Black Enterprise Small Business University Week 2 Review
This week personal finance expert and founder of Ask the Money
coach.com , Lynnette Khalfani-Cox is teaching a course on
Financing and Investing.
Lesson 1: HOW TO RAISE CAPITAL FOR YOUR BUSINESS (LOANS VS.
INVESTMENTS)
Raising capital for your business is tough, but
just because it’s tough doesn't mean you can’t do it. First thing to
remember is financing starts with you not someone one else. Start financing
your business with your own personal money, look into second car that you can
sell, whole life insurance policy that's been building cash value, furniture ,
assets that you own that you can sell and electronics . Be prepared to
show that you've put up money of your own for your venture and have some sweat
equity invested.
Secondly, get in touch with your local small
business administration office for financing options. They maintain a data base
of loans and funding initiatives for different types of business owners. There
are loans for startup companies, women owned, minorities, home based businesses
owners and other types of entrepreneurs. A great resource to find based
on certain criteria is business.gov. Bank loans and financing
from investors are another option but first you will need to build up your
personal credit rating. You’re personal credit rating is what really matters
most when attempting to secure government loan, commercial business loan, or a
business credit card. Many lenders require you to offer a personal
guarantee on a business loan. So anything that you can do to improve your
credit score will greatly improve your chances of a getting a yes from a
lender.
If your personal credit history makes getting a
traditional business loan impossible, consider non tradition resources for
funding such as asking friends or family members for help. Be sure to frame your
request as a business loan not a gift and be prepared to put everything in
writing. Have a plan b in place; be sure to explain to family members what
would happen just in case everything doesn’t go according to plan. There are
also other loan options to think about, small business owners are leaning on
peer- to-peer lending. They are a number of online lending networks such as prosper.com, lendingclub.com,
and kickstart.com.
You can also use online tools such as Go Big Network to
find venture capital and angel investors. This site has a network with more
than 20,000 investors who can review your funding request and provide you with
the funds you need.
Finally, creativity can sometimes trump cash,
not everything requires upfront money to finance your operations. Consider
bartering, renting or leasing equipment instead of purchasing, or what low cost
ways can you creatively come up with in order to meet your company goals.
Remember sometimes success in business isn’t just about dollars, it’s
about the heart and passion you have for your business too. And when funds are
little tight, a little creativity goes a long way.
Lesson 2: PERFECTING YOUR ELEVATOR PITCH
An elevator pitch is a short statement about
your business that tells others what you do and how you help clients. The key
to the best elevator pitch is to convey just enough information to peak
someone’s interest. When you’re trying to raise capital for your company,
having a killer elevator pitch is crucial, you only have a few moments to grab
someone’s attention and make your business memorable and interesting. The
strongest elevator pitch doesn’t sound like a sales pitch, that’s a turnoff for
anyone listening to you. Let your passion shine through!
Three essentials ingredients to perfecting your
elevator pitch:
- Keep
it short and sweet - Your elevator
pitch needs to be concise but it needs to contain some of the key
information that will make people perk up and listen. It should take no
longer than 20 seconds to spit out. If you’re elevator pitch is any longer
than that, you need to go back to the drawing board and rework it.
- Describe
how big a problem you’re solving - Be sure to
describe the scope of the problem that you’re solving in specific terms.
For example: If you have a business that is a transportation
service that offers delivery of meals and medical supplies to home bound
senior citizens and others. A good elevator pitch should sound like this: 12
million Americans are home bound due to age, illness, or medical
disabilities. My company delivery service helps people who can’t leave
their homes get the food and medical supplies they desperately need.
- Position
your company as a solution - When you describe your
company be sure to state specifically how you will help the market place,
particularly your target clients. Avoid abstractions and
metaphors, and stick to one main tangible benefit that you offer. If your
elevator pitch is done right you will have another opportunity to tell an
investor or a potential customer more about your business.
As your delivering your pitch, pass along your
business card to the person and expect a phone call or an email later. That’s
the benefit of developing a well-crafted elevator pitch; it makes you and your
company irresistible.
Lesson 3 - WHAT TO
SPEND, WHAT TO SAVE – MANAGING YOUR BUDGET
When deciding how to manage your business
budget, start with the basics; get into the habit of doing proper budget and
tracking every time. Especially keeping an eye on your spending in different
categories, like your marketing expenses, distribution and production costs,
and of course your payroll costs. Having 3-6 months’ worth of saving set aside
is good initial target. If you’re funding most of the business with your own
money, having a 2 year savings and spending plan, will give you insights as to
what you can expect from this new venture.
Make realistic projections, look at the
numbers, and make sure that launching this business makes financial
sense. If making future projections about income and expenses fall
outside of your comfort zone get professional help, get an accountant, or use
online budgeting software for small business owners.
To keep business expenses low don’t buy
everything new or all at once, you made need basic equipment to get things
going. One of the smartest money moves you can make is to wait before
making certain purchases. And when you do buy, consider purchasing certain
things used. Search local classified ads to see what former business
owners are selling that you can use, that should cut down on your startup
costs.
Here are 3 pointers that can help you manage
your business budget:
1. Create a savings and
spending plan – Create this plan
before you get started. If you’re already launched your business, it not too
late to, create a plan that shows you exactly what you expect to spend, save,
and earn over the next year or two.
2. Get professional help – If managing your business budget is too difficult for you or
too time consuming, considering hiring a part time accountant to help out with
bookkeeping and related tasks.
3. Question every purchase
– Don’t make the mistake of buying a laundry
list of things that can mess with your cash flow, be smart about the purchases
you make and when you make them, that will help keep money issues to a minimum.
Making smart money decisions and managing your
business budget wisely, will free up your time to focus on what matters most.
Running your dream business and doing it well!
Expert Teacher –Lynnette Khalfani-Cox The Money Coach
Student – Lashana Thomas
thanks for sharing such nice post. the mission is to create successful workplaces for women, their families and employers.
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