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Utility Factor – The prospect has to find your product / service to be useful. If you can prove that your product is more useful at the same price point your competitors offer than your competitors you already have won most of the battle.
Trust – You want your prospects to trust you, so make sure they see and read great comments from your satisfied clients. Place testimonials throughout your marketing so your prospects can’t miss them.
Observe – Observe what they do, where they shop, what they don’t like, what they will pay for, what they will not pay for, what they hate.
Motivation to act – Give your prospects a compelling reason to read or hear your message, to contact you, and to buy from you today. If it’s possible to put off a decision, most people will. Include something in your marketing that will motivate your prospects to act right away, whether it’s an offer too good to refuse, or a time limit on an offer or both.
Amuse – Life is too short to be serious. Enjoy doing business and let your existing customers enjoy doing business with you. Do something funny. Your customers will convert your prospects for you.
Time – Your prospects time is important. Your time is important. Don’t waste a prospects time by selling something they don’t need. Understand their needs intimately before you pitch.
Interest – Before your prospects get distracted by another site, or another task, grab their interest by making them curious about how much better off they’ll be with your product or service by addressing their concerns with your solutions.
Commitment – Help your prospects make a commitment by using everything above to try using your product or your service and then hook them on your outstanding customer service.
Quoted from here.
Applicants hate to hear that dreaded “no” and the feeling of rejection that follows can be disturbing. Although a refusal almost always creates anxiety, it need not be a negative experience. A bit of thought and well-planned action can turn a doubtful situation into a win.
Here are a few suggestions for anyone whose application hits the denied pile.
1.If you’re passionate about your business, resolve to do what it takes to succeed. Accept that it’s not the gatekeepers fault and take ownership of the problem. You are the champion for your application, and if it’s to move forward, it will be because you fix any issues and move on.
2.Re-examine the criteria we used; these are the rules the gatekeeper must live by when making loan or grant decisions. Make sure your application or project fits the mandate. In other words, even if you did everything perfectly, would the gatekeeper be obliged to deny your request because it doesn’t fit within his guidelines?
3.Recognize that the gatekeeper has reasons for rejecting your application. Find out what those reasons are and ask if you can revise and reapply. Most often this can be done with a phone call, but it might also be an opportunity to meet in person.
4.If it’s a grant you’re after, consider whether you really need it. Grants sometimes hinder more than they help. They can be a great boost for a small venture, but more often they derail the owner from the core business. Grants tend to focus applicants on ‘getting’ instead of giving and serving, which are necessary practices for any successful business.
5.If your business or project is to be, it will be because you take the necessary actions to make it happen. Don’t allow yourself to be stopped by a “no” from one lending agency. A rejected loan or grant application is just a speed bump, perhaps enough to slow you down, but not a reason to stop.
6.Consider other sources where you might get the needed funding or financing. If your application doesn’t fit one agency, perhaps it stands a better chance with another. There are many types of business financing and little research might lead to a more suitable funding partner.
7.Finally, determine if the gatekeeper might be saving you from a disaster down the road? Anyone who has seen or experienced the destruction that comes with a bankruptcy will know that sometimes “no” is the best answer. Be open to the idea that you may be headed the wrong way, and be willing to accept guidance from others, and to change your direction when it makes sense to do so.
Entrepreneurs walk a thin line between open boldness and passivity. Too much of one or the other can put you out of business. There are important lessons to be learned from a denied loan application. Sometimes all you have to do is listen, and the gatekeeper will tell you how to turn the situation into a success.
Checklist for Starting a New Business
Background work
- assess your strengths and weaknesses
- establish business and personal goals
- assess your financial resources
- identify the financial risks
- determine the start-up costs
- decide on your business location
- do market research
- identify your customers
- identify your competitors
- develop a marketing plan
Business transactions
- select a lawyer (preferably through somebody’s recommendation)
- choose a form of organization (proprietorship, partnership, or corporation, for example)
- create your business (register your name, incorporate the business, etc.)
- select an accountant
- prepare a business plan preferably through a financing consultant (like us)
- do not talk to a banker unless you have consulted a financing consultant. Some of them give you free advice.
- set up a business checking account
- don’t apply for business loans unless you know for sure that you will not be rejected. Once rejected by a Canadian institution, it is very difficult to apply for a loan.
- establish a line of credit
- select an insurance agent
- obtain business insurance
First steps after you talk to a financing / startup consultant
- get business cards
- review local business codes
- obtain a lease
- line up suppliers (if applicable)
- get furniture and equipment
- obtain a business license or permit (if applicable)
- send for federal and state tax forms
- join a professional organization
- set a starting date
When we mention debt financing, small business owners have two reactions. They either say we don’t use debt, period. Or they say we don’t need debt financing, period. Interestingly enough, these business owners have used debt financing previously but now are scared of it. However do not discount debt financing as if used correctly, it can be an excellent way to raise much-needed funds for your business.
Today, there are two types of unsecured credit facilities open to small business owner. Whether it is to be a business overdraft or a business installment loan, the choice would ultimately depend on the needs of your company and how the capital will be utilized.
If your company needs a safety net for rainy days, your best bet would be an unsecured bank overdraft facility. It is an excellent way to minimize your interest expense especially if the funds are used for a short period. This is due to the interest being calculated on a daily basis. However do take note that the interest rate is usually pegged to the board rate which fluctuates with time. Some banks even pay you preferential interest rates if your account has credit balances in it. Your current banker probably has offered you this facility before so take it. With the credit line being reviewed on a yearly basis take the maximum quantum offered. After all, there’s no certainty that you will be getting the same or better deal in years to come.
On the other hand if your company is planning to expand, go with the unsecured business installment loan ( most of the time with a Government Guarantee). Now you get to maximize your business potential without needing to fear that your sources of livelihood being taken away from you. Most banks do not restrict the usage of the funds thus the flexibility is a big bonus to any small business owner. The funds can be used for working capital, purchase of machinery and materials, payroll financing etc. The option to pay back between 12 to 60 months allows you time to reap the returns on your investment.
Every bank has slightly different policies on unsecured credit facilities for small businesses. The problem is 80% of the time small business owners get rejected by banks for many reasons and it gets hard to get your funds.
We strongly encourage you to come to us for a free consultation before deciding whether debt financing is suitable for your company. To find out more about how debt financing can work for your business, speak to us today at 416.222.2909.
We at BPF use $333 / month as an average lease cost per employee for our high level financing projections for service based companies. We use an average of 200 sq ft per person at a Toronto average of $20 per square foot per year.
We have seen the richer firms allocating more than 400 square foot per person and smaller firms doing less than 200 sq ft per year.
For service based companies, it is always wise to do an average sq ft of 200 or more because anything lesser than that would mean diminishing results from your employee because of the ‘cramped’ atmosphere. People are whats expensive, not space.
Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.
I should also say that for businesses that don’t have the benefit of venture capital backing, the reverse is probably true. Almost certainly non-venture backed businesses will not have the ability to get too big too fast. They will mostly fail because they have the wrong business plan and they don’t have the wherewithal to survive for the period of time it takes to figure out the correct one.
Regardless of whether you have taken venture capital or not, capital efficiency and bootstrapping are critical values. You must keep your burn rate low until you can show without a shadow of a doubt that you have a business model that works, can be operated profitably and is ready to be scaled. Then and only then should you step on the gas.
This is not a rhetorical question. Startups and small business will drive us out of this recession with the new jobs they will create. Their new jobs replace the hundreds of thousands eliminated at the large global brands whose solutions fell behind. And without access to financing, these new jobs with small business and startups will not be created. So, no this is not a rhetorical question.
And, its answer addresses all of our lives.
So. Where do startups and small business find their financing?
Credit Cards?
Most of the startups dont have a business plan and think that they might only need ’some’ cash to start off and don’t see any problem in using their credit cards. But the problem is the startup money is not usually enough to keep the business running and they keep on using their credit cards.
Startups that lean too much on credit cards are more likely to fail, according to a new report (PDF) from the Kauffman Foundation. The study found that every $1,000 of credit card debt increases the probability that a new firm will close by 2.2%.
Credit cards have increasingly replaced traditional loans, and this study suggests that taking on credit card debt is one factor that contributes to business failure.
The report notes that “with the recent contraction of credit markets, many new businesses will face difficulties in accessing traditional forms of credit, which likely will create greater demand for credit cards.” - BusinessWeek, Credit Card Debt Hurts Startups.
When there is an option to go for a Government Guaranteed Loan for Startups (which BPF is an expert on), why do you have to max up your credit cards? . This not only eats up a large share of your profits by paying high interests but also reduces your chance of getting a loan by affecting your credit score.
Names of competitors: List all of your current competitors and research any that might enter the market during the next year.
Summary of each competitor’s products: This should include location, quality, advertising, staff, distribution methods, promotional strategies, customer service, etc.
Competitors’ strengths and weaknesses: List their strengths and weaknesses from the customer’s viewpoint. State how you will capitalize on their weaknesses and meet the challenges represented by their strengths.
Competitors’ strategies and objectives: This information might be easily obtained by getting a copy of their annual report. It might take the analysis of many information sources to understand competitors’ strategies and objectives.
Strength of the market: Is the market for your product growing sufficiently so there are enough customers for all players?
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