Posts Tagged ‘financing’

Another life lesson from my venture moving from the corporate world to self employment. So far a very liberating decision but filled with unexpected surprises. For the most part getting the business side set up and running has been relatively smooth, but personal finances have been a great challenge.

This has been made complicated by the fact that we are relocating to start the business, one of the drivers for making the change is to reduce the mortgage burden we have today by moving to a cheaper part of the country so that we did not overburden the business in its start up stages.

Having a solid credit score, 6 years of banking and mortgage history without any blemishes any yet when inquiring for a mortgage on a new house all the large banks would not even complete the application process because of being an entrepreneur  and self employed. Being self employed means the banks need 2 years worth of company trading records, P&L and Balance sheets. This requirement has been a result of the collapsed subprime market, but also driven by the fact that most banks want the option to sell the loans they originate to Fannie Mae and Freddie Mac. These two institutions, a little shy after the meltdown, have raised their criteria and this has flowed through the whole lending chain to the retail banks we approach for loans.

At first I found this very frustrating that I was being measured by the lowest common denominator, by someone sitting behind a computer asking yes/no questions until the computer told the operator to stop. Then I had a conversation with a good friend, he enlightened me to the reality of the current economic situation where so many people have lost their jobs and their only option has been to set themselves up as self employed businesses doing freelance work in their trade  – anyone can get a business incorporated and print business cards, but if they have not completed any regular business then they likely don’t have a secure business plan to lend against – thus the 2 years business record requirement.

During the application process, I began asking lots of questions and found this out about what it means to be self employed.

• If you are listed as the owner of an incorporated company or LLC
• If you have more than 15%  ownership you are self employed
• Even if you have a regular salary, the fact that you are self employed means that you bring into the equation an element of risk in your ability to service a loan, until you have 2 years of accounting records to share.

If are thinking of relocating and are starting a new business, try and arrange some of your financing before you begin the new operation – loan officers prefer steady track records to the unsubstantiated hype of a new entrepreneur.

Another option is to explore local banks that originate and hold the loans themselves. While the general application criterion is much the same these banks take a little broader assessment of your projected finances for a sacrifice in interest rate.

Tagged as: active garage, business, Entrepreneurship, financing, Guy Ralfe, loans, mortgage, personal finance, support

Now that I have officially started my journey as a business owner and entrepreneur, but still in the honey moon phase I can share some stark realities about starting a new venture.

Most importantly it takes guts and lots of support. At the age of 38 with a wife and two young children to support, I am leaving a secure and stable employment to relocate half way across America, to the mid-west, to start a new company in one of the worst economic environments the world has known. Making this decision consumed a lot of thinking time and with this uncertain background, produced by the media, conventional thinking does not leave you in a sane place.

I have been looking for this opportunity to begin a new business for over 6 years now, I still do not have enough guts of my own to start this – and this is why I say you need lots of support. To give you an indication of the support I am using to get this off the ground:

Business Partner – I have a business partner that already has a very successful business in the same vertical that can provide operational expertise and contacts within the industry to minimize the lead generation and prospecting phase of starting out.
The partner approach allows for the lowering and distribution of start-up overheads, much like  an Incubation start-up.
Laws, expectations, codes of conduct, processes that can take so much time to learn and often expensive when starting out, can be circumvented.

Financial – contrary to what you may think about business, it does not all center around the business plan, it centers around the execution. You can make all the sales in the world but if you cannot cash-flow the operation then you can never think about being profitable.

Most companies will need capital to start. I have  acquired a reasonable amount of assets, which are valuable to me but they are not all seen equally valuable to my financiers. Start to think about what instruments you can use for financing before you want to begin your business.

What type of assets do you hold? –  as that affects the ratio by which banks will offer/secure lines of credit.
What is your credit score? – what can you do to minimize the impact on your credit score leading up to opening your business.

What do you need to execute your operations – transport, utilities, insurance, offices, systems, subscriptions? They all send bills regularly and all expect payment regularly.

Industry Knowledge Partners – if you are like me and are wanting to start in a field in which you are not an expert, you will need knowledge experts that can guide you through the rapids in your journey. Look to building relationships with people such as:

Suppliers

Competitors

Lawyers/ Regulatory Bodies

Accountants

Customers (though customers do prefer to deal with experts so use this avenue selectively)

Personal Support – we all have our moments when we think we are the Lone Ranger and we can do it all on our own. As I have written about before, consider the impact one decision may have on other aspects of your life.

One such aspect is your family and close friends. This opportunity wasn’t an option until it became an opportunity for my family too – and I thank them for their support.

So yes it has still taken all the guts I have to make this exciting start, my sanity could be questionable and it sure was not due to conventional thinking that I was able to choose this – it is only possible to rationalize and make this choice because of the support and help that is in place.

Tagged as: active garage, Business Management, business planning, entrepreneur, Entrepreneurship, financing, Guy Ralfe, startup, success, support, www.activegarage.com

Just as in the world of Real Estate it is all about “location, location, location”; in the world of marketing it is all about “consistency, consistency, consistency”.

In conjunction with a sound brand strategy, you need a clear and concise message that resonates with your customers. These messages need to be integrated across your brand and into every customer touch point.  Now, you don’t need to use the same words over and over. However, each communication needs to reinforce the key messages that have been developed to support the brand.  It is a case where the whole is greater than the sum of the parts – when the brand is consistently conveyed across multiple touch points, the customer is left with a clear understanding of what the company, product, service, or solution is and how it solves their problem. Simply put, they know what your brand is about.

Unfortunately, as marketers we often get bored with the messages we’ve developed.  We’ve spent hours fine-tuning them and testing them.  Finally, our campaigns launch and the messages are out there, but by that time they feel old and stale to us.  There is a difference between a “fresh” message (with unique language, a clever play on words, a connection to a current event) and a “different” message (not aligned with strategy, not related to existing messages, different for the sake of being different).  Research shows that it takes anywhere from five to nine impressions for an individual to actually internalize a marketing message.  That means they need to see it over and over again.  Not the same words, but the same idea supported by the same brand.

For example, an article in a trade publication mentions the company and their new product; the customer sees an online banner ad, they click on it, and get to a landing page with a compelling offer; they do a Google search to see what else comes up and there is a link to your latest white paper; at an industry tradeshow the company has a booth and is hosting a panel discussion…and the story continues.  With consistent use of key messages across multiple touch-points your customers comes away with the sense that your company is worth their consideration.

Now you have a place to start engaging and driving purchase decisions.  This model holds true for consumer and business marketing.  People are people, whether they are buying high-end mission-critical software or a new plasma HDTV for their living room.  They have a problem.  Through your consistent messages, you have convinced them to consider your product or service as they evaluate their options.  You still have to convince them that your product or solution is really the only one that really addresses all their needs – from technical specifications to user support, maintenance and financing (again, these apply to consumer and business purchases.)

Again, consistency is key.  Your customers need to see and feel that your company is honest and trustworthy.  If there is a disconnect between what you say and what they experience, you will lose the sale, and worse, probably the customer.  So, while consistency in messaging is important…consistency in execution is critical, too.  Both pieces of this puzzle need to be addressed in order for the whole thing to work.  If you only focus on the messaging, then your experience will fall flat.  If you don’t explain your differences and benefits, then you won’t get the chance to display your stellar experience.  No matter how you look at it, consistency is the key to growing you brand and your business

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Tagged as: active garage, Brand, brand strategy, Branding, Communication, Consistency, customer, engagement, financing, laura lowell, location, Maintenance, purchases, technical specifications, Trust