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Friday, September 12, 2014

Need a Bank Loan? The 3 Big Obstacles for Small-Business Owners

Elizabeth Davis from Sageworks

SEPTEMBER 12, 2014

In the wake of the 2008 financial crisis, banks are struggling to return to the small-business market, according to Karen Mills, former administrator of the U.S. Small Business Administration. In a Harvard Business School working paper, Mills attributed the hesitation of banks to return to small-business lending to several factors:

·         Small-business owners are less creditworthy today due to the recession
·         Banks are more risk averse due to stricter regulations in place and increased costs
·         Community banks, traditional sources of small-business loans, are being consolidated by big banks

1. Declining creditworthiness of business owners
Mills, senior fellow with the Harvard Business School and head of the SBA from 2009 to 2013, noted that Federal Reserve data show the income of a typical household headed by a self-employed person decreased by 19 percent from 2007 to 2010. In addition, collateral owned by small businesses (typically residential or commercial real estate) also lost value, she wrote. The net effect? Lower credit scores for small business owners.

2. Stricter regulations and rising costs for banks
Because loans to small businesses are traditionally riskier due to dependence on the state of the economy among other factors, banks are especially cautious, Mills said in her piece. Increasingly strict regulations placed on community banks and larger banks alike are only fueling the fire.

And while Federal Reserve Senior Loan Officer Surveys indicate some easing of loan terms for small businesses has occurred, it hasn’t occurred as much as terms were tightened during and after the financial crisis, she noted.

In response to this environment, banks have been raising their capital reserves and holding onto deposits, decreasing the likelihood of underwriting small business loans, according to Mills.

Another factor that’s not helping the lending environment for small business owners is that transactions costs to process these types of loans are comparable to larger commercial loans, but without the payoff. “Some banks, particularly larger banks, have significantly reduced or eliminated loans below a certain threshold… or simply will not lend to small businesses,” said Mills. She added, “This is problematic as over half of small businesses survey are seeking loans of under $100,000, leaving a critical gap in the small business loan market.”

3. Community bank consolidation
Generally, community banks have been key players in small business lending, Mills said, citing data that shows community banks approved 48 percent of small business loans, while larger institutions approved only 13 percent.

However, the number of community banks has decreased from 14,000 in 1985 to less than 7,000 today, reducing the number of options for small businesses, Mills said. She noted that the largest banks held over 80 percent of the nation’s assets in 2012.

The end result of these trends, Mills said, is that small business owners are having to spend countless hours applying for loans at multiple institutions. She suggested that technology may be able to help banks or competitors address some of the issues related to risk and transaction costs.

In the meantime, other experts recommend that small business owners seek lenders that have developed a relationship-based focus for their lending efforts and work to build up their credibility and creditworthiness. As the recovery from the recession is slower coming to a close, it is also a possibility that conditions will improve for small-business lending.

To find out more about relationship-based lending, check out this complimentary whitepaper on How to Balance Relationship-Based Lending & Risk Management.

This story originally appeared on Sageworks

Saturday, August 2, 2014

One of Steve Jobs' Last Public Statements Can Help You Discover Your Passion

AUGUST 1, 2014

Passion is everything. You cannot inspire unless you’re inspired yourself.

In 25 years of studying communication, I’ve never met an inspiring entrepreneur who isn’t freakishly enthusiastic about his or her idea. Steve Jobs, one of the most passionate entrepreneurs in business history, may have offered the best definition of passion in one of his last public presentations, in March 2011 (he died that October).

"It is in Apple’s DNA that technology alone is not enough -- it’s technology married with liberal arts, married with the humanities, that yields us the results that make our heart sing,” he said.

When turned into a question, Jobs’ statement can have a profound impact on your happiness and success. Discovering your true passion is as easy as asking yourself:

“What makes my heart sing?”

Notice how the answer to the question -- what makes my heart sing -- is a lot different than the answer to the question, “What do I do?” Jobs made computers, but designing tools to help people unleash their creativity made his heart sing.

Your passion is not a passing interest or even a hobby, but something that is intensely meaningful and core to your identity. For me, golf is a hobby. I’m even “passionate” about it. But it’s not core to who I am. It is, however, for Rory McIlroy, who won the 2014 British Open.

When asked to describe his passion for golf, McIlroy said, “It’s what I think about when I get up in the morning. It’s what I think about when I go to bed.” For McIlroy, golf isn’t just a passing interest -- it makes his heart sing.

In December, I was invited to be a keynote speaker at the prestigious LeWeb conference in Paris. LeWeb gathers the world’s most passionate entrepreneurs for several days of sharing information that will transform the world. Backstage I met Ferran Adria, the visionary chef who created one of the world’s most famous restaurants, elBulli.

“What is the one quality that all successful entrepreneurs share?” I asked Adria.

“That’s impossible to answer,” he responded. "There are so many paths to success.”

Adria turned away for a moment and I figured our conversation had come to an end.

Then he turned to me and said, “I take it back. There is one thing that all successful entrepreneurs have in common, and that’s passion.”

“How do you know it when you find it?” I asked.

“Let’s put it this way. When you see a glass of wine, what do you think of?” “A drink,” I said.

“Exactly. You see a beverage. I see a vineyard. I see an ingredient. I see joy. I see celebration.”

I personally enjoy wine, but it’s one of many things I’m passionate about. For Adria, wine makes his heart sing in celebration.

Several years ago I interviewed Chris Gardner for one of my books. He’s the man portrayed by actor Will Smith in the movie, The Pursuit of Happyness (‘happyness’ is purposely misspelled in the title. You’ll have to read the book or watch the movie to find out why).

Gardner told me the story of being homeless, spending nights in the bathroom of a subway station along with his 2-year-old son. During the day, Gardner would put on his one suit, drop off his kid at day care and take unpaid classes to become a stockbroker.

You can guess how the story ends. Gardner rose to the top of his firm and became a multi-millionaire.

“How did you find the strength, the spirit, to keep going?” I asked Gardner.

“Carmine, here’s the secret to success: find something you love to do so much, you can’t wait for the sun to rise to do it all over again.”

Gardner had discovered a passion -- a role -- that made his heart sing. Have you?

If you haven’t found your passion yet, don’t just “keep looking.” Ask yourself a better question. Ask yourself the one question that will change everything: What makes my heart sing? 
Carmine Gallo
CARMINE GALLO, CONTRIBUTOR, Keynote Speaker, Bestselling Author, Communication Coach


Saturday, May 17, 2014

Shopping for Startup Capital Outside of Silicon Valley

BY  | May 16, 2014

Shopping for Startup Capital Outside of Silicon Valley
Image credit: Shutterstock









While it's still true that the bulk of venture capital dollars go to startups in San Francisco and Silicon Valley, over the past decade a number of other metropolitan areas have begun to make a dent in the tally of investments.  
The San Francisco-Oakland area and San Jose-Sunnyvale area landed the atop a list of the top 20 locations for venture capital investment, with both California regions responsible for generating 40 percent of all the venture capital deals in 2012, according to Atlantic editor Richard Florida.
Rounding out the top 10 were Boston, New York, Los Angeles, San Diego, Seattle, Austin, Chicago and Washington, D.C., accounting for 38 percent of all the venture capital dollars invested, just 2 percent behind San Francisco and the Silicon Valley's share.
Yet, in addition to traditional venture capital funding, entrepreneurs can also turn to seed investors to help them fund their companies. Health care, mobile and internet startups claimed nearly 80 percent of angel group dollars in 2013 according to the Halo Report 2013. Of particular interest is the fact that 15 of the top 20 most active seed funds are not based in the Bay Area but are in states in the Northeast (New York, Massachusetts and Connecticut) as well as Western cities like Las Vegas, Los Angeles and Seattle.
Here are six tips for entrepreneurs on the hunt to raise funds for their startups:
1. Start networking locally. Be sure to use LinkedIn as a power tool for networking. Who are the angel investors and or venture capitalists in the startup's home community. Determine how to be introduced to them. Which alumni groups operate in the area and are suitable for networking with?
Many college or alumni groups have started entrepreneurial groups that are helping startups through mentoring and perhaps offering seed funding such as my organization, UCLA VC Fund. It is crucial to find and build relationships in a network that will provide a personal referral to potential investors.
2. Research crowdfunding opportunities. Several online resources are now available such as AngelList, which has extensive listings and ratings of angel investors. For project funding also check out crowdfunding sites such as Kickstarter and Indiegogo
3. Check out other investor hot beds. Explore cities such as New York, Seattle, Los Angeles, Salt Lake City and Boulder, Colo. A good place to start the research is CB Insights' list of the "150 most active seed investors of 2013." But, be sure that it's possible to tap into those cities through a tie through the startup’s location, customers, founders or other early investors or advisors.
4. Focus on cities where people are interested in the industry. Have a biotech startup? Be sure to research venture capital firms in Boston or Los Angeles and scratch Washington, D.C., off the list. For a media-tech company, try Los Angeles or New York City. A little business sector research can go a long way.
5. Learn as much as possible about a targeted investment firm. Investment firms are ultimately a collection of individuals, so get to know the organization and also the partners themselves. What is their background? Which partner has the most relevant expertise for the startup's underlying business sector? What is the success rate for the firm's prior investments? Does the firm have similar or conflicting investments?
Remember a venture firm will most likely request a seat on the startup's board of directors as a condition of investment. This person will spend a lot of time with the startup. Be just as careful in selecting the firm and individual partner as when selecting friends or a mate.
6. Understand what kind of funding is needed. Have a financial plan so it's clear the amount of money needed from an investor. This will also help to set expectations about what can be achieved by the company and in what time frame. So entrepreneurs just starting out with a partner and a great idea are best off looking for angel funding. But those with a fleshed-out business plan and product could be on the road to raising the first venture capital Series A round.  
Michael Howse is an executive board member of the UCLA Venture Capital Fund. He is the former CEO of Bigfoot Networks, a venture-backed startup that was acquired by Qualcomm. He previously served as entrepreneur-in-residence at U.S. Venture Partners and was founder and CEO of PacketHop, a wireless systems company. As a marketing executive, Howse worked at Silicon Valley startups S3 and 3dfx Interacitive.

This One Thing Can Make or Break Your Consulting Business

May 17, 2014, Entrepreneur Express
This excerpt is part of Entrepreneur.com's Second-Quarter Startup Kit which explores the fundamentals of starting up in a wide range of industries.
In Start Your Own Consulting Business, the staff at Entrepreneur Press and writer Eileen Figure Sandlin explain how you can start a profitable consulting business, no matter whether your consulting business will focus on HR placement, computer troubleshooting, or anything else you can dream up. In this edited excerpt, the authors offer tips on providing customer service that will help you land new business again and again.
To succeed as a consultant, you must do everything you can to set yourself apart from the competition. You want to give your clients a reason to say, "I'm really glad I chose this consultant." One way to ensure this is to provide the best customer service on the planet.
One great way to do this is by communicating with your client often about whether his or her expectations are being met and if the project is progressing as desired. "At the end of the first month of a project, I always ask my clients whether they think value is being achieved," says California trainer and coach Susan Bock, who is a past president of the Association of Professional Consultants. "I'll give them a full refund and won't proceed any further if I determine it's not possible to deal with their unrealized expectations."
Fred Elbel, a web design and computer consultant in Lakewood, Colorado, takes a different approach to customer service: He actually gives information away free as a way to make a favorable impression. "I give a lot of free advice to customers--in fact, sometimes too much," he admits. "It could be information like how to back up a computer system. But what happens is that clients remember how I helped them, and they'll call me when they don't have the time or skill to tackle other problems."
To succeed as a consultant, you need to develop a win-win style of customer service. This means that both you and your client must view everything you do as something positive, a means of moving forward and/or a way to solve a problem. Your ultimate success depends on your ability to use your inner resources and strengths, as well as your ability to do whatever it takes to solve your clients' problems and challenges and to be positive and energized while you do it. When you do these things, both you and your client will come out winners.
While solving problems and addressing challenges are certainly a consultant's main functions, there's another important task consultants must undertake, says Melinda Patrician, a Virginia public relations consultant. "One thing I highly recommend," she says, "is to get to know what the power structure is in that organization and get to know the support staff as well as your contact person." Understanding the organization will help you make better decisions and give better advice. It also helps you to know who the go-to person is when you need input or a decision made relating to the project you're handling.
Successful consultants live by these 10 customer service credos:
1. Accept full responsibility for your actions. Concentrate on giving your very best, no matter how good, bad or indifferent your client may be.
2. Develop an attitude of optimism and positive expectations. Begin to expect the very best from yourself, and soon others around you will see what a powerful force you present. Remember, optimists are simply people who've learned how to discipline their attitudes to their advantage.
3. Motivate yourself to have a "never give up" style. Make your clients feel you're there for them no matter what. In other words, go above and beyond the call of duty to fulfill your end of the agreement.
4. Keep improving your communications skills. When there's a breakdown in communication, chaos results. Practice your listening skills. Sometimes clients may not be clear about what they want, so ask questions so you're sure you understand what's expected of you.
5. Believe in yourself. When you have a high level of self-esteem, the sky's the limit.
6. Be flexible. Any consultant who can maintain a high degree of flexibility will gain a good reputation and have no trouble attracting new clients.
7. Set goals. When you have a plan of action with certain goals in mind, your goals will be easier to achieve. Remember, if you fail to plan, you plan to fail.
8. Organize yourself. This will impress your clients and help you become a more successful consultant.
9. Seek more than one solution to a problem. You also should always look for creative ways to solve those problems. Walt Disney, a true visionary if ever there was one, was a firm believer in the power of brainstorming; you should be, too!
10. Be happy! When you're happy, those around you will be happy, too.

Secrets of Consulting Success

Erin Blaskie, an author and internet marketing specialist, offers these suggestions for becoming a successful consultant:
Implement ideas fast. Don't hold back, and don't dilly-dally with details or try to be perfect. Get ideas out there, and tweak them as you go.
Use your strengths, and delegate the rest. Don't try to do everything yourself. Let's face it--to be successful, you need to learn that you aren't the best person to do everything in your business. Find the right people to help you out, and they'll pay for themselves.
Do only what you love. If you take on work you don't love, you run the risk of doing a poor job or taking light-years to complete a task. No one is meant or expected to do everything. Rather, we're meant to do the work we're passionate about because that makes us successful.
Work only with people who energize you. Find clients you're inspired by, who embrace your talents and who understand the way you work.
Limit your overhead. Stay in the green, and you'll become more successful. Think of how much less stress you'll have when money isn't an issue!
Be generous. Don't be afraid to give away information or help out your fellow businessperson for nothing in return. It feels great, and people will remember you.
Joining experts, editors and business writers, Entrepreneur Press delivers everything you need to know about starting and running more than 55 of today's hottest businesses. Learn more about Entrepreneur's Startup Series, available at EntrepreneurBookstore.com.

Thursday, January 16, 2014

Habits of the World's Wealthiest People (Infographic)

Habits of the World's Wealthiest People (Infographic)

By Nina Zipkin

, Jan. 16, 2014
What do Oprah Winfrey and Warren Buffett have in common, in addition to their fairly sizable net worths? More than you might think.
An infographic developed by social-media marketing company NowSourcing details some of the qualities and traits shared by the rich (we're talking those who earn more than $160,000 a year and have $3.2 million in assets). If you want to take a page out of Bill Gates' playbook, wake up early, exercise, read more (definitely cut back on your reality TV intake) and write a daily to-do list.
For more tips and statistics, including a gender breakdown and where the world's nearly 31.7 million millionaires call home, check out the infographic below.
Habits of the World's Wealthiest People
Nina Zipkin is an editorial assistant at Entrepreneur.com.

Shark Tank's Daymond John on Lessons From His Worst Mistakes



Read more: http://www.entrepreneur.com/article/230918#ixzz2qaigc2tl

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