I read quite a few business books each year and have developed an ability to tell an academic writer from an entrepreneur in just a couple of pages, even without the help of the author biography.   Built to Sell is the former and a book I feel comfortable recommending as an accurate and realistic guide from a successful entrepreneur who has “been there, done that”.
If you own a business and want to successfully sell your company one day, realize that exit planning is a multi-year process that is financially worth the effort you invest.  If you are not a book reader, the cliff notes are contained in this article and you can keep current with John Warrillow’s blog.

Do you every think about selling your company?  Have you done any exit planning?  Here is a good first step…

Built to Sell – Exit Planning From the Begining is a post from: Business Cash Advance provider Instant Capital Solutions.

Often when politicians try to “help” business owners they are just shilling for future votes.  I expect today’s announcement of a “small business bail out” to be no different.

While there are many reasons today’s announcement will have little impact on Main street, here are three off the top of my head.  I expect the political rhetoric from Mark Warner, (D- Virginia),  Christopher Dodd (D-Connecticut) and The White House today will likely have very little impact on small business owners in search of working capital or business loans.

First,  The White House will raise the limits on government-backed small business loans, so what?   While that may sound appealing to the few politicians that understand its impact,  it does not focus on the real problem.  It’s not the lending caps, it is the qualification for loans and tight credit environment.

Also, what about the Treasury’s March announcement of a $15 billion program to purchase pools of SBA loans.  This will really help, but so far has not been implemented.

Secondly, there are plans to “re-emphasize” community bank access to the TARP.  Only in politics does “re-emphasizing” count as policy change or anything substantive.

Community banks do not want to access TARP funds, because they are prohibited from charging any fees on the lending they make.  Other than our government, an enterprise can not survive without charging reasonable fees for the services it provides.

Finally, there is a current requirement that anyone participating in TARP sell warrants to the government giving the U.S. the right to purchase common stock at a set price.  Would you accept government money if you had to give Uncle Sam the option to buy part of your business?

These are my thoughts, do you think this is it rhetoric or real change we can believe in?

White House Small Business Loan Program, Rhetoric or Real change? is a post from: Business Cash Advance provider Instant Capital Solutions.

It happens every single day and often kills small business owners without a great credit score.

This morning’s Wall Street Journal’s did a great story on free credit score reporting.  I know you have multiple issues you manage on a daily basis, but hey, this is about bottom line profits.  There is nothing more important.

Your credit score will ultimately have an impact on profits and sales, so focus.  The impact of your credit score is not noticeable to most owners until it becomes expensive.  As a business owner there are other levels of complexity which I’ll develop in a future post.  Today I’ll just illustrate the financial importance of your credit score.

Your FICO score not only impacts the availability of capital for a small business,(which could save your business one day)  it has direct impact on your profits as well.  Because this is an abstract concept for most, let me give you a specific look at the financial rewards of strong personal and business credit.

Last week I helped a business owner secure an equipment lease for a new machine he wanted so he could expand into a more profitable business segment.  His credit score of 620 (below average) provided a bit of a challenge, but we were successful with his equipment financing.  He elected a 5 year lease with a monthly payment of $1,025.  He was thrilled because his return on investment was significant.

Here’s where I hope to get your attention:

The exact same business owner with a 720 FICO score would have been offered a lease with a monthly payment of $836 per month.  Over the 5 years his equipment lease, he would have saved $11,340, his monthly cash flow would have been improved by $189 and his ROI would have been even more impressive.

I realize there are many issues that demand your attention each day and it is easy to ignore issues that are not burning.  Don’t!  Maintaining your credit score is relatively easy and will have an important impact on the profitability, and maybe even the survival, of your business.

The $11,340 Credit Score Mistake is a post from: Business Cash Advance provider Instant Capital Solutions.

One of the most popular innovations in small business financing over the past 10 years has been the business cash advance (merchant cash advance) industry.  This industry has provided billions to cash starved small business owners of almost every credit profile over the past decade.

Like most industries, the business loan alternative industry has continued to mature and offer different financing potions that are less expensive and have different requirements for the borrower.  A “non-bank business loan” is one of the most recent innovations in this maturing industry designed to provide loan alternatives to small business owners.

What is a “non-bank loan”?

It is an evolution from a traditional business cash advance.  As the business cash advance industry continues to mature I anticipate additional funding companies will step in and fill gaps in the marketplace.  Initially, business owners who could not get a traditional bank loan for any of a dozen reasons had only business cash advance as an alternative.  Even with great credit and a willingness to sign a personal guarantee, these owners were stuck with higher priced capital and shorter repayment periods.

Over the last year, a couple innovative financial companies have developed programs that have begun to fill this niche.  The first program I call a “non-bank business loan”.  This is an actual loan (unlike a business cash advance) and requires a personal guarantee from the borrower.  However, it is preferred over a cash advance because it is much less costly and does not require any change to your merchant processing company as many (not all) business cash advance companies do.

These programs do not require a change of credit card processor, they simply divide your stated repayment amount by 250 (business days in a calendar year) and take that amount as a fixed daily payment.  Some owners prefer a consistent daily payment which has an even impact on cash flow rather than the variable repayment that cash advance offers.  However, some prefer payments that reduce when revenue slows and increases during strong cash flow periods.  The choice is now yours.

As the economy has worsened over the past year, these companies have continued to provide financing to business owners who qualify, though some have reduced the amount of financing they are willing to offer.  While this funding is very welcomed, the amount of financing is often a source of frustration for business owners with larger financial needs.

What is a “private” non-bank loan?

This business loan alternative is virtually the same but is financed by private investment funds.  They typically offers the same pricing but larger funding amounts, and will typically require more documentation (2 years tax returns) than other funding alternatives, but offer an excellent combination of pricing and lending amount.  Many of these funds will lend up to 6% for your total annual sales (averaged over your last 2 years).  So, if you have averaged $1.5 million over the last two years, you should expect financing up to $90,000 if you qualify.

I expect to see the business loan alternative industry continue to become more creative and innovative as traditional bank loans and SBA loans fail to meet the needs of small business owners in search of working capital, business loans and growth opportunity financing.

Business Loan Alternative: Part II is a post from: Business Cash Advance provider Instant Capital Solutions.

Do you remember how frustrating he was?  He was the cause of problems, putting the Robinson family in danger because of his greed, stupidity or fear.  After the crisis passed, he would deflect blame and grab credit.

That is exactly the feeling I got last night when I saw an American Express ad forecasting a light at the end of the economic recession and the rebirth of a new and better small business economy.  Clearly, their Dr Smith moment.

Reality is that American Express cut credit limits to small business owners in their moment of need.  This not only limited available credit, it cause credit scores for many to drop and their cost of capital jump.  In other words, Amex was part of small business’ problem, not a solution.  When times were tough and the recession was scaring many business owners, Amex cut their risk and ran for cover.  Owners were looking for small business loans and working capital while Amex was taking them away.

Now that things are looking brighter, they want to be a resource and a friend.  Until when…?

I understand weakness and fear, we’ve all experienced that at one time or another.  I understand Amex wanting to protect their balance sheet.  What I do not tolerate well is Amex boldly proclaiming they are part of the solution now that the future looks brighter.  I did not like it when I was a kid watching Lost in Space and I do not like it now when my business is on the line.

I think Zachery Smith is Running Amex Small Business Loan Department is a post from: Business Cash Advance provider Instant Capital Solutions.

“We can’t solve problems with the same kind of thinking we used when we created them.”
– Albert Einstein

I wish I could report that the legislation our law makers finally passed on Friday will have immediate impact on the economy and capital will begin to flow into small business lending quickly

However, it will likely take several weeks before the Treasury Department can create room on lenders’ balance sheets and impact underwriting decisions that make capital available to small business owners.

Essentially, traditional business lending sources will continue to limit or freeze their lending activity for weeks.

There are no shortage of articles about small business credit crunches, including Concerns about how franchise restaurants will remodel or expand in Entrepreneurs Scramble for financing Even my local and Tight credit forces stores, restaurants to be flexible .

While these stories reflect the world of traditional lending, it does not tell the entire story of small business financing and the business cash advance industry which has stepped in to fill this capital void for greatfull business owners.

Business Cash Advance Capital, Lending Programs are Available

Truth is, in the past few months, many of the companies we work with to arrange client financing have raised hundreds of million of dollars in new capital, created new lending programs and seen a significant increase in their small business financing.

We are clearly in difficult times, but there are financing alternatives for small business owners in almost any industry with almost any credit profile.

Stay positive.

Small Business Finance – Much Better than Press Reports is a post from: Business Cash Advance provider Instant Capital Solutions.

Earlier this week I read a very interesting, front page article in the Wall Street Journal that discuss how consumers are scrambling to raise cash now with the economy slowing. It is obvious to me that some of these decisions will very likely have a negative, long term impact on their financial health.

As business owners deal with this economic slow down, it is helpful to have simple criteria to help with your financial decision making. One helpful question: “Will this strategy harm my company by reducing its long term value”?

It is certainly more fun to manage your business in a time of economic growth. However, decision making during slow periods often have a more important impact on how well your business performs in the long run. Small business owners understand that during slow times there is less profit. It is the long term enterprise value of the company that you want to protect.

Here are some of the non-conventional alternatives that business owners could consider as they look for working capital to survive this slow economic period. I hope it helps you with your decision making and ask you to reply with other options you have considered for financing your company.

Negative Loss of Loss of Permanent Negative

Credit Asset Company Economic Tax

Option Impact Control Equity Loss Impact

This economy is providing a wonderful opportunity for the business cash advance industry to prove its value to the business community. So far they have met that challenge as several companies have raised new capital to lend and are setting records for advances they are providing to business owners managing this recession.

While the cost of capital is more than traditional financing, it is available now and, when used properly, helps a business owner maintain or even enhancing the long term value of your company.

Long Term Planning for Short Term Cash Needs is a post from: Business Cash Advance provider Instant Capital Solutions.

Yesterday I was reading an industry publication and the chairman of a fairly large Merchant Services company commented that merchant cash advance is “a great product for add-on sales because ti gives the sales rep the advantage of having another product line to sell.”

I absolutely hate that language. I hate the idea of someone, particularly an industry person, referring to merchant cash advance as a product. It reflects a lack of appreciation and understanding for what this financial tool can really do for business owners if designed properly.

Yes, there is an element of sales with merchant cash advance, but there is (should be) more craftsmanship and design than salesmanship. The language is a reflection of a dominate culture in many companies that are supposed to serve business owners, not sell to them.

Last week I spoke with a restaurant owner who did not take a business cash advance because they could not afford to give up 25% of their Visa/Mastercard sales for repayment. We designed a funding amount that only required a 14% repayment and they were able to put the new funds to work to improve and expand their summer dinning area.

A day spa owner did not take the working capital she was approved for because it required her to change her current credit card processor. We arranged funding with a company that allowed her to keep her processor and sales are up over 12% with the new equipment she has in her spa.

A vet with a very successful pet hospital in Illinois had excellent personal and business credit and also needed equipment for her clinic. She did not like the expense of traditional business cash advance but did like the significant discount we arranged for her because of her credit profile. New equipment arrives next week.

I offer these as examples of carefully designed solutions, not products. As long as sales people view merchant cash advance as a “product” to sell instead of a solution to design and customize, the marketplace will remain under served.

When a “Great Product” is a Bad Idea is a post from: Business Cash Advance provider Instant Capital Solutions.

Protecting your personal assets from business creditors, litigants and lawyers is critically important in today’s world. Yet, many business owners are so busy with daily operations they leave themselves exposed to financial disaster because they do not take a couple simple steps to provide protection.

The fact that you are busy will seem like a stupid excuse once you are involved in a lawsuit that threatens your lively hood as well as your retirement. Here are two steps you can accomplish this week.

1) Incorporate properly

Your attorney or CPA can provide advice about weather to be a “C” corporation, “S” corporation, LLC or some other corporate status, but the important point is to establish some type of entity (other than yourself) that can assume the risks of your business.

If you have not taken this step, do so quickly. If you have, make sure your corporation is in good standing with your state. Did you register properly? Have you made annual filings that may be required? Have you conduced annual shareholder meetings and are you keeping corporate minutes?

To have an entity other that yourself, you have to prove the entity has complied with these minimal requirements in order to provide the protection you expect from your company. If you have not or you are not sure, move it to the top of your “to-do” list. There are several companies that do a fine job of this right online

2) Your tax ID number

Many business owners under utilize their tax id number because they suspect it is only necessary for their tax filings. In reality, it is a great tool to establish credit in the name of your company only.

The next time you fill out a credit card application of any kind, put your tax id number where you typically put your social security number. This, then, will cause your company (not you personally) to be approved or denied credit.

Visit your local Staples, Office Depot or Sam’s Club and request a credit application. Use your tax ID number and you’ve just established your first bit of credit entirely in the name of your company.

While this may be a small first step, it is an important step to establishing credit in the name of your company. With proper care and effort, your business credit can grow in size and strength. This will be critical when you look for bigger funding to fuel your future growth.

Business Loan? Not Without These 2 Steps… is a post from: Business Cash Advance provider Instant Capital Solutions.