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  • Introduction

    Every business needs to start somewhere, and that somewhere typically requires some cash. Starting your own business is not always the cheapest venture, but it can be the most rewarding.

    As an entrepreneur you are always thinking about where the money is coming from and going to. You need to pay for overhead costs, production, shipping, marketing, and oftentimes outsourcing. But to pay for all of these expenses, a reliable financial backing is needed to cover the costs. Your financial plan should be one of the first things you draft when starting a business.

    This plan needs to include production costs, money allocated toward marketing, how much you will sell your product, and most importantly, and from where is the money coming.

    There are many avenues to receive financial support for your start-up company, including business loans, venture capitalists, angel investors, etc. DooBizz is here to help you find and negotiate your monetary support and create a strong financial plan to sustain your business.


  • The Power of Microbusinesses

    Friday, 18 May
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    The news talks about corporate scandals. The government talks about helping small business. Small business and corporate are the businesses that most people talk about, and that leaves another type of business ignored: micro-business. You don’t hear about micro-business in your daily paper or in the mainstream press. Most people don’t know what a microbusiness is or how it’s different from small business.

    Small business, defined by the US Small Business Association, is a manufacturing business with less than 250 employees or for non-manufacturing businesses, it’s a company with less than $7 million in annual revenue.  For most Americans, a company with 499 employees or a company with $6 million in annual revenue isn’t small—that’s huge! Mom-and-pop shops don’t have 249 employees and certainly aren’t doing $6 million in annual revenue.

    A microbusiness is a company with less than 5 employees and requires less than $35 thousand in seed capital.  Mom-and-pop shops, family owned restaurants, and many of the other classic small business can be examples of microbusiness too. Other examples of microbusiness are small cleaning businesses, many landscaping companies, and most day-care and child care programs.

    Why Does Microbusiness Matter?

    The United States is home to 20 million microbusinesses and  represents almost 20% of all private  employment in the United States.  That means that almost one in every five Americans that works for a private company is employed by a microbusiness.

    Obviously, any sector of business that employs almost 20% of the population is very important.  These businesses represent lower startup risk since most of them can be started for less than $35 thousand in seed capital.

    What are some trends that make microbusinesses important?

    The dominance of the Internet has made tools that are necessary for starting and growing a business much cheaper. Google Ad Words campaigns are cheap. Facebook advertising is cheap. Blogging and Twitter are free. Cheap marketing makes the problem of marketing microbusiness easier and more feasible.

    When the housing bubble burst it caused the price of real estate to drop dramatically. This made land and location cheaper for young micro-entrepreneurs looking to acquire a place to house their business.

    When it’s cheaper to market a business, it’s cheaper to grow a business. When it’s cheaper to grow a business, it’s easier to start one. The marketing costs those companies spent in times past can now be spent on land, location, and product.

    Microbusinesses are a crucial part of the modern economy. With the speed at which technology is changing the game, microbusinesses will become more and more commonplace. With over 20 million microbusinesses in the US, and with almost 20% of Americans working at privately owned companies working for microbusinesses, one thing is now certain: microbusinesses might be small, but they can no longer be ignored.


  • Does the SBA Offer Grants?

    Thursday, 17 May
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    The Small Business Administration (SBA) does a lot of things, but one thing that it doesn’t do a lot of are grants. The agency, which was started in 1953, focuses on what they call the “3 C’s,” which are Contracting, Counseling, and Capital.

    The capital aspect of the SBA focuses primarily on guaranteeing loans for small businesses. The SBA does not offer grants for starting or for expanding businesses. However, the SBA does offer grants to non-profit and educational organizations. If you are the founder of a non-profit organization or if you are interested in starting an educational organization, then the grants are definitely something to look into.

    While the SBA does not offer loans for small businesses, some state and local communities do offer grants for certain types of businesses and business activities. If your business is involved in any of the following activities then you should check to see if your state or local community has any small business grants available:
    ·        Expanding a child care operation
    ·        Creating energy efficient technology
    ·        Developing marketing campaigns for tourism

    If your company is involved in R&D or in high-tech innovation, there is a government program that could possibly assist in funding you. The Small Business Innovation Research (SBIR) program helps small businesses that have a large R&D need as well as assisting others in high-tech innovation. Each and every year, the following 11 agencies are required by the SBIR to R&D funds to give to small business:

    ·        Department of Agriculture
    ·        Department of Commerce
    ·        Department of Defense
    ·        Department of Education
    ·        Department of Energy
    ·        Department of Health and Human Services
    ·        Department of Homeland Security
    ·        Department of Transportation
    ·        Environmental Protection Agency
    ·        National Aeronautics and Space Administration
    ·        National Science Foundation

    If your company is closely related to any of the above agencies, then you should look into the funds that the SBIR appropriates for small business. For more information on the SBIR and how to apply with them, click here.

    The SBA doesn’t offer a lot in terms of loans, but it is good to know what they do offer and what they don’t.  Unfortunately, most people involved in sectors where the SBA does offer grants aren’t aware of what is available. Take advantage of SBA grants if you can, and if you can’t, spread the word to someone who can. There is a lot of money available for companies who quality, and it’d be a shame for that to go to waste.


  • Business Grants vs. Loans

    Monday, 14 May
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    Why Business Grants Are Always Better Than Loans

    In the debate of grants vs. loans, grants almost always win. Getting a grant is like winning the lottery except you don’t have to pay for the ticket. It’s free money. You don’t have to pay it back, and you don’t have to answer to anyone. There are no time constraints on how or when you have to use your money except with certain types of SBIR grants.

    If your company can qualify for a grant, it is certainly better than taking out a loan. With either a loan or a grant, you have to do a significant amount of paperwork. Since paperwork is necessary for both of them, you might as well try for the one with the better pay off.

    There aren’t many downsides to grants, but there are a few. The first is that you have to work through the government to get them. Grants are slow money. It takes a long time to process them, and often you don’t know if you’ve been awarded for some time. This can slow down the business process and lead to a lot of sitting and waiting.

    Why Loans Work

    Let’s face it, loans aren’t as good as grants, but they are much more realistic. Grants take a lot of time and aren’t easy to get. Loans are faster and easier to get. Many times the speed you get by going through a bank to get a loan can somewhat compensate for the time you take waiting to hear back about a grant.

    If you think you have a good shot at getting a grant but you want to get started right away, simply apply for both. Grant money is finicky about what you can and cannot spend it on. However, grant money can be used to pay off business loans. So if you got a loan, spent it, and then found out you got the grant, you can use the grant money to pay off the loan. No problem.

    Tip:  Loans, in general, aren’t good for tech-based businesses because they don’t generate a lot of cash early on.
    Since grants are more rare, assume that you will have to get a lot, but that doesn’t mean you shouldn’t look at getting a grant. The paperwork for both is so similar that it doesn’t hurt to apply for both.

    Grants are awesome, but loans are good too. Evaluate your options. Do research on what you need. And don’t be afraid to apply for both, because you never know if you just might get that grant, and grants are always better.


  • Small Business Innovation Research Program (SBIR)

    Wednesday, 9 May
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    What is the SBIR?

    It started in 1982 as a way to help struggling small businesses cover research costs. SBIR has three goals:

    -To push technological innovation in the small business sector
    -To help meet the research and development needs of the federal government
    -To further commercialize federally funded investments

    Why it matters?

    In 2010, the SBIR gave $2 billion in research grants to small business on over 6,000 teams. Half the teams that were awarded had fewer than 25 employees and a third had fewer than 10. These numbers tell us two things:

    -The government is giving away a lot of money for R&D.

    -You don’t need a huge team to be awarded—you just need to be good.

    There are many small startups in many different sectors of business that would have a great shot at these grants.

    How It Works

    Teams that are awarded receive grants in a three phase process. Phase 1 is about getting started and testing the early idea. They give you up to $150k for up to six months of support. Phase 2 is where you build the idea, and you. Phase 2 offers up to $1 million for two years of research and testing. Phase 3 is when the project shifts to the marketplace. Companies should be nearly ready to launch their products to the public in this phase. And if it grows, instead of seeking more government money, companies must seek private money from VCs or other early stage investors.

    Does Your Business Have A Shot At Getting Awarded?

    We know that SBIR gives a lot of money, and we know that they award a lot of people. But what types of companies are they rewarding? Eleven different government agencies are required to award grants through the SBIR program, and it’s these agencies that you need to please if you want to get funded. If you think that your idea or your business relates to any of these agencies, then you probably have a pretty good chance.

    1.    Department of Agriculture
    2.    Department of Commerce

    a.    National Oceanic and Atmospheric Administration

    b.    National Institute of Standards and Technology

    3.    Department of Defense
    4.    Department of Education
    5.    Department of Energy
    6.    Department of Health and Human Services
    7.    Department of Homeland Security
    8.    Department of Transportation
    9.    Environmental Protection Agency
    10.   National Aeronautics and Space Administration
    11.   National Science Foundation

    Roland Tibbets, the man who founded the program, said that the goal of the program was “to provide funding for some of the best early-stage innovation ideas—ideas that, however promising, are still too high risk for private investors, including venture capital firms.” If you’re interested in learning how to apply, click here.

    If you have a great idea and a small team, give it a shot.  There is a lot of money that is being given out, and it might as well be given to your team.


  • Angel Investor or Venture Capitalist

    Thursday, 12 April
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    As your company begins to grow, it is likely that you will need to find a source of capital. There are two main sources. One of them is through debt financing and the other is by sharing equity with an investor. Debt financing is generally better for service and product based businesses, but equity financing is generally better for tech businesses because tech businesses don’t generate as much cash early on. You can read more about the pros and cons of debt and equity financing by clicking here.

    If you choose to fund your company through equity financing, then there are a few things that you should know.

    1. ANGEL INVESTORS VS. VENTURE CAPITALISTS: There are two types of investors that you should consider – angel investors and venture capitalists. Angel investors fund businesses that are still early in the start-up phase and the average amount that they fund ranges from $10,000 to $200,000. However, Venture capitalists usually require their prospects to have a history of success, but they provide companies with at least $500,000.

    2. YOU WILL BE REQUIRED TO GIVE UP EQUITY: It doesn’t matter how much money investors give you, they will require a percentage of equity within your company. Remember that your business is nothing more than an investment. For this reason, they will be very interested in the success of your company. Don’t expect them to just give you money and allow you to use it however you would like. By funding your business, they have purchased a portion of your control. Don’t automatically assume that this is a bad thing though. If you choose your investors wisely, they will provide valuable advice.

    3. NOT ALL BUSINESSES ARE ABLE TO FIND EQUITY FINANCING: It can be very difficult to find an investor who will provide capital for your company. There are a lot of start-ups who try but fail, so what can you do? Many investors are looking for companies that have a high probability of hiring a large number of employees in the future, experiencing rapid growth, and being highly profitable. In order to attract investors, you need to be able to prove that your company will be successful. Review your business plan and ensure that it shows accurate financial forecasts that include supporting documents. Your business plan should also show that you have a strong and diverse management team with the necessary skills, education and experience that are needed to manage and build a company. Before approaching an investor, practice presenting your business plan to a business mentor or adviser and revise any areas that could be improved.


  • Two Ways to Get a Free Business Financing Quote

    Tuesday, 10 April
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    If you’re like most early-stage companies, you’re probably strapped for cash. Finding the ways to finance your company isn’t always easy.

    Most depository banks, state banks, and credit unions aren’t the most helpful. Banks aren’t expert at evaluating businesses. Banks are expert at evaluating tangible assets like houses and buildings. But most businesses aren’t about assets like houses and buildings—they re about growth. In short, the problem with most banks is that you have to have cash to get cash.

    Before you look to find financing, you need to do your homework on your company. Whether you are seeking to finance your company with equity or debt, you should know the following about your company:

    • What are your annual gross revenues?
    • What is your personal credit score?
    • How much are you seeking in financing?
    • What are the assets that your company owns?
    • How long have you owned your business?
    • What are the future growth projections of your industry?

    Getting your financials in order is crucial for you to get financing faster and cheaper.  If finances aren’t your forte, you’ll need to hire an accountant or someone who’s strong with finances.
    Once you have this information, put it in a spreadsheet and a power point. Spreadsheets can look messy—make yours look clean.

    You need to know these things about your company, because most lending groups will require this information. The more information that you have about your company and its financial situation, the faster you’ll get the quote. Certain organizations might try and make you pay a fee for a business financing quote—don’t pay it. Here are 2 ways you can get a free business-financing quote:

    1. Local banks: Most banks have a small business lending office. You’ll have to make these guys your best friend. With the banks, it’s really important that your spreadsheets look clean and are easy to read. This will speed up the process. Remember, the easier it is for the banks to evaluate you, the easier it will be for you to get money. Most small business owners don’t do their homework. They don’t have the spreadsheets, and they don’t have the other information. By having all of your homework done and ready to go, you’ll be miles ahead of the other people they see.
    2. Online resources: Not everything online is reputable. However, there are a few sites online that great for helping you get a free business financing quote online. Most of these match you up with banks that, based on your financial information, would be willing to loan your business money. Lendio and SmallBusinessLoans.com are the best and simplest sites to use. Enable Finance and National Unsecured are also good resources to use if you want to get more quotes about financing rates.

    Do your homework. Get your finances in order, and get a few quotes. The money you can save by shopping around could save you and your business thousands.