Real World experience with Business Funding

When you have no money to start out and your job is keeping you busy from doing much otherwise, one area to consider is selling information on a topic that is in demand. In every field people are searching for the right information to help them do things better. This could be from areas such as an hobby or basically how manage their lives.

The advantage with information is that you can present without too much overhead. The information could be in Writing, Audio, video or live in person or conference call format. Another important factor is that you do not have to be the person generating the information. You could locate an expert in the field of choice and interview them. Then market the interview either as audio or video and make a written transcript of the interview.

The most important thing about selling information is to make sure that the outcome of the product would generate results for the client. No point in taking up a cheap PLR book online to sell without knowing that it will bring real results.

The best way to sell or advertise information is on the Internet or you can use some cheap classified ads in your local area. In terms of the Internet you need to have keywords related to the product or problem you are trying to solve.

How would you go about this?

First lets say you have several areas you know well or have strong interest, you would then do some research to locate keywords that are related. Once you find those general keywords, you would then research what are the demands for each keyword on a daily or monthly basis. This is your first step to see what makes sense to pursue. Best tool to test is the Google Adwords tool.

Once you nail down one area to pursue further, the next step is to generate content for your product. Now, this content could be a online booklet, video or Audio file or combination which is highly recommended. To speed things up you could find an expert in the field to help and share the proceeds. You can look at existing articles and form your own product based on these contents.

To deliver the product, you could use a basic blog well presented with the necessary buttons to purchase and download the information right there. You could use wordpress.com or blogger.com for the blog if you do not want to pay for a site. Paypal.com could be used for the payment button side of things.

How do you get the word out?

So far, everything looks good to do. The biggest challenge is to get the word to the right people. The first thing is to make sure you have good presentation of the product and your site. Make it look respectable and have the interest to grab clients. Once that’s done, you could approach people who are established in the related area and ask them to market to their clients. In this way, you could already have 1000s of potential clients to look at your product without any upfront cost. This will need work to call the prospective partners and show them that your product is really worth the effort.

The other way to get the word out is probably to give away some preliminary free information using advertising on social sites and free classified sites. Once people get the free stuff that is good, they could decide to buy the full product.

Lets say you want to market locally. Then you could use local community notice boards, get event planners to present the free side of the product to their audiences etc..

In the end, we all have skills that can help to solve someones problem, we need to get out of our comfort zone and achieve our vision for life.

Well, this is a topic that will always keep coming up as long as you need funding for your business. First of all there are few persons who have the privilege to decide of if you get funding. They are an authorize Bank officer, Wealth Venture Capital Investor and authorize personnel for investment funds. Bear in mind these funds could be private investors or a standard investment fund.

I bring this up to highlight that regardless of how many offers out there to help you get money, you need to meet the requirements of these people. Yes, you have different form of brokers that will help you meet some requirements but bear in mind that there is always a risk despite their past success. Risk in the sense that the people who control the money can change requirements any time they wish.

How can you be sure to get past the need for business funding regardless of the funding source? Lets first look at common factors.

1. Corporation – You will need a corporation either new or old. Old is great if in good standing as it can get you past the initial scrutiny but by itself won’t work. In fact you can get an old corporation cheap with permission from the existing owner.

2. Credit Profile – While people will charge you 1000s to do this, most of this is free. You get an EIN free, DNB number free and I think all the other credit agency numbers are free.

3. Credit Activity – Show some activities on your business profile to get a score that is minimum for consideration. The Paydex 80 is the usual minimum – The cost to do this is very cheap.

4. Business Plan – While banks may not ask for this, it’s critical to make sure you have a good purpose and plans for the money. Can’t just say you want to borrow some money. You need to have good plans to pay back. Investors would want to see your plan to even consider lending the money in the first place.

Now with those basics out of the way, you may be able to get $50K or so depending on the bank without doing anything else. Lets look at some advance areas to consider to more credit.

1. Personal/Business Guarantor – Once you get up in the $100K range, you will need to show some kind of personal guarantee to the bank which means they will check your personal credit score and other factors. This is where you may need to get a service if you don’t want to do it yourself.

2. Company Financial – When you present a aged Corporation for large sums, they will want to see your finances with activities and most likely tax returns proving that. Typically when people go and buy corporations, this is one of those services that they want to have. be careful with this route as the bank could catch any bogus documents used

3. Large Trade Lines – This area is critical especially to apply for large amounts of capital. You could take time and apply for trade lines directly with stores and vendors but some companies may be able to get large lines attached to your profile. This would show good business practices over a period of time and give the funding source some confidence in your business.

The main reason I am writing is to warn people again about dishonest providers. First they do not know how to do things right, second they do not have much success in the past and finally they will not take blame for failures. As I said early there are risk in this field when you ask someone to do it for you, however, they need to be above board and have the best of integrity.

As I said before, make sure the payments are protected.

Regardless of what people will try to sell you, there some simple basic fundamentals to obtaining business credit in the general sense. The main ones are good personal and business credit profile or good strong history in business. Lets break this down.

1. Good Credit Rating – If you have good credit ratings today, you could get some degree of business credit or what is called unsecured credit. Normally this is in the region of maximum $100K per bank as above that would probably need other documentation. Now a provider could offer the good personal credit piece to ensure that you get credit but you would also need to build up the Paydex score to 80 or so.

2. Good Business History – This is the area that I think gets confusing. If you have an older company and some good trade lines showing high amounts with good payment history, you maybe able to avoid the personal guarantee requirement. The requirements for this is very strict as then you may need to supply tax returns showing that the business actually was doing stuff for some years. This is where some providers tend to offer services but then again, they need to know what they are doing to pull it off. In any case, they need to provide some guarantor to get large credit lines for the business anyway.

3. Small Loans – Looking back at #1, you may be able to get smaller amounts without any personal guarantee per institution. This could be in the region of $50000 or less. Again, you have to pick banks that are friendly with this stuff.

In terms of personal guarantee, its always good to avoid this as when the business fail, they will come after you for the money and not just the business. However, you may need to work with a reputable provider to get the guarantee in order to get a descent loan otherwise, you will not get much from each bank.

This is going to be a fairly short posting on the world of shelf Corporation funding. Whenever you search the Internet, you get conflicting views on what you could obtain with a shelf corporation in terms of business funding.

The issue to me here is to make sure whomever offer you this service can explain why this would help getting the bank to fund your business. For example, will the transfer of ownership at this point negate the age of the company? Is it a case that the bank may not have ask about this but when they do, it would change their view on the company’s age?

Some quick pointers to approach all these providers with out there.

1. Make sure your payment for service is secured. Make sure Credit cards are your preferred way of payment at all times. Lots of promises out there and not many can deliver.

2. Make sure the provider can explain why they can provide you the service that would get funding. Please note that they can’t guarantee the funds but they should be able to explain that their approach has gotten funding in the past and the chances are good in the future.

3. Research the providers and their names. Lots of time they may already have some bad reputation out there on the Internet so this would help to eliminate those repeat offenders. Of course they may use an alias to offer the business so look out for that. Who knows tell them you want to do a background check and see how they react.

4. The issue of secrecy to me can be tricky. Many of these providers will not provide any information to you during the process as they claim you will circumvent the process. Most times this does not make sense as if you could do that then why would you pay them in the first place. There are legal ways for them to protect themselves in this arena, so stick with first principle, know what is going on, we are all adults.

5. Make sure they explain the time lines on these properly. What I have seen is that most of them do miss their own deadlines so often. Let them explain to you each step and what is the time allowed realistically. Also make sure that they present risk at each step of the process.

The more I experience these companies, the more I realize that they refuse to abide by conventional terms mostly because they have no intention to deliver as promised. In other words its to get your money and drag things out while they try to scam others.

This method of shelf corporation funding could help to satisfy your funding needs but its not an easy maze to navigate in todays credit market.

Well, you know, everyone could have a business literally if they had the business funds to satisfy the scale that they want. In other words the more funding you have, the more freedom you have to pursue your business goals more effectively.

On the flip side funding does not help if your plan is flawed but if the plan is well positioned then funding would help you to propel yourself forward very fast. The key is that you need to think through what you want to achieve before you pursue money to get the venture going. What value are you bringing to customers/clients or the shareholders of your business.

In saying that, there are several ways to achieve funding for your business venture. I will try to present them based on the effort levels required to do this.

1. Bootstrapping – This is the case where you have no assets or money in the bank to pursue your dreams. Most times in this case, the best option is to look at providing services or information as your initial product to generate cash to expand your business. Whether you have cash upfront or not, cash flow is the important driver of a successful business.

2. The Business Plan and Idea – This is the case where you have a good idea that you can tap friends and family to help with your business funding. The next level to this is either angel or venture capital funding. The idea that you present and how it offers a good long term business opportunity is the main selling point here. Now in this model, you could lose control of the business so its a tight rope to walk.

3. Bank Financing – This is the case where you focus on getting a loan from the bank. In todays market, it’s very tight so you would need to have very good credit history and your business plan in case needed. Alternatively, along this line, you could look at the many services out there that could help you to obtain business financing. You will need to be careful as they could take your money instead of getting you funded. However, it is possible and could save you the trouble of using your name to guarantee the loan directly.

4. Private Investors – This is kind of similar to #2 but this is the case where you get rich investors to buy into your idea and fund the business over the specified period of time. Most times they want to get out by about 5 years and this gives you the option to buy out their share of the business.

5. US Regulation D – This allows you to offer shares in your company in a limited sense but could get you more than enough to start out plus will not have to lose control of the business.

In the end my view is that you can approach funding in two ways, 1. raise money yourself directly and build on that or 2. Bring others on board to push things faster along. Both of these have upsides and downsides but don’t create constraints by having too much bias on how you get the cash, focus on getting your idea out there and working.

This blog will serve mostly as an educational tool for experiences the Authors had in funding a new business.

General areas that will be covered are Shelf Corporations, Venture Capital funding and others along that line…