NSBDC » Business Conditions

Your Business To-Do List for 2012

jennott — Fri, 20 Jan 2012 22:53:04 +0000

By: Jennifer Ott, MBA Student, University of Nevada, Reno

Depending on the industry, the beginning of a new year can be incredibly busy or the slowest time of the year. Wherever the start of a new year finds your business, January marks a good time to begin thinking of baseline business strategies. Here are six things that should be reviewed in order to keep your business running smoothly and moving ahead of the competition.

Update your website.
Begin by updating photos. Many businesses use the same photos and graphics for the About Us section or Products/Services section. With new images, viewers realize your website is active. Additionally, add to any blogs or newsletters and revise menus, staffing, or other items. These revisions immediately give your website an inexpensive facelift.
Review pricing.
Costs on shipping, fuel surcharges, supplies, utilities and other day-to-day items can slowly creep up during the year. Review all costs to make sure that pricing is maintained to produce a comfortable profit margin.
Mystery shop your own business.
Have a friend do an internet search for your business, call in to ask a question or schedule an appointment, and visit your location. Ask your friend to give a detailed account of your business so that you can determine how to improve customer service. This is important to get an honest view point that a customer might not be able to give you.
Evaluate employee compensation.
Every business person knows that great employees are hard to find. Keep employees loyal by evaluating compensation in your industry and being competitive in wages and benefits. It is widely written that employee turnover is one of the most expensive costs of business. Avoid these costs by keeping the talent in-house.
Re-visit your competition.
When starting your company, visiting competition was a main activity. Although there doesn’t seem to be enough time in the day, keeping track of the competition is a key ingredient to success. Knowing what bargains key players in the industry are offering, and what events they are participating in, are important to keeping pace. Anticipating growth opportunities that your competitors are pursuing are important to keeping ahead of the game.
Get one new thing.
Strive to add one new item to your business this year. This new item could be a big new client, an addition to your product line or service offering, or a new location or outlet for your services or goods. Adding one new thing to your business stimulates growth by creating fresh interest in your business and increases your client list.

Whether you are updating your web presence or evaluating yourself or your competition, this information is useful in growing a business. Each of these to-do items increases knowledge of the industry and gives a head-start to the new year.

A Look Back at Entrepreneurship in 2010

admin — Tue, 01 Feb 2011 00:08:44 +0000

Jonathan Ortmans is an author at www.entrepreneurship.org who wrote an article recently that recapped the role of entrepreneurship in 2010 and why it is important to economic recovery. Here is a blurb and we suggest reading the whole storey.

This past year brought new, sobering data that defied conventional wisdom that all businesses contribute to job growth at least to some degree. “The Importance of Startups in Job Creation and Job Destruction” by economist Tim Kane documented that net job growth occurs in the U.S. economy only through startup firms. While older companies lose 1 million jobs annually, new firms add an average of 3 million jobs in their first year. Moreover, during recessionary years, job creation at startups remains stable, while net job losses at existing firms are highly sensitive to the business cycle. Simply put, entrepreneurs are the primary engines of job creation in the country. If you zoom in further, you will see new firms that scale—those that grow in revenues and jobs—are especially important. More precisely, the top 1 percent of all companies generates 40 percent of new jobs, and the vast majority of these firms are no more than five years old. If we look even closer at the most rapidly growing young firms (those between ages 3-5 years), they represent less than 1 percent of all companies in the economy, but account for 10 percent of new jobs created each year (see High-Growth Firms and the Future of the American Economy)….

read the full article here

The Reality of Lending

Bill Sims — Mon, 06 Dec 2010 17:37:11 +0000

The Reality of Lending – “The New Norm”

A feature article re-posted from the online edition of Nevada Business – The Decision Makers Magazine.

A Nevadan needs $120,000 to open a used sporting goods store but can’t get a loan from a bank. Either he gives up the idea or resorts to creative financing, if possible. In the end, he puts up $40,000 of his own money, gets his landlord to cover $15,000 of tenant improvements, and obtains a $40,000 loan from the state’s micro-loan lender and a $25,000 loan from a Florida bank.

“In that situation, we’re looking at four sources. That’s what we have to do,” said Rod Jorgensen, who is director of counseling for the Nevada Small Business Development Center (NSBDC) and helps small businesses find and obtain funding.

Lending to start-up, early-development and existing businesses is happening in the Silver State but far from the level it was at three years ago….

READ THE ENTIRE ARTICLE AT NEVADABUSINESS.COM

The ‘Six Ps’ of Small Business Borrowing in Tough Credit Markets

Bill Sims — Wed, 22 Oct 2008 23:35:00 +0000

Despite the current financial upheaval both in Nevada and throughout the nation, entrepreneurs and small business owners still need access to capital to start or expand a business. But, navigating the path from deciding a loan is needed to having the funds in the business banking account has recently become much tougher.

Not only have most all lenders tightened their underwriting guidelines in response to their own challenges in getting access to capital, many lenders are now only looking for outstanding business investment opportunities (that’s what a small business loan actually is). The challenge for potential borrowers is to position themselves and their business (or proposed business) at the top of the applicant pile.

Here are six Ps that will help ensure a loan applicant is well-positioned for borrowing success:

Perfect the Business Plan

Enough cannot be said about the value of a concise, yet thorough and well-written business plan. The many business plan template programs can help in this regard, but giving a business plan the personal (and localized) touch shouldn’t be ignored. The business plan should reflect YOUR plan for YOUR business, and state the case for anticipated business success in a compelling and straightforward manner.

Applicants should put themselves in the banker’s shoes as they perfect their business plan. What questions would you expect the plan to answer if it was your money being loaned out? Running a draft business plan past a trusted friend with some business background is advisable to cross check the vision of a business dream against the reality of the current business environment. Having historical demographic and economic data is nice…but including current, local data and explaining how the company plans to address current market conditions provides the banker a firm basis for a business plan, and not just an idea plan.

Bankers want to be reassured of two major things. One, that the business plan can show how the company can generate enough cash flow to pay back the loan, and two, that the borrower has a contingency plan to repay the loan if the business falters. Demonstrating both is essential in this current lending environment.

Pull Personal Financials Together

Those applicants who are just getting started in business should be prepared to show the banker several documents related to personal finances. These documents include:

•    2-3 years personal tax returns
•    Personal Financial Statement (all personal assets, liabilities and cash flows)
•    Banking statements for at least the most recent 12-month period
•    Any contracts or agreements that prove the basis for existing passive income (rents, royalties, etc)

For those applicants who are already in business, add any business tax returns from the last three years of operations. Keep in mind that when asking a bank to loan large sums of money for a business, none of an applicant’s financial history should be considered ‘confidential.’ Such a policy may seem intrusive and bothersome, but bankers are only trying to make sure the borrower is worth the risk the bank is assuming by making the loan.

Preview Your Credit History

Knowing what’s on a personal credit report before applying for a small business loan is a must for two reasons. First, it gives the borrower a chance to craft explanations (careful…not lies) for any entries that are negative. Also, it gives the borrower a chance to assess their current credit status and decide what steps they can and should take to improve their credit standing.

It makes little sense to approach a lender with an otherwise excellent loan proposal package if the borrower’s credit history is riddled with a constant stream of recent negative entries. Being able to explain bad credit entries from several years ago is different from addressing poor credit entries within the last year.

Borrowers with a recent history of poor credit would be best served by taking proactive steps to correct the situation before approaching a lender for a small business loan, especially given the current tight credit market.

Poll Family and Friends for Equity Injection

Lenders are now requiring even higher levels of personal equity injection into a business than they were a year or two ago. This is a direct reflection of the current economic situation we are all experiencing. Since most borrowers cannot personally come up with a 20-25% cash injection (or more, depending on the lender), polling family and friends to guage their ability to commit the needed equity funds is a crucial preparatory step before approaching a lender.

Related to equity injection is available collateral for the loan being sought. In many cases, lenders will want to place a lien on personal assets, including homes, especially if the proposed business assets do not adequately cover the bank for potential losses in case of a loan default. Deciding what is personally acceptable along these lines is recommended before approaching a lender to avoid any ‘surprises’ to the borrower, family or friends.

Prepare the Loan Package and Polish the Presentation

Making a good impression on a lender is vitally important in the current lending environment. Recommendations in this regard include making multiple copies of the formal loan package with Business Plan, Projected Financials (plus actual financials for existing businesses), Uses of Funds Statement (how the business will use the loan proceeds), Personal Financials, Resumes and other supporting documents (i.e. articles of incorporation, business licenses, permits, etc.). A professional-looking package generates perceived credibility for the business concept, and appropriately preps the banker for a verbal presentation of the business loan proposal.

Having a polished five minute oral presentation on the highlights of the business plan demonstrates to the banker that the applicant has a command of the major facets of the plan, including key success factors and potential challenges. Create a compelling presentation and then practice, practice, practice, especially in front of an audience! The final product should flow and sound like an extension of the applicant’s normal conversational style.

The banker will ask a variety of questions. Field each one thoughtfully, and truthfully. Promising to get back to the banker within 24 hours with answers that are not available during the meeting is a best practice. Don’t bluff it. Bankers are like mothers…they know when the truth is not being told. But, they will give the applicant the leeway to get back to them, since they understand no one can have all the answers at their fingertips. The final touches? Dress for success to engender and show respect, and arrive at least five minutes before the scheduled appointment time.

Promote Yourself and the Business!

The best cheerleader for a business is its current owner. Without engaging in theatrics, business loan applicants should sound and act passionate about their business proposal. Touting one’s experience and successes in prior business environments is especially useful. Bankers loan money to companies largely based on their perception of the skills, knowledge and abilities (SKAs) of the people who will run the business on a day-to-day basis. And that includes managerial staff below the owner. Being prepared to effectively position the experience and previous successes of the owner(s) and management staff is essential, including having current resumes in the loan package.

Prepare to Meet with Multiple Lenders

Presenting a business loan proposal to multiple lenders isn’t one of the 6 Ps, but it’s a reality of small business lending. Each bank will have their own preferences for certain industries they feel comfortable with. It pays to start with a bank that’s already being used for personal banking. Asking for referrals to other banks that may be better suited to the applicant’s loan needs is the next logical step if the current banker is not a good match. A list of all current SBA-participating lenders serving Nevada and their historical SBA loan production is available through this SBA Nevada District web site link.

Summary – Preparation is the Key

Successfully obtaining a small business loan is very challenging in the current economic environment. Following these steps will better position any small business loan applicant to ‘put their best foot forward’ when it comes time to meet with a lender. During this time of tight credit and lending, taking the time now to thoroughly prepare a loan proposal package and presentation will likely pay off when credit markets begin to recover, and lenders seek to bolster their loan portfolios through small business lending. Remember: Proper Prior Preparation Prevents Poor Performance.

This post provided by the U.S. Small Business Administration – Nevada District Office

Small Business and the Economic Meltdown

Bill Sims — Fri, 17 Oct 2008 22:40:43 +0000

UNR President Milt Glick and our own Sam Males, Director of the Nevada Small Business Development Center, visit with KUNR Radio’s Dan Erwine to discuss how the economic meltdown is hurting small businesses in Nevada and the University’s role in assisting businesses. This October 17, 2008 edition of KUNR’s Friday morning Nevada Newsline features call in comments and questions from listeners.

The program is archived on KUNR’s website.