19. October 2017

As a Vendor or a Lender everything you pronounce a person or a business as "Declined" you make an enemy. If you are Home depot and a business owner applies for your Commercial Card and you decline them, well then they never want to shop at Home Depot again. You just created a Lowes customer for life. And why?

Anyone hearing declined from whatever source is offended. Declined at Wells Fargo so they will never do business there again, when it didn't have to be. But when "Declined" or "Approved" are your only two options you have left yourself only two choices, approve them and make a friend who speaks well about you to others or decline them and make an enemy who speaks badly about you to others.

Enter a third choice and that is "Not Yet". 

"We very much want to approve you but you are Not Yet where we can. To help you get there we would like you to go to Fundability.com. It is a free service that provides you with all the education, tools, and help you need for us and many others to approve you".

Now think about the mental state of those who simply hear "Declined" versus those who hear "Not Yet". How would you feel? There is a world of difference.

Vendors and Lenders are in business themselves to make a profit so they must guard against their number of defaults. That is just good business. Approving everyone has been tried over and over again and it always leads to failure. Too many defaults leads to too many losses, which leads to a business closure.

Business owners has to do their part as well. Their part is to not apply before they know they are pre-qualified. Home Depot wants to approve you. Of course they do. They don't want you as an enemy. But when you walk in unprepared for the test, then you are as much to blame for the "Declined" as they are and maybe even more.

The solution to both sides of this is to remove "Declined" from the equation. If as a business owner you go to Fundability.com first, before you apply, then you will know with whom you are pre-qualified. And if you are a Vendor or a Lender who says "Not Yet" and sends that business owner to Fundability.com then you have empowered their success rather than damaging it.

Solutions to problems are usually found if only we take the time to look.

Business Loan Approvals, Pre-Qualify for Business Loans, Small Business Financing, Vendor Credit Lines

18. October 2017

The phrase "Finding Business Financing Is Really Hard" is true, but only for those who are unprepared and not yet pre-qualified.

For those business owners who take the time to prepare and to educate themselves on what it takes to pre-qualify, finding business financing becomes easy and in fact in most cases it finds them. People with 760 FICO scores know this because they get financing offers thrown at them almost daily. The same is true of those business owners who become pre-qualified, fundable, and bankable.

A growing percentage of individuals now take care to educate themselves as to what goes into a 760 FICO score. What is it based upon? What type of accounts do I need? What is the mix of those accounts? What debt to limits are optimal? They learn that FICO is doing nothing more than crunching numbers, so they set out to optimize those numbers themselves. It is math plus time and nothing more.

So why is it that business owners think it would be any different in business lending? It is not. Business lenders have underwriting approval guidelines just as do personal lenders. The business lenders are also looking to minimize their defaults by simply not approving known high risk of default flags. Your goal as a business owner should be to simply know what those high risk of default flags are and eliminate them. Sounds easy right? Well it actually is easy.

Let's quickly look at a few of those flags.

Flag 1 - Home Based Business - Having a home based business is great. Work when you want, no long drive, play when you want, and more. The downside is that those before you who had home based businesses had a way higher rate of default so there you have raised that flag.

Flag 2 - Not An Entity - The default rate among sole proprietorships and partnerships has been significantly higher than those who operate as an incorporation or LLC. So here too you have raised the default flag.

Flag 3 - Cell Phone - Cell phones make all our lives easier, however those business owners who have elected to have only a cell phone as their main business line have also shown much higher rates of default. And now your number of flags that are waving is getting pretty high.

Flag 4 - Free Email - At last count there were 1,637 free email account providers. So who needs to pay for an email account, right? Well as a business owner that answer would be "You Do". Those businesses who operate as "joesplumbing@gmail.com" versus those who are "Joe@joesplumbing.com" have proven to have a higher rate of default. Now you have so many flags raised that it is hard to see you.

Simply put, vendors and lenders are looking for any data points that will help them to lower their rates of default. They want portfolios the make money and not ones they have to chase around constantly to collect or that worse end up defaulting.

The more high risk of default flags you raise the less likely it becomes that you will get approve. Put yourself in their shoes. If you raised 5 or more high risk of default flags would you lend to you? If your answer is "yes" then just remember "A fool and his money are soon parted" and most lenders are not fools.

This means you need to be smart. Educate yourself on what your business needs to do to become pre-qualified, fundable, and bankable. At Fundability.com you can find it all in one place and for free.  

Build Business Credit, Business Credit Scores, Lender Compliance Items, Small Business Financing

17. October 2017

Starting a business of any type can be a huge drain on your time and on your resources. So why do people do it? Because there is so much upside, but where to begin?

When you start a business the best thing to do is to lay a good foundation. Your foundation begins with forming an Incorporation or LLC. Much can be said about this and there is too much to cover here. Enough to say that if your business fails you don't want it to take away everything else you have, your; house, car, savings, assets, etc. To provide a layer of protection your business needs to be a standalone entity.

Having an Entity helps greatly in establishing business credit that is separate from you personally so that at some point the business can stand on its own for financing.  This is also very true if at some point you wish to sell your business. If you operated your business as a sole proprietorship or partnership then when you sell all the credit and goodwill leave with you because the business is you. When you operate your business as an entity then all the credit that has been built stays with the business as does all the goodwill you built under the business name.

A very large part of building a strong business foundation is completing what is called "Lender Compliance". These are a series of about 20 items which vendors and lenders will check some or all of to determine if your business might be a high risk of default. These are all easy to complete with most business owners being able to do so in a few days. The problem is that over 90% of all startup businesses never take the time to complete and in most cases have no clue what they are.

Think about your business like you would a person. Now what if that person went for 10 years and never established a credit history or what if that person only had one credit card and that was it for their credit. Would that person be welcomed with open arms by vendors and lenders? Would they get approved for any large credit lines? Of course not. Why? Because there is no established history to determine how or if you will repay the loan.

Therefore the same is exactly true of your business. First it has to be an entity or as the lender there is nothing to lend to, there is just you. Then has your business completed the simple foundational items of Lender Compliance that tell the lender's computer if you are automatically a high risk of default or not. And lastly is there a business credit history file that can be reviewed which will show a pattern of paying your business bills and paying them on time.

If as a startup business you do just those three simple things you will place your business above 90% of all the other small businesses that may be competing for the same financing that you are. Give yourself and your business a huge edge. Get them done now.

Business Planning, Business Startups, Entrepreneurship

16. October 2017

You wouldn't think that potential lenders or investors would care much about the online footprint of your business, but more and more they do!

Having your business found on search engines, Facebook, Twitter, LinkedIn, national 411, online directories, mobile map searches, local searches, BBB, and with your State all lead to more credibility for your business which translets into less risk of default.

While having a great business idea is a good thing, lenders and investors are more concerned with the level of risk that your business will fail and therefore default. The more you can do to lower that perceived risk the better chance you have of being funded.

The place to start is with having a professional business website. You do not need to spend a lot of money, but you do need a professional looking website. Whether you do a website tonight from GoDaddy or some other website provider, pick one that compliments your industry and highlights your company's place in it.

Next you will need a professional email account like joe@joesplumbing.com rather than joesplumbing@gmail.com. Nothing against Gmail or any other free email provider. It is simply the lenders have seen a higher rate of default in businesses that use free email accounts, so there again is that whole higher risk thing. Try to stay out of known high risk pools.

Many lenders will do a simple national 411 search and if your business is not found you could be declined. This takes only seconds to fix and remove another high risk item.

When you search locally for your business do you find it? Check Google Maps, run local searches, look on manta and yp.com. If you are not there, then get there. Again it is easy and only takes a few minutes to complete.

Make sure your business is found on the social media sites. The important ones are Facebook, Twitter, LinkedIn, and YouTube. These too are easy to setup and there are many services that will do it for you.

Go online to all the business credit agencies; Experian, Dun & Bradstreet, CreditSafe, and Equifax. Check to see if your business is listed. If not, get it listed. If it is listed then know what is in your business credit reports before lenders do.

You should also know what lenders and investors are going to find out about the business owners. Pull the personal credit reports of anyone owning 15% or more of the business. There are lots of free and no inquiry services that let you do that. If there are major derogatory items on any one business owner you may consider dialing back their ownership at least until after funding or taking the time to optimize those reports before presenting to lenders or investors.

Business Credit Scores, Lender Compliance Items, Optimize Personal Credit, Pre-Qualify for Business Loans

15. October 2017

A difficult task for any business is conducting market research. This research can impact a business in many ways including how you brand your products and who you market to. Although market research can aide a lot with your businesses marketing efforts, it also plays a key role when your business is attempting to obtain financing. 

The lenders or investors main objective when evaluating your business is to determine whether or not they will get their money back. Good market research will help set your potential lenders mind at ease, and you will be more apt to obtain the business capital you need. The lender also wants to know things about the market such as the competition and the demand for your product or services. 

To begin the process of researching your market you can start by searching trade associations, trade show websites, and trade magazines. They exist in nearly every industry and can supply a wealth of information related to your market. The best part is that many of the trade related websites provide the information free of charge. The government also provides a number of valuable resources for market research. For example, the Economic Census, released every five years from the U.S. Census Bureau, provides an excellent glimpse at industrial activity including the Industry Series report that offers separate reports for many industries and shows the number of businesses within an industry, sales volume, number of employees, and more. Other good resources for market researching are corporate websites of your competition and press releases from your competition. White papers provide good market research data because they are well-researched documents. 

Magazines and Newspapers are another inexpensive resource for market research. As part of their research for articles journalists often gain access to expensive market research reports which may be mentioned in an article. Additionally, expert sites such as Google Answers provide value in offering direction to someone who seeks information. They don't provide the hard numbers you may be looking for, but you may find the expert opinions useful when putting together your market research. Finally, another inexpensive resource for obtaining market data can be found at Academic Research Centers. 

Market research companies and investment houses are expensive alternatives to market research. The information found with a market research company is generally well researched and contains extensive product/industry metrics and statistics, including forecasts and trend analysis. It is not uncommon to pay well into the thousands of dollars for a report that is only a hundred or so pages long. Since money is typically tight for a business starting out, it's best to go after your market research using the methods above for gathering free and inexpensive research data. 

Although market research is extremely important to your business plan and your business capital search, it is only one piece of the puzzle. Before a lender even looks at your market research they will look at things such as your business management team's experience, your past business successes, and your "lending character " or your ability to repay a loan. It is vital that you not only have a good business plan, but you also need a good business financing plan as well. 

Business Loan Approvals, Pre-Qualify for Business Loans, Small Business Financing