Motivate Staff and Consumers With Gift Vouchers

If you're considering the various options for boosting your staff's performance and encouraging clients to buy your products or use your services, consider schemes that use gift vouchers. To find out why these are so popular and how they could help your business, read on.
Gift vouchers can be harnessed for a variety of purposes - and it's this that forms a large part of their appeal. Whether you plan to launch a consumer-focused scheme or something for your staff, you'll find gift vouchers are an effective tool to have in your arsenal.
There are a number of ways they can be used to improve your engagement with clients, for example. If you plan to launch a new product, why not offer a gift voucher with each purchase to encourage more sales?
Or, you could simply use them to acquire more customers - or encourage existing clients to keep choosing your services. Indeed, the latter could prove particularly beneficial if you operate in a competitive marketplace, as it will help to differentiate your business from your rivals - and even potentially gain some of their client base.
When it comes to staff performance, meanwhile, you'll find reward schemes and incentives can be an incredibly effective motivational tool.
For example, you could boost employee morale by offering rewards for long service or loyalty. Alternatively, you can encourage workers to meet their full potential by offering sales incentives, such as gift vouchers for meeting targets.
Of course, different people are interested in different things, which means what is considered valuable by some may not be by others. This brings us to the next benefit of vouchers and cards - their wide appeal.

Unlike other forms of reward, vouchers can offer tangible benefits for everyone. Should your client base be broad or your staff have a wide range of interests, consider multi-option gift vouchers that can be redeemed at an abundance of familiar names on the high street.
Alternatively, vouchers catering for travel services, leisure attractions and spas - to name but a few - are also available should you be happy to go with something a little more specific.
In addition to these great benefits, such schemes are typically simple to implement and wonderfully cost-effective - something most companies will be concerned with during the current troubled economic climate.
So, why not consider harnessing the power of vouchers to help achieve your business goals today?

Motivate Staff and Consumers With Gift Vouchers

If you're considering the various options for boosting your staff's performance and encouraging clients to buy your products or use your services, consider schemes that use gift vouchers. To find out why these are so popular and how they could help your business, read on.
Gift vouchers can be harnessed for a variety of purposes - and it's this that forms a large part of their appeal. Whether you plan to launch a consumer-focused scheme or something for your staff, you'll find gift vouchers are an effective tool to have in your arsenal.
There are a number of ways they can be used to improve your engagement with clients, for example. If you plan to launch a new product, why not offer a gift voucher with each purchase to encourage more sales?
Or, you could simply use them to acquire more customers - or encourage existing clients to keep choosing your services. Indeed, the latter could prove particularly beneficial if you operate in a competitive marketplace, as it will help to differentiate your business from your rivals - and even potentially gain some of their client base.
When it comes to staff performance, meanwhile, you'll find reward schemes and incentives can be an incredibly effective motivational tool.
For example, you could boost employee morale by offering rewards for long service or loyalty. Alternatively, you can encourage workers to meet their full potential by offering sales incentives, such as gift vouchers for meeting targets.
Of course, different people are interested in different things, which means what is considered valuable by some may not be by others. This brings us to the next benefit of vouchers and cards - their wide appeal.

Unlike other forms of reward, vouchers can offer tangible benefits for everyone. Should your client base be broad or your staff have a wide range of interests, consider multi-option gift vouchers that can be redeemed at an abundance of familiar names on the high street.
Alternatively, vouchers catering for travel services, leisure attractions and spas - to name but a few - are also available should you be happy to go with something a little more specific.
In addition to these great benefits, such schemes are typically simple to implement and wonderfully cost-effective - something most companies will be concerned with during the current troubled economic climate.
So, why not consider harnessing the power of vouchers to help achieve your business goals today?

Motivate Staff and Consumers With Gift Vouchers

If you're considering the various options for boosting your staff's performance and encouraging clients to buy your products or use your services, consider schemes that use gift vouchers. To find out why these are so popular and how they could help your business, read on.
Gift vouchers can be harnessed for a variety of purposes - and it's this that forms a large part of their appeal. Whether you plan to launch a consumer-focused scheme or something for your staff, you'll find gift vouchers are an effective tool to have in your arsenal.
There are a number of ways they can be used to improve your engagement with clients, for example. If you plan to launch a new product, why not offer a gift voucher with each purchase to encourage more sales?
Or, you could simply use them to acquire more customers - or encourage existing clients to keep choosing your services. Indeed, the latter could prove particularly beneficial if you operate in a competitive marketplace, as it will help to differentiate your business from your rivals - and even potentially gain some of their client base.
When it comes to staff performance, meanwhile, you'll find reward schemes and incentives can be an incredibly effective motivational tool.
For example, you could boost employee morale by offering rewards for long service or loyalty. Alternatively, you can encourage workers to meet their full potential by offering sales incentives, such as gift vouchers for meeting targets.
Of course, different people are interested in different things, which means what is considered valuable by some may not be by others. This brings us to the next benefit of vouchers and cards - their wide appeal.

Unlike other forms of reward, vouchers can offer tangible benefits for everyone. Should your client base be broad or your staff have a wide range of interests, consider multi-option gift vouchers that can be redeemed at an abundance of familiar names on the high street.
Alternatively, vouchers catering for travel services, leisure attractions and spas - to name but a few - are also available should you be happy to go with something a little more specific.
In addition to these great benefits, such schemes are typically simple to implement and wonderfully cost-effective - something most companies will be concerned with during the current troubled economic climate.
So, why not consider harnessing the power of vouchers to help achieve your business goals today?

Help Clients Start a Business Right by 8 Tips

When clients fail to plan, they plan to fail

Starting and running a profitable business is not rocket science. The 1st reason many people fail is they fail to follow a well-established business development process. Below are 8 tips to business development that, when followed with purpose, will significantly help your business clients and customers improve their chances for growth and long-term success:

1. Test the Waters: Encourage client so close a sale. While this is not possible for all ventures, making a sale validates the business idea on multiple levels, such as who will buy, why they buy, what they'll pay, how much it costs and how much profit will be made.

2. Research, Research, Research: Encourage clients to Web surf and shop the competition to learn how similar businesses define, price, market and sell their offerings. LIttle is new. Take advantage of what works.

3. Connect Clients to Experts: There are over 33,000 "volunteer" business mentors in the U.S. that offer all types of expertise, such as tax, funding, marketing, import/export, govt. contracting, etc. Introduce and help clients to connect.

4. Write the Business Plan: Require clients to write their own plan and invest the time, hard work, learning and focus that will be the keys to their future success.

5. Fund Innovatively: You well know, banks are rarely lending. Get creative. Will customers invest or prepay? Is joining forces an option where client have "x," someone else has "y" and together they're better off? Is contracting for a service versus buying equipment an option, such as a delivery service instead of buying a truck.

6. Recordkeeping: Require clients to demonstrate that they understand and have arranged for reliable expertise for maintaining breakeven, forecasting, cash flow and bookkeeping records. Business success lies in the details of managing the numbers.

7. Defeat Fear Through Knowledge: Asking for the sale is scary. Maintaining financial records can be intimidating. Investing in ones future is risky. Yet millions of people are doing this every day with success. Help clients connect with no-cost business assistance networks to learn how they can do it too.

8. Focus, Focus, Focus. Profitability is the first objective in business. Focus on a sales cycle where revenues exceed expenses. Assist clients with refining and repeating this process before they start something new.

Like most things in life, the more purposefully you engage, the more likely you'll get the results you seek. Good luck!

Help Clients Start a Business Right by 8 Tips

When clients fail to plan, they plan to fail

Starting and running a profitable business is not rocket science. The 1st reason many people fail is they fail to follow a well-established business development process. Below are 8 tips to business development that, when followed with purpose, will significantly help your business clients and customers improve their chances for growth and long-term success:

1. Test the Waters: Encourage client so close a sale. While this is not possible for all ventures, making a sale validates the business idea on multiple levels, such as who will buy, why they buy, what they'll pay, how much it costs and how much profit will be made.

2. Research, Research, Research: Encourage clients to Web surf and shop the competition to learn how similar businesses define, price, market and sell their offerings. LIttle is new. Take advantage of what works.

3. Connect Clients to Experts: There are over 33,000 "volunteer" business mentors in the U.S. that offer all types of expertise, such as tax, funding, marketing, import/export, govt. contracting, etc. Introduce and help clients to connect.

4. Write the Business Plan: Require clients to write their own plan and invest the time, hard work, learning and focus that will be the keys to their future success.

5. Fund Innovatively: You well know, banks are rarely lending. Get creative. Will customers invest or prepay? Is joining forces an option where client have "x," someone else has "y" and together they're better off? Is contracting for a service versus buying equipment an option, such as a delivery service instead of buying a truck.

6. Recordkeeping: Require clients to demonstrate that they understand and have arranged for reliable expertise for maintaining breakeven, forecasting, cash flow and bookkeeping records. Business success lies in the details of managing the numbers.

7. Defeat Fear Through Knowledge: Asking for the sale is scary. Maintaining financial records can be intimidating. Investing in ones future is risky. Yet millions of people are doing this every day with success. Help clients connect with no-cost business assistance networks to learn how they can do it too.

8. Focus, Focus, Focus. Profitability is the first objective in business. Focus on a sales cycle where revenues exceed expenses. Assist clients with refining and repeating this process before they start something new.

Like most things in life, the more purposefully you engage, the more likely you'll get the results you seek. Good luck!

Help Clients Start a Business Right by 8 Tips

When clients fail to plan, they plan to fail

Starting and running a profitable business is not rocket science. The 1st reason many people fail is they fail to follow a well-established business development process. Below are 8 tips to business development that, when followed with purpose, will significantly help your business clients and customers improve their chances for growth and long-term success:

1. Test the Waters: Encourage client so close a sale. While this is not possible for all ventures, making a sale validates the business idea on multiple levels, such as who will buy, why they buy, what they'll pay, how much it costs and how much profit will be made.

2. Research, Research, Research: Encourage clients to Web surf and shop the competition to learn how similar businesses define, price, market and sell their offerings. LIttle is new. Take advantage of what works.

3. Connect Clients to Experts: There are over 33,000 "volunteer" business mentors in the U.S. that offer all types of expertise, such as tax, funding, marketing, import/export, govt. contracting, etc. Introduce and help clients to connect.

4. Write the Business Plan: Require clients to write their own plan and invest the time, hard work, learning and focus that will be the keys to their future success.

5. Fund Innovatively: You well know, banks are rarely lending. Get creative. Will customers invest or prepay? Is joining forces an option where client have "x," someone else has "y" and together they're better off? Is contracting for a service versus buying equipment an option, such as a delivery service instead of buying a truck.

6. Recordkeeping: Require clients to demonstrate that they understand and have arranged for reliable expertise for maintaining breakeven, forecasting, cash flow and bookkeeping records. Business success lies in the details of managing the numbers.

7. Defeat Fear Through Knowledge: Asking for the sale is scary. Maintaining financial records can be intimidating. Investing in ones future is risky. Yet millions of people are doing this every day with success. Help clients connect with no-cost business assistance networks to learn how they can do it too.

8. Focus, Focus, Focus. Profitability is the first objective in business. Focus on a sales cycle where revenues exceed expenses. Assist clients with refining and repeating this process before they start something new.

Like most things in life, the more purposefully you engage, the more likely you'll get the results you seek. Good luck!

Should You Have a Business Partner?

Here at the Small Business Development Center (SBDC), we work with all types of  businesses — from sole proprietorships, to partnerships, to corporations with several owners. We’ve seen partnerships work exceptionally well and we’ve seen disasters.
A Successful Partnership
We’ve counseled many small businesses with more than one owner. In a great many of these cases the owners are also a married couple. As one couple said, “We want to continue to stay married to each other and therefore make the business partnership work!” Their marriage is the “glue” that keeps the business partnership working. But what if the partners aren’t married? Several years ago we worked with a non- married couple that started a business that was unique for this area. Soon their personal relationship ended. They separated their living arrangement, but both wanted to continue to work in the business. They did and were successful at it because they both believed in their business idea and wanted it to be a success. Later, one partner married and moved to Seattle. She couldn’t work in the business anymore and wanted her partner to buy out her half. She said “I want to be fairly compensated, but I also want the business to succeed.” Her partner agreed. We worked with them to come up with a buy-out plan that accomplished both goals. The business grew and did succeed.

A Disaster
While we hear more tales of disastrous partnerships than we’d like to, one short example may be illustrative. Two couples, in their late-thirties, fulfilled their dream of moving to the Olympic Peninsula and buying a business. The women were childhood friends. The men were friends as well. The four of them planned to run this business. Within 6 months after buying the business the personal and business relationship between the two couples was destroyed. They found out too late that being friends doesn’t mean you have the same goals for a business or the same values that guide operating it. We offered to mediate, but one couple refused, demanding to be bought out at double what they put into the business a mere six months ago. One couple did buy out the other and the lifelong friendship between the two women was gone.

How to Avoid Disasters in Partnerships
Before you take on a business partner, ask yourself some important questions:
• Why do you want a business partner?
• What financial contribution can your potential partner make to the business? Does your potential partner have access to credit and what is his/her financial situation?
• Do your skills complement each other?
• Do you both have the same vision for the business?

If you do decide to enter into a partnership, it is best to have a written partnership agreement. Although we advise seeing an attorney to assist you with it, here are some issues to discuss with your partner. Your answers will form the basis of your agreement. The first section deals with issues involving “getting into the partnership”:

“Getting Into the Partnership”
~What are the mission, vision, and goals of the business? Of each partner?
~What are each partner’s expectations of the business?
~Will the partners be equal?
~ What is the initial capital contribution of each partner? Are the contributions true investments or loans?
~What commitment of time, equipment, and other resources will you each make?
~What is the value of “other equity” such as “sweat equity”?
~What level of income will you each expect or need from the business?

Once you’ve worked out the issues to get into the partnership, turn to the actual running of the business and how you will do that in partnership:

“In the Partnership”
~ What are the roles and responsibilities of each partner? Who will do specific tasks? How will day-to-day decisions be made?
~Will partners make additional financial contributions?
~How will each partner share in profits and losses?
~What salaries, if any, are to be paid to partners?
~ Will you prohibit outside business activities that would be in competition with the partnership business?
~ How will disputes be resolved? Is there a “managing partner” who will make final decisions?
~Will new partners be added? If so, what procedure will be followed?
~Who can make commitments or expenditures on behalf of the company?

Since partnerships do end, now is the time to discuss how this will happen:


“Getting Out of the Partnership”
~ How will a break-up of the partnership be handled? What if one partner wants to keep the business? What if both partners want the business but no longer want to work together?
~ How will you determine the value of the business in case of death, incompetence, or withdrawal of a partner, or dissolution of the partnership for any other reason?
~Is a partner allowed to sell his or her portion of the business?
~ What happens in the event of the death of a partner? Is it specified in a legal will for each partner?
~ What happens if a partner gets divorced? What legal and financial impacts will that have on the business?

Getting Help in Forming a Partnership

Bringing a partner into your business is a key decision that will either help or hinder the business. We recommend reviewing the issues presented in this article and perhaps making an appointment with the SBDC to guide you and your potential partner in this task. We also recommend getting advice from your accountant and having your attorney assist you with the final agreement, typically referred to as a Buy-Sell Agreement.

Should You Have a Business Partner?

Here at the Small Business Development Center (SBDC), we work with all types of  businesses — from sole proprietorships, to partnerships, to corporations with several owners. We’ve seen partnerships work exceptionally well and we’ve seen disasters.
A Successful Partnership
We’ve counseled many small businesses with more than one owner. In a great many of these cases the owners are also a married couple. As one couple said, “We want to continue to stay married to each other and therefore make the business partnership work!” Their marriage is the “glue” that keeps the business partnership working. But what if the partners aren’t married? Several years ago we worked with a non- married couple that started a business that was unique for this area. Soon their personal relationship ended. They separated their living arrangement, but both wanted to continue to work in the business. They did and were successful at it because they both believed in their business idea and wanted it to be a success. Later, one partner married and moved to Seattle. She couldn’t work in the business anymore and wanted her partner to buy out her half. She said “I want to be fairly compensated, but I also want the business to succeed.” Her partner agreed. We worked with them to come up with a buy-out plan that accomplished both goals. The business grew and did succeed.

A Disaster
While we hear more tales of disastrous partnerships than we’d like to, one short example may be illustrative. Two couples, in their late-thirties, fulfilled their dream of moving to the Olympic Peninsula and buying a business. The women were childhood friends. The men were friends as well. The four of them planned to run this business. Within 6 months after buying the business the personal and business relationship between the two couples was destroyed. They found out too late that being friends doesn’t mean you have the same goals for a business or the same values that guide operating it. We offered to mediate, but one couple refused, demanding to be bought out at double what they put into the business a mere six months ago. One couple did buy out the other and the lifelong friendship between the two women was gone.

How to Avoid Disasters in Partnerships
Before you take on a business partner, ask yourself some important questions:
• Why do you want a business partner?
• What financial contribution can your potential partner make to the business? Does your potential partner have access to credit and what is his/her financial situation?
• Do your skills complement each other?
• Do you both have the same vision for the business?

If you do decide to enter into a partnership, it is best to have a written partnership agreement. Although we advise seeing an attorney to assist you with it, here are some issues to discuss with your partner. Your answers will form the basis of your agreement. The first section deals with issues involving “getting into the partnership”:

“Getting Into the Partnership”
~What are the mission, vision, and goals of the business? Of each partner?
~What are each partner’s expectations of the business?
~Will the partners be equal?
~ What is the initial capital contribution of each partner? Are the contributions true investments or loans?
~What commitment of time, equipment, and other resources will you each make?
~What is the value of “other equity” such as “sweat equity”?
~What level of income will you each expect or need from the business?

Once you’ve worked out the issues to get into the partnership, turn to the actual running of the business and how you will do that in partnership:

“In the Partnership”
~ What are the roles and responsibilities of each partner? Who will do specific tasks? How will day-to-day decisions be made?
~Will partners make additional financial contributions?
~How will each partner share in profits and losses?
~What salaries, if any, are to be paid to partners?
~ Will you prohibit outside business activities that would be in competition with the partnership business?
~ How will disputes be resolved? Is there a “managing partner” who will make final decisions?
~Will new partners be added? If so, what procedure will be followed?
~Who can make commitments or expenditures on behalf of the company?

Since partnerships do end, now is the time to discuss how this will happen:


“Getting Out of the Partnership”
~ How will a break-up of the partnership be handled? What if one partner wants to keep the business? What if both partners want the business but no longer want to work together?
~ How will you determine the value of the business in case of death, incompetence, or withdrawal of a partner, or dissolution of the partnership for any other reason?
~Is a partner allowed to sell his or her portion of the business?
~ What happens in the event of the death of a partner? Is it specified in a legal will for each partner?
~ What happens if a partner gets divorced? What legal and financial impacts will that have on the business?

Getting Help in Forming a Partnership

Bringing a partner into your business is a key decision that will either help or hinder the business. We recommend reviewing the issues presented in this article and perhaps making an appointment with the SBDC to guide you and your potential partner in this task. We also recommend getting advice from your accountant and having your attorney assist you with the final agreement, typically referred to as a Buy-Sell Agreement.

Should You Have a Business Partner?

Here at the Small Business Development Center (SBDC), we work with all types of  businesses — from sole proprietorships, to partnerships, to corporations with several owners. We’ve seen partnerships work exceptionally well and we’ve seen disasters.
A Successful Partnership
We’ve counseled many small businesses with more than one owner. In a great many of these cases the owners are also a married couple. As one couple said, “We want to continue to stay married to each other and therefore make the business partnership work!” Their marriage is the “glue” that keeps the business partnership working. But what if the partners aren’t married? Several years ago we worked with a non- married couple that started a business that was unique for this area. Soon their personal relationship ended. They separated their living arrangement, but both wanted to continue to work in the business. They did and were successful at it because they both believed in their business idea and wanted it to be a success. Later, one partner married and moved to Seattle. She couldn’t work in the business anymore and wanted her partner to buy out her half. She said “I want to be fairly compensated, but I also want the business to succeed.” Her partner agreed. We worked with them to come up with a buy-out plan that accomplished both goals. The business grew and did succeed.

A Disaster
While we hear more tales of disastrous partnerships than we’d like to, one short example may be illustrative. Two couples, in their late-thirties, fulfilled their dream of moving to the Olympic Peninsula and buying a business. The women were childhood friends. The men were friends as well. The four of them planned to run this business. Within 6 months after buying the business the personal and business relationship between the two couples was destroyed. They found out too late that being friends doesn’t mean you have the same goals for a business or the same values that guide operating it. We offered to mediate, but one couple refused, demanding to be bought out at double what they put into the business a mere six months ago. One couple did buy out the other and the lifelong friendship between the two women was gone.

How to Avoid Disasters in Partnerships
Before you take on a business partner, ask yourself some important questions:
• Why do you want a business partner?
• What financial contribution can your potential partner make to the business? Does your potential partner have access to credit and what is his/her financial situation?
• Do your skills complement each other?
• Do you both have the same vision for the business?

If you do decide to enter into a partnership, it is best to have a written partnership agreement. Although we advise seeing an attorney to assist you with it, here are some issues to discuss with your partner. Your answers will form the basis of your agreement. The first section deals with issues involving “getting into the partnership”:

“Getting Into the Partnership”
~What are the mission, vision, and goals of the business? Of each partner?
~What are each partner’s expectations of the business?
~Will the partners be equal?
~ What is the initial capital contribution of each partner? Are the contributions true investments or loans?
~What commitment of time, equipment, and other resources will you each make?
~What is the value of “other equity” such as “sweat equity”?
~What level of income will you each expect or need from the business?

Once you’ve worked out the issues to get into the partnership, turn to the actual running of the business and how you will do that in partnership:

“In the Partnership”
~ What are the roles and responsibilities of each partner? Who will do specific tasks? How will day-to-day decisions be made?
~Will partners make additional financial contributions?
~How will each partner share in profits and losses?
~What salaries, if any, are to be paid to partners?
~ Will you prohibit outside business activities that would be in competition with the partnership business?
~ How will disputes be resolved? Is there a “managing partner” who will make final decisions?
~Will new partners be added? If so, what procedure will be followed?
~Who can make commitments or expenditures on behalf of the company?

Since partnerships do end, now is the time to discuss how this will happen:


“Getting Out of the Partnership”
~ How will a break-up of the partnership be handled? What if one partner wants to keep the business? What if both partners want the business but no longer want to work together?
~ How will you determine the value of the business in case of death, incompetence, or withdrawal of a partner, or dissolution of the partnership for any other reason?
~Is a partner allowed to sell his or her portion of the business?
~ What happens in the event of the death of a partner? Is it specified in a legal will for each partner?
~ What happens if a partner gets divorced? What legal and financial impacts will that have on the business?

Getting Help in Forming a Partnership

Bringing a partner into your business is a key decision that will either help or hinder the business. We recommend reviewing the issues presented in this article and perhaps making an appointment with the SBDC to guide you and your potential partner in this task. We also recommend getting advice from your accountant and having your attorney assist you with the final agreement, typically referred to as a Buy-Sell Agreement.

Five Ways to Simplify Your Life As a Small Business Owner

Most small business owners decided to start their own business because they believed it would allow them the freedom and flexibility to set their own schedule, make their own decisions, and only work as much as they wanted to. They might have thought that running a small business would give them more personal time and the opportunity to explore other activities outside of work. However, the nature of running a small business is such that most small business owners quickly discover that their business is controlling their entire life, and that they are working much harder than they ever did at any previous job. This is why it is always crucial for business owners take a step back and consider ways in which they can simplify their lives, practice better time management, and be more focused on the issues that are truly pressing at their business.
Here are five tips that will help you if you find yourself in this predicament:

1. Quit Sweating the Small Stuff
Don't let the minutia of owning and operating a business get in the way of you working effectively to achieve larger goals. While the small details of your business are certainly important, you can't let them hold you back from the more large-scale projects and tasks that you must accomplish. The lesson applies to perfectionists too: you will either have to let the small details and problems wait, or you will need to expand your staff to take care of them for you.

2. Set Concrete Goals
One way to deal with the issue of having too many projects to deal with at the same time is to set concrete goals and follow timetables. Once a week on Monday mornings, or every day - if necessary - write down a list of the goals you hope to accomplish that week or day. Keep your goals realistic.
Remember how much time you have and who is helping. No matter what issues may arise, ask yourself a few times every day, "Am I doing what I need to to accomplish my goals for the week?"

3. Stop Planning, Start Doing
There is at least one new study, blog entry, book, or Podcast published every week to help small business owners achieve success. Especially when it comes to small business marketing - a rapidly evolving and expanding field - it seems like there is way more information out there than any small business owner could feasibly comprehend and follow. This is why it is more important to take a look at what has actually worked to produce money for your business, and to use this knowledge as your own framework for success. You know your own business better than any author does, no matter how reputable they may be.

4. Allocate a Certain Amount of Time To Your Personal Life Every Week
No matter how pressing the issues confronting your business may be, there is nothing more important than your own health and happiness when it comes to running a business well. Balance is extremely important. If you are feeling overworked, exhausted, or overly stressed out, your emotions might begin to affect the way you work and the people with whom you work. There is nothing worse than snapping at a staff member or a customer because you aren't tending to your own well being. Give yourself a certain amount of time every week to spend with people you love, or doing the things you love, to help clear your head from all the work-related stress.

5. Make Your Workplace Your Happy Place
Regardless of how much you choose to follow the preceding four tips, the fact remains that, as a business owner, you will be spending a very large portion of your daily life in your workplace. This is why it is crucial to make sure that you enjoy your surroundings as much as possible. Hang up pictures of the people you love, bring some of your favorite or most sentimental pieces of art from home, or decorate in whatever other way makes you feel comfortable and at peace. Buy yourself a comfortable chair or invest in a nice sound system to play your favorite album (if the nature of your business permits it). Personalizing your work space and making it somewhere you like to spend your time will reflect in your work ethic and attitude more than you may realize.

Five Ways to Simplify Your Life As a Small Business Owner

Most small business owners decided to start their own business because they believed it would allow them the freedom and flexibility to set their own schedule, make their own decisions, and only work as much as they wanted to. They might have thought that running a small business would give them more personal time and the opportunity to explore other activities outside of work. However, the nature of running a small business is such that most small business owners quickly discover that their business is controlling their entire life, and that they are working much harder than they ever did at any previous job. This is why it is always crucial for business owners take a step back and consider ways in which they can simplify their lives, practice better time management, and be more focused on the issues that are truly pressing at their business.
Here are five tips that will help you if you find yourself in this predicament:

1. Quit Sweating the Small Stuff
Don't let the minutia of owning and operating a business get in the way of you working effectively to achieve larger goals. While the small details of your business are certainly important, you can't let them hold you back from the more large-scale projects and tasks that you must accomplish. The lesson applies to perfectionists too: you will either have to let the small details and problems wait, or you will need to expand your staff to take care of them for you.

2. Set Concrete Goals
One way to deal with the issue of having too many projects to deal with at the same time is to set concrete goals and follow timetables. Once a week on Monday mornings, or every day - if necessary - write down a list of the goals you hope to accomplish that week or day. Keep your goals realistic.
Remember how much time you have and who is helping. No matter what issues may arise, ask yourself a few times every day, "Am I doing what I need to to accomplish my goals for the week?"

3. Stop Planning, Start Doing
There is at least one new study, blog entry, book, or Podcast published every week to help small business owners achieve success. Especially when it comes to small business marketing - a rapidly evolving and expanding field - it seems like there is way more information out there than any small business owner could feasibly comprehend and follow. This is why it is more important to take a look at what has actually worked to produce money for your business, and to use this knowledge as your own framework for success. You know your own business better than any author does, no matter how reputable they may be.

4. Allocate a Certain Amount of Time To Your Personal Life Every Week
No matter how pressing the issues confronting your business may be, there is nothing more important than your own health and happiness when it comes to running a business well. Balance is extremely important. If you are feeling overworked, exhausted, or overly stressed out, your emotions might begin to affect the way you work and the people with whom you work. There is nothing worse than snapping at a staff member or a customer because you aren't tending to your own well being. Give yourself a certain amount of time every week to spend with people you love, or doing the things you love, to help clear your head from all the work-related stress.

5. Make Your Workplace Your Happy Place
Regardless of how much you choose to follow the preceding four tips, the fact remains that, as a business owner, you will be spending a very large portion of your daily life in your workplace. This is why it is crucial to make sure that you enjoy your surroundings as much as possible. Hang up pictures of the people you love, bring some of your favorite or most sentimental pieces of art from home, or decorate in whatever other way makes you feel comfortable and at peace. Buy yourself a comfortable chair or invest in a nice sound system to play your favorite album (if the nature of your business permits it). Personalizing your work space and making it somewhere you like to spend your time will reflect in your work ethic and attitude more than you may realize.

Five Ways to Simplify Your Life As a Small Business Owner

Most small business owners decided to start their own business because they believed it would allow them the freedom and flexibility to set their own schedule, make their own decisions, and only work as much as they wanted to. They might have thought that running a small business would give them more personal time and the opportunity to explore other activities outside of work. However, the nature of running a small business is such that most small business owners quickly discover that their business is controlling their entire life, and that they are working much harder than they ever did at any previous job. This is why it is always crucial for business owners take a step back and consider ways in which they can simplify their lives, practice better time management, and be more focused on the issues that are truly pressing at their business.
Here are five tips that will help you if you find yourself in this predicament:

1. Quit Sweating the Small Stuff
Don't let the minutia of owning and operating a business get in the way of you working effectively to achieve larger goals. While the small details of your business are certainly important, you can't let them hold you back from the more large-scale projects and tasks that you must accomplish. The lesson applies to perfectionists too: you will either have to let the small details and problems wait, or you will need to expand your staff to take care of them for you.

2. Set Concrete Goals
One way to deal with the issue of having too many projects to deal with at the same time is to set concrete goals and follow timetables. Once a week on Monday mornings, or every day - if necessary - write down a list of the goals you hope to accomplish that week or day. Keep your goals realistic.
Remember how much time you have and who is helping. No matter what issues may arise, ask yourself a few times every day, "Am I doing what I need to to accomplish my goals for the week?"

3. Stop Planning, Start Doing
There is at least one new study, blog entry, book, or Podcast published every week to help small business owners achieve success. Especially when it comes to small business marketing - a rapidly evolving and expanding field - it seems like there is way more information out there than any small business owner could feasibly comprehend and follow. This is why it is more important to take a look at what has actually worked to produce money for your business, and to use this knowledge as your own framework for success. You know your own business better than any author does, no matter how reputable they may be.

4. Allocate a Certain Amount of Time To Your Personal Life Every Week
No matter how pressing the issues confronting your business may be, there is nothing more important than your own health and happiness when it comes to running a business well. Balance is extremely important. If you are feeling overworked, exhausted, or overly stressed out, your emotions might begin to affect the way you work and the people with whom you work. There is nothing worse than snapping at a staff member or a customer because you aren't tending to your own well being. Give yourself a certain amount of time every week to spend with people you love, or doing the things you love, to help clear your head from all the work-related stress.

5. Make Your Workplace Your Happy Place
Regardless of how much you choose to follow the preceding four tips, the fact remains that, as a business owner, you will be spending a very large portion of your daily life in your workplace. This is why it is crucial to make sure that you enjoy your surroundings as much as possible. Hang up pictures of the people you love, bring some of your favorite or most sentimental pieces of art from home, or decorate in whatever other way makes you feel comfortable and at peace. Buy yourself a comfortable chair or invest in a nice sound system to play your favorite album (if the nature of your business permits it). Personalizing your work space and making it somewhere you like to spend your time will reflect in your work ethic and attitude more than you may realize.

Tracking Your Prime Cost? Good, Just Make Sure You're Calculating It Right

One of the most important and telling numbers of any restaurant is its Prime Cost.

Prime Cost is the total of food and beverage costs plus all payroll expenses including wages paid to management and staff and payroll taxes and related benefits.

Prime Cost is a key indicator of a restaurant's profit potential and how well management is managing the restaurant's biggest and most volatile costs.

Generally accepted industry rules of thumb tell us that in tableservice restaurants the goal should be to keep Prime Cost at or below 65% of sales. QSR or non-tableservice operations should aim for a Prime Cost is 60% of sales or less.

When Prime Cost exceeds these percentages by more than a point or two, it usually becomes a real challenge for any restaurant to make a sufficient bottom line profit regardless of the other expenses on their P&L.

Some independent operators may not be getting an accurate reading of their Prime Cost because of the way owner's compensation is handled.

When calculating Prime Cost, the owner's compensation should be included in management payroll only if the owner is actively working in the restaurant and the amount of compensation does not exceed 4% of sales.

If you own a restaurant but have a GM manage the daily operations, don't include your compensation when calculating Prime Cost

For owners who perform the duties of a GM and/or chef, first see if your salary exceeds 4% of sales. If it does not, don't do anything. If it does, take the amount that exceeds 4% of sales out of Prime Cost.

Reason for the 4% amount is this. In general, GMs or chefs are not paid more than 3%-4% of sales. When a restaurant is very profitable, working owners may pay themselves more or even much more than 4% of sales so including all of their compensation in Prime Cost can cause it to be artificially high in comparison to other restaurants.

If applicable, reclassifying some portion of owner's compensation out of Management Payroll should give you a better number for comparing your Prime Cost to industry averages and rules of thumb.

Have a profitable week!  Jim Laube & Joe Erickson

Tracking Your Prime Cost? Good, Just Make Sure You're Calculating It Right

One of the most important and telling numbers of any restaurant is its Prime Cost.

Prime Cost is the total of food and beverage costs plus all payroll expenses including wages paid to management and staff and payroll taxes and related benefits.

Prime Cost is a key indicator of a restaurant's profit potential and how well management is managing the restaurant's biggest and most volatile costs.

Generally accepted industry rules of thumb tell us that in tableservice restaurants the goal should be to keep Prime Cost at or below 65% of sales. QSR or non-tableservice operations should aim for a Prime Cost is 60% of sales or less.

When Prime Cost exceeds these percentages by more than a point or two, it usually becomes a real challenge for any restaurant to make a sufficient bottom line profit regardless of the other expenses on their P&L.

Some independent operators may not be getting an accurate reading of their Prime Cost because of the way owner's compensation is handled.

When calculating Prime Cost, the owner's compensation should be included in management payroll only if the owner is actively working in the restaurant and the amount of compensation does not exceed 4% of sales.

If you own a restaurant but have a GM manage the daily operations, don't include your compensation when calculating Prime Cost

For owners who perform the duties of a GM and/or chef, first see if your salary exceeds 4% of sales. If it does not, don't do anything. If it does, take the amount that exceeds 4% of sales out of Prime Cost.

Reason for the 4% amount is this. In general, GMs or chefs are not paid more than 3%-4% of sales. When a restaurant is very profitable, working owners may pay themselves more or even much more than 4% of sales so including all of their compensation in Prime Cost can cause it to be artificially high in comparison to other restaurants.

If applicable, reclassifying some portion of owner's compensation out of Management Payroll should give you a better number for comparing your Prime Cost to industry averages and rules of thumb.

Have a profitable week!  Jim Laube & Joe Erickson

Tracking Your Prime Cost? Good, Just Make Sure You're Calculating It Right

One of the most important and telling numbers of any restaurant is its Prime Cost.

Prime Cost is the total of food and beverage costs plus all payroll expenses including wages paid to management and staff and payroll taxes and related benefits.

Prime Cost is a key indicator of a restaurant's profit potential and how well management is managing the restaurant's biggest and most volatile costs.

Generally accepted industry rules of thumb tell us that in tableservice restaurants the goal should be to keep Prime Cost at or below 65% of sales. QSR or non-tableservice operations should aim for a Prime Cost is 60% of sales or less.

When Prime Cost exceeds these percentages by more than a point or two, it usually becomes a real challenge for any restaurant to make a sufficient bottom line profit regardless of the other expenses on their P&L.

Some independent operators may not be getting an accurate reading of their Prime Cost because of the way owner's compensation is handled.

When calculating Prime Cost, the owner's compensation should be included in management payroll only if the owner is actively working in the restaurant and the amount of compensation does not exceed 4% of sales.

If you own a restaurant but have a GM manage the daily operations, don't include your compensation when calculating Prime Cost

For owners who perform the duties of a GM and/or chef, first see if your salary exceeds 4% of sales. If it does not, don't do anything. If it does, take the amount that exceeds 4% of sales out of Prime Cost.

Reason for the 4% amount is this. In general, GMs or chefs are not paid more than 3%-4% of sales. When a restaurant is very profitable, working owners may pay themselves more or even much more than 4% of sales so including all of their compensation in Prime Cost can cause it to be artificially high in comparison to other restaurants.

If applicable, reclassifying some portion of owner's compensation out of Management Payroll should give you a better number for comparing your Prime Cost to industry averages and rules of thumb.

Have a profitable week!  Jim Laube & Joe Erickson

The Regulation Modifications That Can Help You Start a Business in Latin America Countries

When it comes to starting a new business in Latin America, the general misconception on the part of the potential investors is that the legislative limitations of the countries situated in this area outweigh the benefits. It is fairly true that in the past many governments imposed restrictive laws which deemed the business environment constraining.
However, nowadays, business in Latin America seems to be picking up the pace quickly due to several favorable modifications of the legal system and new regulations that favor development and the expansions of companies in the region. Although the following article will exemplify the highlights of these changes, it is advisable to employ the services of specialized consultants if you are not familiar with the Latin America market.
For Brazil, the most notable modification comes from the tax system, which has now synchronized the federal and the state taxes, for the convenience of the companies. It is necessary to point out that the old system of taxes made it very complicated and confusing for businesses to stay up to date with the full array of taxes in order to avoid penalties. Furthermore, those interested in the Chilean market will be happy to learn that the authorities have implemented an online business registration method as well as one that allows you to file publication requests.
Moreover, Chile now promotes corporate transparency and regulates the transaction approval, all in the interest of investors.
In Colombia it is much easier now to obtain construction permits, as the pre-building certificates are verified by the authorities online. There is no other notable achievement for Ecuador except for the implementation of the online system that manages social security registrations. In Mexico, on the other hand, several changes have been made, the first one being the one-stop shops which allow companies to register their business. At the same time, it is now much easier to obtain construction permits, as two major services (utilities and zoning) have been merged and streamlined. However, corporate taxes in this country have been increased, although the administrative tasks are much simpler due to the widespread popularity of online payment methods and high usage rate of accounting software programs.
Nicaragua, while it has regrettably imposed several new taxes (10 percent withholding taxes for the gross interest generated by a deposit) on companies and increased the preexisting ones has substantially improved the trade using innovative electronic data transfer systems for the department of customs and one-stop shops for goods exports. In addition, the investments made in the equipments for Corinto, one of the major ports of the country will also facilitate exports and imports trading.
In Uruguay, entrepreneurs will find it easier to register properties due to the elimination of the preemption rights waivers, which was required up to now. At the same time, Paraguay also allowed companies to obtain a construction permit with less hassle thanks to the improved administrative structures and the superior tracking systems which eliminated a great deal of bureaucracy. In a nutshell, many countries are striving to make business in Latin America enchanting for investors and many more changes are yet to come.

The Regulation Modifications That Can Help You Start a Business in Latin America Countries

When it comes to starting a new business in Latin America, the general misconception on the part of the potential investors is that the legislative limitations of the countries situated in this area outweigh the benefits. It is fairly true that in the past many governments imposed restrictive laws which deemed the business environment constraining.
However, nowadays, business in Latin America seems to be picking up the pace quickly due to several favorable modifications of the legal system and new regulations that favor development and the expansions of companies in the region. Although the following article will exemplify the highlights of these changes, it is advisable to employ the services of specialized consultants if you are not familiar with the Latin America market.
For Brazil, the most notable modification comes from the tax system, which has now synchronized the federal and the state taxes, for the convenience of the companies. It is necessary to point out that the old system of taxes made it very complicated and confusing for businesses to stay up to date with the full array of taxes in order to avoid penalties. Furthermore, those interested in the Chilean market will be happy to learn that the authorities have implemented an online business registration method as well as one that allows you to file publication requests.
Moreover, Chile now promotes corporate transparency and regulates the transaction approval, all in the interest of investors.
In Colombia it is much easier now to obtain construction permits, as the pre-building certificates are verified by the authorities online. There is no other notable achievement for Ecuador except for the implementation of the online system that manages social security registrations. In Mexico, on the other hand, several changes have been made, the first one being the one-stop shops which allow companies to register their business. At the same time, it is now much easier to obtain construction permits, as two major services (utilities and zoning) have been merged and streamlined. However, corporate taxes in this country have been increased, although the administrative tasks are much simpler due to the widespread popularity of online payment methods and high usage rate of accounting software programs.
Nicaragua, while it has regrettably imposed several new taxes (10 percent withholding taxes for the gross interest generated by a deposit) on companies and increased the preexisting ones has substantially improved the trade using innovative electronic data transfer systems for the department of customs and one-stop shops for goods exports. In addition, the investments made in the equipments for Corinto, one of the major ports of the country will also facilitate exports and imports trading.
In Uruguay, entrepreneurs will find it easier to register properties due to the elimination of the preemption rights waivers, which was required up to now. At the same time, Paraguay also allowed companies to obtain a construction permit with less hassle thanks to the improved administrative structures and the superior tracking systems which eliminated a great deal of bureaucracy. In a nutshell, many countries are striving to make business in Latin America enchanting for investors and many more changes are yet to come.

The Regulation Modifications That Can Help You Start a Business in Latin America Countries

When it comes to starting a new business in Latin America, the general misconception on the part of the potential investors is that the legislative limitations of the countries situated in this area outweigh the benefits. It is fairly true that in the past many governments imposed restrictive laws which deemed the business environment constraining.
However, nowadays, business in Latin America seems to be picking up the pace quickly due to several favorable modifications of the legal system and new regulations that favor development and the expansions of companies in the region. Although the following article will exemplify the highlights of these changes, it is advisable to employ the services of specialized consultants if you are not familiar with the Latin America market.
For Brazil, the most notable modification comes from the tax system, which has now synchronized the federal and the state taxes, for the convenience of the companies. It is necessary to point out that the old system of taxes made it very complicated and confusing for businesses to stay up to date with the full array of taxes in order to avoid penalties. Furthermore, those interested in the Chilean market will be happy to learn that the authorities have implemented an online business registration method as well as one that allows you to file publication requests.
Moreover, Chile now promotes corporate transparency and regulates the transaction approval, all in the interest of investors.
In Colombia it is much easier now to obtain construction permits, as the pre-building certificates are verified by the authorities online. There is no other notable achievement for Ecuador except for the implementation of the online system that manages social security registrations. In Mexico, on the other hand, several changes have been made, the first one being the one-stop shops which allow companies to register their business. At the same time, it is now much easier to obtain construction permits, as two major services (utilities and zoning) have been merged and streamlined. However, corporate taxes in this country have been increased, although the administrative tasks are much simpler due to the widespread popularity of online payment methods and high usage rate of accounting software programs.
Nicaragua, while it has regrettably imposed several new taxes (10 percent withholding taxes for the gross interest generated by a deposit) on companies and increased the preexisting ones has substantially improved the trade using innovative electronic data transfer systems for the department of customs and one-stop shops for goods exports. In addition, the investments made in the equipments for Corinto, one of the major ports of the country will also facilitate exports and imports trading.
In Uruguay, entrepreneurs will find it easier to register properties due to the elimination of the preemption rights waivers, which was required up to now. At the same time, Paraguay also allowed companies to obtain a construction permit with less hassle thanks to the improved administrative structures and the superior tracking systems which eliminated a great deal of bureaucracy. In a nutshell, many countries are striving to make business in Latin America enchanting for investors and many more changes are yet to come.

Preparing a Loan Application

Obtaining a business loan has become more difficult as the economy, regulations, and lendig policies become more stringent.  I took the following notes during a recent staff training presentation and hope they will help you to understadn what lenders need to see in a business loan appllication. 

I. Understanding the Lender

It is much easier to find a business lender if you understand what a lender needs in order to process your loan application. I recommend starting with the lender you are already doing business with but check for the most recent bank policies and procedures. Government regulation and bank policies are frequently updated. To prepare you application it is helpful if you know the following:

Bank Policies –

Loan portfolio mix, number of and type of loans they like to make.

Loan Programs they use? (SBA or USDA programs?)

Loan requirements – Minimum Credit score, Loan to Value, Collateral, Equity, Lending Ratios -- Liquidity, Debt Coverage, others

Risk tolerance – some banks are more liberal, others more conservative.

Lender’s experience with customers in your industry?

Recent changes in the bank’s corporate structure that effect lending policies.

Banking regulations that affect the bank’s lending policies.

Average time to close a loan.

• Loan Underwriting – The lender will only know what you provide, incomplete applications get denied. Your loan officer will need to justify a loan approval based on due diligence review of you and your business. Information they are looking for includes:

Is the loan purpose consistent with the type of loan?

Credit Standing (score and credit report)

Cash Flow, is the business be profitable?

.... Are losses explained?

.... How were losses funded?

Collateral

.... Quality and value

.... Collateral value covers loan?

Equity/Net Worth

.... Has equity increased or decrease over last three years?

.... Amount of contributed equity and earned equity (retained earnings)

Financial ratios

.... Exceed lenders minimum target?

.... Ratio trends over last three years

Business condition – Strengths, Weaknesses, Issues

Other

.... Other business owned

.... Other sources of income

.... Personal Financial history

II. Preparing a loan package

Presenting the lender with a complete package is critical. Your package must demonstrate your capacity to manage the business, your capacity to produce stated outcomes, and the market place capacity to buy your service/product. Incomplete packages slow review and errors or misstated information will result in a denied application. Lenders will be examining:

1. Financial Statements – History

• Profit Loss Statements- YTD  Revenue, margins, profit

 • Cash Flow: EBITDA and Working Capital needs, Owner draws, distributions, When you spent cash, when you received cash

• Last three years of Tax records, Explain differences between tax records and Profit & Loss Statements. Explain any expenses made for tax purposes

• Balance Sheets – current liquidity, asset quality, leverage, capital structure, retained earnings, Aging of A/R and A/P

• Budget Projections with assumptions

• Break Even analysis

• Ratio analysis - Liquidity, leverage, performance over time has been consistent and is sustainable Sales to Assets, ROI, ROA, A/R Turnover, Average Collection period A/P turnover, average payment period Inventory Turnover, Inventory on hand

2. Management

Character of top management, resume of management experience, experience as management in this business/industry. Team depth, who does the tasks of CEO, CFO, A/R and A/P. Succession (who runs the business if you can’t be there?) Performance as compared to industry standards and trends

3. Business Plans

• Supports and explains how you will accomplish what you claim in your budget. How you meet the five C’s of credit. (Character, Capacity, Capital, Conditions, Collateral)

• Explains market opportunity

• Provides budget assumptions.

• Describe the business, how you make money

• Describe the service/product, provide pictures, marketing materials, samples

• Associated documents, Articles of Incorporation (Partnership), Leases, Contracts, firm estimates on major purchases, Collateral

III. Presentation Tips

• Be enthusiastic

• Be professional

• Be prepared

• Make an appointment, be early and ready

• Be organized and bring copies of all the document to leave with the lender

IV. Deal Breakers

Some issues in your history can be deal killers, there must be extenuating circumstances before a lender can consider proceeding with an application. Other problems could result in a loan application being considered as a higher risk. If a loan were to be approved, these issues could result in higher interest rates and more conditions and restrictions.

Preparing a quality loan application package will help identify potential deal breakers and provide you the opportunity to explain what happened and what you have done to correct the situation. Remember, it is safer for the lender to say no if there is any doubt or perception that your loan is a higher risk than the lender wants to accept.

Preparing a Loan Application

Obtaining a business loan has become more difficult as the economy, regulations, and lendig policies become more stringent.  I took the following notes during a recent staff training presentation and hope they will help you to understadn what lenders need to see in a business loan appllication. 

I. Understanding the Lender

It is much easier to find a business lender if you understand what a lender needs in order to process your loan application. I recommend starting with the lender you are already doing business with but check for the most recent bank policies and procedures. Government regulation and bank policies are frequently updated. To prepare you application it is helpful if you know the following:

Bank Policies –

Loan portfolio mix, number of and type of loans they like to make.

Loan Programs they use? (SBA or USDA programs?)

Loan requirements – Minimum Credit score, Loan to Value, Collateral, Equity, Lending Ratios -- Liquidity, Debt Coverage, others

Risk tolerance – some banks are more liberal, others more conservative.

Lender’s experience with customers in your industry?

Recent changes in the bank’s corporate structure that effect lending policies.

Banking regulations that affect the bank’s lending policies.

Average time to close a loan.

• Loan Underwriting – The lender will only know what you provide, incomplete applications get denied. Your loan officer will need to justify a loan approval based on due diligence review of you and your business. Information they are looking for includes:

Is the loan purpose consistent with the type of loan?

Credit Standing (score and credit report)

Cash Flow, is the business be profitable?

.... Are losses explained?

.... How were losses funded?

Collateral

.... Quality and value

.... Collateral value covers loan?

Equity/Net Worth

.... Has equity increased or decrease over last three years?

.... Amount of contributed equity and earned equity (retained earnings)

Financial ratios

.... Exceed lenders minimum target?

.... Ratio trends over last three years

Business condition – Strengths, Weaknesses, Issues

Other

.... Other business owned

.... Other sources of income

.... Personal Financial history

II. Preparing a loan package

Presenting the lender with a complete package is critical. Your package must demonstrate your capacity to manage the business, your capacity to produce stated outcomes, and the market place capacity to buy your service/product. Incomplete packages slow review and errors or misstated information will result in a denied application. Lenders will be examining:

1. Financial Statements – History

• Profit Loss Statements- YTD  Revenue, margins, profit

 • Cash Flow: EBITDA and Working Capital needs, Owner draws, distributions, When you spent cash, when you received cash

• Last three years of Tax records, Explain differences between tax records and Profit & Loss Statements. Explain any expenses made for tax purposes

• Balance Sheets – current liquidity, asset quality, leverage, capital structure, retained earnings, Aging of A/R and A/P

• Budget Projections with assumptions

• Break Even analysis

• Ratio analysis - Liquidity, leverage, performance over time has been consistent and is sustainable Sales to Assets, ROI, ROA, A/R Turnover, Average Collection period A/P turnover, average payment period Inventory Turnover, Inventory on hand

2. Management

Character of top management, resume of management experience, experience as management in this business/industry. Team depth, who does the tasks of CEO, CFO, A/R and A/P. Succession (who runs the business if you can’t be there?) Performance as compared to industry standards and trends

3. Business Plans

• Supports and explains how you will accomplish what you claim in your budget. How you meet the five C’s of credit. (Character, Capacity, Capital, Conditions, Collateral)

• Explains market opportunity

• Provides budget assumptions.

• Describe the business, how you make money

• Describe the service/product, provide pictures, marketing materials, samples

• Associated documents, Articles of Incorporation (Partnership), Leases, Contracts, firm estimates on major purchases, Collateral

III. Presentation Tips

• Be enthusiastic

• Be professional

• Be prepared

• Make an appointment, be early and ready

• Be organized and bring copies of all the document to leave with the lender

IV. Deal Breakers

Some issues in your history can be deal killers, there must be extenuating circumstances before a lender can consider proceeding with an application. Other problems could result in a loan application being considered as a higher risk. If a loan were to be approved, these issues could result in higher interest rates and more conditions and restrictions.

Preparing a quality loan application package will help identify potential deal breakers and provide you the opportunity to explain what happened and what you have done to correct the situation. Remember, it is safer for the lender to say no if there is any doubt or perception that your loan is a higher risk than the lender wants to accept.

Preparing a Loan Application

Obtaining a business loan has become more difficult as the economy, regulations, and lendig policies become more stringent.  I took the following notes during a recent staff training presentation and hope they will help you to understadn what lenders need to see in a business loan appllication. 

I. Understanding the Lender

It is much easier to find a business lender if you understand what a lender needs in order to process your loan application. I recommend starting with the lender you are already doing business with but check for the most recent bank policies and procedures. Government regulation and bank policies are frequently updated. To prepare you application it is helpful if you know the following:

Bank Policies –

Loan portfolio mix, number of and type of loans they like to make.

Loan Programs they use? (SBA or USDA programs?)

Loan requirements – Minimum Credit score, Loan to Value, Collateral, Equity, Lending Ratios -- Liquidity, Debt Coverage, others

Risk tolerance – some banks are more liberal, others more conservative.

Lender’s experience with customers in your industry?

Recent changes in the bank’s corporate structure that effect lending policies.

Banking regulations that affect the bank’s lending policies.

Average time to close a loan.

• Loan Underwriting – The lender will only know what you provide, incomplete applications get denied. Your loan officer will need to justify a loan approval based on due diligence review of you and your business. Information they are looking for includes:

Is the loan purpose consistent with the type of loan?

Credit Standing (score and credit report)

Cash Flow, is the business be profitable?

.... Are losses explained?

.... How were losses funded?

Collateral

.... Quality and value

.... Collateral value covers loan?

Equity/Net Worth

.... Has equity increased or decrease over last three years?

.... Amount of contributed equity and earned equity (retained earnings)

Financial ratios

.... Exceed lenders minimum target?

.... Ratio trends over last three years

Business condition – Strengths, Weaknesses, Issues

Other

.... Other business owned

.... Other sources of income

.... Personal Financial history

II. Preparing a loan package

Presenting the lender with a complete package is critical. Your package must demonstrate your capacity to manage the business, your capacity to produce stated outcomes, and the market place capacity to buy your service/product. Incomplete packages slow review and errors or misstated information will result in a denied application. Lenders will be examining:

1. Financial Statements – History

• Profit Loss Statements- YTD  Revenue, margins, profit

 • Cash Flow: EBITDA and Working Capital needs, Owner draws, distributions, When you spent cash, when you received cash

• Last three years of Tax records, Explain differences between tax records and Profit & Loss Statements. Explain any expenses made for tax purposes

• Balance Sheets – current liquidity, asset quality, leverage, capital structure, retained earnings, Aging of A/R and A/P

• Budget Projections with assumptions

• Break Even analysis

• Ratio analysis - Liquidity, leverage, performance over time has been consistent and is sustainable Sales to Assets, ROI, ROA, A/R Turnover, Average Collection period A/P turnover, average payment period Inventory Turnover, Inventory on hand

2. Management

Character of top management, resume of management experience, experience as management in this business/industry. Team depth, who does the tasks of CEO, CFO, A/R and A/P. Succession (who runs the business if you can’t be there?) Performance as compared to industry standards and trends

3. Business Plans

• Supports and explains how you will accomplish what you claim in your budget. How you meet the five C’s of credit. (Character, Capacity, Capital, Conditions, Collateral)

• Explains market opportunity

• Provides budget assumptions.

• Describe the business, how you make money

• Describe the service/product, provide pictures, marketing materials, samples

• Associated documents, Articles of Incorporation (Partnership), Leases, Contracts, firm estimates on major purchases, Collateral

III. Presentation Tips

• Be enthusiastic

• Be professional

• Be prepared

• Make an appointment, be early and ready

• Be organized and bring copies of all the document to leave with the lender

IV. Deal Breakers

Some issues in your history can be deal killers, there must be extenuating circumstances before a lender can consider proceeding with an application. Other problems could result in a loan application being considered as a higher risk. If a loan were to be approved, these issues could result in higher interest rates and more conditions and restrictions.

Preparing a quality loan application package will help identify potential deal breakers and provide you the opportunity to explain what happened and what you have done to correct the situation. Remember, it is safer for the lender to say no if there is any doubt or perception that your loan is a higher risk than the lender wants to accept.

Typical Requirements For Business Loans

Seeking a business loan requires preparation and excellent documentation of your businesses financial health. The following list will help get you started, complete and accurate information will help the lender complete their review with a better chance of reaching approval. Pay close attention to financial projections and cash flow needs, they must be believable and supported by your business plan market assumptions


Proof read your documents as errors will delay review and possible cause rejection. Have someone else review you documents did they clearly understand what you wrote?


I. Cover Letter --States who you are, how much money is needed, what the money will purchase and what results are expected.

II. Business Plan
A. Description of the business
B. History and nature of business
C. Ownership structure. Attach contracts or organizing charter, copies of business licenses, EIN, Resolution/Articles of Incorporation or partnership contracts.
D. Key Management resumes
E. Description of product/service and market place. Including competition, market area, major customers, major suppliers, description of plant and equipment
F. Amount of loan requested. Specific dollar amount and purpose of loan, use and benefits, amount of owner’s contribution, primary source of repayment and repayment terms, list of collateral.

III. Business Financial Reports
A. Projected cash flow budget, income statement, balance sheet, financial assumptions
B. Business financial history for last three years
C. Tax returns for last three years
D. Itemization of all debts
E. Current aging of accounts receivable

IV. Personal Financial Statements (for each co-owner)
A. Recent personal financial statements, recent
B. Personal Tax returns for last three years

V. Attachments
A. Application forms.
B. Business incorporation documents, partnership agreements, buy/sell agreements, etc.
C. Legal documents: leases, contracts, franchise agreements,
D. Detailed lists of assets to be purchased
E. Summary of market research
F. Supporting documentation, pictures, plans, contractor estimates, customer contracts.


NOTE: Loan Decisions Points – Lenders have several critical decisions points. The information you provide must prove to a lender your ability to accomplish your business goals.  A lender review will include but is not limited to:

• Evidence of your ability to achieve the cash flow budget
• Total amount existing debt and how much more debt will be added with a new loan
• Ability to pay all of your debts and still be profitable
• Personal and business credit history
• Amount you are investing as the owner
• Amount of collateral
• Potential risk of business failure
• New business vs. well established business