Tag: start up business

Transitioning to Entrepreneur from Corporate America

by Bryan Janeczko, to see the original post click here.

Working at home
Working at home (Photo credit: gibsonsgolfer)
More and more Americans are leaving the corporate world to start their own business. While some strike out to create a new industry or move in an entirely different direction, most decide to start businesses in the industry they have worked in throughout their corporate career.

Basing your startup in a field you know well offers many obvious benefits. Contacts, peers and clients can be transformed into co-founders, employees and customers. Familiarity with the market or manufacturing process, on-the-job training from their previous employers and even access to groups and associations in their industry are just a few of these clear advantages.

But, not all is perfect. There are some downsides to having a corporate background before becoming an entrepreneur, and they are more likely and pronounced if one has spent a long time in corporate America. Here are the key disadvantages:

1. Lack of Flexibility

In the corporate world people get accustomed to and even dependent on many things that just don’t work in an entrepreneurial environment. Complicated organizational charts, detailed and specific processes, reliance on big-brand suppliers, and similar things create a rigidity that takes away the nimbleness of their small business. Don’t try to beat the big guys at their own game; you need to be quicker, more responsive, and more creative.

2. Financial Stability

When you know how much your paycheck is, when it is coming, and the likelihood that it will continue to come in the future, it eliminates a lot of the hardest parts of financial planning, stress and management. With your own business, especially starting out or in growth spurts, you may have no income or even negative income for days, weeks, even months. (I took no pay in my first company for 1 1/2 years!) If you are not accustomed to this, it can be jarring and disruptive, and create issues in your family and community affairs. Plan accordingly, and prepare yourself for this potentially huge change in your life and lifestyle.

3. The Desire to Change Everything

Many people leave corporate America feeling under-appreciated, unfulfilled, and/or completely burnt out on working for someone else. They are essentially jaded towards the corporate environment, and swing much too far in the other direction. They may hire only or mostly friends and family, maintain no routines or timelines, and favor “going with the flow” over planning and strategy. While it is your business, remember, it IS A BUSINESS, and you have to have your priorities straight. Sure you can ditch the dress code, take a vacation when you normally wouldn’t or promote a more “relaxed” culture in your office, but don’t throw the baby out with the bath water. Corporate America makes big money for a reason, and you shouldn’t stray too far away from their models.

Leaving the corporate world to start your own business is exciting and liberating, and can very well lead to improved fortunes, lifestyle and satisfaction from your work. But, if not properly done, can have quite the opposite effect.  Have you made the transition to entrepreneur from corporate America? I’d love to hear your story in the comments below!

Bryan Janeczko Bryan JaneczkoFounder, Wicked Start Bryan has successfully launched multiple startups. His latest venture, Wicked Start, provides tools to plan, fund, and launch a new business. Also author of WickedStart: Guide to Starting a New Venture with Passion and Purpose, Bryan is committed to helping small businesses grow and succeed. www.wickedstart.com | Facebook | @WickedStart  | LinkedIn | More from Bryan

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What Is The Criteria For Getting A Small Business Loan?

Written By: Mark Ellis

Getting a small business loan from a bank can be difficult and time consuming. Each bank has its own criteria for loan approvals and can change its criteria depending on both internal and external events. The best chance you have for getting approved is to present the bank with the information they need, how they need it, and in a professional and concise but complete manner. To that end, here are the major criteria used by most banks in approving loans.

1. Business Plan

A well thought out business plan provides the business owner and the bank with a road map for the success of the business. It introduces the business in a clear and thorough but concise manner. It describes the business, the potential for the products or services offered, the competitive situation, the experience of the management/owners, and the organization of the business.

The plan should include historical and year to date financials as well as estimated financials for the business for two years. It should clearly show how the borrowed funds will be used. Financials presented should include and Income Statement, Balance Sheet and Cash Flow statement. Often banks look for a new business to be cash flow positive after the first 6 months of operations. For existing businesses, increased margins to more than cover the interest of the loan are expected. If your financials show margins outside of the usual margins in this business, a detailed explanation will be required.

Also included in the business plan are documents which support the estimates made in the business plan (competitive situation, market trends, etc.) . In addition, resumes of the key management personnel as well as a personal financial statement of net worth will likely be required for anybody with a significant (>20%) ownership position.

The business plan should give the bank confidence that the business will generate at least 110% of the required cash flow to fund debt service and all other expenses. Newer businesses might be required to show coverage of 150%.

SCORE has many document with will guide you in the preparation of your business plan and you are advised to take advantage of those resources.

2. Experience

A lender will need to be assured that the loan will be paid back. The bank will be looking to see if the management of the company has the experience and expertise to run the business so that it generates sufficient gross margins to pay back the loan. While this criterion varies by bank, many look for three years of experience as an owner or in management of a similar type business. Additional management people and their experience and expertise will also help satisfy this expectation.

3. Equity

From a bank’s perspective, it wants to make sure that the owner is also at risk with this company to make sure they put their best efforts forward. Sometimes that is called skin in the game. Many banks require 10 to 20% if it’s an SBA backed loan or 10- 30% if it is a conventional loan of the value of the loan to be put into the company by management.

4. Credit

When evaluating business loans, banks will turn to any of the owner’s personal credit rating to see what history they have had in paying back their bills. This is a very important criterion for any business loan. Banks will look for good or even outstanding credit when evaluating your loan request. In a recent meeting with an SBA preferred lender, the loan officer told the SCORE group that a minimum credit score of 650 was needed. Other banks have said a FICA score of 700 is needed. If the loan is for an existing business, a SBSS score of 175 is needed

5. Collateral

One would think that if you had good credit, a sound business plan and financials, plus a healthy equity infusion into the company that the bank would approve the loan. Collateral is the last criteria as it backstops the risk of the loan. Collateral is any asset of value that can be pledged by the borrower(s) as collateral to make sure the bank gets paid back its loan with interest. The collateral requirements vary by bank and can range up to and above the 100% of the loan value. The percentage will depend upon the calculation of risk for this loan by the bank as well as the banks situation with regards other loans it has in its portfolio.

Collateral can take the form of securities inventory of the business, equipment, real estate, and other assets as well as deposits, home equity, home equipment, etc. Note that in determining the collateral value, only a percent of the cost of the item is considered in the collateral determination. Inventory that is easily sellable might have a value of 80% while perishable inventory might not have any value at all.

Summary

The five major criteria used by banks for a business loan are:

Business Plan Clear, complete and shows positive cash flow in 6 months including debt service

Includes: financial projections, relevant experience of the management, description of the industry, competition and positioning of the business in the industry, the use of borrowed funds, and the types of collateral available and how accessible is that collateral to being sold.

Experience 3 years

Equity 10 – 20% SBA loans or 10%– 30% conventional

Credit 650 to 700 minimum FICA and, if applicable, SBSS of >175

Collateral up to 100%+ in discounted value of collateral assets

Mark Ellis is a former SCORE Mentor. If you would like to meet with any of our SCORE Mentors to assist and help your business grow, CLICK HERE!

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Floyd Fence Company

Alicia Lopez was studying for her MBA at The Citadel when the opportunity to purchase the fence company her husband worked for presented itself.  He had the industry experience and she had the business studies but they wisely turned to SCORE for advice from seasoned professionals who had logged years of experience in starting and running successful small businesses.  Floyd Fence now specializes in aluminum and custom fences for Tri-county residents that wish to protect or add beauty and style to their homes with quality constructed, long lasting fences.

My Successes

During their first two years of ownership the company enjoyed solid growth.  While Floyd Fences started by serving the residential market, they have since expanded to serve commercial and industrial markets. Their largest commercial project is the Island House Pool, Fitness Center & Playground at Seabrook Island.  They currently have 2 full time employees and up to 10 part time employees depending on the project.  The North Charleston business has been so successful that it earned SCORE Coastal’s 2010 Small Business of the Year award after just one year in business.

How SCORE Helped

Of SCORE’s aid in their success Tristan comments, “They helped us out with any little questions we had.  They wanted us to succeed as bad as we did. It’s free information, and they were extremely helpful. We started when the economy was not very good. We were iffy about it, and they advised us to keep overhead as low as possible so that when business was slow, we could ride it out. On a scale of 1 to 10, their help was a 10.”

What’s Great About My Mentor?

SCORE mentor Joseph Conti advised the husband and wife duo on many facets of business ownership including accounting, advertising, business plan development, obtaining financing, analyzing cash flow, human resource management and marketing.

To Learn More About Floyd Fence Company, Click Here!

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4 Surprising Facts About Social Media For Small Businesses

1. 40% Say They “Like” A Business’s Facebook to Get Promotions and Discounts

According to this RocketMedia infographic, a majority of a business’ Facebook fans were originally attracted to hitting the “Like” button because they thought doing so would get them special deals or promotions. Feel free to update your feed with interesting articles on your Facebook page to engage a customer, that’s all well and good, but if you really want to incentivize new people to “Like” you and want to keep your current community’s attention perked; post a link or a code to a freebie, coupon or promotion at least once a month.

 

2. Launch Your Social Media Campaigns on Tuesdays; Never on Fridays

YesMail, an email marketing services provider ran a three-month study to research the success of social media campaigns for more than twenty top retail brands. Their findings: Although most campaigns are deployed on Fridays, the amount of actual social media engagement peaked the most on Tuesdays (engagement fares the worst on Fridays). Although the study wasn’t conclusive on why this is so, you could use common sense to deduce that most people are more-or-less gearing up for “weekend” mode on Fridays and they’re probably spending more time on confirming dinner plans than on a shop’s website.

 

3. Blog Posts That Are 450 Words Long Have A Higher Chance of Being “Shared”

Statistic & Image Courtesy of Dan Zarella of HubSpot

Three to five paragraphs seems to be the “sweet-spot” length for blog posts that get shared more often than their shorter or longer counterparts. This makes sense seeing that bite-sized content that can be summed up in less than a paragraph should probably be boiled down to a tweet that “packs a punch” and anything longer than five paragraphs will have attention spans wandering. Turn that lengthy blog post into a whitepaper instead.

 

4. Facebook Content Posted on Wednesdays at 3PM Have the Highest Click-Throughs

 

Statistics & Image by bitly and RakaCreative

When posting Facebook updates, aim for the middle – middle of the week and middle of the workday, that is. Much of social media exposure depends on the likelihood that eyeballs will be in front of computer screens. What’s the best time to catch people on Twitter and on Facebook? After lunchtime, when people are back at their offices of course! Take advantage of that opportunity by posting primarily in this time slot. As for Twitter, the time to tweet for the best exposure is on Mondays-Thursdays between 1pm-3pm.

 

Bryan JaneczkoFounder, Wicked Start
Bryan has 15 years of financial and entrepreneurial experience including co-founding start-ups like Nu-Kitchen, an online food retailer. Bryan is an active board member of the Entrepreneur’s Organization (EO) and StartOut. He is dedicated to the success of all small businesses.
www.wickedstart.com | Facebook | @WickedStart | More from Bryan

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LinkedIn Dos and Don’ts

By Giselle Aguiar

LinkedIn is a powerful networking tool for both jobseekers and businesses, but there are rules to follow. There are things that you just don’t do. LinkedIn is the Facebook for professionals and it’s nothing like Facebook.

It’s about networking

It’s not who you know, but who your contacts know. Most of the time, a 1st-level connection may never be a customer of yours but they may very well connect you with someone who might.

It’s also not about you, but about what you can do for a potential employer or client.

LinkedIn Don’ts

  1. Never ask for an endorsement from someone who doesn’t know you or your work.
  2. Don’t connect with someone you don’t know or with whom you have absolutely nothing in common.
  3. Don’t put someone down if they are not interested in your product or service. That will hurt you even more.
  4. Don’t SPAM people

LinkedIn Dos

  1. Connect with people you meet at networking events
  2. Respect their wishes to not be contacted
  3. Send them 1 announcement email only. If they are interested, they’ll respond.
  4. Request endorsements or a recommendation from people who know you or your work. If you need more of those types of connections, volunteer, then ask for the endorsement. A happy client, former co-worker, boss or a friend should be happy to recommend you.

Giselle Aguiar is a SCORE presenter and owner of AZ Social Media Wiz. to Learn more about her, CLICK HERE!

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