Check This Book Out!

The book The Art of the Start by Guy Kawasaki is a microcosm of nearly every experience I’ve had with start-up companies, the good, the bad and the ugly. I was hesitant to read the book at first, asking myself what could I learn about something I’ve already experienced. I was definitely wrong. The book did an excellent job of explaining where entrepreneurs go wrong and why. Kawasaki has been at both ends of the spectrum (entrepreneur and investor) giving him an unbiased opinion on the realities of growing a company. While reading the book, I not only received explanation for why things we did went wrong but explanation on why things we did went right. I would recommend this book to any successful entrepreneur not just one at the beginning of their journey.

Moral of the story: you can learn something from every book you read and every situation you’re in as long as you keep your eyes open

What the Fed Decision does for Entrepreneurs?

If any entrepreneurs have been watching Federal Reserve Chairman Ben Bernanke explain this year’s FOMC decision, I hope you’re ready for meager profits and slow growth. The FOMC has decided to finish its current round of economic easing and keep the interest rate at 0.25%. Banks and large corporations will be happy because they are, in essence, receiving “free” money leading to the continuation of rising inflation in commodities and the devaluation of the US Dollar.

Cash flow and profits, for startup companies and small businesses, are a delicate balance. Gas prices shooting up a dollar over a two month period can put many small businesses out of business. More small businesses will fail to make it through the rest of the current recession and many startup companies will fail to launch. A squeeze on profits for a company that is barely profitable isn’t sustainable.

Why will large companies succeed? Large companies can survive extended periods of time at low profit margins because of their high volume. If something goes wrong, it is easier for them to gain financing because they can use the millions of dollars of assets on their books as collateral. This allows large companies to expand or maintain while their smaller competition is forced to cut operations or go bankrupt leading to larger more powerful corporations created by the Federal Reserve.

Trying to Hook That Big Fish? Make Sure You’re Using the Right Bait

It seems harder than ever these days to locate funding for your next big project. There is virtually no Angel Investing going on right now in the State of Michigan and the banks are coming up with excuse after excuse on why YOU are not qualified to receive a loan. What can you do? Traditionally, investors and banks want to see a business plan. Investors will take business plans seriously if they are well written and thought out. They aren’t too picky, just looking for a few things:

·         What problem is your product or service the solution for?

·         How is it going to make money (your business model)?

·         How much will it take to get started?

·         How much money will it make them?

·         Most importantly, who is going to get the job done (your management team)?

Before you can “reel them in,” you need a killer executive summary. If it’s good enough, they will jump in the boat for you.

Banks on the other hand are a nightmare. A business plan used to work but now banks are requiring:

·         Business Plan

·         Promises from vendors

·         Collateral

·         Legal Documents

o   Franchise agreement

o   Commercial leases

o   Contracts with third parties

·         Schematics for your building

·         What color carpeting is in the building?

Ok, so I made the last one up but once you have everything a bank is looking for which is usually more than I listed, they will ask for something else. These days the best way to go is with an Investor but you have to be prepared if you want to get funding.