Small Business Lending Ticks Up?!

An explosion, no; a small tick upward, yes.  Now granted, that may be like you bragging about having more hair than me, however it is still good news.

Below is what Angus Loten said from the WSJ:

“There are signs that more banks may be loosening the purse strings for small firms, as business conditions improve and as borrowers become more willing and able to take on debt.
 

Small-business lending hit a four-year high in November, according to the latest Thomson Reuters/PayNet lending index, for instance. 
 

The total volume of small-business financing increased by 18% over the same period last year, and reached the highest level since Feb. 2008, its latest data show.”

I have seen this anecdotally (which means I am being lazy and not sharing real data) this year alone.

I’m not advocating that everyone rush to the bank to borrow money immediately, however if you have been biding your time and want to purchase equipment, a building or just get some ole fashioned working capital, you should take a peek at what the lenders will want to see from you.

Basics

Here are just a few of the basics that a lender will look at, when reviewing financial statements.

Income Statement

Has the revenue has been growing or at least steady?

Are profits increasing as a percentage of sales?

Balance Sheet

Are all of your assets just old accounts receivable?

Do you actually have some equity?

Cash Flow

Do you have enough working capital (cash at end of each period) to stay in business?

Is there discretionary cash flow?

Now let’s look at more in-depth (and boring) ratios lenders find important.

Key Financial Ratios

Lenders will look at certain numbers in your financials and use them to determine the viability of your business.  They will also compare key financial ratios in your business to other like businesses in your industry, so they can get an apples-to-apples comparison.

Debt to worth ratio – Comparing liabilities and equity.  This shows that you are not all debt and no ownership.

Current ratio – Compares current assets to current liabilities.  This shows that you can pay its immediate debt with no major issues.

Debt service coverage ratio – Compares net income to amount of money you pay on debt.  This shows that you have the ability to pay on debt.

There are a list of other things lenders will look at like your credit score, your industry, and projections and maybe even a business plan.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to http://www.tsbdc.org/.

Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdc

Becoming Bankable

This is the first of a 5-part series on how to become bankable.  Whether you have owned your own business for 30 years or if you are a start-up trying to find your way, you will want to learn what it takes to get a loan these days.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to http://www.tsbdc.org/.

Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdc

March Workshops

Government Contracting workshop of Volunteer State Community College's Tennessee Small Business Development Center, 2 - 4 p.m. Wednesday, March 7, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.


Starting a Small Business workshop of Volunteer State Community College's Tennessee Small Business Development Center, 3-5 p.m. Tuesday, March 13, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.


How to Become Bankable workshop of Volunteer State Community College's Tennessee Small Business Development Center, 9-10 a.m. Tuesday, March 20, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free. 

5 Steps to Marketing Success

Marketing is much more than simply advertising.  Let’s take a look at five steps to getting marketing refreshed and ready.

1.      Fine tune your focus
Repeat after me; I can’t be all things to all people, I can’t be all things to all people, I can’t be all things to all people.  Know what your strengths are and play to them.  Identify the top two to three areas you can focus on and hone your craft.  Be a financial advisor that specializes in protecting the assets of dry cleaners.  Do not be just another financial advisor.

2.      Who are your customers?

Since you can’t be all things to all people, not everyone can be your customer.  It’s important to identify the types of customers that want what you are selling, that are willing to pay for it, and focus on them.

3.      Competitive advantage

This may be the hardest thing for most small business owners to do.  I’ve sat in a room full of eager business owners that are expressing how wonderful their business is, dozens of times.  They have years of experience, the best product or service, and even a story of adequate customer service.  And when it’s all said and done, I couldn’t tell you the difference from one business to the next.   It’s up to you to know what makes your business unique.  You don’t have to bash the competition.   If there truly isn’t a huge difference between you and the next guy, you can at least try the following:

·         Show sincere interest in others, give referrals, and be friendly

·         Be active in the community

·         Tell true tales of extraordinary customer service

4.      Marketing message and promotion

Marketing is not doing a lot of different things once.  After you have identified what you do and who your customer is, it is up to you to deliver your message.  Create a budget that consists of .5% - 8% of your monthly fixed expenses.  It doesn’t have to be an obnoxious in-your-face-method.  Create a consistent message that clearly states who you are, the competitive advantage you offer, the types of customers you work with and the desired result.  Networking, social marketing, and search engine optimization offer the slowest, but steadiest growth for most small businesses.

5.      Schedule your activities and track your progress

Schedule the activities and do not let anything interrupt it and then do it!  My belief is that most business owners fully understand this.  However, they at times lack the motivation. 

One of my favorite quotes from author John Maxwell is "The whole idea of motivation is a trap. Forget motivation. Just do it. Exercise, lose weight, test your blood sugar, or whatever. Do it without motivation. And then, guess what. After you start doing the thing, that’s when the motivation comes and makes it easy for you to keep on doing it. "

The reason I find it appropriate for marketing is because so many small business owners are looking for some type of encouragement to get them out the door and sell their product or service. Don't worry about the motivation. Once you start doing it on a regular basis, it will become habit, and then the motivation will come.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to http://www.tsbdc.org/.

Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdc

Social Media Workshop

Folk, it's here and it's free, Social Media for Small Businesses.  This workshop will cover how to use Facebook , Twitter, and YouTube to grow your business.

This workshop will be at Vol State Community College, Thursday, February 23, 2011 9:00 AM to 11:00 AM. 

To register click here http://www.tsbdc.org/workshop.aspx?ekey=53320009.

The TSBDC offers free and confidential one-on-one counseling for existing and start up small businesses. To register for go to http://www.tsbdc.org/.

Other contact information - Phone (615) 230-4780 www.volstate.edu/tsbdc

Social Media in Plain English

This video is a couple of years old, but sums up social media very well.

And ice cream cut outs are very cool.

Remember that the Tennessee Small Business Development Center (TSBDC) also specializes in personal and confidential one-on-one advising services for existing and start up small businesses.   Whether the counseling is in the area of marketing, finance, management, or any other business service, the TSBDC consultant provides guidance every step of the way. To schedule an appointment visit http://www.tsbdc.org/.

February workshops

February (It’s Marketing month!)

How to Start a Small Business workshop of Volunteer State Community College's Tennessee Small Business Development Center, 3-5 p.m. Tuesday, February 14, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.

5 Steps for Marketing Success workshop of Volunteer State Community College's Tennessee Small Business Development Center, 9-11 a.m. Thursday, February 16, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.

Social Media for Small Businesses workshop of Volunteer State Community College's Tennessee Small Business Development Center, 9-11 a.m. Thursday, February 23, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.

Upcoming in March
Government Contracting workshop of Volunteer State Community College's Tennessee Small Business Development Center, 2 - 4 p.m. Wednesday, March 7, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.

Seth Godin on Small Business

Take a few minutes and see what marketing guru says about making your small business indispensable.

Not to mention, he has an awesome haircut.

6 Things to Fix in 2012

Yes, I know that 12 things to fix in 2012 would have a much better ring, but who has time for 12 things.  In fact, I think 6 things may be pushing it.  At least 12 is divisible by 6.  You know what, just read this list and pick out 2 or 3 that you are comfortable with, and stick with those. 

1.      Poor cash flow management

Problem: Payment doesn't always match outflow and it's up to the business owner to make up the difference.

Solution: Fill out a cash flow (not P/L statement) and identify shortfalls.  Do not extend credit to all customers.  Bill customers quicker in order to speed up the collection process (billing cycle) and get funds into the business faster.  Eliminate or reduce some overhead or fixed costs to reduce monthly expenses. Pull frequent (weekly) accounts receivable reports in order to examine how effective the business is at collecting funds. 

2.      Lack of planning

Problem: On average, people spend more time planning a vacation or wedding than they do for running their small business.  The business should last a lot longer than a seven day vacation or a one night wedding.

Solution: Create goals for your business and a plan to reach those goals through marketing, management, and financial planning. Obtain an annual business check-up.  Meet with an accountant, banker, or TSBDC counselor to review financial statements and get advice on how to improve performance.

3.      Marketing

Problem: Set up a real marketing budget. It should be at least .5% - 8% of your monthly expenditures.

Solution: Identify your target market and a good marketing mix to attract that target market.  Track where your sales come from, such as internet, coupons, chamber contacts, etc.

4.      Delegation

Problem: If you want something done right, you have to do it yourself.  If you want to own your business longer than a few years, learn to delegate and deal with imperfection.

Solution: Hire the right people using systematic processes to operate the business.  Recognize what you are not good at and delegate that role so you can spend time managing your business

5.      Personal use of business funds

Problem: DO NOT GET THAT NEW DIAMOND ENCRUSTED IPAD YET!

Solution: Monitor the amount of money that is being used for activities unrelated to the business.  Keep personal use of funds separate from all business funds, by using different accounts.

6.      Unexpected growth 

Problem: Perform an annual SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to determine what your business will likely be experiencing and create a plan to meet that growth.

Solution: Have a growth plan and stick to it.  This may mean turning down customers.

Vol State TSBDC 2011 Results

The Results Are In.........

We met with 215 clients and had 710 people attend workshops.

However, we are most proud of….

---

Working with clients to obtain$1,251,000 to expand or start their business.

Working with clients to create70 jobs.

Working with 29 clients to start their business.

Use Video to Promote Your Business

One of the hot topics from the social media "experts" is video.  They say, if you don't have video content on your website in five years, you will not be on the first page of Google and may not be found at all.  This doesn't mean that posting videos will make you a YouTube sensation.  It just means that you will need to have this type of content just to compete.  And it makes sense.  We are not a very patient society.  We want to access information quickly, easily and we  want to be entertained.  Therefore videos are currently the way to go.   (If in five years we are talking about hologram monkey professors that will inject you directly with a knowledge shot, that will be a different story.  But right now, it's video.)   And from taking a look around, you can get a jump on the competition by posting brief, informative and entertaining videos to your site and YouTube now.  This will drive more traffic your way and keep people on your site longer. 

Starting a Small Business

This is the TSBDC's first run at online video content.  This clearly is not a training video, however it does provide information that people are searching for and has given our website a boost.

Will It Blend?

The story goes that on the days that employees at the Blendtec plant smelled sawdust, they knew Tom was experimenting again and would flock to see the show. Tom was stuffing things like 2x2s into his blender. Noticing how entertained the staff was, Tom's marketing manager, George Wright, caught it on video, and with an advertising budget of only $50 it all began. It instantly hit the jackpot on YouTube, and the company saw a 700% sales incrase over the next two years.

Zappos 

Zappos has used video to cleverly promote their online retail store for a while now.  This is an example of how they used humor to incorporate themselves in the holiday season.

QuickBooks - How To Do a Year-End Close

Topic: Business Accounting and Budget

Thursday, December 15, 2011 9:00 AM to 11:00 AM

The class will show you the procedures you should complete at year-end before the preparation of your income tax return. It will also go over items to look out for on financial statements that can be red flags to incorrect entries within your QuickBooks software.

Speaker(s): Rachel Hutcherson McCrary - Greeno CPA

This class is in room 175 in the Ramer Administrative Building, NOT the Betty Gibson Building.

Fee: $ 25.00        Register for this event online

Check out our new Starting a Small Business video!  It is also posted on our home page at www.tsbdc.org.
You'll soon see that Joe has a lot of new things to learn and consider.

November Workshops

How to Start a Small Business workshop of Volunteer State Community College's Tennessee Small Business Development Center, 4-6 p.m. Tuesday, November 8, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.

Social Media for Small Business Owners workshop of Volunteer State Community College's Tennessee Small Business Development Center, 9-11 a.m. Thursday, November 11, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.

Borrego Springs Bank SBA Loan Seminar workshop of Volunteer State Community College's Tennessee Small Business Development Center, 10-12 p.m. Wednesday, November 16, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.

Borrego Springs Bank SBA Loan Seminar workshop in Lebanon.  2-4 p.m. Wednesday, November 16, Wilson County/Lebanon Chamber of Commerce. Registration is required. Reserve online. www.tsbdc.org. Free.

Government Contracting workshop of Volunteer State Community College's Tennessee Small Business Development Center, 2-4 p.m. Thursday, December 1, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free. 

Legal Tips for Small Businesses

One of the areas of advice that the TSBDC defers on is legal issues.  That’s why I choose to surround myself with folks that can give advice in these areas.  One such person is attorney, George Phillips from Bone McAllester Norton.  He will be teaching a “Best Legal Advice for Small Businesses” workshop and below are some of the tips he finds important.

1.         Get Personal Guarantees.  If you are extending credit to a small business, always try to get a personal guaranty.  When the borrower fills out the credit application for their LLC, add a line and ask them to sign that if the LLC does not pay, that they will.  Most of the time when a small company is seeking credit, they will sign what is put in front of them.  If they won’t, you should wonder why, and start asking for financial statements for the LLC to see if it is credit worthy.

2.         Have A Partnership Agreement.  If you have to have a partner, make sure there is a partnership agreement.  However, given the risks of a true partnership, and given that the LLC is available as an alternative, most are done through an LLC.  Either way, you need an agreement that spells out how a partner can exit, can he compete after exiting, and what happens if a partner dies or is disabled.

3.         Oral Agreements Aren’t Worth the Paper They Are Written On.  Many small businesses operate on a handshake, but even the most honest and good folks over time forget details or remember them differently.  Even if you don’t do a formal contract, send a confirming e-mail.  A writing made at the time the deal was made, especially if shared with the other side and not objected to, will always trump a person’s memory in court months or years later. 

           

4.         Worker’s Compensation Insurance.  While worker’s compensation does provide some level of coverage for injured employees, it caps liability for the business unlike a normal negligence suit where the damages are unlimited and sometimes only constrained by the plaintiff’s attorney’s imagination.  Even if you have less than 5 employees, workers compensation coverage makes lots of sense, even if not required.

5.         Deal with Good People.  A bad contract with good people will, in most cases, work itself out because everyone will do what they should to try to make it work.  The best contract is the one that is signed, put on a shelf and the parties never have to read it over again.  They work together to both parties’ benefit, sometimes in spite of what the contract may actually say.

            The opposite is also true.  No matter how good the contract, no matter how hard your attorney works on it, it is still only as good as the person or business it is with.  We all, on occasion, have no choice but to deal with bad folks.  With those folks, the signing of the contract is often only the beginning of the negotiation.  In addition to whatever the contract provides, you have to make sure you keep the leverage and anticipate and plan for the other party not doing what they promised. 

            With respect to your employees, insurance agents, accountants, and attorneys use the best folks you can find.  Do you really want an accountant or an attorney who is so hungry for the business, they will just tell you “yes” to whatever you want to do?   

Guy Kawasaki on Why He's a Justin Bieber Fan

Learn about marketing to the decision maker.  The business guru talks about the power of marketing to influencers and how he'll do anything for his young daughter.

To learn more about targeting the decision maker attend:

Small Business Sales Forum

Tuesday, October 18, 2011 3:00 PM to 5:00 PM

October Small Business Workshops

October

How to Start a Small Business workshop of Volunteer State Community College's Tennessee Small Business Development Center, 4-6 p.m. Tuesday, October 11, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.

IRS Small Business Tax workshop of Volunteer State Community College's Tennessee Small Business Development Center, 9:00 – 3:30 p.m. Friday, October 14, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson 110. Registration is required. Reserve online. www.tsbdc.org. Free.

Small Business Sales Forum workshop of Volunteer State Community College's Tennessee Small Business Development Center, 3-5 p.m. Tuesday, October 18, 1480 Nashville Pike, Gallatin, TN in the Rochelle Center in the Thigpen Library. Registration is required. Reserve online. www.tsbdc.org. Free.

Best Legal Advice for Small Businesses workshop of Volunteer State Community College's Tennessee Small Business Development Center, 9-11 a.m. Thursday, October 27, 1480 Nashville Pike, Gallatin, TN in the Betty Gibson Hall, Gibson Conf Room 104. Registration is required. Reserve online. www.tsbdc.org. Free.