After working hard to grow your business into a successful company, most likely you'll want to sell it and reap the benefits of all those years of hard work. There are many questions involved with selling a business, but the most important is: How do you find qualified buyers?
Some people say the quantity of buyers that are interested in buying your business is most important. Others say it's the quality of buyers, regardless of quantity. But the correct answer is...both are very important. Here's why...
If you have 50 buyers interested in your business, then you have plenty of quantity. But if you are selling a $1,000,000 manufacturing business and these buyers can only afford a business that costs less than $300,000, or if they all prefer a service business, then this "quantity" of buyers is a waste of time. You will spend hours talking to unqualified buyers about your business when they have no interest in actually buying it.
Conversely, say you only have 2 buyers interested in your business and they are looking to spend at least $1,000,000 on a manufacturing business. You have good buyer "quality" but not enough quantity.
On average, you need at least 10 or more qualified buyers to look at your business before you can reasonably expect to sell it. And the more qualified buyers you have considering your business, the higher the sales price will be.
In a nutshell, the more qualified buyers you have looking at your business, 1) the faster you will sell your business and 2) the more money you will make on the sale.
But how do you get both quantity and quality of buyers interested in your company?
The answer depends upon the amount which you expect to sell your company. If the amount is less than $2 million, you are generally looking to sell to an individual. At an amount over $2 million, you are typically seeking a corporate buyer.
Depending on the amount and thus the buyer type, there are different ways to find buyers as follows.
For sub-$2 million sales, the two best methods of finding a buyer are as follows.
1. Business Brokers
Business brokers are typically very professional and knowledgeable in the art of buying and selling a business. Plus they are skilled at helping sellers sell their business. They will prepare your business for sale and handle all discussions with buyers on your behalf.
In addition, brokers will help generate interest in your business from buyers through their relationships with other brokers, as well as listing your business for sale on their website.
However, to get maximum quality and quantity of buyers interested in your business it is best to complement a broker's services with additional advertising efforts. You can do this either in conjunction with the broker's efforts, or on your own.
2. Online Marketplaces
Currently the most effective method of getting both the highest quantity and quality of buyers interested in your business is by advertising on an online business-for-sale marketplace. These marketplaces are searched by hundreds of thousands of buyers each month, and can generate a staggering amount of interest in your business.
There are many online marketplaces to choose from, such as BizBuySell.com, BusinessSmart.com, and BizSale.com-but they are far from equal.
Some have inadequate search functions, which mean your quality of buyers will decrease. The better the search functions the site offers, the more precisely buyers can search for what they want. And when a buyer finds your business, you know they are highly qualified.
Other business-for-sale marketplaces are just interested in collecting listing fees from you, regardless of whether or not they help you find a buyer. These sites charge a monthly listing fee that is not tied to performance of any kind. As a result, they may or may not bring you any qualified buyers, and they really don't have any incentive to do so.
Different websites have more or less traffic than others, and I would generally go with whichever can boast of the most visitors. However, if there's no cost to add your listing on a site, it doesn't take more than a few minutes to copy and paste the listing details from one site to another.
The most effective business-for-sale marketplaces put their money where their mouth is and only charge sellers on a pay-for-performance basis. With these sites, you list your business for sale and it appears in buyers' search results when they search for a business like yours. But you are only charged a small fee if the buyer actually clicks on your listing and views its details. And you can set your own budget to determine the quantity of buyers you want.
Performance-based marketplaces are very efficient and highly effective because you get exposure to the maximum number of highest quality buyers, but you don't pay if you don't have any qualified buyers view your listing.
If you seek to sell your business for more than $2 million, as stated above, most likely you are seeking a corporate buyer -- who has the ability to pay big dollars for your company.
When seeking such a buyer, your best bet is to use the services of a qualified investment banker. While the banker will charge you fixed cash and success fees (a percentage of the amount for which your company is sold), most are well worth the cost.
Why? Because they can help you sell for a higher price (making their fees insignificant) and they can help you negotiate the best terms of the sale (e.g., the timing of your payout, etc.).
Good investment bankers will know how to position your company for sale and get as many qualified buyers as possible interested, and get them to bid against each other so you can get the best deal terms and price.
To build a sellable company, whether or not you plan to sell it for less or more than $2 million, you will need to get as many qualified buyers as possible to ensure the highest price. In the meantime, focus on building a company that tons of buyers will WANT to buy. Generally, that means a company with strong profit margins, recurring customer revenue, a diversified customer portfolio (versus having few customers comprising the majority of sales), and systems and personnel that allow the business to run without you.
When you build such a business, finding lots of qualified buyers will be much easier.
This is arguably the worst small business financing strategy:
The entrepreneur develops what they believe to be a sure-fire business plan that can't fail. Then, unable to locate any form of startup capital (because they haven't invested in learning how to find capital), they start their business with credit cards as the only source of financing, and an expectation of sustainable business results within 3 to 6 months.
If everything goes well, the credit card debt will be retired within a year and funds will start building in the bank account. Sounds good, right?
But, have you ever spoken to someone who runs a successful small business; perhaps one that's been around for 5 or 10 years? If you take the time to ask one of these entrepreneurs about their startup period, what you learn may shock you.
Even some of the most successful small and medium sized businesses out there today had some questionable moments making a go of it in the beginning - which can sometimes last for several years.
The point here is simply this:
The process of getting a business operating and successful can take many unexpected twists and turns, no matter how diligent you are in creating a thorough business plan and business financing strategy.
Therefore, to increase your probability for success you need to allow for the unknown, the unplanned, and the unfair.
A business financing strategy that cannot accommodate unforeseen events is not much of a strategy. Furthermore, a business financing strategy that is based on high interest credit cards that can destroy both your cash flow and your personal credit is also not much of a strategy.
To improve your odds of small business success, here are some tips for developing a solid business financing strategy.
Invest Your Own Cash
If you have some of your own cash included in your business financing strategy, it will immediately increase your likelihood of getting other kinds of startup funding.
The more "skin" you have in the game, the more interested a lender will be in approving your loan request. Plus, most angel investors will be more impressed and eager to fund knowing you have some of your personal savings invested.
There is also something to be said about the psychological incentive of losing your own money and the motivation it creates for you to work harder to keep it.
Create Contingencies in Your Cash Flow
Whatever you estimate your working capital requirement to be, double it. Things can and will go wrong. So make sure you don't run out of funding when they do.
Use Credit Cards Wisely
Used properly, credit cards can be the cheapest form of working capital you have at your disposal. They can cover gaps in cash flow, or they can be used to fund endeavors that should result in a fast payback. But carry a large balance for a long time and the interest and payments will be way too much.
Some business credit cards provide 30-90 days of interest-free financing. If you pay off the entire balance every month, you have an extremely low cost of working capital financing.
But if you start carrying large balances without paying them down monthly, you will go from the cheapest source of working capital to one of the most expensive, and you will likely also hurt your credit rating in the process (lenders like to see your balance being less than half of your available limit).
Watch Spending Closely At Startup
One of the things you can control early on is how much you spend and what you spend it on.
This will change in time, but if you can spend wisely in the beginning you may be able to avoid a cost cutting exercise further down the line. For example, if you spend too much for an office lease early on, you may have to make the painful and expensive decision to downsize your space later.
While it's normally true that you have to spend money to make money, you can still be smart about the spending process. Be most cautious about your purchases in the beginning when funds are the scarcest. Always negotiate a better deal with vendors and delay anything expensive until you can justify it later on.
With these financing tips in mind, get out there and make those sales. Build a track record of success that you can show an investor while maintaining a positive cash flow throughout.
Suggested Resource: Want funding for your business? Then check out our Truth About Funding program to learn how you can access the 41 sources of funding available to entrepreneurs like you. Click here to learn more.
I know a lot of business owners, and their businesses are very diverse. Some are profitable, some aren't. Some involve single, store-based locations, while others are Internet-based or even spread across an international network. Some have large staffs, others only have a few people. Some specialize in technology, some in produce, some in commerce.
The variations are endless, but all these companies share one thing. They all required a lot of money to get started and/or grow.
When raising funding, you always have several options - from securing a loan from a bank, receiving a secured line of credit, crowdfunding, or seeking investors. When looking for investors, most people think of venture capitalists, firms who manage pools of money and invest it in startup projects.
Angel Investors are a Realistic Option
Another option for the shrewd businessman or businesswoman, though, is to find angel investors. Angel investors are individuals who invest their own money in a company or business, usually in exchange for equity ownership.
The angels will then wait for your company to grow (and usually sell to a larger company), at which time they will sell their shares for a big gain.
Sometimes, angels will band together into angel funding groups which pool their capital in order to invest in larger projects and to diversify their risk of investing in just one company.
So, where can you find these angel investors and let them know about your company? There are a few options.
Your Current Customers
If you already have a small business and are looking for angel investors to help it expand, you may be able to find angels among your current customers - someone who knows and trusts you already, who has already experienced the value of your product or service, and who could more easily envision how successful your company could become.
Internet Search for Angels
One of my favorite types of angel investors are retired industry executives. For example, if you are in the aerospace industry do a Google search on "retired Boeing executive." You will find numerous former Boeing executives from this search. Then you can start contacting them via phone or email. These former executives generally will have the money to fund you and the connections to help you grow your business faster.
Local Entrepreneurial Groups
I have met several angels myself by attending local entrepreneurial groups. Do an internet search for "your city/state" plus "business networking group" or "entrepreneurs" group, club, or forum. They're pretty much everywhere and all have different names, but check around.
Depending on the size and legitimacy of the group, you can find some very experienced businesspeople - who are good to know for many reasons, such as mentoring or connections or funding.
Importantly, most potential angel investors don't refer to themselves as such, but if they have funds available and would be interested, then don't be afraid to bring up the opportunity to fund your business once you've established a relationship with them.
Friends of Friends
It's also true that the more business contacts you know, the more your odds of finding an angel will increase just by calling them all and asking if they know anyone who might be interested in your opportunity.
Ask Your Accountant
Banks and personal accountants often have contacts, as well. If you're unable or unwilling to find angels through other means, you can check in with your bank or with your accountant.
They may know some angel investors personally and be willing to recommend one to you.
Angels are Individuals
Remember, angel investors are not venture capitalists. Rather, they're spending their own money on things in which they believe.
This means that your odds of convincing them will go up if you can sense their other motivations besides pure growth potential and profitability, such as the social/ethical value of your company or falling in love with you or your product.
Angels invest for all kinds of reasons. Find theirs out and use it to your advantage.
Come up with a good pitch and business plan with evidence that you have a great opportunity to succeed, and you'll go far every time.
Suggested Resource: In our Angel Funding Formula program, you'll learn exactly how to find and contact angel investors, exactly what information to convey to them and how, and how to secure your financing check. This presentation explains more.
The amount of time you have each week to accomplish tasks and get results is limited. Which means you have a finite budget of hours -- just like you have a finite budget of dollars. After reading this article, my hope is that you give your time budget the same discipline and respect (or more) that you give (or should give) to your financial budget.
Staying Within Your Time Budget
As an example, let's say you and your spouse have a personal budget of $400 per month for groceries. It's the last week of the month and you're at the grocery store with a cart full of items. The items will cost you the amount that will make your total money spent on groceries this month $400.
Then, right as you're approaching checkout, you see something in the store that catches your eye. Maybe it's on sale. Maybe it tastes really good. Or maybe it's something you've been meaning to get for a while.
What do you do?
The correct answer is don't buy it; and rather stay within your set budget. Unless of course you can put an item in your cart of equal value back on the shelf.
Your time budget is the same way. When it's 4:55 and you've committed to stop working and go home at 5:00 but there's some nagging task you really want to knock out but would take 30 minutes -- DON'T BUY IT. Don't do it today. Do it tomorrow or some other day.
Go home and enjoy your life. Do something fun or relaxing and stay within your time budget. It can probably wait until later, just like that last-minute item at the store.
Is it Ever Done? Yes and No!
Now I know that if you practice this, there will be painful days where you fail to do something important because you ran out of time and would not work later. But so what? Even on days I've worked 12 hours there are things I failed to get done. Is it ever all done? Not in general.
But, each day has a beginning and an end, so it's really a matter of "Did I achieve today's priorities?" versus "Is there anything left to do?"
Your tasks will never all be done, just like you will never not need to buy groceries anymore. What's important is how you manage however many hours you DO have in your time budget.
Try this today -- track your time, then look back afterward and note what you did. I bet there were some things you did that took 30 minutes that weren't as important as other things. The key (whether time, money, or any other valuable resource) is to budget, budget, budget...and then watch it like a HAWK.
My Favorite Solution
My favorite time management solution is to budget my time with my calendar. For example, I have a set amount of time to finish this article. Because in a few more minutes, I have to get to my next appointment (which is to complete another important task). If I hadn't scheduled that next task on my calendar, I most likely would spend more and more time on this article. Yes, possibly, this article would end up a little better, but I wouldn't have also been able to complete the other task.
I urge you to try scheduling your time on your calendar. And sticking to it; meaning that when it's time for your next appointment, you go to it and complete that task.
Suggested Resource: Follow the tips above and you'll start maximizing the productivity of your team. And check out "Productivity Secrets for Entrepreneurs: How to Get More Done, Make More Money and Take More Time Off" if you'd like to access my complete program for maximizing your productivity and results.
Finish what you start...finish your projects...finish your dinner! :) Everyone has experienced some tension in their lives from having unfinished business waiting around for them on the back burner.
If you're like me and want to grow your business quickly, then you're all about finding leverage. One way to get a lot more results for the effort you put in is by duplicating yourself.
Consider this -- if you find it's effective to follow-up on every inquiry by phone, then you can only call back so many people yourself. If you want to grow, you'd need a salesperson or phone rep contacting everyone for you and reporting the results.
An autoresponder service is kind of like that salesperson, but it automatically follows up with prospects by email after they enter their address somewhere on your website (via a contact form, a form to download one of your reports, purchasing one of your products or services, etc.). I'll walk you through the 5 W's of Autoresponders below to show you how they can help you make more sales without lifting a finger.
What is an autoresponder service?
An autoresponder is a an automatic series of emails that get sent out to people that give you their email address, usually as the result of requesting information of some kind, like a free report, or subscribing to your newsletter.
You would write a sequence of emails and choose what order they go in-and how many days later they will be sent to each new subscriber who opts in. So when someone subscribes to your newsletter, you could send them a Thank You For Subscribing email that same day (Day 0), then a follow-up email on Day 1, Day 2, Day 5, Day 7, etc.
Why should I use one?
It's been tested time and time again in pretty much every business niche that prospects are more likely to respond or make a purchase if they receive 4-10 follow-up emails, than if they only visit your website once. Getting in front of prospects more often gives you more opportunities to make a sale, and a percentage of people will usually buy with each email you send.
This is a massively important part of marketing online, because an autoresponder allows you to create a trusting connection with your list (particularly if your autoresponder emails include good information). Building this trust means they are more likely to respect your suggestions, and therefore means if you suggest a product they will be more likely to buy it.
You earn their trust and respect by sending them good information and not bothering them with excessive promotions or other stuff they don't find relevant.
When should I use one?
Whenever you're ready to write a few emails and make more sales from new subscribers, then you should set up your autoresponder. Block out 2-3 hours to choose an autoresponder service, set it up, and write a simple series of emails. Put links to the appropriate pages of your website in the body of the email messages.
You'll find that you recoup a higher percentage of every marketing dollar you spend. And believe me-it's much easier to double your profits through higher conversions on your existing website traffic (via the increased sales from the autoresponder) than it is by paying for more traffic.
Where do I put it on my site?
So where should you include an "opt in" box for people to subscribe to your newsletter or otherwise give you their email address? The most common place to put an opt-in box is on the sidebar of your website or blog. You can create one of these with the help of your autoresponder service, and there are also web programmers who can make them for you on Fiverr.com for $5.
You should include language in the box telling people why they should opt-in or subscribe. Offer them an exclusive report or video they can't get anywhere else that addresses their most compelling need. This is where knowing your customers' needs and psychology is crucial to your success.
Clearly you should also have a Contact Us page with a form to collect email address that can go into your autoresponder.
Whose service should I use?
A good autoresponder service for those starting out is Get Response. The reason for that is because you can send an unlimited number of emails, the emails get sent on time and you have many different options including broadcast, timed broadcast, follow-ups, you can easily manage your subscribers and it is free for lists under 100 people.
I've also used aWeber and 1ShoppingCart. They are both very straightforward. Also I like that their pricing is a little more fixed-not based on the # of subscribers you have (they do it by tiers of number of subscribers). Constant Contact is also a good service for beginners. Sometimes they have special promotions and plan changes, so I would scan through each of their websites and compare how they do at the following:
Can they send unlimited number of emails?
There are some email services such as iContact that have very good deliverability and a very good interface but you are limited to only sending out six email messages to your subscribers every month.
That means if you have a busy week and happen to launch a product that week and send six emails that week then you can't send anymore messages to your subscribers for the rest of the entire month. That's why even though there are some autoresponder companies with better deliverability than Get Response, I don't like them because you are limited in how many emails you send every month.
Do the emails get sent out on time?
Read the user reviews around the Internet of the autoresponder service you're looking at and find out if when it comes time to blast or broadcast a message to your subscribers, it will get sent right away.
Do they provide you with everything you need?
You need to be able to delete people from your list and create sub-lists if needs be (e.g., a special list of subscribers who perhaps are interested in a specific product or service). You need to be able to set up an autoresponder (automated follow up messages) and also do broadcasts (messages that send to everyone at the same time).
You'll also want to find out if they have an opt-in form creator you can use to make the opt-in box on your website. Or, you may find it's not worth your time to learn how and pay someone else to do it.
So there you have the Who, What, When, Where, and Why of autoresponder services and how they can make your follow-up efforts effortless. If you have a website but aren't using an autoresponder, I'd strongly suggest looking into setting one up now.
Suggested Resource: Want to learn my complete strategy for methodically maximizing your online traffic, leads, sales and profits? Including a section on how to best use autoresponders? Then check out my Ultimate Internet Marketing System.
Open any book on do-it-yourself publicity written after 2004 and you'll see blogs mentioned as a key source of publicity right alongside more traditional sources such as TV, radio, newspapers, and magazines. The good news is that getting in touch with popular bloggers is a lot easier than contacting a reporter at a popular newspaper like The New York Times.
So how can an entrepreneur or small business like yourself get mentioned by some of the bloggers with tens of thousands (or hundreds of thousands) of readers?
I've tried waiting for them to discover me on their own...not so effective. Rather, you have to take action.
Here are two steps to follow in order to successfully contact the right bloggers with a compelling reason to mention you. The first step is making such a list and the second is reaching out to them.
Step #1: Choose Bloggers to Contact
Make a quick list of the blogs you visit or comment on and start there. Then add the blogs that cover topics in your industry (this might take a little research, like googling "concrete blogs" to find related sites or maybe an existing list of them). And yes, there are even blogs about concrete. And once you find one good blog, look at their "blog roll" (if they have one) to find other relevant blogs.
Then, think of any blogs that your customers would be following -- where it would make sense for your company or product to be mentioned. Now you have your contact list. You only need 20-30 to start.
If you're also going for search engine optimization benefits, you might take the Page Rank of the different blogs into account. But the main benefit of being mentioned is direct traffic -- people reading about you and then clicking a link to your website.
The next step is to get the contact information of the person with whom you want to get in touch on each blog. Usually, this will be the one blogger who does most of the writing as well as managing everything else. But the larger blogs often have several writers and a team, and you might have to figure out and contact one specific person.
Look on their website's "Contact Us" page and the writers' bio (or "About Me") page to gather their email address and phone numbers. Add this information to your list, which I suggest keeping in a simple spreadsheet.
Step #2: Reach Out With Your Story
Ideally, you can get in touch with the right person prior to pitching them a story idea. The easiest way to do this is to send them a simple email introducing yourself. In your email, you should tell/show them you follow their blog and are a fan. Also, you can and should comment from time to time on their blog. They may see and read your comments or even respond. Any rapport you can build with bloggers in advance of pitching them your idea is helpful.
But when the time comes to pitch your idea, email them something relevant to what their readers want and need.
You can't go wrong with stories or news that would "wow" readers. See what their more popular posts are and find an idea for a similar post that you could be mentioned in. Then email them your idea.
Bloggers often want fresh news to report-when a new startup has kicked off, received funding, launched a new product, or reached some growth milestone.
You can also try calling them on the phone and telling them your idea. Calling will also help you figure out the right person to contact, how to reach them, and also what types of stories they would be most interested in.
Another way to get noticed is when someone they like and trust contacts them about you. Who do you know that knows this blogger? Search the blogger on LinkedIn to see if you have any connections that could introduce or recommend you.
It doesn't take much time to make a list of 20 bloggers and send them all emails. Once you've reached out to all of them, you'll have relationships with them or at least understand how they work more clearly for your next approach.
Try this for yourself and note how many blogs mentioned you, who they were, and how many visitors or links you got to your website as a result. You might find it a much easier strategy than targeting reporters and traditional media journalists.
Suggested Resource: Getting bloggers to mention you is one way to get publicity for your company. There are many other ways too. Learn how to easily get tons of publicity for your business with Growthink's Publicity Playbook.
Speaking at events is a great way to generate quality leads and expand your business.
The truth is, you don't have to be a great orator or the next Tony Robbins, so long as you know what you're talking about (which you will), come across as credible, and most of all, interest the audience.
Below are some tips to help you find and speak at events to generate new business. But first, I'd like to reiterate why you should be speaking at events.
Why should I speak at events?
Event marketing is another marketing channel, or way to let people know what you do and how to contact you. And it's face-to-face; this can help get your message across more powerfully and position your business more credibly. With these barriers overcome in the listeners' minds, you'll find that the new inquiries you get are more qualified leads-which usually means more sales and the sales process comes together a lot more easily.
Make a short list of the local service organizations in your area-the local Chamber of Commerce, or organizations like Kiwanis and Rotary Club. Likewise, consider national organizations. Most importantly, choose organizations and groups whose members are target customers of yours.
Contact the organizations and ask how to get considered as a speaker for one of their regular events. Also, be sure to find out how much time you will be given to speak. After the event, count how many appointments you get and see for yourself if it was worth the time invested.
Ideally you can get a video made of you speaking at the event. If so, post that on your website and on social media sites. The video will give you more credibility and position you as an industry expert.
Who is my audience?
Once you know where you'll be speaking, you can find out more about the audience. What do they want to learn about? What do they believe they want and what are their needs?
Think of how these relate to what you do. What could you show them how to do that would help them get what they want? These could be tangible or psychological benefits.
Figure this out and you're on your way to preparing a simple speech.
What should I talk about?
Address what it is that your audience is looking for, and explain it in a way that they'll understand.
For example, let's say your company provides outsourced customer service. If so, you'd want an audience primarily comprised of business owners. A simple talk would be for you to give them 5-10 tips related to customer service. For each tip, you would include good and bad examples.
Importantly, in doing this you will naturally promote your company's service (as the "good" examples will be ones that your organization has done) without directly pitching the audience.
So, yes, you can get tons of leads from your speech without being "salesy."
Where do I get material?
This part is easier than you think. Once you choose the topic, try brainstorming everything you can think of that it entails. With our customer service example, you can discuss delivery & fulfillment, billing, refunds, returns & exchanges, technical support, customer phone support, etc.
The key is that you are an expert on your business, so the information is probably already in your head.
Overcoming fear of speaking at the event
If you have some time before the event, don't worry or rush too much to finish your speech. Rather, try keeping a journal for collecting ideas and tips to share along the way. Then, assemble them into an outline for your talk. You don't have to write it out word for word if you don't want to.
If someone called you on the phone and asked you a question, would you need a script? No, you'd just explain it to them as you naturally would. Half of public speaking is reframing the way you see the situation, so you can relax and communicate as you would with an old friend.
Practice giving your speech by yourself a few times so you can pause and think about how it sounded along the way. Maybe have someone else listen to you in order to give feedback.
But when the day comes, relax and remember to talk as if you're on the phone with a friend. You don't have to hold eye contact with anyone in the audience, and they'll forgive you for any blunders as long as you're sincere and interesting!
Public speaking and "event marketing" is a great channel to meet and secure new customers. So, take a minute now to find a relevant event at which you can speak. You'll be glad you did.
Suggested Resource: Doing public speaking is one of many ways you can increase your company's credibility and get new clients. There are many more other "publicity" methods that can help you get even more new customers. Learn how to easily get tons of publicity for your business with Growthink's Publicity Playbook.
In the United States, many entrepreneurs get SBA loans to start or grow their businesses. While these loans are issued by private banks, the U.S. Small Business Administration (SBA) guarantees a percentage of each loan. What this means is that if you, the entrepreneur, default on the loan, the bank only loses a small percentage of the money it lent you (the U.S. government pays the rest).
Because of this guarantee program, it's much easier for entrepreneurs like you to get SBA loans -- as the bank doesn't need to bear all the risk themselves. Without the program, banks wouldn't make as many loans, and fewer businesses would get funding.
When small businesses grow, everybody wins! According to Karen Mills, current head of the SBA, its job is to make sure that small businesses have all the tools they need to grow, stimulate the economy, and create new jobs.
Small business funding challenges during the recession
But as you may have noticed, business owners are still having trouble getting access to capital, namely 1) Small dollar loans, and 2) Loans in the niche industries affected by recession, such as real estate, finance, etc.
If you think about it, most small businesses don't need $1 million or even $500,000, and wouldn't even know what to do with it all. In many cases, even $50,000 can go a long, long way towards boosting revenues (or even doubling them) if invested in more lead generation campaigns, building a sales team, etc.
The odds are you can suffice with a smaller loan amount. In the past this has been more difficult because banks are geared towards extending larger loans since they can earn more interest for the same amount of due diligence per loan.
What the SBA is doing for small businesses
The SBA recently launched two loan-guarantee revisions that simplify and streamline paperwork even more for banks and borrowers.
One of them, the Small Loan Advantage program, is off to a strong start. It allows banks to make loans at more affordable rates, and brings more opportunities to borrow smaller loan amounts, like $50,000 to $100,000 or even less....which is great if that's all you need!
Applying for a small SBA loan from banks
To take advantage of this for yourself, find out which local bank makes the most SBA loans. You can often find this information on the bank's website. Or you can visit the branch or call them. Ask them how many SBA loans they make and how often they fund loans in the dollar range of what you need.
Find the local bank that is most active in the SBA loan program and apply for a loan. If the bank says you're not ready for the loan, ask them why. Then figure out how to address the issue so you can go back later after resolving the concern.
The United States Small Business Administration wants you to succeed as an entrepreneur and business owner. Because when you do, you will create jobs and stimulate the economy. So consider SBA loans as a funding source; they might be just right for your business.
Suggested Resource: Want funding for your business? Then check out our Truth About Funding program to learn how you can access the 41 sources of funding available to entrepreneurs like you. Click here to learn more.
Crowdfunding, or raising money from the Internet "crowd" has really taken off. Just a couple years ago there were only hundreds of companies who had raised Crowdfunding. Today we are in the tens of thousands.
Below is a brief overview of the many Crowdfunding platforms to consider.
The Largest Crowdfunding Sites:
Kickstarter.com is the largest site for funding projects, mostly creative projects. Having the largest network is nice, because the more people visiting the site, the more they have the chance to find you (as opposed to driving all of the traffic through your own efforts). The downside of Kickstarter is that not every project is accepted and they charge a success fee of 8% in the event you get funding. Also, if you raise fewer funds than you need, you don't receive any of it (but if you raise more than projected, you get the surplus).
Rockethub.com is primarily for funding creative projects. Their network is not as large as Kickstarter's, but still substantial. They accept more projects, and also have a success fee of 8%. I suggest scanning this site for similar projects to yours. Were they funded? How many days long was the funding period? Finding "comps" like yours can help you determine if you want to post your project here, on Kickstarter, or somewhere else.
GoFundMe.com has heavy traffic and is unique in that it doesn't charge a success fee if you get funded. They do charge a $9 fixed monthly fee, which is really minimal but still screens out less serious competitors and donors will take you more seriously. You can also raise money for anything here without an end date to the fundraising time frame you're given. While I have not used it myself, GoFundMe has gotten positive reviews on many blogs.
IndieGoGo caters to business owners-particularly artists and creative projects. You can make donations tax deductible here, which is fantastic because that's a deal breaker for some donors (and you don't want to have to form a non-profit yourself just to receive donations...or pay taxes on them!). Scroll through the different projects on this site to get an idea of how easy to use it is for visitors and entrepreneurs.
Rock The Post is similar to Kickstarter in a lot of ways. If you don't reach or surpass your funding goal you won't receive any of the funding. This is good for donors but can be frustrating for you. More uniquely, there are many other entrepreneurial members of their online community who can help you to brainstorm or even implement ideas. So think of it as a way to get connected to potential partners and support as well as funding.
Niche Crowdfunding Sites:
Localstake is a new site that is focused on helping local businesses get funding. This is a great idea, because most investors would rather help out someone local. One reason is that they benefit from helping their community become stronger, but also because they are more familiar with local concerns and feel like they can keep an eye on things (eating at your restaurant, etc.). My experience is the more tangible you can make your pitch and plans for those you approach, the more "for real" they perceive it to be.
FundaGeek is a site geared towards funding technology, invention, and education projects. Many college students and professors use it to advance their research and submit ideas for funding as an alternative to grants and give people more freedom and control over the project's purpose and implementation. I would definitely check this site out if you have a relevant project, as more donors here will be inclined to support your cause.
Appsfunder is the "kickstarter for mobile app design." On Appsfunder, you'll start by telling the story behind your idea, get funded by milestones as it's developed, and then launching it in the iTunes and Google Android markets.
Appsplit focuses on mobile, web, and desktop apps, and lets you hold "open" or "all-or-nothing" funding campaigns. The latter type are the same as with Kickstarter, but making your project "open" means that you receive the funds as they are donated, regardless of whether you reach your full projected funding goal or not. This is helpful because even some funds are better than none in some cases. If I were making an application, I'd definitely check out Appsplit and Appdfunder first.
Equity Based Crowdfunding Sites:
Once the SEC provides its rulings on how equity-based crowdfunding will work, we will see a crop of new equity-based crowdfunding sites. To date, several of these sites have already launched, but aren't fully functional. My favorite (because I know and like the people behind it among other reasons) is Crowdfunder.
Hopefully with this selection of sites available, you'll catch the vision of crowdfunding as well. It's no longer a question of "Should I?" -- now it's a matter of which site, for what, and when. Happy fundraising!