base their business decisions with that underlying idea (in terms of financing), they will be set up for long term success.

The lending institutions base their acceptance or declination on one thing.

Is the business an attractive lending risk.

There are 20 key points every business owner must have in place to be approved by financial institutions when their underwriting team is determining to approve or decline a loan app. Many of these are small, seemingly meaningless ideas. However, lets take a look at it from the eyes of the lenders.

Banks and lending institutions get so many applications from business owners who, quiet frankly, have no business applying for a loan. Their business is not set up to be lent to. The banks are not even viewing these entities as a viable businesses. So the first stage of getting past the computer guidelines is to have these in place.

Additionally, if you were to go to the bank and not have these in place, the loan officer would get a two digit code back from the computer system and all it was say was “Loan application declined.” Your loan officer, without investing some time into the issue, would not know exactly what you needed to do differently to be approved. The loan officers surely do not have the underwriting guidelines for their firm.

In this article we will examine the top three reasons business owners fail at business credit building and business financing.

The first is simply the business owner does not have all the I’s dotted and the T’s crossed in their business. Things like having an 800 number, being listed in the 411 directory, and having a dedicated fax line is a must to a business owner seeking financing. Many business owners I speak with are small businesses, who are just seeking their financing options. It’s impressive to see the amount of businesses that do not even have these first three steps accomplished. Remember, the goal here is to have your business look attractive on paper. In the eyes of a lender, if you do not have an 800 number it is suggested you own a “mom and pop shop” and are not setup for success.

Secondly, business owners have not started to build their business credit. There are right ways and wrong ways to go about building your business credit structure. In the eyes of the lender business owners who go out seeking to open revolving lines of credit and are turned down (due to reasons outside the scope of this article) it appears as though they are fishing for financing. It’s imperative to apply for the right types of credit lines and being approved for those lines when establishing your business credit from the get go.

Thirdly and most relevant to most entrepreneurs: they have not separated their personal liabilities from their business. It’s important for a business owner to have good receivables in his/her business. But, and what’s equally important, is that business owners personal credit is not tied to the business, in any possible way. There are two reasons why you’d want to separate yourself from your business. If something happens to your personal financial situation, you do not want that to be the reason your business is unsuccessful in obtaining financing. Secondly, should something happen to your business, you do not want that to affect your personal credit.

Laying Your Business Foundation: Where to Find Customers? – Part 5

This is a short and precise series filled with suggestions about Where to Find Customers? Again, if you have not read the previous articles I encourage you to build on the previous lessons of this series before reading the current issue.

You’ve asked yourself hundreds of times, where are the customers? Entrepreneurs and business owners alike has posed this one particular question more times than any other question. My response to that is, they are everywhere and the primary reason you haven’t noticed is because you are not actively looking for them. Case and point, how many people did you pass today? Start with this number then add the previous weeks so on and so forth for the past month. If you’re honest I would guess hundreds maybe thousands of people who probably need your service or product but you did not bother to share what you have to offer.

Locating customers is much easier than you think. Let me expound further. Most entrepreneurs and business owners or a staff member will frequently visit the post office, office supply stores, courthouses and other businesses where people are gathered. On average you will personally come in contact with a minimum of 15 people per day times 365 days per year equals 5,475 potential customers. Now multiple 5,475 x 2% = 110 customers. Notice I said customers because 2% is your conversion rate. Not only will you meet customers personally but via the internet, telephone and referrals are potential customers too. Factor these prospects with the others and watch how easily your pipeline fills up.

For illustration purposes, multiply 110 (which is the number of customers) X $25 (your average sale price) = $2,750 (the amount added to your bottom line). See all the money what you’ve been passing.

Let’s Begin…

Have in mind who is your ideal customer. In essence, know your targeted audience. Your ideal customer may or may not be the person you encounter on a daily basis but they may know someone who is your ideal customer; therefore, always treat everyone with genuine courtesy and respect. People will remember how you made them feel longer than what you said to them.

Make it your mission to expect five new customers per day than increase this amount to whatever number of customers you want in your pipeline. Remember, without customers your business will definitely derail and you will be responsible for getting everything back on course. Avoid this at all cost, the reason being it is time-consuming to convince your regular customers to come back without jeopardizing your relationship with them. Winning back regular customers will cost you more because they will expect something greater than what you originally offered.

So the next time you are at the grocery store, shopping mall, movie theater, doctors office, parking lot, restaurant, sporting event, music festival or any place where people gather, have a business card or pamphlet about your business to leave with your next customer.

Word of Caution. Never leave any of your business materials with other businesses without their permission. By doing so you are showing them respect which they will remember your professionalism and probably send you several referrals.

This is enough information to point you in the right direct to finding customers.

Until Next Time! Stay tuned to “Laying Your Business Foundation.”

The topic of discussion for the next article of “Laying Your Business Foundation – Part 6: Marketing Your Services or Products.

Business Coach Explains To You How Build Solid Business Foundations

Make sure you have solid foundations.

Have you ever seen a skyscraper being built?

The first thing they do to build it is to dig down.

It’s a little strange to see, but it makes sense if you think about it.

By digging down and making sure all the foundations are in place, and making sure they are rock solid… the building can then reach up towards the sky.

Without the rock solid foundations the building could topple and crash to the ground.

Unfortunately that’s what happens to some businesses.

Some owners neglect, ignore or are ignorant of some of the ‘foundations’ that MUST be in place to allow the business safe and secure business growth.

The things we are covering aren’t as exciting or as ‘glamorous’ as the topics that most business owners want to delve into like marketing, or team training… yet the areas are fundamental to the success of your business.

And they are topics that all multi-million dollar business owners are great at… and follow religiously.

Although they aren’t as glamorous – they are still fundamental to the successful growth and in some cases – the existence of your business.

So please don’t fall into the trap of ignoring these areas like some business owners do – because you can find yourself in serious trouble.

Insurances – Go over the kind of insurances that you need, and your business needs in case of any form of mishap, act of god and/or litigation. There are some critical ones that you need to be aware of. And there’s some that you may not have thought of that are fundamental to your business. So check them out and put them into place.

Contracts – How good are the contracts you have in place? Do you have any? Do you have them with your team and suppliers?

Make sure you’re working with a good contract lawyer to make sure you’re adequately protected in your contracts. Don’t just copy other people contracts; get them done specifically for your business.

Disclaimers – With the increasing rate of litigation make sure you are working with your lawyer to protect yourself from any type of litigation that may occur.

Technology – Find the appropriate levels of technology for your business so you can become more effective and efficient with your current workloads… and make sure you’re continually taking care of your current technology and updating regularly before the need arises.

Technology is only a cost if you don’t use it. When you use it, it’s an investment.

Software – When you start off in business you can get away with rip off versions of software. Yet when you’re aiming to grow – get the real versions.

I recommend it.

As you start to grow and you’re producing data that’s becoming more and more valuable you need to protect it and have constant support and access to it.

If you don’t have the ‘real McCoy’ you can say goodbye to sometimes years of hard work.

Back ups Virus Protections – Make sure you’re following the guidelines of backing up your data and keeping up-to-date virus software as well.

The data on your computer has taken you and your business literally thousands of hours at around $20 per hour. So you’ve probably got $100K or more worth of data on your system. Back it up, and store it off site.

If you’re online – you’ll know how many viruses are around. So get yourself a great system and update it daily.

I use Vet and I update it daily.

Correct Asset Protection – There’s no point making great money and building wealth if – seemingly at the drop of a hat – you lose it all. It happens because of poor asset protection. Make sure your assets are protected.

Get yourself a good asset protection lawyer and accountant.

Statutory Obligations – Be aware of all the statutory obligations that you have of running and owning a business – and comply with them. It’s the law.

Taxation – Make contact and work with the tax office often to understand all the different forms or taxation that you and your business are subject to. Know when payments are due, budget for them and make sure you get everything in on time.

Rateable Remuneration – As your business grows and you employ more and more people make sure you’re updating your rateable remuneration with WorkCover. Otherwise you can be stuck with an unpleasant bill or even be fined.

Time Off – Like the axe man that cuts wood. You’ve got to take time off to sharpen your saw. Otherwise it just becomes blunt and ineffective.

Time off helps charge up your batteries – and it also makes your team step up when you’re away.

Regular time off will have you feeling fresh and ‘on-the-ball’.

There may be many more things that you can do for your business to make sure you have nice strong foundations in place for growing your business.

Go through all the potential areas and topics that are specific for your business – and make sure they are in place. That way you’re geared up for growth.

Copyright © 2006 by Casey Gollan. All Rights Reserved