Monday, July 28, 2014
Posted by Small Business Development Center at the University of North Florida at 7/28/2014
Last week, my colleague Marge gave a brief overview of traditional sources of capital for small businesses. To continue the discussion, I have outlined a few more options that our clients don't always consider when starting or expanding their business. But they are often very viable alternatives to choose from.
1) Crowd Funding (non-equity)For those of you who don't know this can be an effective way to raise money. There are several sights on line. Kickstarter.com and Indiegogo.com are the main ones. You set a goal for how much money you want to raise over a period of time. Your family, friends and strangers can then pledge money to your project using credit cards or pay pal. However on many of the sights if you don’t reach your goal the funds are returned to the contributors and the sites do collect a fee for this.
2) Peer-to-Peer Lending
Also known as person-to-person lending and P2P lending, this is loans made by individuals to another individual without going through traditional financial institutions such as a bank. Often referred to as social lending, the loans are unsecured and interest rates are typically lower than a bank for the type of loan because of lower costs and lenders are competing on interest rates; but higher than would be received if the lender had it in a CD or money management account. Online platforms such as Prosper, www.prosper.com, and Lending Club, www.lendingclub.com, charge a fee to facilitate the loan. This is a good option for high risk borrowers with little to no collateral who are seeking a micro-loan of less than $50k. The risk is that you don’t know the lender nor the stability and security of the lending platform you use.
3) FactoringAlso known as accounts receivable financing, is one of the oldest methods of in-house financing. Factoring, simply put, is when a business sells its receivables to a financial institution or "factor". The factor will advance funds on a portion of the receivables, usually 75-80% of their face value. The remaining 20-25% is known as the "reserve" and is initially held by the factor. The amount of the reserve will vary with the quality of the receivables and the historical average of the payers. Historical late payers will increase the amount of the required reserve.
The factor handles the transactions, administers the accounts, conducts credit assessments and handles collections. For these services and the funds advance, the factoring costs to the borrower may exceed 20% of the face value of the receivables. Once the accounts are paid, the borrower receives the difference between the face value and the reserve. The factor usually gets a 2-3% fee.
The benefits of factoring include quick access to cash (usually within 10 days) and the fact that with a growing business, more accounts receivable will be coming in. The drawback is that it’s expensive.
4) Convertible Debt
Convertible debt instruments are essentially asset-backed loans that can require the business owner to give up some future equity in the business if the lender wishes to convert the debt to an equity position in the company. One of the benefits is that the lender incurs less risk in making this type of loan and therefore is more likely to make the loan even with some risk in the situation. It is also less risky for the lender than a straight equity investment if the lender just wants to be paid back with a return and doesn't want ownership. This may occur if the company's bottom line growth is not performing as anticipated.
The dangers and drawbacks to the borrower are the potential loss of future equity if the company does well. Conversely, the owner may be required to pay back unconverted debt if the company is performing below budget.
In a nutshell, availability and choice of financing will be governed by the unique variables inherent in the needs, capacities and credit history of the borrowing business or individual. These will include timing requirements, asset bases, geographic location, risk tolerances and the ability to pitch the soundness and success potential of the business, among others. If thorough and competent credit market shopping and evaluation is done, you can get the financing you need. Additionally, you can find further information and assistance on financing at SBA.gov.
Michael Chung has been with the SBDC at UNF since 2006 helping businesses improve profitability or potential owners achieve their dream. Prior to joining the UNF team, Mike owned and operated a shipping company for 13+ years and was with the USAF for 14 years and as a project engineer and contract manager was responsible for multimillion-dollar R&D and SBIR projects. He brings a blended public-private experience to business management, operations, financial management and planning.
Thursday, July 24, 2014
We had the pleasure of interviewing long time clients Cindy and Robin of Roomscapes. Many of you may be familiar with them for their frequent appearances on channel 4 WJXT's The Morning Show. They have been doing the show for seven years!
What is Roomscapes purpose?
Who is your customer?
RoomScapes customers are varied in age and income level. But, we have found that our business niche are customers that have found themselves at a stage in life where things are changing. They may be downsizing, becoming empty nesters, retiring, combining households for remarriage or alone again due to divorce or a loss.
What have been some of your most interesting projects?A couple who were both starting their second marriage together and they each had a house full of their own furnishings which they were trying to combine into one. We helped them make those decision without bloodshed! J
What sets you apart from other companies?The two of us. Most redesigners work alone, we work together combining our creative talents to give our customers the look they desire. There is also more to us than just Redesign. We do Staging for Resale, Holiday decorating, Paint Consultations, Permanent Botanicals for your home and even Personal Shopping.
What advice would you give someone who is thinking of going into business?
Robin: Do what you Love! Also, find a mentor.
Cindy: Research and interview your team of web designers, accountants, attorney’s etc.
How can people contact you for a consultation?www.RoomScapesRedesign.com
RoomScapesRedesign.blogspot.comSee their latest appearance on The Morning Show: http://www.news4jax.com/news/roomscapes-bathroom-makeover/26942328
Tuesday, July 22, 2014
In days past a handshake with your banker was all that it took to obtain financing to start a business or to obtain a loan for your existing business. In today’s environment it can be very challenging to obtain any loan. But there will likely come a time when you need additional capital. Keeping that in mind, the following is a list of ideas that may work for you and your business.
1. Get a Bank Loan
Because lending standards have tightened you will need a business plan and projected revenues and expenses for your new business and at least an executive summary and current financials if you have an existing business. Many lenders will use the SBA program to guarantee your loan and reduce the risk for the lender which will increase your chances of securing a loan.
2. Ask Family and Friends
There is no harm in asking; and family and friends may want to help. Make sure you treat this as business, show them a formal business plan and explain how you intend to pay them back. You need to tell them about the risks involved, how you will pay them back and secure the loan with a note. After all your family will always be there.
3. Check your 401 k
You may be able to tap into your 401 k without penalty. You will need to set up a corporation and someone with experience to set this up such as an attorney or CPA.
4. Credit Cards
You can use a credit card but this can be risky business. Pay the minimum monthly and it can take you years to pay this off. However used responsibly it can get you out of a jam.
There are investors out there and they look for certain types of business. They will want you to know your business. They too will want a business plan, financial information and market analysis.
The options listed above are the historical go-to methods for obtaining capital for your business. Next week, part two of this article will explore other ideas for finding money to grow or start your business. See you then!
Marge Cirillo has entrepreneurial experience that includes owning and operating three highly successful restaurants and catering service for eight years. After selling the restaurants she went to work for the SBA Disaster Team as a loan specialist. She has also worked for Certified Development Companies as an underwriter and marketer of the SBA 504 Loan program. Before joining the SBDC Marge was an Assistant Vice President at a community bank specializing in SBA lending. She now serves as the SBDC liaison in St. Johns County.
Tuesday, July 15, 2014
Interesting development: Certain old fluorescent light bulbs are no longer being produced. Our client, Jim Anderson, is helping companies update their fixtures and lights to meet the new standards. But even better, these updates are a money saving opportunity based on the low operating costs of LED lights. Check his LED Lighting website.
Posted by Small Business Development Center at the University of North Florida at 7/15/2014
Monday, July 14, 2014
A company’s brand epitomizes the business and communicates to the public what and who the business is. It is all about the image of the business and the impression you want to make on your customers. A good logo is just the beginning of branding and is the base for your identity package (business cards, letterhead, signage, website, etc). The key to visual collateral is it needs to be well-designed with the target audience in mind. In addition to your look, your words are important to your marketing. Slogans, messaging and language should match your culture and personality.
So how do you put it all together? With a successful brand strategy of course. But that can be a tricky undertaking. To help you get started, here are a few tips to building a branding strategy for your business.
Tips to Build a Successful Brand Strategy
1. Define your brand – What do you offer and what specific customer need does your brand fill?
2. Be unique – What can your brand do or offer that your competitors do not? Establish the unique value proposition (UVP) for your brand.
3. Develop your name, logo and tagline – This creative aspect is the key to unlock your brand image in the consumer’s mind.
4. Stand for something – What does your company stand for? Examples include: fun, environmentally friendly, service to others, etc.
5. Be consistent – Develop a style guide to ensure creative consistency and be very consistent in messages conveyed about the brand across all mediums.
6. Build long-term relationships with your customers – Deliver consistently on your brand promise to ensure both repeat customer business, referrals and brand evangelists.
7. Measure effectiveness -- Who knows your brand, what do they think, are they loyal and who are they? Customer surveys and focus groups can provide invaluable information. Also, be sure to continually check and track online engagement metrics such as mentions, shares, subscribers, etc.
Putting the strategy together is the first step actually implementing the plan take time, patience and perseverance. But you can do it, and your business will be the better for it. Questions? Make an appointment with any of our business consultants. They are here to help and happy to do it.
Tracy Nazzaro works from the FSBDC office in Nassau County. She has a knack for focusing on the organization and management of new and developing businesses. She has successfully initiated business expansion efforts that included detailed financial and operating assessments. Most recently, Nazzaro was Vice President of Aldebaran Partners and worked as an advisor to a diverse range of businesses. Nazzaro is a graduate of the University of South Florida. She has a Bachelor of Arts degree in speech communication and business administration.
Friday, July 11, 2014
Ever gotten in a car crash and started fretting about the resale value of your car? Leticia Slade had just this problem and decided to fight back. Leticia founded Car Accident Recovery, in hopes of helping others get the money they deserve from insurance companies through a diminished value claim.
"When you get in an accident, the insurance company is supposed to make things right. But they don't account for the lost value to your vehicle due to the use of used or after market parts, paint differences, and of course Carfax and Autocheck reports. We give you the tools to collect on the lost value."
Car Accident Recovery is a women owned business, and hails Jacksonville as its home. It's great to see businesses like this popping up on the First Coast.
Posted by Small Business Development Center at the University of North Florida at 7/11/2014
Tuesday, July 08, 2014
The Florida Small Business Development Center at the University of North Florida (FSBDC at UNF) is pleased to announce the opening of a new full-service FSBDC office in Suwannee County.
Located in the Suwannee County Chamber of Commerce in Live Oak, the new FSBDC office will provide one-on-one consulting, training and information to help business owners make sound decisions and to assist potential owners in getting started on the right foot.
Mark Yarick has been hired as a consultant to work with businesses in Suwannee and surrounding counties. Mark's professional experience includes work in the automotive field with hands-on management and production supervision as well as warranty and customer service. He has been a small business owner since 2002 and holds an undergraduate degree from St. Leo University. Mark will lead the FSBDC efforts in growing opportunities in Agribusiness.
To make an appointment at the new FSBDC located at 212 North Ohio Ave. in Live Oak, call (386) 362-1782.
Posted by Small Business Development Center at the University of North Florida at 7/08/2014
Thursday, July 03, 2014
Marion Cook has always enjoyed interior design and space planning and her husband, Paul, has enjoyed building things. Having been married for 21 years, they worked well together on projects. Paul’s work in construction management required frequent travel around the country and took him further into the paperwork associated with government contracting than he wanted to go. He wanted to get back to building things on a smaller scale, reduce the travel and establish a business that could sustain their family, as well as providing a way to fully employ each of their gifts and talents working together. Kitchen and bath projects are typically more complicated than other types of remodeling. The Cooks gravitated toward the challenge and found that those projects offered a good balance of complexity, artistic expression, customer interaction and engineering that matched their strengths.
Paul and Marion first visited the FSBDC at UNF in January 2012. They attended several workshops covering topics such as business planning, taxes, marketing and QuickBooks. They also met FSBDC consultant Cathy Hagan who helped them develop a business plan, including cash-flow projections.
The Cabinet Shoppe officially opened its showroom in April 2013. It is a family-owned business that provides custom designs, quality cabinetry, and expert installation for residential and commercial clients. They specialize in helping people find what they love – in design, function and finish. There are a myriad of possible styles on the market today, and the company’s design team is skilled at creating designs that best match clients’ tastes, while achieving the best functionality of a given space. In addition to design services, The Cabinet Shoppe offers high-quality, American-made cabinetry and accessories from select manufacturers and local builders, ranging from stock to full custom. To ensure clients’ long term investment is preserved, they partner with select installers who each have many years’ experience in cabinet-making and finish carpentry. Fantastic cabinets will be all for naught with a poor installation!
Marion Cook has a degree in interior design and is the lead kitchen and bath designer. She works with clients in developing well-functioning, beautiful designs that capture the look and feel that the client desires. Marion is skilled in creating beautiful spaces with traditional, blended or modern themes. Prior to founding The Cabinet Shoppe, she worked with interior design firms in Ponte Vedra and Jacksonville Beach, as well as independently for 14 years. She is currently a board member of the Jacksonville chapter of the National Kitchen and Bath Association (NKBA).
Paul Cook manages the purchasing and installation phases of projects and works closely with both clients and subcontractors. Prior to joining The Cabinet Shoppe, Paul managed large commercial construction projects with Sauer, Inc. for 5 years. He originally came to Jacksonville with the Navy and served as a Lieutenant. He has a degree in Construction Management from UNF and a degree in Physics from the Naval Academy. He is a licensed contractor and a LEED Accredited Professional. One of Paul's passions is woodworking, and he builds custom kitchen hoods, islands and cabinetry for select projects.
Starting The Cabinet Shoppe has presented some challenges for Paul and Marion. Juggling the responsibilities of running the business while keeping up with the hectic schedule of three children has made life interesting. They equally share the housework and childcare responsibilities by alternating routines each week – never a dull moment!
Another challenge was learning all the intricacies of starting and running a business, especially in the area of government compliance. The Cooks attended several workshops offered by the FSBDC at UNF to help them navigate these waters.
Launching this type of business requires a significant up-front investment that may take years to recoup. It has been the one of the most difficult tasks the Cooks have ever tackled. “The challenge has strengthened our faith in God without a doubt!” said Paul.
Despite these challenges, Marion and Paul are passionate about The Cabinet Shoppe and are having fun. They enjoy working with customers who appreciate the value of high-quality products. “Treasure worth searching for” is their tag line, helping people find beautiful things for their home. They get to work with very talented artisans in a variety of specialties. But the most fun comes from working together, expressing their artistic sides in creative ways that results in a design that exceeds the client’s expectations.
Building The Cabinet Shoppe brand has been a great opportunity for Paul and Marion to combine their creative ideas and business experiences and shape this new entity. As individuals, they have unique backgrounds and think differently about how certain things should be done. Working through such issues has been rewarding and inspiring, especially as they see the results their labors starting to bear fruit!
Posted by Small Business Development Center at the University of North Florida at 7/03/2014