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Written by Dave Lavinsky on Tuesday, June 30, 2009
If you own an existing business, or are planning to start one, there is one organization who really wants you to succeed.
In fact, this organization is even willing to loan you money to start or expand your business. And they will give you this money with favorable interest rates and payback terms.
That organization is the United States government.
The U.S. government has learned over time that giving capital to entrepreneurs creates more jobs, improves the economy, and expands the tax base. All the things they really want to achieve.
Many years ago the U.S. government set up the Small Business Administration (SBA) specifically to make loans to entrepreneurs and small business owners. In fact, the SBA currently has $45 billion in loans outstanding to entrepreneurs.
And, in addition to SBA loans, there are several kinds of debt capital that may be available to start or grow your business such as business lines of credit and traditional bank loans.
Each of these types of capital are covered in detail, including a step by step plan for getting these loans for your business, in our new report entitled "Growthink's Step-by-Step Guide to Raising Capital from Banks & SBA Lenders."
Among other things, the report covers:
* The differences between raising debt capital and equity capital that you need to understand (Page 2)
* The important elements of loans and what you need to know BEFORE you look for one (Page 7)
* Exactly what lenders are looking for when they consider whether or not to fund your business (Page 9)
* The biggest misconception about loans that keeps many entrepreneurs from getting funded (Page 11)
* One easy, but seldom used trick to maximize your chances of getting a loan on the best possible terms (Page 12)
* The key types of loans and what you need to know to make sure you get one that's right for your business (Page 13)
* The best way for startups to overcome a key SBA requirement and quickly get the perfect SBA loan (Page 19)
* Assessment of every type of SBA loan to allow you to quickly determine the optimum one for your business (Pages 19 to 24)
* The hands-down fastest way to get an SBA loan (Page 29)
* Growthink's proven 6-step formula for getting an SBA or bank loan (Pages 32 to 36)
* The 30 U.S. banks that are most likely to loan money to your business (Page 37)
To learn more, click here.
Written by Dave Lavinsky on Thursday, June 25, 2009
In a world with a poor economy and uncertain economic outlook, the knee-jerk reaction of most entrepreneurs and business managers is to layoff employees and thus reduce labor costs.
While I agree that reducing labor costs is key, you can oftentimes do this by increasing the amount you pay your employees.
Take the case of The Container Store. This Texas-based company has a unique HR strategy. That is, they have just one employee for every three that their competitors have. But, they pay their employees double the industry average and spend 160 hours training them.
The result is that their employees are better trained and happier, and thus provide superior service at a 33% overall lower cost than competitors.
Interestingly, when The Container Store opened in New York City, it had 100 times more applications than available positions. With numbers like that, they are able to hire the best of the best each time.
Similarly, Harry Seifert, CEO of Winter Garden Salads gives employees bonuses just before Memorial Day, when demand for its products peak. The bonuses boost morale and cause the company's productivity to jump 50% during the busy period.
Paying employees more to improve performance and boost company-wide profits is a historically proven tactic. In fact, back in 1913, Henry Ford doubled employee wages from $2.50 to $5.00 per day. The move boosted employee morale and productivity and caused thousands of potential new workers to move to Detroit.
A final key point to note is that laying off employees is often a bad strategy. While it will save you money in the short-term, in the long-term, hiring new employees and training them is much more expensive than the cost of keeping the employees that you laid off.
Rather, a strategy that you should consider is to ask (or require) employees to take pay cuts and/or offer employees company stock in lieu of a portion of their cash compensation.
Written by Dave Lavinsky on Tuesday, June 23, 2009
When entrepreneurs ask me what sources of capital to tap to fund their businesses, my answer is generally "as many as you can."
I often point to companies like Google, who relied on credit cards, angels and venture capitalists in its early days.
Recently Animoto heeded my advice. In it's most recent round of funding, Animoto raised $4.4 million from a venture capitalist (Madrona Venture Group), a corporate/strategic investor (Amazon.com), and two angel investors: iStockphoto founder Bruce Livingstone and angel investor Jeff Clavier (Clavier is also the founder and managing partner of SoftTech VC, a seed-stage venture capital firm).
What's even more interesting is what Animoto is. Animoto is a website where you can quickly and easily turn photos into videos. Why is this interesting? Because you can use Animoto to create a video about your company to market it to investors.
So not only is Animoto teaching each of us about how to best raise capital to fund our growth, but is offering a tool to help us market ourselves to investors.
To see how it worked, I created an Animoto account (doesn't cost anything and is quick to do) and created a quick video. I was home at the time with my daughter, so we did it together and created one with a few of her recent horseback riding pictures.
The good news is that it was really simple to create the video. The negatives were that 1) rendering time was slow (plan to wait at least 5 minutes before the video is ready to be viewed for a 30-second clip), and 2) the non-paid version only allows your video to last 30 seconds. Fortunately for $3 per video, or $30 for a year, you can create full-length videos.
Overall, Animoto is a great lesson in capital raising and a great tool to use when raising capital for your business!
Written by Dave Lavinsky on Thursday, June 18, 2009
Over the past decade, I have written countless articles on how to raise capital. I have taught thousands of entrepreneurs how to create a great business plan, how to develop a strong financial model, and ways to devise a slide presentation that gets investors excited.
Written by Dave Lavinsky on Tuesday, June 16, 2009
Every day I hear pitches from entrepreneurs about the great new product or company they are launching (or want to launch).
Written by Dave Lavinsky on Tuesday, June 2, 2009
Recently, I had the great fortune of interviewing Mark DiPaola, an extremely accomplished entrepreneur.
As the founder of Vantage Media Corp., Mark raised a $70 million Series A financing, which is still on record as one of the largest Series A raises in history. And in 2007, his company generated $68 million in revenues.
As president of D3 Ventures, Mark also functions as an investor.
As a person with such success on both sides of the table - investing in growing businesses, and actually founding and growing businesses himself, I couldn't wait to interview him about entrepreneurship and raising capital.
During the interview, Mark went into great detail as he recounted his own experiences on raising capital for Vantage Media. One thing he emphasized was how important it is to know your business inside and out, and how this knowledge impacts not only your ability to grow your business, but also to achieve sales breakthroughs and get the attention of investors.
Mark revealed one website for job postings which helped him assemble a 35 -person team that brought in $40 million/year in revenue -- and it's not the website you might think! We discussed hiring strategies, the number one factor to look for in job candidates, and when it's time to bring in a highly-experienced management team.
Regarding his role as an angel investor, Mark shared the qualities he looks for in a company before making an angel investment, and why it's important that entrepreneurs are referred to investors.
Growthink University members can listen to the interview here:
For those who have not yet joined, you can listen to the first five minutes by clicking the blue triangle below:
Written by Dave Lavinsky on Tuesday, May 26, 2009
It is common knowledge that companies need business plans.
Written by Dave Lavinsky on Thursday, May 21, 2009
I hope you're not a Susan Boyle fan. Because I have a major bone to pick with her. If you don't know who Susan Boyle is, she's the 48-year old British woman who gained international fame upon singing on the reality TV show "Britain's Got Talent" in April 2009.
So why am I so mad at her?
Because for 48 years she kept her talent to herself. She was too afraid to take a shot. To use her natural abilities and training to achieve real success.
I say "how dare she do this!" Is this fair to the millions, if not billions, of other people in the world who don't have this talent? Or who live in places where they have no ability to use their talent? And is this fair to the billions of others worldwide who have missed out on hearing her beautiful voice for the past four decades?
Now what really gets under my skin is when I compare Susan Boyle to an entrepreneur, which she essentially is. How many natural entrepreneurs are out there who are letting their talent waste away? Who have tons of ideas and abilities, but are working in their same, boring jobs and not using them?
Why do I care?
Because they are failing to create wealth for themselves and their families. And worse, they are killing our economy. Because entrepreneurs like them are supposed to be creating great companies- companies which provide jobs, great products and services for the rest of us, and a tax base that feeds our government. Yes, they are failing themselves and their countries.
So why is this happening? I think it's because they are too afraid. Like Susan Boyle was for many, many years. And unfortunately, in many cases, these entrepreneurs simply haven't gotten the kick in the pants that they needed.
Like entrepreneur Mark DiPaola who I spoke with the other day. Mark graduated from college and got a cushy job at a consulting firm. He worked there for a couple of years, and may have worked there for decades if he kept getting promoted.
But thank goodness, Mark got laid off. And then he went to work at a startup. And thank goodness, the startup failed. Because it was those two experiences which prompted Mark to start his own company.
Which he did. And which was a massive success. The company, Vantage Media, generated $68 million in revenue in 2007. In March of that year, venture capitalists and private equity firms put $70 million into the company and Mark was able to cash out and leave the company at the age of 30. And retire. And start a foundation to give back. Now that's what I call success.
Are you the next Susan Boyle? Do you have entrepreneurial talent, but are keeping it to yourself? Have you not started your own company yet? Or failed to really grow your company? Well, I'm willing to bet that you have more talent than you let on and that you could be more successful than you currently are.
And, I also know what's probably holding you back.
That's right. Most entrepreneurs start their companies or grow them properly because of money. Which is odd, since successful entrepreneurs make tons of money. But, to become a successful entrepreneur, you often have to leave your current job and current income.
To solve this problem, many entrepreneurs, like Google AdSense founder Eytan Elbaz who I spoke with the other day, raise capital BEFORE formally launching their companies. They continue to work at their current jobs and develop their business plan and raise money. And then, once the money is in their bank account, they leave their current job and dive into their ventures full time.
And you can do this too! IF you know how to raise money for your business.
So, in addition to all the information that you buy and read on marketing, operations and other business disciplines, start investing in learning how to raise money for your business. Since that is the most essential skill for a successful entrepreneur.
Written by Dave Lavinsky on Thursday, May 14, 2009
If you haven't yet launched your new business, I have some advice for you.
It's actually not my advice. As I'm a little conflicted about it. Let me explain.
The advice is to start your new business as a project. What that means is that you don't quit your day job. You don't raise capital. You don't focus 100% of your effort on it.
Rather, you work on it as much as you can in your spare time until it either becomes something, or it doesn't.
The advice comes from Bambi Francisco, the co-founder and CEO of Vator.tv who I spoke with earlier this week. It's not only her advice having founded a company, but the advice given to her by Mark Pincus.
Pincus is the serial entrepreneur who founded Tribe in 2003 and sold it to Cisco Systems in 2007, and is now the founder and CEO of Zynga, a large social gaming company. You can watch Francisco's brief but informative interview of Pincus here.
So, the point is to start your new business as a project. Obviously, this depends on your choice of business. If it's a restaurant, there's not much of a project to be had. But if it's software, for example, you can start developing it and see if you are able to start creating features that people want.
And once you can prove that the project is developing into a viable business, you create a real company for it.
This "project" concept also reared its head when I recently spoke with Eytan Elbaz, co-founder of Oingo, the company which later would be purchased by Google and renamed as Google AdSense.
Elbaz and his co-founders were developing their novel software while still holding full-time jobs. After a little while, they were able to develop a working prototype. And then, Elbaz showed it to an angel investor (who interestingly was a client of his at his current job). It was only upon the angel investor writing them a check that they decided to leave their full-time jobs and really launch the company.
So why am I conflicted about this advice? Well, there's definitely something to be said for the entrepreneur that is so passionate about their business that they're willing to fully launch it from the get go.
To leave the comfort of their current job and take all the risk. In these cases, I like that the entrepreneur can't blame their current job for limiting their time. They fully immerse themselves in their business, and give it their best possible shot. And in many cases, this total commitment is what drives success.
The key here is probably that everyone's situation is different. The young entrepreneur might have an advantage in that it may be easier to leave their current position and jump 100% into their business. Conversely, the older entrepreneur with the family and mortgage may be less able to shoulder the risk of foregoing their current salary.
The choice is yours - take the leap fully or partially. Each can result in success.
The only choice that I truly hate is doing nothing. Too many people sit with great ideas in their heads but fail to act on them. And then, when someone else successfully executes on their idea, they say, "Hey, that was my idea."
To them I unfortunately say, "Who cares - it's the entrepreneur's willingness to commit and execute on the idea that really matters!"
Written by Dave Lavinsky on Tuesday, May 12, 2009
Have you ever heard of ZipSkinny.com?