Resources for Business Capital Part 1 : Small Business Grants

Resources for Business Capital Part 1 : Small Business Grants

Most of you who have created a business plan are probably going to need money one way or another to fund your start-up, growth and expansion, or just to get through some trying times. The question is how does one find where to get those funds if they are not going to use their cash, go to their family or local bank, or refinance their home or assets? Over the next few articles I write I will point out places to find money whether it be through grants, venture capital, angel investing, and loans. This article will concentrate on links to places that I’ve found that point to grants. After all the best money to fund your start-up is free money isn’t it? The Small Business Administration has been in the business of helping businesses since 1953. American tax dollars fund the SBA who are charged with the responsibility by Congress to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns” and also to give “fair proportion of government contracts and sales of surplus property.” The first thing you should do while surfing around the SBA’s website is learn the facts about government grants. You will learn where grant money comes from, compliance, and reporting measures to maintain transparency. You will also find many forms here in regards to construction and non-construction grants. The SBA also provides links to loans and VC financing if you want to check that out too. Technology and scientific research are huge these days and our government recognizes that. If you’re small business is engaged in research and development, innovation, and/or technology than you will want to read more about SBA research grants for small businesses. Lastly regarding the SBA’s website and perhaps the most important is where to start finding grants. By clicking on the Loans and Grants Search Tool you can immediately start entering information that the website will then use to help narrow down your search. Grants.gov is partnered with the Department of Health and Human Services and is a source to finding and applying for federal grants. They also have a number of links to various government programs like Recovery.gov which are recovery-act specific grants and Benefits.gov which provides information on government benefits and assistance programs. Another website that I liked because of its detailed, need-oriented database is Federal Money Retriever. Not only do...

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Resources for Business Capital Part 2 : Angel Investors

Resources for Business Capital Part 2 : Angel Investors

In this second part of a three-part series on “Resources for Business Capital” I will be discussing the role of Angels as investors in your business. I will discuss who they are, why you should consider them, and also provide links to angel investor databases and private sites. If you haven’t read the first part of the series, Business Plan Development – Resources for Business Capital: Small Business Grants, than you might want to read that first and investigate any opportunities you might have in regards to receiving grants before seeking out an Angel. Otherwise let’s get to the subject at hand. Angel investors are private investors who are prosperous individuals, one way or another, who are looking to invest in new or existing entrepreneurial start-ups. They tend to be looked at more favorably by entrepreneurs than VC’s because they do not have stringent requirements that conventional Venture Capitalists are constrained by. Some of them are motivated in what they do for personal satisfaction as opposed to strictly being bean-counters. Important contrasts between Venture Capitalists and Angel investors should be noted given the nature of the topic to assist you in deciding upon which is the more preferential investor-type in your endeavor to raise business capital. Rhonda Abrams in her book Successful Business Plan: Secrets & Strategies has broken it down quite nicely and therefore I will use her thoughts on their contrasting positions. The investment criteria for an angel investor and venture capitalist are somewhat similar. They both require a company with growth but venture capitalists are looking for extreme growth. The source of investment funds differ greatly between the two kinds of investors. Angels generally provide their own private assets whereas VC’s use other people’s money, i.e. institutional funds. Angels are looking to invest anywhere from $25,000 to $2,000,000 whereas VC’s are looking at funding companies for no less than $2,000,000 dollars. Expected return between the two investor’s shows to be almost identical, three-to-ten times a return on investment for Angel’s versus five-to-ten times expected return for VC’s. Angel’s generally will start funding an entrepreneurial venture at the seed, start-up, and early stages whereas VC’s will invest in the start-up stage as well as any expansion stages. Angel’s generally bring hands-on expertise as well as early funding but VC’s bring a lot more; large amounts of money, team-building, and industry-specific strengths. The extent of due diligence brought...

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Resources for Business Capital Part 3 : Venture Capitalists

Resources for Business Capital Part 3 : Venture Capitalists

In this third part of a three-part series on “Resources for Business Capital” I will be talking about Venture Capitalists, their role, who they are, why you should consider them, and also provide links to databases and other miscellaneous places to find and learn more about Venture Capitalists. If you haven’t read the first two articles I have written on “Business Plan Development – Resources for Business Capital” you may want to take a look at them first before moving onto VC’s. Here are the links to both of those articles; Resources for Business Capital: Small Business Grants, Resources for Business Capital: Angel Investors. In the last article I talked about how business Angels differ from VC’s in what their expectations and requirements are. But what are venture capitalists exactly? As Rhonda Abram’s sums up succinctly in her book Successful Business Plan: Secrets & Strategies; “As you search for money, you probably will hear the term “venture capitalist” quite often, but those who use the term may be referring to different entities. True venture capital firms are among the most sophisticated investors available, typically providing an entrepreneur with more than money. Their knowledge, experience, and connections may prove to be as important to your company as the dollars they bring.” It would appear that VC’s are incredibly risk aversive but looking for greater returns than a CD from a local bank. Because of these naturally conflicting financial prerequisites VC’s have a large network of support to increase your success probability. However that may mean if they like your idea, but think your role in the company as CEO or whatever position you want is not the best fit for the company and their investment, than they may require you to take a different role in the company. Sounds like the old cliché “it’s business….nothing personal” type of attitude which you must be willing to accept as a prospect if you decide to take VC money. I have decided to feature VC’s last in this series because they are fickle about who and what they invest in. They want extreme high-growth in the companies they choose and they expect hundreds of millions or even billions of dollars to be made by that company in the future. Thus for the majority of entrepreneurs or small business owner’s-to-be (and current owners as well) VC’s are just not a viable option. You would...

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Eight Government Resources for Business Plan Development

Eight Government Resources for Business Plan Development

In your quest to develop your business plan you will want to obtain information regarding industry analysis, international information and data, legal and regulatory statutes, manufacturing, training and counseling, and maybe even corporate financial information. This is just a few of the areas you can research through our government’s online resources. Though they are free and free is often synonymous with undervalued they are indeed not free. Your tax dollars pay for them and the information is rich and vast. These government resources are put there to help you succeed so there is no better place to start your research than with the resources you pay for. The U.S. Census Bureau, Department of Commerce, Small Business Administration, Internal Revenue Service, The State Department, FedStats, Export.gov, and the U.S. Securities and Exchange Commission all have information that you will find helpful. I will talk a little about each one, what they do and how you can use them, and provide links to different areas for easy navigation. So without further adieu let’s begin. The first place you may want to start with your investigation on industry analysis is through The Department of Commerce. The DoC is comprised of twelve separate agencies responsible for many things regarding business from weather forecasts to patent protection. Their mission statement states exactly what they do and there is no better way to sum it up, “The DoC touches the daily lives of the American people in many ways, with a wide range of responsibilities in the areas of trade, economic development, technology, entrepreneurship and business development, environmental stewardship, and statistical research and analysis.” There is much to the DoC so in addition to the link provided above that leads to their website they are also a portal to several other government agencies and partners that you may find useful. The U.S. Census Bureau, a derivative of the DoC, is a great resource for industry analysis and they are arguably the most important branch of the DoC for demographic information ranging from population breakdown, income , education levels, and housing to name just a few in the Peoples and Households section. The Census Bureau also collects massive amounts of data on economic activity. You may need to search the industry code for the particular type of business you’re in or looking for, by searching its NAICS code. You can break information down from a national...

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Scope of Fraud and Its Impact on Small Businesses. What Owners Can Do to Prevent Fraud from Occurring in the First Place

Scope of Fraud and Its Impact on Small Businesses. What Owners Can Do to Prevent Fraud from Occurring in the First Place

Fraud is any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain.(1) According to a poll by the Association of Certified Examiners on small businesses with less than 100 employees fraudulent activities ranged from employee theft of cash, equipment, merchandise, inventory, and even data. Fraud schemes ranged from such things as billing, check tampering, skimming, expense reimbursement, corruption, physical theft, cash larceny, fraudulent financial statements, and register disbursements.(2) As you can see there are many ways in which fraud can be committed within a business. Fraud can hurt small businesses to a larger extent simply based on the fact that small businesses have much more to lose. They can’t afford the negative publicity of a corruption scandal because they may only have a couple of clients that do most of their business and if news spreads it may permanently scar the small business. Losing trust from clients is one sure way to not only lose their business but lose your credibility within your market. Larger companies can handle the downswings and micromanage fraud cases better perhaps. One reason why small businesses are affected to a greater extent than larger businesses is because as a small business they don’t have the amount of systems in place to flag fraud. Many larger organizations have check and balance systems that allow people to overlook others work. In a corporate climate this ability to afford workers for oversight work is often a leisure of corporate business but small businesses are often running pretty tight and it is usually up to the owners to catch it. There is however some tips and tricks to spot potential fraud. First you should know that fraud happens at all times whether the economy is good or bad. According to Chris Barr who has thirty-three years of experience as an operational risk underwriter in corporate insurance against internal fraud; “Most frauds are perpetrated during economic booms, when greed reigns. Money is plentiful and it flows freely. These frauds are discovered when economic activity drops, revealing the previously obscured shortages. The frauds cited tended to commence two or three years before they blew up. And business owners seemed to cite closer scrutiny of cash flows as the cash dwindled. The distinction is often critical to the insurance. The crime loss occurrences that do tend to spike during...

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Why Large Firms are Slow to Change

Why Large Firms are Slow to Change

I think that large firms are so slow to change because of the sheer size. In the physical world the larger an object, the more massive an object, the greater the force needed to overcome frictional force, the force required to get an object moving. Once you overcome that frictional force it generally takes less force to keep the object moving. If you imagine that a company with few employees is better able to incorporate drastic change because in essence it is easier to communicate with all employees and the success of the business depends on each of those employees taking on a much larger workload than an employee involved with a larger sized firm. Combine this with what Frederick Duffy says: “In the age of the Internet, at the dawn of the knowledge-based society, it is strange that we tolerate buildings . . . that assume that everyone comes in at nine and leaves at five, and sits solidly at a desk for five days a week. The model, of course, is still the factory where supervisors had to put enormous emphasis on synchrony to force a barely literate proletariat to work at the loom and the lathe. When the bell rings, the work begins. When the siren blows it is over – for the day . . . rolling out formulaic solutions has become the norm in office design”. I imagine this being the norm across the country that employees are factory workers and generation after generation exists in this format and is subsequently passed down from generation to generation than the amount of frictional force it would require to overcome nation-wide change simultaneously would be enormous. Then imagine the late twentieth century comes along and with this a booming technology called the internet and the pressure begins to build. The world is getting bigger and more interconnected. Globalization makes for stiff competition and the ability to survive or sink is a matter of how fast a company can evolve with change and the output it can receive from each employee. Where once upon a time a company could take its time changing maybe once a decade or two now exists a time where one must contend and update every couple years or be left behind. But it’s still too soon and there is not enough total pressure but the ball is rolling change overnight but what...

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