Key Facts About Your Business Blueprint

The home business industry is littered with people who have failed in their businesses. The success rates are very low compared to other entrepreneurial industries like franchising. Statistics say that about less than 18% of home business owners earn a consistent cash flow.

Don’t be a victim of the home based business industry. Have you failed in your business before? How many times have you jumped ship? What are your reasons for failing? How many sales did you make? Why have you chosen to work from home? Answer these questions honestly and you are on your way to financial success. I am going to give you a business blueprint.

If your business has a product or service that is in demand, a convertible offer, marketing plan, and follow-up system then you will succeed. The truth is you will win in any niche if you follow successful business models.

Franchises are one of the most successful business models to copy. They have a proven track record of creating cash flow for their franchisees. They provide the training, marketing plan, vendors, and sales support for the owners. Some franchise systems have a 80-90% success rate for their owners.

Duplication is the key for your home business success. Whether you are building a down line or just a one man band you must have a game plan in place. We do not suffer for lack of information. You can find a successful business model to follow.

Find a success system that compliments your personality. Be enthusiastic about your business. Don’t join a fad because everyone else is doing it. Join because you believe you can reach your financial goals with that business.

Key Facts about Your Business Blueprint

Key Fact 1 Find a Product or Service You Can Visualize Selling: Yes you have to sell. Get over it. Every business needs to sell. That is the point of capitalism. Make sure your product are consumable so you can have repeat sales. Investigate your niche. Do people need this product? Can you up sell them to higher priced items?

Key Fact 2 Marketing Plan: I see real estate agents fail at their businesses before they even start. They pay for their real estate license, pay their Realtor dues, and other fees. They have invested over $1000 for their business and don’t have a plan to get customers. They do things like go door knocking, cold calls, and send out letters. They fail to follow the franchise or broker’s plan.

Make sure you have a marketing system in place. Your first goal is to create leads so you will have a list. Your list is the life-blood of your business. Your marketing should have 3-5 techniques for you to generate traffic. A plug and play system is best for the new business owner. A marketing program should teach you marketing strategies while it generate sales for you.

Key Fact 3 Training: In my real estate office our broker provides training every week. Athletes, entertainers, teachers, and blue-collar workers all have to do go through continuous training. The same with your home business. Education is a must for entrepreneurs. Do not slack on your training.

Key Fact 4 Getting Paid: Your home based business needs to pay you enough so you can have a positive cash flow every month. Find products or services that pay high commissions. It is hard to do paid advertising when you are making 15% commissions on a $3 product. Look for products that pay a commission fee of 50% or higher and has residual income.

Action Steps

Spend time putting together your business blueprint. Put these key facts into action. Achieving financial success is the only reason to be in business. Creating and acting on your business blueprint will get you there.

21.5 Funding Sources for Your Home Business

Funding your business is simple not easy. True it is easy to get money when you have a traditional business. You will find it hard press to get the banks to give you a loan for your affiliate, network, direct sales, or internet marketing business.

If you are a licensed professional like a real estate agent, insurance agent, or certified financial planners good luck on traditional funding sources.

This guide will give you 21.5 ways to funding your home business. Looking to raise between $500-$10,000? Then this is for you. You may want to offer top-tier products and get paid higher commissions. But you don’t have the money to invest in your business to offer top-tier services. I give 21.5 ways to fund your business.

Here are 21.5 ways to fund your business:

Quick Funding Sources

1. Personal Savings: The simplest way to fund your home business. You are investing your personal savings into a cash flowing business that will give you mega returns. You must think like this to succeed. You are not spending your savings you are investing it.

2. The 3 F’s: Family, Friends, and Fools. It’s tricky borrowing money from family and friends. Especially if you have a history of starting and quitting businesses. If you have borrowed before and failed to pay it back you are up a creek. Then then are fools. There is someone out there who will give you money. I have raised over two hundred thousand dollars from friends, family, and fools.

Be sure to draw up a written agreement saying when you will pay the money back. Offer a high interest rate so the person will not feel like a “Fool” when they are giving you their money.

3. Credit Cards: Use your credit cards to get started. This is easy when you need less than $300 to start your business and becomes difficult when you want to sell top-tier products that pay higher commissions.

Use your credit cards or someone else. This is where the 3 F’s come in again. I started my company, gave my friend 5% equity, and had her get business credit cards. I then borrowed $5000 for my internet marketing business. It took me 18 months to pay her back but now she gets her car note paid every month plus a nice dividend check at the end of the year.

4. Short Term or Payday Loans: If you have a job you may want to try short-term or pay-day loans. You can borrow up to $2500 with some of these institutions. This is high risk and make sure you are in your home business for the long haul. Their interest rates are atrocious.

5. Personal Lines of Credit: use your personal lines of credit from your bank. I prefer to use credit unions because they are a little more lenient and offer better rates. Plus they have favorable repayment terms.

6. Personal Assets: Borrow against your home, car, or stocks. Borrow enough to start your business and keep it running. Borrowing against your assets will keep you committed to your business.

7. Insurance: Cash out your insurance. This is how many entrepreneurs start. Check your policy’s conditions on you cashing out.

8. Your Retirement Accounts: You can borrow from your 401k plans or IRA’s. Just make sure you borrow enough to cover 3-6 months of business expenses. Most people only borrow enough for the start-up. They forget about marketing and fixed monthly costs.

9. Your Job: This is a slower process and sacrifices have to be made. Need to invest $5000 for your home business? Then save $500 for ten months. Saving a portion of your job income is a smart move because you will not owe anyone and your bills will still be paid. Plus you will have the time to learn your business.

Creative Funding Sources

10. Your Customers: Yes, your customers. You can pre-sell items to fund your business. I promoted marketing system before it was even launched. I sold a new blogging platform before it came to the market.

11. Partnered Up: When I started my real estate career I did not have the money for my license, Realtor dues, or investing. I partnered up with agents and sent them my clients. I got a referral fee. I took finders fee on distressed properties. This ides works well in certain niches.

12. Boot Strapping: You only invest the money you make from your business. This may be the only way to raise funds for your business if you have poor credit, no friends, or family who will lend you a dime. You may have to sell small items and upgrade when enough sales come in. The advantage of this is you are learning while you are earning.

13. Sell Your Crap: Yes your crap that stuff you don’t need anymore that is taking up space. I have had several members of my team sell their cars, furniture, clothes, and other items to fund their home business. They used eBay, Craigslist, Back Page, and garage sales.

14. Mobile Advertising: Turn your car into a moving advertisement. Some companies pay up to $300 per week. You are driving anyway might as well get paid.

15. Sell Your Body: No, not like that. Sell advertising space on your body. Options include wearing signboards, t-shirts with company logos, or temporary or permanent tattoos.

16. Windfalls: Use your tax refunds, lotto winnings, settlements, and gifts. You can expand your business every year with your tax refunds.

17. Medical Research: I have a teammate who raised money by participating in medical research projects. This may be extreme but he got his money and has a profitable business. Search online for medical research projects in your area.

Non-Traditional Lending

In my membership site there is a training that teaches you to raise $500 to $10,000 in 30 days or less. Here are the funding source we teach:

18. Crowd Funding: is the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations. You can use crowd funding resources GoFundMe, Fundagreek, and Fundly.

19. Peer-to-Peer Lending: is the practice of lending money to unrelated people, or “peers”, without going through a traditional financial intermediary such as a bank or other traditional financial institution. This lending takes place online on peer-to-peer lending companies’ websites using various lending platforms and credit checking tools. Sites like Peerform can help you with this process.

20. Investor Loans: Lending Club and Prosper.com connect borrowers and investors. Borrowers get their funding and investors get a nice return on their money. Please check out these sites for more information.

21. Micro Financing: Micro Financing is a form of financial services for entrepreneurs and small businesses lacking access to banking and related services. Mission-driven lending organizations give micro-loans (between $500 and $50,000) to businesses not eligible for traditional bank funding.

21.5 Prayer: When all else fails pray that you will get the divine wisdom to raise the money you need. In fact this should have done this first.

You now have 21.5 funding sources. You can raise money for your home business. Take action on these funding sources and excel in your home business.

Down Payments On Business Loans And Where You Can Get Yours

All small business lenders – banks, private lenders, alternative financing companies, SBA, etc. – have one major thing in common. They require some form of down payment.

Let’s say that you are requesting an unsecured business loan from your bank. And, you are asking for $80,000 that you want to use to purchase some inventory and supplies as well as to bolster your marketing efforts.

And, your bank approves that request. However, they only approve 80% of your requested amount or $64,000. What?

Or, your business is in need of a new routing machine to handle your ever increasing customer load. The equipment costs $50,000. Your lender approves your request but will only fund $40,000 or 80% of what you need. Huh?

Or, your business has $100,000 in outstanding invoices just waiting to get paid by your customers. Yet, you have new orders coming in everyday that you just do not have the cash on hand to start or complete. Therefore, you approach an asset based lender or accounts receivable factor and ask for an advance on those invoices that will pay within the next 30 days. However, the lender will only fund 80% or $80,000 against those invoices – even though they take control of 100% of their face amount. Really?

Down Payments

Why do lenders require down payments? It all started with banks centuries ago. They determined, through trial and error – mostly error – that if a borrower were to put at least 20% down – have 20% of their own money attached to the loan – then they are 80% less likely to just walk away from that loan should the going get tough.

Thus, they determined that 20% in a down payment was both enough to better ensure that their borrowers will repay those loans – the one thing they want the most – and that 20% was enough of an amount (high and low) that only serious borrowers would and could be able to raise that amount.

In fact, when the government got involved in the banking and lending industries, this down payment figure of 20% was one of the first things that they agreed on as a standard practice and now hold these lenders to that standard.

Bottom line is that having a down payment in nearly all lending – mortgage loans as well as business loans – is now the standard and is already calculated in their underwriting process. Thus, you request a business loan for $100,000 – the lender already marks it down by 20%.

Now, leave it to the SBA to throw a wrench into this discussion. The SBA has a business loan program – their 504 loan program – which helps local small businesses finance commercial real estate or business equipment in their local areas. These loans are secured – 100% – by the real estate or equipment. Thus, with this specific loan program – this secured loan program – the SBA lowered its down payment requirement to 10%. Still a down payment but less of a burden on the borrower.

Types Of Down Payments

Now, there are essentially two forms of legitimate down payments.

1) Simply cover the 20% with your own cash. You need $80,000 for your equipment purchase, the bank will provide 80% or $64,000 and you cover the other $16,000 out of your own pocket.

2) You have built in equity in the item being bought with the loan. Here, you are buying a commercial property to expand your small business (and quit paying outrageous rents). The purchase price is $250,000. Yet, that price is only 80% of its market value – the market value is $312,500. Thus, the difference between the purchase price and the true value of the property is the 20% – 20% equity in the property.

Where To Get That Down Payment

There are several ways that you – the business borrower – can get that required down payment as most small business owners either do not have that kind of cash on hand to cover the 20% or just do not know where to obtain it.

Don’t Pay It:

1) Negotiate with the lender. While this does not provide you the equity to put down – it can alleviate that requirement all together. If your business is strong enough and the lender really wants to work with you – then negotiate that requirement away – and get that lender to cover 100% of your needs.

2) Negotiate with the seller. If you are buying a physical asset like equipment or commercial real estate then negotiate the price to 80% of the asset’s value. Kind of hard to do these days with property values being as low as they are and that most equipment vendors do not have control over their prices – but, if the person wants to sell as bad as you want to buy – then they will find a way to work with you – they always do. MSRP prices are more wish lists then actual prices.

Find The Money:

3) Personal loan. Do you have equity in your home or other personal assets? Can you get a personal loan based on the personal income you do have? Can you tap some other source of personal income or equity – that 1) does not relate to your business and 2) does not put an additional burden on your company?

Most lenders will find out about all of your business debt and most of your personal debt during their approval process. Know that with the business debt, they will include that in their underwriting process when approving your business loan request. And, if they find out that you took another business loan to cover your down payment – they tend to frown on that. But, if they find out that you have a personal loan – even if they know that you did that to cover your down payment – it is still a personal loan and something that ties you personally to that new loan request – means you might get away with it.

Or, try to get a personal loan from a friend or family member. This way, it is not reported anywhere and very hard for the new lender to find out about it. This could be a loan or even an equity injection for stock or ownership in the company. Either way, it should not directly affect your new loan request.

The idea here is simple. Let’s say that you need a business loan for $100,000. You request that amount at 8% for three years. This would set your monthly payment at $3,134. But, if the lender will only approve and fund 80% or $80,000 – then your required payment would drop to $2,507 – leaving the difference of $627 to cover that personal loan you need for the down payment ($627 is more then enough to cover the $20,000 personal down payment loan for the same term at the same rate).

4) Sell off unneeded or unused assets – personal or business. This way you get needed money from assets that you don’t need or want and you don’t have to pay that money back – it is free and clear for you to use. Thus, while you are only getting 80% of your requested loan amount – you only have to pay for that 80%. And, the $627 difference – outlined above – is money that you now don’t have to pay to any lender – it is added money in your pocket or for your business.

5) Lastly, use your business. Let’s say that your business needs a $100,000 to expand. Now, it could get a loan now or it could save up its own money – its own profits – for the next 3 years (your business has to be generating some form of profits for you to be able to afford the loan payments in the first place – thus, it can just save that money itself).

But, not wanting to or not seeing it as a viable option to wait 3 years – your business can just save that money (profits) for that down payment only – save for 7 months or so to get that needed 20% – then request the loan. This would have the same benefits of selling off assets for that needed cash without losing the use of those assets. The only requirement here or burden on the business is time – the 7 months.

Conclusion

Down payments are one of those facts of life like death and taxes. If you are seeking a business loan, you have to think about how you will come up with the down payment.

Know that with anything in business – this challenge can be overcome just like you overcome all other challenges – by working them out. This means that where there is a will there is a way and the best way to handle this financing requirement is to know about it up front and plan for it from the very beginning.

Far too many business owners – who finally get to the point that they can seek outside financing to take advantage of growth opportunities – end up only getting that down payment slap down – having not known of the requirement before applying for their business loan and ultimately getting that request turned down.

Don’t let this happen to you – especially when it is you who can prevent it.