Several weeks ago, Sara Pope of ConsumerAffairs.com, reached out to me and asked if I could review a step by step guide to business loans and financing that her company had produced. My initial reaction was to just say no.
My inclination to decline her offer was based on my experience with hundreds of nascent entrepreneurs. All too often, my first encounter with a new client with a new idea for a product or service and little else is to get a loan from a bank or a grant to fund their business. I spend a considerable amount time in my practice explaining that there are no grants for entrepreneurs wanting to start a business and also explaining the difference between debt and equity financing when it comes to starting a business.
Because there is not a clear understanding between a startup, looking for risk capital most often in the form of equity to start a new business, and an established small business looking at using debt as leverage to scale a business, I was not interested in perpetuating the false narrative that debt financing is how all new businesses get their initial seed money.
My initial impression was the step by step guide would be just another such attempt to woo nascent entrepreneurs into debt financing arrangements that they are ill prepared to undertake given the fragile nature of their enterprise and overall lack of business acumen.
However, I agreed to look over her guide more out of curiosity than anything else. What I discovered was in fact a pretty good summation of all the relative facts about debt financing and alternatives to bank financing.
While I often say that “equity is for startup and debt is for scale” and often write for businesses in their early stages, I recognize that some early stage businesses as well as some lifestyle businesses can actually benefit from debt financing.
While I do not have a history of doing endorsements, the step-by-step guide is pretty balanced and worth a shout out.
- Retirement Account Funds New Business
- Using a Self-Directed IRA to Fund Your Business
- Using a 401k Loan to Fund Your Business
- The 5 Stages of a Funding Plan
- Angel Investors
- The Debt Continuum
- The Hidden Value of Crowdfunding
- Understanding Bonds and Royalties to Fund Business Growth
- The 5 “C’s” of Credit
- What Goes Into Your Credit Score
This is not just another business book designed to help entrepreneurs write a business plan. The focus of Everything You Wanted To Know About Business Planning But Were Afraid To Ask is to convey all the business wisdom entrepreneurs need to know BEFORE they sit down to write their business plan.
Readers will learn:
- What factors to consider before they start
- The vocabulary and federal acronyms used in the business world
- How to define the right business and economic models for their business
- How sales tax and income tax really work
- How their credit score is computed and what they can do to improve it
- About business risks and how to minimize them
- How to benchmark your financial projections against other existing businesses
- How to fund your business even when the bank says no
- How different customers think so the reader can market to them better
- About basic business management structures
- The seven most common formation errors when starting a new business
- How to get the most out of employees
As a serial entrepreneur and mentor to thousands of small businesses, the author has distilled a lifetime of wisdom that every new entrepreneur should consider before they sit down to write their first business plan.
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