Need to Borrow Money for Your Home Business? Think Outside Of The Box.

You want to start a business and you need to borrow money, but from whom?? Because of the credit crunch, consumer loans and small business financing is getting harder and harder to obtain. Were you thinking about financing your start-up business through credit cards? (ouch!!) or home equity lines? If this is your line of thinking, think higher fees and tougher underwriting standards. In today's economy, if you need to borrow money you must start to think outside of the box for financing your start-up business. In this edition of JBSCommunications, I will outline a few suggestions you might want to consider in financing your new enterprise.

In addition, after you have gotten the financing for your business, the next thing you need to think about is running you're your business, like a business, right from the start. Unfortunately, many people, especially women (sorry!!) tend to run their business like a hobby. This is an IRS NO-NO. You need to know a bit about managing your cash flow, which, can be actuality as simple as a few reports once a week. But..let's start with getting the money...

Borrow from friends and family. This is the tried and true method for many small business owners to finance start-ups. The key word here is Borrow; not give, Make this a business transaction and friends and family will be more likely to partner with you. When borrowing from friends and family, these loans are generally less expensive than other forms of loans. You can suggest an interest rate that is the same or slightly higher than what they are earning in their high-yield savings account. Remember, going into business is about win/win relationships. You are entering into a business relationship with a friend or a family member and you what you do not want to do is take advantage of their generosity of helping you with your start-up enterprise.

Next you need to set up a payment schedule with them. The same, long term repayment schedule can be arranged. Again, treat this entire transaction as a business transaction. I personally have had my loans with family (many loans!!) properly documented in the amount of the loan, the amount of compounded interest that is going to be paid and my payment schedule on a monthly basis. After there is an agreement and acceptance of the payment and payment schedule, we have had our documentation notarized. This way, both you and your friend or family member can feel confident that your business agreement has been done with integrity and in good faith.

In this agreement, you may want to also build in a grace period before you start to payback your loan. Of course during this grace period you are paying interest on the money that you have borrowed, but at least you can start to build your business and generate cash flow before you have to worry about paying back your loans.

Borrow from many friends and family. Once your family realizes that your business relationship is going to be a win/win for them, they will be more willing to loan you the money you need to make yourself a huge success. They will start to see you as a wise investment for themselves. Remember, all business is about win/win solutions. You will always be successful as long as you keep it as such, no matter who you are dealing with.

Borrow Online. Isn't the Internet amazing? There are now Web Sites that allow borrowers to get money from perfect strangers online. Go to Google and type in "person to person loan" and the search engine will lead you to several online loan companies. Please know that the interest rates are going to be higher, but these sites are a great resource for entrepreneurs seeking loans during this credit crunch.

Borrow from the SBA(Small Business Administration).SBA loan programs do not appear to be taken away from the budget as of yet. Therefore banks will continue to make loans that are guaranteed by the SBA, and the underwriting standards for these loans should not be changed all that much.

Did you ever consider borrowing from yourself? Typically, business owners rely on their savings for about 30% of their initial start-up funds. What you might want to consider is liquidating some stock and lending it to your company, rather than tapping into your retirement funds such as your 401K or other retirement plans. Lending the money to your company can be better because you can pay yourself back at a later date, if you have documented the loan properly.

Now that you have the start-up capital that you need for your enterprise, you need to start to think about your cash flow and setting up you business...as a business.

I want you to ask yourself this question: What is the PURPOSE of your business? Do not get confused with the question: What is the PASSION of your business. The PURPOSE of your business is to make a PROFIT! You need to make your business profitable or else you may need to go back to your JOB, and by this time you, like me, are probably physiologically unemployable!! If you manage your Cash Flow properly and right from the beginning you can build a life of wealth to even a greater extent that you originally dreamed.

So, what is Cash Flow anyway? It is the budgeting and managing of your expenses and your income. You need to monitor your Cash Flow to make your CPA happy at the end of the year! The biggest road block with managing our Cash Flow for many of us is that it is mental mistake. Many creative people have this inner conversation with themselves that they are not good with money, that they aren't good with numbers. Think about the Law of Attraction message this is sending out..You are not good with money. If this is your inner dialogue, you better change it quickly or else you won't be good with money, because you won't have any coming in!

There are programs out there that can help you with monitoring your Cash Flow and one of them is Quick Books. Quick Books is great and I use it, but for some it is a bit over whelming . IRS does love the use of Quick Books, but this is only one tool and not the only way of looking at your business.

I am going to suggest to you to create an additional two reports that will help you analyze your business and your Cash Flow on a weekly basis. These reports are easily created on an excel spreadsheet and will take you only 15 minutes a week to manage once you set them up.

The first report is going to be your Sales and Marketing Report. This report keeps track of everything that you have coming down your funnel on a weekly basis. You may want to create an excel spreadsheet with categories such as how many leads did you get that week, where did those leads come from, how many clicks did you have on your landing page, how many presentations did you do, how many cold calls did you conduct, what products were purchased that week, how many products were purchased, how many proposals did you sent out, how many YouTube views did you get. This is just a sampling of what you can monitor on a weekly basis. Take a look at your business and create the categories you feel are important to track on a weekly basis and create your excel spreadsheet from there. If it all seems a bit overwhelming, start with 3 or 4 categories to track and then slowly add one category every other week.

If you do not know how to create an excel spreadsheet, you might want to go to your local community college and take a quick course on Excel basics. You can also go to your local bookstore and pick up a book on Excel. For this process even Excel for Dummies would be a good resource. If you don't want to bother, have a college student set a spreadsheet up for you. If you give him/her your information on what you want to have on your report it should take no longer than 15 minutes to set your spreadsheet up.

Now that you have your spreadsheet set up, all you have to do is start to track the statistics each week and document. After two or three weeks you will have your historical data to compare how you are doing from week to week.

This can be very valuable information. If you see that sales have been going down and you are not sure exactly why go back and take a look at your data..are you getting as many leads, did you not spend as much time on your marketing as you should the past couple of weeks, what are your YouTube numbers? By going back and analyzing what you have been doing, you will then realize where you might have been a little light in activity, thus causing a decrease in sales. Make the proper adjustments and you will then be back to having the steady cash flow again.

The second report that I want you to create is the Cash Flow Projection Report. In this report, you will need to start to make some educated decisions on what you think, what you are going to project, for your expenses and your income each month during the year. It is important to know where you are, even if you are just starting out and then getting very clear on where you are going to go. When you physically write down your projections, you are then taking ownership of those numbers. Certainly these numbers in the beginning are going to be adjusted and tweaked, but as the months roll on, you will start to see the history and you will start to see how your monthly income is increasing at what percentage and your projections will then become more educated and more accurate. The same is then true for your expenses. With these projections you can then start to strategize for bigger projects, bigger advertising funds, etc.

Can you see the power you have in these two simple reports? Don't do what so many people do by creating elaborate reports, spending huge amount of times and energy, only to file in a filing drawer never to be seen or used again. What a waste. You want to use these reports to troubleshoot any problems BEFORE they happen or at the very least before they become overwhelming for you. Make it a habit to review these reports and any other reports that you have for your business on a weekly basis. Remember, it only takes about 21 days to create a habit. Create this crucial habit for your business and for your future.

"You are only as successful as your habits."

Brian Tracy

These two reports will also show you exactly where you are profitable and where you aren't. If there are portions of your enterprise that are not profitable, or too time consuming for the small profit that you are making you might want to rethink that portion of your business. By studying these two reports on a weekly basis for 15 or 20 minutes you will start to realize your ROI (Return on Investment) and what your business is actually costing you. Not what you are making, but what it is costing you. You may be selling your products like there is no tomorrow, but if the price of selling is more than the money you are bringing in, what is the point? There will be no profit. Remember, profit the reason you are in business.

I know you have CPA's, Bookkeepers, and financial advisors. They can give you the tools and the data, but it is not their job to make decisions about your business. Take ownership of these reports, create the habit of meeting with yourself or your partner every week and create your enterprise as a profit entity, not just a hobby, as so many of us do.

Thanks , take action and make it a profitable day....until next time.

Jen

Disclaimer: You shouldn't make any investment decision based solely on what you read here. This is not an offer to buy or sell a security. Should you choose to invest in the markets, it should be only after exhaustive due diligence and possibly in consultation with a licensed investment advisor.

Jennifer is the author and editor of JBSCommunications - an entrepreneurs directional on wealth and wisdom. If you are serious about reaching a six figure income and are willing to do what it takes to achieve that status, then this strictly business newsletter is for you. Sign up for Jennifer's Free E-Newsletter follow this link: http://www.jbscommunications.com/

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