Small Business Trends |
| 8 Ways to Finance Your Startup with Debt: Part 2 Posted: 22 Jan 2012 11:30 AM PST I mentioned this article to someone recently who was surprised at the limited number of debt options for startup companies. I asked her to do some research and encouraged her to come on and comment on the story if she has some other suggestions. It’s not that we’re discussing the “only” debt options for startups but, rather, we’re talking about the most common options or the solutions that can be employed by the majority. The answers to all your prayers may not be here but it’s important to clearly understand your options and the beginning of empowerment is to know what can and can’t be done so that decisive action can be taken. So here we go with our next set of startup debt financing options: SBA Loan – We’re all familiar with SBA loans and I know they have a bad name with some but, if you’re a startup, don’t discard this option. Brock Blake is the CEO of Lendio, a free small business resource that should be utilized by any small business owner looking for capital. According to Blake:
Home Equity Line of Credit or HELOC – I realize this isn’t 2007 so there are not nearly as many HELOC’s being handed out. However, there are still people who either own their homes free and clear with no financing or they have a lot of equity. People who have been downsized after several years in the workforce. Others have inherited a property from parents or grandparents and now they have options to borrow against their new home. So, despite the fact that approximately 30% of homeowners owe more than their homes are worth, there is still a large army out there with equity. If you’re part of the silent “equity army” and you’re looking for a HELOC then you may be wise to look at the smaller banks and credit unions since the lending challenges and issues at the big banks are well documented. Lastly, even though HELOC’s are not nearly as prevalent as they once were, they belong on the list of options. Peer to Peer Loan aka P2P – I’m still amazed that, with all the requirements involved in being a lender and the burdensome requirements of the SEC, that we still have lenders who are willing to offer small loans like the P2P lenders. So on one hand they are great. But if you visit the websites for two of the largest P2P lenders, Prosper and Lending Club, you’ll quickly learn that these loans aren’t cheap. With closing costs and high APY’s this is not your bank loan with minimal closing costs and a reasonable interest rate. However, there are tens of millions of dollars of loans being issued through these networks and the default rates are rather minimal. So they have created models that work. The downside is that loan amounts are pretty low on average. Lending limits are usually $25,000 to $35,000 and the average loan sizes that are being approved are much lower than those limits. You’ll almost always get better terms on a credit card which allows you to use the funds over and over again instead of only once like a loan – and you may be able to get a larger credit limit as well. P2P loans may not be cheap and they do have their downsides but these are a good fit for the right person. Contract Financing – This is a relatively new financing option that allows business owners to capitalize on a contract that is either existing or in the beginning stages of negotiation. Kris Roglieri is the founder of Commercial Capital Training Group and the President of a national commercial finance company who has used contract financing for many clients. Roglieri explains it like this:
The credit of the borrower and financials of the new business are not a factor in determining whether or not a business can access capital from their contract. Roglieri points out that:
So the bottom line is to know and understand what your options are. After all, how can you make the best decision if you don’t know what your options are and which one or which combination is best for you? Be sure to check out Part 1 too. I realize that not every option is here but we welcome your comments. So to all my fellow business owners keep living the dream!
From Small Business Trends      |
| Start Your Engines and Read the “Roadmap to Revenue” Posted: 22 Jan 2012 05:30 AM PST
Over the last few years, I'd done a decent job of targeting my customers and understanding what was important to them, but I've never really created an offer around exactly how they want to buy. I'm not going to kid you – it's been a challenging process that's involved daily quiet sessions picking through my brain, observing my customers' behavior and trying to parse out exactly what's going to resonate with them. The Universe must have gotten wind of all these brainwaves because soon after making this commitment in my business, I received a review copy from the author of Roadmap to Revenue: How to Sell the Way Your Customers Want to Buy by Kristin Zhivago (@KristinZhivago). And what's really strange is that I was certain that I had passed the book on to another reviewer on the team and was kicking myself for not hanging onto it and then as I was looking for another book – THERE IT WAS! That's when the theme from the Twilight Zone started ringing in my head. I was meant to read this book and share it with you. The Culture has Firmly Moved Into a Customer-Driven Market If you've taken any marketing classes or read any older marketing books, you might remember the standard history chapter on how the culture has moved from being manufacturing driven (build it and they will come) to being sales driven (sell it to them and they will buy) to being market driven (give them what they want) to being customer driven (know what the customer wants and how they want it). Roadmap to Revenue is one of those books that will help you build your marketing strategy and system around creating a customer experience that just resonates so that your customers choose you. This book would be a great follow-up book to the series we did that includes SNAP Selling, SHIFT and Selling to the C-Suite. Let's Take a Road Trip Around Roadmap to Revenue One of my favorite aspects of this book is the graphic inside the front cover. I received a hard back review copy, so the summary map and graphic are easy to find, easy to read and serve as a terrific introduction to what's coming up as well as a resources to double check my marketing efforts to make sure I'm going in the right direction. (Don't you just love the analogy? It's effortless.) Your journey starts at the Awakening Point where you DISCOVER what your customers want and figure out a way to make purchasing easier. Then you move on to Resolution Junction where you DEBATE the differences between what they want and what you have to sell. And finally you DEPLOY as you hit Lake Turnaround. Here you map out the buying process and start moving toward "Revenue City!" What Make Kristin Zhivago a Great Tour Guide on the Road to Revenue? Kristin Zhivago is a "Revenue Coach" who helps CEOs and entrepremeurs make more money by understanding exactly what their customers want to buy from them – and how they want to buy it. She's been at this a long time. She founded her company Zhivago Management Partners in 1979 and since then, she's worked with companies such as IMB, Dow Jones and Johnson & Johnson. What You’ll See Along The Roadmap to Revenue Zhivago has some specific suggestions as to WHY and HOW we are actually standing in the way of our customers choosing us. These start early in the book on pages 6 – 9. I'd recommend spending some quality time with this list. You might want to mark the ones you think you are guilty of so that you can focus on those in your marketing plans later. And remember the model I told you about inside the front cover? You'll get into all the details in Chapter 2. Chapters 3 – 5 get into the “what to do” of each phase of your road to revenue. Chapters 6 – 12 really dig deep into understanding your customers and their buying process. One powerful way of designing a marketing process around a customer is to create a "persona" of a real person. Give them a name and describe their real world experiences as realistically as possible. In Roadmap to Revenue you'll meet Joe. Zhivago breaks down this fictitious customers every move and every thought and then shows you how to think about your marketing messages so that Joe has an easy purchasing experience with you. Who Will Get the Most Out of Roadmap to Revenue? Small business owners – especially those who serve consumers such as retailers or consumer services providers will find a lot of great ideas in this book. Sales and marketing managers will be able to identify their own "blocking" behaviors that keep customers from buying from them. What To Look Out For on Your Trip Through the Book There is a good possibility that you will pick up this book, read it and nod your head – but then do nothing. While the book is absolutely loaded with information, and how-to advice, it stops short of feeding it to you. After going through the book I went to the Kristin Zhivago web site to see what online resources were available for Roadmap to Revenue. All I found was a page that described the book and how to buy it. Then I went to the book jacket where I found Kristin Zhivago's blog, Revenue Journal. You'll find lots of articles there – but no worksheets or templates or guidelines that I think would have made it easier for customers of this book to actually put these principles in action. But don't let this stop you. If you're ready to become a more customer-friendly business that makes it easy to buy from you, then this is a book that is right up your alley. From Small Business Trends     |
Now that we are solidly into 2012, it's time to stop dreaming and start doing. One of my business resolutions was to create product and service offerings that are rooted in targeting my ideal customer, what's important to them when they are buying what I'm selling and then developing an offer that is structured for exactly how they want to buy.
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