Ask me about starting a business.
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Ask me about starting a business.
mrbizplan 1:31 pm on November 13, 2009 | Comments: 6 Open Thread |
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FreeXenon 10:44 am on November 11, 2009 | Comments: 6 Open Thread |
Esperanto
God do I feel strange bringing this up…. Feel free to ignore me… move along people…. move along… =O
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erik 12:21 pm on November 9, 2009 | Comments: 7 Open Thread |
Ask me about my new website!
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FreeXenon 5:30 pm on November 13, 2009 Permalink
How do I get funding for a down payment to buy a property for my business?
mrbizplan 10:28 pm on November 13, 2009 Permalink
That’s a tough question to answer without some more info…but I can make some assumptions:
Assuming you are already in business, you have good credit (700+ FICO) and the building would appraise for the agreed purchase price, then we can start with some financing scenarios:
Option 1) Assume the bank will finance 80% of the appraised value on conventional financing for 15-20 years which means that you need to come up with the other 20%, which is referred to as an equity requirement.
A few options for that would be:
a) Have the seller finance the down payment on a baloon loan – for example make a contract to have the seller finance the 20% on a 3-5 year baloon with a 15-20 year amortization. You can expect an interest rate somewhere around the bank financing rate +1%-2% to compensate the seller for the risk of having a second position.
b) Depending on the amount you could take a home equity loan, borrow against retirement or sell some other assets.
c) Again, assuming you are currently in business you might have equity in the business that can be used to obtain 100% financing from the bank…this usually is only possible if your business has higher value fixed assets and low debt position (in otherwords you have at least the $$ value of equity needed when you take fixed assets – long term loans on your balance sheet.
d) You could look for a private investor to give you either a personal loan or make an investment in the property for partial ownership. In the case of partial ownership set up an LLC for the property and have the business pay rent about equal to market rates so that you both get a return on the investment. Note though: if the investor owns 20% or more they will need to personally guarantee the loan with you so they may not want to invest the whole 20% needed or you may have to get it from two or more investors.
e) You could look into the SBA 504 program which *can* under most conditions have a 10% down payment requirement. The hitch is it has to be a cash down payment most of the time so some of the above options wouldn’t work.
Now…assuming you are not in business:
All of the above would apply except using current company equity for a down payment.
One final note…the above suggested have worked in practice in the past under a normal lending environment. Currently alternative financing may be fowned upon by lenders.
So there are a few assumptions and a few answers…if you need further clarification I need more details.
Best Regards;
Donovan AKA MrBizPlan
http://www.diybizplan.com
erik 10:26 am on November 14, 2009 Permalink
In your experience, what has been the most challenging hurdle to overcome to make a new business successful?
mrbizplan 11:39 am on November 17, 2009 Permalink
Well they say the number one reason why businesses fail is lack of capital but, if you follow the bread crumbs you might say that it is lack of sales that causes business failure.
Yes many startup companies do run out of money but the reason they run out of money usually is because they planned for higher sales and/or lower cash burn and then when the sales don’t materialize like they thought, BAM…your broke.
So I would say the most challenging hurdle is marketing and promoting your business in an effective and meaningful way on a limited budget. It always takes more advertising then most would think because we are barraged with ads and it is hard to make our own ads stand out.
Donovan
erik 12:34 pm on November 17, 2009 Permalink
So, given a budget of zero (or nearly zero), how would one best promote a fledgling start up business… say, a new website. In other words, what are the best ways to generate traffic to a website without spending money?
mrbizplan 1:26 pm on November 17, 2009 Permalink
Since 65% of all traffic comes from search engines it would make sense that search is where you should focus your efforts. And when it comes to search the number one thing is Search Engine Optimization. Two of the best resources are SEOBook.com and BruceClay.com
There is the obvious like submitting links manually to the search engines and directories. But also use “meta data” should be present but it has little effect on search marketing and page rank. Pay per click advertising can give you a jump start but it is not worth it over a period longer than a month or two at the most especially if your site is static because you get one visit and then it’s done.
One of the best things that can happen to you is getting one way links (not link exchanges) and some of the best one way links are from recommendation engines like StumbledUpon.com – for one of my sites it is my number 4 referer behind Google, Yahoo and Bing. So adding an AddThis button to every page / post may be helpful to generate links.
After that content is what it is all about and you have a great head start/model cause you have user generated content…which is like a massive snow ball…the trick is to get it rolling.
Finally, you can do press releases using PRweb.com and the like it is affordable and the sheer number of pages one press release generates is amazing. But you have to keep it up…so when you add a new feature make an announcement. Or, write an articles about new social trends on the web and reference your website alongside other popular social networks.
That said, there is no silver bullet…traffic is a never ending battle. Mostly it just take time to build content, links and page rank.
Donovan