Tips For Identifiying A Home Based Big Money Business
Il y a 17 ans
lundi 27 avril 2009
Small Business Advice: Is Your Marketing Upside-down?
When I first thought of how to market my business, ideas for how to do it were things like.. print a brochure of flier, run an ad, send out some postcards. But I later discovered that's actually upside down and is the last of 3 steps in an effective marketing strategy.
Many marketing efforts fail because they don't follow the right order of things. We often focus on the fancy glossy brochures, and the image we project. I'm not against creating an image, by the way, but for small business owners, image is not the most important thing. We can leave that to giant companies with colossal marketing budgets. They can afford to focus countless dollars on "image-marketing."
As small business owners, our marketing budgets are often limited. So when we implement a marketing strategy, the goal has to be "How can I get my ideal clients to take action, respond, get to know me and my business, and choose to do business with me?"
Logos and fancy brochures may get you some oohs and aahs from friends, family, business acquaintances and even prospects, but they are rarely set up to accomplish the goal of increasing business.
From my experience, here's the most effective order of things for implementing your marketing actions:
1) Who: When you think of marketing your business, the first thing to think about is the profile of the person to whom you are targeting - your target market. Who are they, what's their greatest need in your area of expertise, and how do they express that need. The answers are what you put into your marketing.
2) What: And what you put into your marketing is the message that is specifically tailored to your target audience. That message must resonate so strongly with their problems that they prompted into action. Action that makes them pick up the phone, go to your web site, etc.
3) How: The how is the tool you use to convey the message to your market. The tool or the media is the postcard, the flyer, the ad, etc. If you do not first know your target market, then the message will be weak which then makes the tool/media ineffective. Often people say things like "postcards don't work" when the marketing process actually failed in steps 1 and 2 above.
When you finally get to step 3 where you are choosing the tool to reach your target market, the question to ask is "What action do I want them to take?" And your tool (flier, postcard, ad, etc) must lead them directly into taking that desired action. Don't leave it up to the reader to figure it out. Specifically say things like "Call now for ...." "Click here to..." "Go to for..." Always end with a "call to action."
Key Questions For You:
* How can you get so crystal clear on the profile of your ideal client that you're able to refine your message to their specific problem so that you can then choose the best tool to reach them?
* What's the specific action you want your prospect to take and how can you make that action step crystal clear within your marketing materials?
----------------------------------------------------
And now I'd like to offer you the FREE Audio for solo entrepreneurs "How to Create a Steady Stream of Clients And Cash For Your Small Business" at: http://www.GreatSmallBusinessAdvice.com
Copyright © 2008 Allison Babb International LLC.
Allison Babb is an author, speaker and Small Business Coach to solo entrepreneurs. She is also the creator of http://www.TheSmallBusinessSuccessMovie.com
Many marketing efforts fail because they don't follow the right order of things. We often focus on the fancy glossy brochures, and the image we project. I'm not against creating an image, by the way, but for small business owners, image is not the most important thing. We can leave that to giant companies with colossal marketing budgets. They can afford to focus countless dollars on "image-marketing."
As small business owners, our marketing budgets are often limited. So when we implement a marketing strategy, the goal has to be "How can I get my ideal clients to take action, respond, get to know me and my business, and choose to do business with me?"
Logos and fancy brochures may get you some oohs and aahs from friends, family, business acquaintances and even prospects, but they are rarely set up to accomplish the goal of increasing business.
From my experience, here's the most effective order of things for implementing your marketing actions:
1) Who: When you think of marketing your business, the first thing to think about is the profile of the person to whom you are targeting - your target market. Who are they, what's their greatest need in your area of expertise, and how do they express that need. The answers are what you put into your marketing.
2) What: And what you put into your marketing is the message that is specifically tailored to your target audience. That message must resonate so strongly with their problems that they prompted into action. Action that makes them pick up the phone, go to your web site, etc.
3) How: The how is the tool you use to convey the message to your market. The tool or the media is the postcard, the flyer, the ad, etc. If you do not first know your target market, then the message will be weak which then makes the tool/media ineffective. Often people say things like "postcards don't work" when the marketing process actually failed in steps 1 and 2 above.
When you finally get to step 3 where you are choosing the tool to reach your target market, the question to ask is "What action do I want them to take?" And your tool (flier, postcard, ad, etc) must lead them directly into taking that desired action. Don't leave it up to the reader to figure it out. Specifically say things like "Call now for ...." "Click here to..." "Go to for..." Always end with a "call to action."
Key Questions For You:
* How can you get so crystal clear on the profile of your ideal client that you're able to refine your message to their specific problem so that you can then choose the best tool to reach them?
* What's the specific action you want your prospect to take and how can you make that action step crystal clear within your marketing materials?
----------------------------------------------------
And now I'd like to offer you the FREE Audio for solo entrepreneurs "How to Create a Steady Stream of Clients And Cash For Your Small Business" at: http://www.GreatSmallBusinessAdvice.com
Copyright © 2008 Allison Babb International LLC.
Allison Babb is an author, speaker and Small Business Coach to solo entrepreneurs. She is also the creator of http://www.TheSmallBusinessSuccessMovie.com
Small Business Advice on How to Keep Your Customers
Whether the economy is up or down, as self-employed professionals, we all want to be sure we're doing everything to keep our customers. Some of you have shared that your customers are disappearing or just not returning to your business. Some have expressed a concern that their business is viewed as a luxury expense and is the first to go when hard times hit.
So how do your keep your customers on board with you? Here are 5 ideas you may want to think about:
Stay in touch:
Your business should have some consistent method of following up with prospects, clients and customers. If your customers haven't heard from you in months, out of sight, out of mind. Customers need to know that you're there and that you have something valuable to offer them. And speaking of valuable...
Ask them what they want:
If you are not providing what your customers want, they won't stick around very long. And the best way I know to deliver the best products, services, and value is to ask customers and clients what they want and to do so regularly. The needs of our clients and customers change over time. If you asked years ago, you may be way behind really understanding their needs.
What used to be of high interest years ago may have shifted to something new. If you never ask, you never have the opportunity to create something new, tweak your offerings, and remain valuable in the eyes of your clients.
Listen for objections:
When you ask them what they want, listen carefully for objections they share. Too often, we rush to convince customers that their objections are not that important and that they should buy from us anyway. But if it wasn't important, they wouldn't share it. So instead look for the opportunity in the objections. Is it time to offer a payment plan to make payments easier, is it time to add another offering at a lower price point because of economic times, is it time to start offering something new/different to better match their needs?
Listen carefully, take notes, spend time genuinely trying to understand how your business can be of greater value to your clients. You don't have to change your entire business, but a little tweaking wouldn't hurt. That said, sometimes and overhaul may very well be in order.
Create what they want:
Sometimes as entrepreneurs, we are busy creating what WE think is cool and innovative because we have a nonstop supply of ideas. Idea-generation is our gift. However, we should become focused on what our clients and customers want and create that. The other side of this is the myth of "Build it and they will come." Not so. It is not wise to build something then try to find people to buy it. Ask people what they want first.
Ask them for feedback on your product/service: After you have delivered your products and services, don't skip the step of asking what your clients thought of it. You'll never know what opportunities you may be missing if you never ask for feedback. Paying attention to feedback on your existing products and services will give you plenty of ideas for how to keep your customers.
Customers stick around when they get great service, great products, and great results from working with you. But you can't deliver all that greatness unless you're asking them what they want and what they think about your products and services.
Key Questions & Actions:
* Have you asked your customers and clients what they want?
* When was the last time you asked? Have things changed? Is it time to ask again?
* Is it time to do a mini survey to get into some discovery of what will really make them stick around?
----------------------------------------------------
And now I'd like to offer you the FREE Audio for solo entrepreneurs "How to Create a Steady Stream of Clients And Cash For Your Small Business" at: http://www.GreatSmallBusinessAdvice.com
Copyright © 2008 Allison Babb International LLC.
Allison Babb is an author, speaker and Small Business Coach to solo entrepreneurs. She is also the creator of http://www.TheSmallBusinessSuccessMovie.com
So how do your keep your customers on board with you? Here are 5 ideas you may want to think about:
Stay in touch:
Your business should have some consistent method of following up with prospects, clients and customers. If your customers haven't heard from you in months, out of sight, out of mind. Customers need to know that you're there and that you have something valuable to offer them. And speaking of valuable...
Ask them what they want:
If you are not providing what your customers want, they won't stick around very long. And the best way I know to deliver the best products, services, and value is to ask customers and clients what they want and to do so regularly. The needs of our clients and customers change over time. If you asked years ago, you may be way behind really understanding their needs.
What used to be of high interest years ago may have shifted to something new. If you never ask, you never have the opportunity to create something new, tweak your offerings, and remain valuable in the eyes of your clients.
Listen for objections:
When you ask them what they want, listen carefully for objections they share. Too often, we rush to convince customers that their objections are not that important and that they should buy from us anyway. But if it wasn't important, they wouldn't share it. So instead look for the opportunity in the objections. Is it time to offer a payment plan to make payments easier, is it time to add another offering at a lower price point because of economic times, is it time to start offering something new/different to better match their needs?
Listen carefully, take notes, spend time genuinely trying to understand how your business can be of greater value to your clients. You don't have to change your entire business, but a little tweaking wouldn't hurt. That said, sometimes and overhaul may very well be in order.
Create what they want:
Sometimes as entrepreneurs, we are busy creating what WE think is cool and innovative because we have a nonstop supply of ideas. Idea-generation is our gift. However, we should become focused on what our clients and customers want and create that. The other side of this is the myth of "Build it and they will come." Not so. It is not wise to build something then try to find people to buy it. Ask people what they want first.
Ask them for feedback on your product/service: After you have delivered your products and services, don't skip the step of asking what your clients thought of it. You'll never know what opportunities you may be missing if you never ask for feedback. Paying attention to feedback on your existing products and services will give you plenty of ideas for how to keep your customers.
Customers stick around when they get great service, great products, and great results from working with you. But you can't deliver all that greatness unless you're asking them what they want and what they think about your products and services.
Key Questions & Actions:
* Have you asked your customers and clients what they want?
* When was the last time you asked? Have things changed? Is it time to ask again?
* Is it time to do a mini survey to get into some discovery of what will really make them stick around?
----------------------------------------------------
And now I'd like to offer you the FREE Audio for solo entrepreneurs "How to Create a Steady Stream of Clients And Cash For Your Small Business" at: http://www.GreatSmallBusinessAdvice.com
Copyright © 2008 Allison Babb International LLC.
Allison Babb is an author, speaker and Small Business Coach to solo entrepreneurs. She is also the creator of http://www.TheSmallBusinessSuccessMovie.com
Small Business Advice: Is Your Product or Service Enticing
One question I often get from small business owners is "How do I get people to buy my stuff?" I'll admit the phrase "getting people to buy" makes me squirm a bit as it seems to suggest pushing products on potential customers when the opposite should be true.
Customers should be attracted to what you offer and should be coming your way checking out your products and services.One thing to keep in mind is that people buy when they're ready to buy and not necessarily when you're ready to sell. That said, there are a few things that make products and services enticing.
Ask before creating
First, it is a mistake to create a product or service before asking potential clients what they want. "Build it and they will come" only works in the movies. :-) Many self-employed people make this mistake (myself included in my early days). Now this doesn't mean you have to launch into a giant market research project. It can be as simple as getting 10-20 people who may qualify as your ideal client and having a quick teleseminar, Q&A, etc. It can even be a simple email survey using www.surveymonkey.com.
Your goal is to find out the real problems you can solve for people in your area of expertise and focus your product or service on what you hear. Resist the urge to create something you're passionate about. Instead, ask your potential clients what would be valuable to them. The answers may at times surprise you. When you create what people ask for, the end result is naturally enticing.
Generalists are less enticing
When you query your clients and customers for the problems they're having in your area of expertise, be prepared to hear some things aren't necessarily the focus of your business. It's important to stay focused. If you try to address all of the problems for everyone, you dilute the power of your product or service. Your goal is to stay specialized and niched. You want to be an expert in your field and if you try to be all things to all people, you dilute your expertise.
Expertise is enticing. You won't go to a general doctor for a heart problem. You'll seek out a heart specialist. And so it is in business. You want to position yourself as the expert in your field and narrowing your focus builds your expertise and makes your product/service more attractive. So think about your #1 area of expertise and stick to it. Resist the urge to be all things to all people. Generalists are less attractive.
Results sell
When you talk or write about your product our service, the features aren't what's important to prospects. Focus on describing the results people will achieve with your product/service. Tune into channel WIIFM (what's in it for me) and tell potential customers exactly what they'll experience with your product. What problem will go away? What are they likely to achieve? How soon will they achieve it? When your product description is results-focused, it becomes far more enticing to your potential buyer.
----------------------------------------------------
And now I'd like to offer you the FREE Audio for solo entrepreneurs "How to Create a Steady Stream of Clients And Cash For Your Small Business" at: http://www.GreatSmallBusinessAdvice.com
Copyright © 2008 Allison Babb International LLC.
Allison Babb is an author, speaker and Small Business Coach to solo entrepreneurs. She is also the creator of http://www.TheSmallBusinessSuccessMovie.com
Customers should be attracted to what you offer and should be coming your way checking out your products and services.One thing to keep in mind is that people buy when they're ready to buy and not necessarily when you're ready to sell. That said, there are a few things that make products and services enticing.
Ask before creating
First, it is a mistake to create a product or service before asking potential clients what they want. "Build it and they will come" only works in the movies. :-) Many self-employed people make this mistake (myself included in my early days). Now this doesn't mean you have to launch into a giant market research project. It can be as simple as getting 10-20 people who may qualify as your ideal client and having a quick teleseminar, Q&A, etc. It can even be a simple email survey using www.surveymonkey.com.
Your goal is to find out the real problems you can solve for people in your area of expertise and focus your product or service on what you hear. Resist the urge to create something you're passionate about. Instead, ask your potential clients what would be valuable to them. The answers may at times surprise you. When you create what people ask for, the end result is naturally enticing.
Generalists are less enticing
When you query your clients and customers for the problems they're having in your area of expertise, be prepared to hear some things aren't necessarily the focus of your business. It's important to stay focused. If you try to address all of the problems for everyone, you dilute the power of your product or service. Your goal is to stay specialized and niched. You want to be an expert in your field and if you try to be all things to all people, you dilute your expertise.
Expertise is enticing. You won't go to a general doctor for a heart problem. You'll seek out a heart specialist. And so it is in business. You want to position yourself as the expert in your field and narrowing your focus builds your expertise and makes your product/service more attractive. So think about your #1 area of expertise and stick to it. Resist the urge to be all things to all people. Generalists are less attractive.
Results sell
When you talk or write about your product our service, the features aren't what's important to prospects. Focus on describing the results people will achieve with your product/service. Tune into channel WIIFM (what's in it for me) and tell potential customers exactly what they'll experience with your product. What problem will go away? What are they likely to achieve? How soon will they achieve it? When your product description is results-focused, it becomes far more enticing to your potential buyer.
----------------------------------------------------
And now I'd like to offer you the FREE Audio for solo entrepreneurs "How to Create a Steady Stream of Clients And Cash For Your Small Business" at: http://www.GreatSmallBusinessAdvice.com
Copyright © 2008 Allison Babb International LLC.
Allison Babb is an author, speaker and Small Business Coach to solo entrepreneurs. She is also the creator of http://www.TheSmallBusinessSuccessMovie.com
jeudi 26 mars 2009
Obama's Small Business Stimulus Loans--Are They Coming Our Way?
As Americans we have experienced the full gamut of emotions after hearing TARP I handed 350 billion to big banks, but no money filtered through to small businesses in the form of loans. In fact, the spicket was turned off completely after receipt of the bailout money. But putting down the front page of our local newspaper for a moment, what is it like in the trenches? Are the banks really denying capital to businesses across the nation? And how are they treating them in this crisis. You'll be saddened to hear it is every bit as foreboding as you have heard, or even worse.
Mrs. Smith is the classic poster child of female entrepreneurial success. Starting as an everyday real estate agent, over the last 24 years, she has built an amazing corporate edifice consisting of several real estate sales branch offices and now employs 170 people. Her thriving business came as the result of untold hours of toil in which she describes herself as a "serial workaholic". As a result, she is considered one of most productive real estate offices in the state. Over the years, she had a strong relationship with a big bank and took out eight loans and lines of credit. All had been payback and were never late a single day. Her credit score is excellent and reports no negatives. Needless to say, as most businesses, she relies upon the line of credit to put her over the hump during times of lower cash flow. What happened next could not have been conjured up in your worst nightmare.
One afternoon on January 30, 2009, she received a call from her bank. In the past, she looked forward to receiving these calls because they were so energized and cooperative. They made her feel special. Her credit rating was so good, that twice she merely called up the bank manager, speaking to him by his first name, and was able to extend the line of credit by a simple verbal request. In those days, the conversations were something like: "Hello Mrs. Smith. I trust everything has been good with your business and family. How is your son John enjoying the college life? Sure--we'll be delighted to extend your credit line again and I will have one of my associates prepare the paperwork and get it over to you as soon as possible. Look to speaking with you soon." Today was different. Her CPA was in the office that afternoon picking up profit and loss sheets when the call came in. It was not the manager. It was someone at the bank she had never met.
"Is this Mrs. Smith? I am Frank Thompson with ABC Bank." He began with a twang that could only be described as consummate arrogance.
"Well hello. How are you today?" Mrs. Smith said cheerfully.
"Fine. Mrs. Smith, I assume you're busy so let me come right to the point. We have reviewed your loan accounts and effective immediately I am notifying you that they are being called and are now due and payable." It came to her in words that were abrupt and stinging. Although her heart skipped a beat, her first reaction was they must be calling the wrong person. She immediately motioned her CPA to get on the line.
"Hi. This is Mr. Evans, Mr. Smith's CPA. Would you be so kind as to repeat what you just told Mrs. Smith?"
Mr. Thompson was clearly agitated in having to repeat himself: "I'm really not accustomed to having to repeat myself, but I will tell you again. Mrs. Smith's $200,000 line of credit is canceled effective immediately and all sums are due and payable. Do I make myself clear?
"I'm sorry, we don't understand. Is there a problem with the account? To my knowledge Mrs. Smith has always paid her monthly installments on time and his current as we speak."
To say Mr. Thompson was rude was an understatement. Now he became even more bothered by the conversation: "It's clear you don't understand. I would suggest that you read the clear language of the loan agreement that gives us the option of doing so at any time with two weeks notice. I am giving you this notice now. Having said this in very simple language, I assume you have the basic intelligence to understand what I just said."
"Sorry, but we're just trying to be able to digest this news. This is very serious. We can't just pull out our checkbooks and a make a full payment on one day's notice . You don't have to be rude to us." Although still in shock, Mrs. Smith tried your best to soften the conversation.
Mr. Thompson was now eager to end the conversation. "Let me make it even clearer. Based on what I just told you, our bank no longer has a business relationship with you. You would be well advised to take steps to pay this account so that legal action is not necessary."
"Please understand that we need some time to think this through . . . I should . . . I mean I need to get a hold of the manager first," she pleaded.
"I'm handling the account now. You are not to talk to anyone else but me." The tone of of his voice was unmistakable and threatening.
At that point the conversation went steadily downhill. She and her CPA spent the rest of the day going over the books and speaking with their attorney.
Sound like something that cannot happen in America to a successful small business? Well, think again. These are exact quotes of the conversation. The big bank is simply stomping out big small businesses to improve their balance sheets. The lifesaver that has thrown to the big banks in the hopes they would pass it to small businesses on Main Street has simply not happened. It is at least understandable if a large bank decides not to make a new loan in this challenge economy. But it's another thing altogether to cancel existing loans with good customers.
Is this an isolated occurrence? Not all. Here is another example. Robert Picou is the President of the California manufacturing company known as California Ribbon and Carbon Co., Inc., with a plant located in Los Angeles. Robert is the epitome of the seasoned business owner, knowledgeable, practical, optimistic, and understandably proud of his company's heritage. After talking to him, you get the uncontrolled urge to get in the car and drive out to his plant. You get the image of a certain industrial vibrancy which is missing in America.
He should be proud. It is a story right out of the movies. In 1939, his father started selling old fashioned manual typewriter ribbons door to door to business owners in the Los Angeles area. But unlike Willy Loman in "Death of a Salesman", he made it into a real success. 70 years later this closely held family corporation has continued to thrive. To manage the ruts along the way, twenty years ago he took out a business credit card with a well known company and secured a large credit line. Needless to say, he has paid it on time ever since. But then he got a sudden and unexpected surprise in the mail. The credit card company unilaterally cut his credit line and froze up this access to working capital.
He wasn't especially daunted by this news because after all, he had a longstanding relationship with his large bank. All we needed to do was call them up and ask for an extension of his line of credit. His bank did get $150,000,000 in TARP money to presumably free up the money. Ten years ago he owed them as much as $1.4 million, but because of the success of his business, was able to pay it down to $88,000. A perfect candidate to receive some of the bailout monies and create an even more positive cash flow for him and the neighboring economy. No problem, right? Wrong again.
With no explanation, his bank turned him down flat. Asking why, he has yet to receive a credible answer. With orders piling in, his company is now on the unenviable position of not being able to fund all the orders received. Not to mention the rippling effect it has on his suppliers and employees, all of which have a tangible stake in our troubled economy. It is apparent that large banks have no intention whatsoever of using bailout monies for the benefit of small businesses.
Now the good news. Smaller community banks are interested in your business through the vehicle know as an SBA guaranteed loan. These institutions are using the incentives given by the SBA guarantee to cut their risk of loss and build up a better portfolio to be sold on the secondary market. You just have to find the right bank. At least someone realizes the foundational strength small businesses give to the overall economy.
----------------------------------------------------
Sue Malone is a small business advocate, consultant, and the nations #1 provider of unsecured SBA Community Express cash flow loans(start-up and existing). Email:smalone165@aol.com http://www.StrategiesForSmallBusiness.com Phone:(925)899-8449.
Mrs. Smith is the classic poster child of female entrepreneurial success. Starting as an everyday real estate agent, over the last 24 years, she has built an amazing corporate edifice consisting of several real estate sales branch offices and now employs 170 people. Her thriving business came as the result of untold hours of toil in which she describes herself as a "serial workaholic". As a result, she is considered one of most productive real estate offices in the state. Over the years, she had a strong relationship with a big bank and took out eight loans and lines of credit. All had been payback and were never late a single day. Her credit score is excellent and reports no negatives. Needless to say, as most businesses, she relies upon the line of credit to put her over the hump during times of lower cash flow. What happened next could not have been conjured up in your worst nightmare.
One afternoon on January 30, 2009, she received a call from her bank. In the past, she looked forward to receiving these calls because they were so energized and cooperative. They made her feel special. Her credit rating was so good, that twice she merely called up the bank manager, speaking to him by his first name, and was able to extend the line of credit by a simple verbal request. In those days, the conversations were something like: "Hello Mrs. Smith. I trust everything has been good with your business and family. How is your son John enjoying the college life? Sure--we'll be delighted to extend your credit line again and I will have one of my associates prepare the paperwork and get it over to you as soon as possible. Look to speaking with you soon." Today was different. Her CPA was in the office that afternoon picking up profit and loss sheets when the call came in. It was not the manager. It was someone at the bank she had never met.
"Is this Mrs. Smith? I am Frank Thompson with ABC Bank." He began with a twang that could only be described as consummate arrogance.
"Well hello. How are you today?" Mrs. Smith said cheerfully.
"Fine. Mrs. Smith, I assume you're busy so let me come right to the point. We have reviewed your loan accounts and effective immediately I am notifying you that they are being called and are now due and payable." It came to her in words that were abrupt and stinging. Although her heart skipped a beat, her first reaction was they must be calling the wrong person. She immediately motioned her CPA to get on the line.
"Hi. This is Mr. Evans, Mr. Smith's CPA. Would you be so kind as to repeat what you just told Mrs. Smith?"
Mr. Thompson was clearly agitated in having to repeat himself: "I'm really not accustomed to having to repeat myself, but I will tell you again. Mrs. Smith's $200,000 line of credit is canceled effective immediately and all sums are due and payable. Do I make myself clear?
"I'm sorry, we don't understand. Is there a problem with the account? To my knowledge Mrs. Smith has always paid her monthly installments on time and his current as we speak."
To say Mr. Thompson was rude was an understatement. Now he became even more bothered by the conversation: "It's clear you don't understand. I would suggest that you read the clear language of the loan agreement that gives us the option of doing so at any time with two weeks notice. I am giving you this notice now. Having said this in very simple language, I assume you have the basic intelligence to understand what I just said."
"Sorry, but we're just trying to be able to digest this news. This is very serious. We can't just pull out our checkbooks and a make a full payment on one day's notice . You don't have to be rude to us." Although still in shock, Mrs. Smith tried your best to soften the conversation.
Mr. Thompson was now eager to end the conversation. "Let me make it even clearer. Based on what I just told you, our bank no longer has a business relationship with you. You would be well advised to take steps to pay this account so that legal action is not necessary."
"Please understand that we need some time to think this through . . . I should . . . I mean I need to get a hold of the manager first," she pleaded.
"I'm handling the account now. You are not to talk to anyone else but me." The tone of of his voice was unmistakable and threatening.
At that point the conversation went steadily downhill. She and her CPA spent the rest of the day going over the books and speaking with their attorney.
Sound like something that cannot happen in America to a successful small business? Well, think again. These are exact quotes of the conversation. The big bank is simply stomping out big small businesses to improve their balance sheets. The lifesaver that has thrown to the big banks in the hopes they would pass it to small businesses on Main Street has simply not happened. It is at least understandable if a large bank decides not to make a new loan in this challenge economy. But it's another thing altogether to cancel existing loans with good customers.
Is this an isolated occurrence? Not all. Here is another example. Robert Picou is the President of the California manufacturing company known as California Ribbon and Carbon Co., Inc., with a plant located in Los Angeles. Robert is the epitome of the seasoned business owner, knowledgeable, practical, optimistic, and understandably proud of his company's heritage. After talking to him, you get the uncontrolled urge to get in the car and drive out to his plant. You get the image of a certain industrial vibrancy which is missing in America.
He should be proud. It is a story right out of the movies. In 1939, his father started selling old fashioned manual typewriter ribbons door to door to business owners in the Los Angeles area. But unlike Willy Loman in "Death of a Salesman", he made it into a real success. 70 years later this closely held family corporation has continued to thrive. To manage the ruts along the way, twenty years ago he took out a business credit card with a well known company and secured a large credit line. Needless to say, he has paid it on time ever since. But then he got a sudden and unexpected surprise in the mail. The credit card company unilaterally cut his credit line and froze up this access to working capital.
He wasn't especially daunted by this news because after all, he had a longstanding relationship with his large bank. All we needed to do was call them up and ask for an extension of his line of credit. His bank did get $150,000,000 in TARP money to presumably free up the money. Ten years ago he owed them as much as $1.4 million, but because of the success of his business, was able to pay it down to $88,000. A perfect candidate to receive some of the bailout monies and create an even more positive cash flow for him and the neighboring economy. No problem, right? Wrong again.
With no explanation, his bank turned him down flat. Asking why, he has yet to receive a credible answer. With orders piling in, his company is now on the unenviable position of not being able to fund all the orders received. Not to mention the rippling effect it has on his suppliers and employees, all of which have a tangible stake in our troubled economy. It is apparent that large banks have no intention whatsoever of using bailout monies for the benefit of small businesses.
Now the good news. Smaller community banks are interested in your business through the vehicle know as an SBA guaranteed loan. These institutions are using the incentives given by the SBA guarantee to cut their risk of loss and build up a better portfolio to be sold on the secondary market. You just have to find the right bank. At least someone realizes the foundational strength small businesses give to the overall economy.
----------------------------------------------------
Sue Malone is a small business advocate, consultant, and the nations #1 provider of unsecured SBA Community Express cash flow loans(start-up and existing). Email:smalone165@aol.com http://www.StrategiesForSmallBusiness.com Phone:(925)899-8449.
Obama's New SBA Small Business Loan Program: 90% Guarantee Provides Welcome Relief
On March 16, 2009 President Obama, in a long awaited address, finally reached out to the 27.2 million small businesses in this country and extended his hand. He may not have gone to the mountain, but he certainly walked down Main Street and acknowledged the perils of struggling small business owners. And it was just a matter of time that he did so. After all, the American Recovery and Reinvestment Act of 2009 ("Recovery Act") nicely laid out beneficial provisions for small businesses and just as promised, regulations have come out by the SBA to start the ball rolling. And I'm not talking about more government promises or red tape, but bottom line capital to be infused into the coffers of deserving business owners. So let's roll up our sleeves and see one of the more important elements that was put into place on Monday.
When the Small Business Act was enacted in 1958, it had a very simple mission. Find a way to get loans to small businesses that couldn't get them through traditional channels. It did this in an ingenious way. They knew banks where reluctant to loan to small businesses, especially startups, because of fear of failure. So the SBA collected a fee on each loan and used this as a fund to pay banks if there was a default. Bingo, there was invented the SBA guarantee fee. It doesn't take a degree in rocket science from MIT and an MBA from Harvard to know this gives incentives to the banks to make more loans.
SBA loan programs historically had guarantees of 85% for loans of $150,000 or less and 75% for loans greater than $150,000 (13 CFR Part 120). On the other hand, there are some programs that only go as high as 50%, including the Express Loan program (for those types of loans the new guarantee will not change).
As we all know, on February 17, 2009 the President signed into law the Recovery Act which, under section 502, authorized the SBA to guarantee loans up to 90%. On Monday, the SBA completed its review of the legislation and announced in a Policy Notice that indeed the guarantee would go up to 90% effective March 16th under the various 7(a) SBA loan programs.
Think about this for a moment. Simple math tells us more guarantee, the greater the likelihood of the bank making the loan. For goodness sakes, 90% is tapping on the door of a 100% guarantee! Also note the guaranteed portion is typically sold on the secondary market (which has recently shut down to almost nothing) so there is more chance for loans to be sold and more money to go back into the coffers of the banks for further lending.
Now let us translate this into popular programs for small businesses. The Community Express Loan Program allows quick and reasonably priced SBA loans up to $250,000 (although most lenders are dispersing monies in the neighborhood of between $5,000 and $50,000 unsecured). They are now guaranteed to 90%. And remember there are lenders now making such a loans even in this economy. The equally popular U.S. Patriot Express Loan Program for veterans and their spouses or windows, goes to $500,000 and is also guaranteed now to 90%. At the same time, the workhorse 7(a) loan program, which is usually for loans in the hundreds of thousands of dollars, was likewise increased to 90%. Not to bore you with the details, but the only exceptions are almost minuscule, namely the guarantees are not used for business ventures involved in gambling, aquariums, zoos, golf courses, or swimming pools. Further, the SBA will not issue a guarantee to a borrower that hires, recruits, or refers for a fee, employees that are unauthorized aliens as defined by the Secretary of Homeland Security.
And it gets even better. Banks that are already SBA lenders don't have to do anything different in the loan process. Namely, there is no change to the submission process to get a SBA guarantee loan number. They simply get their approvals from the same central processing units throughout the nation as they did before. The same streamlined paperwork.
Of course, taxpayers' dollars will be funding these guarantees, especially since the borrower no longer pays for a guarantee fee on closing. In other words, the 90% guarantee will stay in effect as long as there is money appropriated by Congress. The current estimate is that approximately $8.7 billion will be allocated for these guarantees, of course depending upon the loan volume and default rate.
So how will the banks react to this news? Many experts predict in a favorable manner. Obviously, with a 90% guaranty, there is less risk if the loan goes south. This also means the traditional robust secondary market for purchasing government backed loans, once it starts to kick-in, will also find them desirable for purchase in investment pools. There is also another intangible you don't read about in the news: The environment in Washington has never been better for small businesses. You now have an Administration that respects small businesses and wants to do everything it can to engender their success.
Translation: banks are comfortable with the new SBA (as opposed to the more insular and contentious regime under the Bush administrations that spent more time fighting and failing to communicate with lenders than trying to treat them as partners) and so more willing to make loans even though the default rates go higher. They know the Obama Adminstration will probably understand the situation because of current market conditions.
So for the small business owner, this news of 90% guarantees is very favorable. Why did it take them so long?
----------------------------------------------------
Sue Malone is a small business advocate, consultant, and the nations #1 provider of unsecured SBA Community Express cash flow loans(start-up and existing). Email:smalone165@aol.com http://www.StrategiesForSmallBusiness.com Phone:(925)899-8449.
When the Small Business Act was enacted in 1958, it had a very simple mission. Find a way to get loans to small businesses that couldn't get them through traditional channels. It did this in an ingenious way. They knew banks where reluctant to loan to small businesses, especially startups, because of fear of failure. So the SBA collected a fee on each loan and used this as a fund to pay banks if there was a default. Bingo, there was invented the SBA guarantee fee. It doesn't take a degree in rocket science from MIT and an MBA from Harvard to know this gives incentives to the banks to make more loans.
SBA loan programs historically had guarantees of 85% for loans of $150,000 or less and 75% for loans greater than $150,000 (13 CFR Part 120). On the other hand, there are some programs that only go as high as 50%, including the Express Loan program (for those types of loans the new guarantee will not change).
As we all know, on February 17, 2009 the President signed into law the Recovery Act which, under section 502, authorized the SBA to guarantee loans up to 90%. On Monday, the SBA completed its review of the legislation and announced in a Policy Notice that indeed the guarantee would go up to 90% effective March 16th under the various 7(a) SBA loan programs.
Think about this for a moment. Simple math tells us more guarantee, the greater the likelihood of the bank making the loan. For goodness sakes, 90% is tapping on the door of a 100% guarantee! Also note the guaranteed portion is typically sold on the secondary market (which has recently shut down to almost nothing) so there is more chance for loans to be sold and more money to go back into the coffers of the banks for further lending.
Now let us translate this into popular programs for small businesses. The Community Express Loan Program allows quick and reasonably priced SBA loans up to $250,000 (although most lenders are dispersing monies in the neighborhood of between $5,000 and $50,000 unsecured). They are now guaranteed to 90%. And remember there are lenders now making such a loans even in this economy. The equally popular U.S. Patriot Express Loan Program for veterans and their spouses or windows, goes to $500,000 and is also guaranteed now to 90%. At the same time, the workhorse 7(a) loan program, which is usually for loans in the hundreds of thousands of dollars, was likewise increased to 90%. Not to bore you with the details, but the only exceptions are almost minuscule, namely the guarantees are not used for business ventures involved in gambling, aquariums, zoos, golf courses, or swimming pools. Further, the SBA will not issue a guarantee to a borrower that hires, recruits, or refers for a fee, employees that are unauthorized aliens as defined by the Secretary of Homeland Security.
And it gets even better. Banks that are already SBA lenders don't have to do anything different in the loan process. Namely, there is no change to the submission process to get a SBA guarantee loan number. They simply get their approvals from the same central processing units throughout the nation as they did before. The same streamlined paperwork.
Of course, taxpayers' dollars will be funding these guarantees, especially since the borrower no longer pays for a guarantee fee on closing. In other words, the 90% guarantee will stay in effect as long as there is money appropriated by Congress. The current estimate is that approximately $8.7 billion will be allocated for these guarantees, of course depending upon the loan volume and default rate.
So how will the banks react to this news? Many experts predict in a favorable manner. Obviously, with a 90% guaranty, there is less risk if the loan goes south. This also means the traditional robust secondary market for purchasing government backed loans, once it starts to kick-in, will also find them desirable for purchase in investment pools. There is also another intangible you don't read about in the news: The environment in Washington has never been better for small businesses. You now have an Administration that respects small businesses and wants to do everything it can to engender their success.
Translation: banks are comfortable with the new SBA (as opposed to the more insular and contentious regime under the Bush administrations that spent more time fighting and failing to communicate with lenders than trying to treat them as partners) and so more willing to make loans even though the default rates go higher. They know the Obama Adminstration will probably understand the situation because of current market conditions.
So for the small business owner, this news of 90% guarantees is very favorable. Why did it take them so long?
----------------------------------------------------
Sue Malone is a small business advocate, consultant, and the nations #1 provider of unsecured SBA Community Express cash flow loans(start-up and existing). Email:smalone165@aol.com http://www.StrategiesForSmallBusiness.com Phone:(925)899-8449.
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