This is a company that manufactures bikes in Walnut Creek. Absolutely dedicated employees lead by a socially conscious man by the name of Grant Peterson work hard and have fun doing it.

Mostly SCORE helps beginning stage entrepreneurs to develop their ideas, form their business plan, offer counseling with respect to funding, insurance needs, leasing space, marketing, accounting and legal issues and more. From time to time SCORE experts help existing businesses to think through a problem and find solutions.

Rivendell is an exceptionally well run enterprise. They just needed to tweak their marketing efforts. Since Grant is a gifted writer the SCORE counselor advised the use of this gift to provide information to clients and potential clients through an improved use of their blog. Yep, the result was an uptick in sales.

Even if you aren’t in the market for a new bike you can still learn much about biking by logging See Rivendell News by logging on to www.rivebike.com.

The economic indicators are starting to look better, and there’s hope in the air that perhaps we are truly at the bottom of the deep well we’ve been descending into for quite some time. This is a perfect time for you to be investing in your business. Here are three key tips for you to focus on to increase growth and profit and accelerate your business:

1. Work on your business, not in it. Think about where you need to be six months from today and ensure all of your actions are aligned with achieving those goals. When we’re busy working in the business, on a day-to-day basis, we sometimes end up doing activities that lead us astray from our real business goals.

2. Make sure you truly understand and can define what differentiates your company from your competitors. This not only includes companies that provide products or services similar to yours, but rather all of the firms that compete for the same customer dollars. For example, one of the successful entrepreneurs in my InnerCity Entrepreneurs class runs an HVAC (heating, ventilation, and air conditioning) company. In reviewing her competitors, she realized that some of her prospects were deciding between spending money on a new AC system or a new swimming pool. That makes swimming pool companies her direct competition.

3. Remember that sales is not a four-letter word. Selling is about listening to your customers’ needs and addressing them clearly and thoughtfully. It’s not about telling somebody everything you know about your products and services. Good salespeople spend at least 75% of their time listening to their customers’ needs before talking. With a typical adult attention span of 15 to 30 seconds, that means you need to truly do your homework before you meet with a key prospect so the message you provide is clear, concise, and targeted toward providing them with a solution that is customer-focused.

Beth Goldstein
President
Marketing Edge Consulting Group
Boston

The U.S. Small Business Administration (SBA) grants millions in loans each year for small businesses.

The SBA’s loan program is in the spotlight right now because the stimulus package expanded the program in a number of ways. First, there is now a guaranteed fee waiver, which can save small businesses thousands of dollars. In addition, the 75% guarantee has also been raised to 90%, which makes it more appealing for lenders to make loans. Lastly, America’s Recovery Capital (ARC) program helps stabilize small businesses at risk by providing cash to businesses that need assistance paying down existing debt.

These recent changes ultimately mean there are more funds available and greater eligibility for small businesses, including the SBA’s largest vehicle, the 7(a) loan program.

Depending on the loan in which you’re interested, requirements will vary. According to the SBA, common documentation requirements include: purpose of the loan; history of the business; financial statements for three years (for existing businesses); schedule of term debts (existing businesses); accounts receivable and payable aging; projected opening-day balance sheet (for new businesses); lease details; amount of investment in the business by the owner(s); income projections: expenses and cash flow: signed personal financial statements and tax returns: and personal resume(s).

Other necessary documentation may include:

In addition to documentation and other requirements, the SBA wants prospective loan candidates to understand some basic credit factors and the ways in which they influence the loan process:

• Equity investment—You should be able to demonstrate a level of equity invested into your business, coupled with a manageable amount of debt. Any loan will involve an examination of your debt-to-worth ratio to correlate the loan amount with the owner’s net worth.
• Earnings requirements—This is about cash management and the ability to meet all your debt payments, not just your loan(s). You’ll need to supply a sound cash flow projection, broken down on a monthly basis, and covering the first annual period after the loan is received. All SBA loans must be able to reasonably demonstrate the “ability to repay” the intended obligation from business operations.
• Working Capital—Working capital means the excess of current assets over current liabilities. Working capital measures what is available to pay a company’s current debts. It also represents the cushion or margin of protection a company can provide its short-term creditors.
• Collateral—Collateral can consist of both assets which are usable in the business and personal assets which remain outside the business. For all SBA loans, personal guarantees are required of every 20% or greater owner, plus others individuals who hold key management positions. If real estate is being used as collateral, banks and other regulated lenders are now required by law to obtain third-party valuation on real estate-related transactions of $50,000 or more. Certified appraisals are required for loans of $100,000 or more. The SBA may require professional appraisals of both business and personal assets, plus any necessary survey and/or feasibility study. One note: SBA will generally not decline a loan where inadequacy of collateral is the only unfavorable factor.
• Resource management—Simply put, it’s your ability to manage the resources of your business. Management expertise and capacity—sometimes called character—are important factors encompassing education, experience and motivation.

The SBA offers several loan programs. Learn more about what you need to prepare, loan types and related information.

In dealing with business sales, often times the seller or the buyer will ask about the use of an escrow company. The seller may say ‘Why can’t the buyer just pay me cash or give me a cashier’s check’?

Escrow does a number of things during the business for sale transaction that are designed to protect both the buyer and the seller. First, it is important for the seller to know that the buyer’s earnest money deposit or good faith deposit actually has some cash behind it. Escrow will deposit the buyer’s check and hold these funds in an escrow account until such time as the transaction closes or is cancelled by the buyer and seller.

On occasion, the buyer will discover during the due diligence period that the income of the business was overstated by the seller. The buyer may decide that the business will not generate sufficient cash flow for his/her needs and may choose to cancel the transaction. If the buyer has given the seller a cashier’s check or cash as a deposit, there may be substantial difficulty in getting the deposit back. However, it is generally a simple process to have the deposit funds returned by Escrow.

It is important for the buyer to know if there are any liens against the business and if so to ensure they are paid by the seller. Escrow orders UCC searches to see that the seller doesn’t have other liens or encumbrances against the assets of the business. Imagine if a buyer simply handed over a cashiers check for $200,000 only to find out six months later that there was an outstanding lien for $125,000 that had been recorded against the assets of the business. Additionally, Escrow ensures that a “Notice to Creditors of Bulk Sale” is published so that any other creditors can file any claims they may have against the business or the seller prior to the transaction closing. All of this is done to protect the buyer in the transaction.

The buyer’s funds have to be deposited into escrow several days prior to the closing date. The funds may come from a lending institution, cashiers check, wire transfer. However, typically the funds are required a few days in advance. This is to protect the seller. There have been situations where buyers have paid sellers directly with cashier’s checks and then proceeded to the bank to stop payment. Since escrow requires the funds in advance, it prevents this type of situation from occurring.

There are many other benefits to using an escrow company and most legitimate business brokers will not be involved in transactions where buyers and sellers are transferring funds directly between themselves.

It is always a good idea to have an objective third party hold the funds, make sure there are no additional encumbrances against the business and make sure both the buyer and seller are in agreement on closing prior to releasing funds. After all, once the funds have been disbursed, there’s no going back.

About The Author: Tawnya Gilreath is the managing broker of First Choice Business Brokers in Los Angeles County. Tawnya can be reached at 818-781-0082 for assistance in buying or selling a  business, or see her listings and more information about her services.

Anyone owning or aspiring to start a small business in the Bay Area has an alternative to the traditional sources of funding. It’s called microfinance or microlending, and it’s been widely used by small overseas businesses in less developed countries for years. The whole focus of this type of program is to help individuals who may lack the credit history or collateral necessary to secure a bank loan to obtain small amounts of money needed to start or expand their business.

Two recent articles in the San Francisco Chronicle provide some good information on microfinancing and sources for microloans in Bay Area.

www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/10/MNPV183N78.DTL

www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/29/BU4R17SQSQ.DTL

SCORE can provide free counseling to entrepreneurs wanting to start or grow their business with a microloan.