Buyers need to utilize both “Pull” and “Push” buyer search strategies and techniques to be successful. They need to pull the right information in, and push their information out to the right contacts and resources to find and buy the right California small business for sale. Small business buyers who don’t use these strategies (and the tips listed below) can expect that it will take anywhere from six months to two years to find and successfully buy a small business. Using the techniques/strategies below and utilizing the BizBen Network, will shorten the search and buying process to an average of three to eight months!

Top Tips & Strategies For Buyers Of California Small Businesses:

1. Know The General Types & Locations Of Small Businesses You Are Searching For

As a buyer you need to narrow down your search requirements–you need to know the business types and locations that meet your needs. As a former business broker I know that I would spend less time with potential business buyers who were unable or unwilling to narrow down their targeted search criteria or desired geographic locations. It’s fine to have several different types of businesses in mind–and you don’t have to be business specific–but there is a big difference between manufacturing oriented businesses and restaurants. Make sure to communicate those preferences to brokers, agents, and intermediaries.

2. Have A Buyer Profile & Personal Financial Statement Form Completed

All potential small business buyers should complete and have on file a Buyer Profile and Personal Financial Statement form. These completed documents should be faxed/emailed back with all Non-Disclosure/Confidentiality Agreements to business brokers, agents, intermediaries, and business owners. Providing these completed forms to sellers and brokers shows you are serious about buying a business, and saves them, and you, a lot of time and effort. These forms will also be requested from potential financing sources and landlords when negotiating the current or new lease on the business being purchased. Buyers signed up with, and participating in the BizBen Network get these forms as part of their initial consultation.

3. Get SBA Loan & Other Financing Pre-Qualified Before Starting The Search Process

Knowing whether your are pre-qualified or able to obtain financing to buy a small business will not only save you time but will educate you about what options you have with potential deal structures, so you’re prepared to negotiate effectively when dealing with brokers and sellers. There are approximately 16 different “data-points” financing companies and banks utilize to see if you are a viable candidate for business purchase financing. You need to know your options before you write an offer to buy a business. All buyers that join and utilize the BizBen Network get SBA loan/financing pre-qualified (all financing options are explored) as this is such an important part of the business buying process.

4. You Need To Get Your Info & Criteria “Pushed” Out

As a potential buyer of a small business, once you have the types and locations of businesses you are interested in, know if you are pre-qualified for financing (or what types of deal structures you should be negotiating on your behalf), you need to “push” your criteria and information out. Exposure is the key here. The more brokers, agents, intermediaries, and advisors that have, and are ready to act on your information, the more likely you will find and buy a business. You need to have your information being presented to all potential contacts at all times!

5. You Need To Reach “The Hidden Market” With “Push” Techniques

Sixty percent of all small businesses for sale are not “officially” on the market or advertised as being for sale. By “pushing” your information & requirements out to ALL intermediaries, potential seller/owners, and advisors, you will have access to many more great deals and “hidden” businesses for sale.

6. Respect The Confidentiality Of A Business Sale

Confidentiality when selling a small business is usually highly important to the owner of the small business and to the intermediary (business broker) who is representing the seller. Be prepared to sign a confidentiality or non-disclosure agreement and make sure you include back with this document your completed Buyer Profile and Personal Financial Statement (see step 2). Do not share information of a potential business acquisition target with anyone – save your sharing of information when working on your due-diligence with a CPA, consultant, or attorney. Those who don’t abide by the requirements for confidentiality, will be placed on the “do not deal with this buyer” list maintained by most intermediaries. There could also be legal ramifications depending on damage that results from the sharing of confidential information.

7. Search Daily, Be Diligent About The Search Process

Buyers need to search almost daily to find the right California business to buy. Over 200 new listings are added daily to BizBen.com and many of these listings get multiple offers right out of the gate when available to the market. Make sure you are signed up for Instant Daily Email Alerts & Daily Email Reports of new listings through a BizBen Power User Account (buyers in the BizBen Network get this set up for them during their consultation with a BizBen Counselor). Remember to do both: call and email potential sellers (see step 8 below)–make sure your message and your interest get through.

8. Don’t Ignore Older Business For Sale Advertised Listings

Just because it’s older doesn’t mean it’s a bad listing. Deals fall out and come back on the market, deal structures and prices change constantly. I counsel potential business buyers all the time to focus on older listings also (instead of just new listings on the market) since sellers of the older listings usually get more realistic, more motivated, and have “been around the block” a few times with a few buyers. Owner/Sellers tend to get more realistic about pricing and deal structures after a time on the market.

9. Call & Email (Both) When Inquiring About A Business For Sale

When finding a potential business to buy on sites like www.BizBen.com make sure you both phone (leave a voicemail if no one answers) and email the seller, broker, or agent! Many buyers just phone or just email. DO BOTH! And if you don’t get a return call or email within 6 hours, do both again. Show that you’re interested. With better listings for sale there is usually a demand for information from many potential buyers. Remember you are in competition with other buyers – show your strong interest by both calling and emailing the seller or broker.

10. Get Your Team Of Advisors In Place & Ready For Action

Select your team of advisors (contact the BizBen Network for an advisor or resource in your area) .CPA/accountant for due diligence, attorney for assistance with contracts, SBA and non-SBA loan financing sources, etc. Be ready with these professionals now so you don’t kill time looking for them while the seller selects another buyer, believing that you weren’t ready to proceed to buy his or her business!

Being successful in buying a California small business takes time and diligence, but if potential buyers utilize the tactics listed above their success will be assured.

About The Author:  Peter Siegel, MBA, is a SCORE Counselor specializing in consulting those selling or buying a small business.  He is the Founder of BizBen.com – Businesses For Sale In California and has written three books on how to buy & sell small businesses. If you have questions about the buying or selling a business process please feel free to phone Peter Siegel at: 866-270-6278.

“Moving Your Business Online”

Where: Pleasant Hill
When: 14th September, 2010: 8:30AM – 5:00PM

What: The 2010 Technology Boot Camp is a full-day workshop for non-technical small business entrepreneurs to learn about all aspects of using online applications in their business.

The 2010 Technology Boot Camp is a follow-up to the very successful 2008 and 2009 Technology Boot Camps, and is brought to you by the same team: the Contra Costa SBDC and the SBDC Technology Adoption Program.

The workshop sessions have been designed for optimum user-friendliness and are intended for non-technical small business owners of all skill levels. Participants will be provided with valuable how-to instructions and sample IT “road-maps” to take back and apply to their own business

Cost: $49.95 (plus booking fee). Early Bird rate 20% discount – $39.95 (plus booking fee) until August 24th!

Should the buyer accept that statement and go ahead with the purchase so he doesn’t miss out on a good opportunity? Or would he be smart to consider the seller untrustworthy and pursue other opportunities instead?

And this is a particularly difficult area for brokers who want to make sure the buyer gets as much pertinent information as possible, but don’t want to make any misrepresentations about the income of the business. And no broker wants to find himself or herself the defendant in a criminal suit, accused by the IRS of conspiring with a seller who is avoiding paying taxes.

The question asked in one of my FREE coaching sessions from a potential business buyer was, “I am looking at buying a local liquor store/market and the broker is telling me that it makes a lot more money than it shows on the books/tax returns. I assume there is a lot of unreported cash. I like this business and want to buy it but any ideas on how to prove this unaccounted income either before or during due diligence? Should I buy this business?”

I asked several leading California business brokers and resources what their thoughts were on this topic – they responded:

“How about self-auditing the business over a period of a couple of weeks? Be at the store and compare cash register “Z’s” or POS system reports to the complete “drawer” at the end of the day. If the seller is not willing to allow you to confirm total sales, then don’t buy this business.”

From Tom Barnett at Santa Rosa Realty

“Seeing is believing. Validating income is essential to the overall credibility of the business. As a broker, we understand that main street mom and pop business has their own creative ways of accounting. I suggest your offer be contingent on validation of income. Once the offer is accepted by the seller, you would then need to schedule time to “see for yourself” more like “show me the money”. Only then you could consider giving merit to sellers claims of revenue.”

From Randall Barondess at Troop Business Services/Commercial R.E.

“Unreported cash income is a very dangerous thing to make a business decision about.

Liquor stores are among the worst offenders at not recording all their sales. The question was asked if you should buy or pass on this business because of the unprovable sales? First, no business should be bought without due diligence. To believe what a seller tells you is like leaving your sheep with the wolf to guard. Sellers can prove almost anything they do if they really want to. The truth is they do not want to prove it, because it rarely matches what they are telling you. I had a buyer bring me a bag of liquor store receipts to do an audit. When I studied them I found that one register’s receipts were only for a 12-hour period and the other was for a 24-hour period. Some days were missing so we couldn’t reconstruct a sales report, because the seller didn’t want us to be able to do it.

If the seller cannot prove what he tells you then go on to another deal. If he can prove it, have an expert review his proof. An uneducated buyer and his money are soon parted. By the way due diligence is not just about auditing the income and expenses it is about everything related to and surrounding the business. Things like a discount liquor store opening up in 6 months down the street. Some government agency is ready to close the store down for criminal charges like evasion of sales or income tax. Little Red Riding Hood beware, the wolf is dressed in Grandma’s clothing and is planning on having you with his after closing drink of scotch”

From Willard Michlin – Due Diligence Consultant

“I’ll give you 2 good ideas to help verify the income of the business. Do them both. They should cross-verify sales.

First: Have the seller gather all of his purchase invoices for several months. I like to use summer and winter months as some locations sales will vary accordingly.

There is a direct correlation between purchases and sales. Most liquor stores overall mark when you calculate all products sold. I personally feel 30% is the right number to use for this purpose. Add up all the invoices and do the math. If he bought $10k of products his sales were very close to $13K.

Second: Do a physical observation. Whereby you stay in the store for a given period time and verify sales. You should be given access all opening hours to watch the seller ring the cash register. At the end of the day see the actual total income. Do this for 1 – 2 weeks. You need to at least complete a 1 week cycle. Multiply out the period of observation into a month and it should come close to the invoice calculation method above. Also during the observation period you should pay close attention to the suppliers bringing in merchandise. These should be the same suppliers you are seeing in adding up invoices. Pay attention to how many times a week each one show up. This should be consistent to what you see in the monthly invoices.”

From Lee Petsas at UBI Business Brokers

“Many businesses with cash sales where the cash is not reported are difficult to determine gross sales and therefore making it difficult to determine profitability. The only way to answer the question of how much the gross sales are for a business with a cash component is to conduct a 2 week audit by observing the business, by checking the purchases of product over a period of time, by checking utilities consumed (for coin laundries) or by auditing 2 week’s worth of recorded video of the business (if the video shows the cash register’s). The risk with observation is how do you decide which 2 weeks to observe, especially if the business has a seasonality component? The risk with checking purchases is that sometimes suppliers to those businesses play the same game–they sell product for cash with no paperwork. The risk with a video is whether or not it has been “manipulated”.

From Ron Hottes at Business Team/Southern California

“Buying a business based on unreported income is always risky. Liquor stores are a prime example. Should you buy it? Depends on your tolerance for risk both in terms of whether the sales are truly underreported and whether you can withstand a potential crackdown by the Sales Tax collectors. There are over 120 Liquor stores in California that have sustained significant fines and back taxes in 2008/2009. You might be the next one.”

From Patrick Marsch at First Choice

“It is customary for owners of liquor stores, convenience stores and other cash based businesses to claim revenue in excess of that which is reported on their tax returns when they choose to sell the business. After all, the higher the revenue, the more they believe they will get for the business. When it comes to claims of unreported cash, the seller generally has no way to substantiate it. Sure, you can look at register tapes; however, if the sale wasn’t rung up then it won’t show on the z-tapes. They may have a cash journal; however, you have no way of knowing if the log entries are real or if the entire journal was written in a few hours over a weekend.

If you are looking at purchasing this liquor store, ask questions of the owner not the broker. The broker doesn’t work there and can’t tell you what percentage of cash is or is not being declared. The broker is simply repeating what he/she has been told. Ask questions in person and watch the seller’s eyes and the seller’s body language. If you sense some truth in the story and you want to proceed, you will need an observation period before or as part of your due diligence. A day or two will not cut it. You will need to sit in the store and observe for two weeks to a month minimum.

Take notes and track daily income, checks, cash, credit cards, deposits, etc. Also track purchases, payroll, and other expenses and note if they were paid by cash, check, credit card, etc. If the seller or broker will not allow an observation period, walk away. It’s not only important to know how much cash is coming in – it’s equally or more important to know how much cash is going out. Are the employees being paid in cash or on the books? Are vendors and suppliers being paid cash?

As for whether or not you should buy the liquor store – you are the only one that can make that decision. Do your homework and depending on your comfort zone and your risk tolerance, make a decision you can live with.”

From Tawnya Gilreath at Business Sales and Acquisitions

About The Author:  Peter Siegel is a SCORE Counselor specializing in consulting those selling or buying a small business.  He is the Founder of BizBen.com – Businesses For Sale In California and has written three books on how to buy & sell small businesses. If you have questions about the buying or selling a business process please feel free to phone Peter Siegel at: 866-270-6278.

1. Value is not in capital equipment. A seller emphasizing the amount of cleaning equipment that will be included in the sale, may be attempting to distract the prospective buyer from more important aspects of the business. It’s beneficial, when taking over a company like this, to get enough equipment–in good working order to conduct the business. But it’s important to remember that most capital assets in this kind of enterprise, with the exception of any vehicles, have a short life span and are easily replaceable.

Most commercial grade vacuum cleaners and power washers can be purchased for a few hundred dollars per item. And will be useful for a matter of months, rather than years. And carrying more equipment than is needed may be an indication that the firm has lost accounts and not replaced them with new customers.

2. Customer contracts also can be overrated. Written agreements with residential customers, even with commercial clients, may be reassuring to the prospective buyer of a janitorial cleaning business service. But keep in mind that such agreements can be broken or circumvented by customers who change their needs or decide they don’t like the service provider. While it’s a good sign that a company has contracts with its clients, the careful janitorial cleaning business buyer should be doubtful if a seller claims these documents mean that future business is “guaranteed.”

3. Customer distribution and loyalty: For some people buying a janitorial cleaning business service it’s appealing to know there’s a major customer contributing a big chunk of the firm’s income and, consequently, reducing the need for a lot of smaller accounts to keep track of and to bill for services. But most experienced business people don’t think it’s a good idea to have all, or even most, of your eggs in one basket. There are a lot of reasons a new owner could lose the major client, including a personal relationship between that customer and the seller–a loyalty that would not be enjoyed by the buyer.

When examining the customer list, it also is important to know how long each one has been serviced by the company. A two or three-year history with a retail or commercial client is ideal because it represents a long-standing relationship that’s likely to continue. The buyer is wise to ask a lot of questions about customers with the firm more than eight to ten years. Are principals of that firm ready to retire or move on? What’s the possibility of a management change with someone new in charge wanting to do things differently by using other vendors? And, of course, clients who’ve been with the firm only a few months can pose a risk because they may be among the many companies that constantly try different vendors, searching for the ideal match and the absolutely lowest price.

4. Employee longevity: It’s not uncommon for a person with a background in fast foods, now interested in buying a janitorial business service, to make the mistake of discounting the importance of long-term employees. Considerable training is involved in preparing cleaning crewmembers to work quickly, thoroughly and carefully. The seller of a company with high worker turnover may want buyers to believe that competent and reliable employees are easy to find and to train. But it’s not a good sign if at least half of the cleaning staff hasn’t been with the enterprise more than a year.

5. Review those receivables: While many janitorial firms are able to get customers in the habit of paying immediately after each service is completed, the buyer may find an interesting acquisition target that receives many payments later, after sending out invoices. That’s particularly the case with a company serving commercial accounts. The critical factor here is to examine the receivables ledgers to make sure most invoices are paid within 30 days of service.

If the company for sale is carrying customers any longer, the buyer will notice the receivables total exceeds the monthly revenue figure. And it’s likely that some of those debts are uncollectible. A large receivables sum may not be a problem with some service companies but it should raise the red flag of caution when reviewing a janitorial service for sale.

6. Financing available: With purchase money difficult to borrow in the current environment, the entrepreneur interested in buying a janitorial service should be encouraged by an offering that includes seller financing. Not only does this feature make the purchase easier, it demonstrates the seller’s faith in the company’s continued success.

A bonus for buyers of either starting a janitorial business or buying a janitorial cleaning business company, or any business opportunity for sale, is pre-approval for an SBA-backed loan to assist in the purchase. Considering that many small business lenders are reluctant to help buyers and sellers complete their transactions, a small or mid-sized business offering that includes a commitment for bank assistance is a particularly appealing opportunity.

For an entrepreneur interested in acquiring his or her own enterprise, buying a janitorial business for sale can be a smart move. It’s important, however, to consider these six factors when reviewing potential business opportunities in this industry.

Looking to buy a janitorial business? See the entire list of California janitorial service businesses for sale in the marketplace at this time.

About The Author:  Peter Siegel, MBA is a California SCORE Counselor specializing in consulting those selling or buying California small businesses.  He is the Founder of BizBen.com – Businesses For Sale In California – an active network of business buyers, small business owners, advisors, business brokers, and agents in the California marketplace.  If you have questions about buying or selling a California small business or would like to join the BizBen.com Network please phone Peter direct at: 866-270-6278.

Part 1: The Bad News

Before Embarking on a Campaign to Raise Venture Capital Funding, You Should Look at Yourself Objectively and Honestly to Determine if You Even Qualify. Most People Don’t Stop to Do This.

Since the vast majority of venture capital hunters don’t qualify, you will, in most cases, end up wasting 6 to 12 months of your life writing a business plan which will never be read and doing “dog & pony” shows for audiences who are at best only mildly curious or at worst engaged in “brainsucking” you for ideas.

Who Qualifies for Venture Capital Today?

Industry “stars” qualify for venture capital. This means someone who has already taken a start-up from zero to 50 million in sales or better. So if you’re counted amongst the stars in your industry, you stand a good chance of attracting venture capital provided your current deal has the following elements:

* at least 2 other senior executives with experience in building wildly successful companies,
* a proprietary technology in a sector currently considered hot by the venture capital industry,
* a top-notch technical team,
* a target market at least one billion dollars in size,
* a minimum of one year of rising sales to blue chip customers.

If you don’t meet the above criteria venture capital funding won’t happen.

The Three Dirty Little Secrets About Raising Outside Capital

* First, chasing outside capital is by far the most unpleasant and drawn-out ordealexperienced by entrepreneurs. It always seems to take forever. (For this reason, veteran entrepreneurs try to avoid raising outside capital at all costs.)

* Second, based on the fact that your typical early stage venture capital firm invests in only one company out of every 500 business plans it reviews, your odds of succeeding are only 1:500. (If you are pursuing angel investors your odds improve to maybe 1:200, although no one knows the numbers for certain.)

* Third, in about 50% of instances where an early stage company actually succeeds in raising venture capital, the founder is fired within the first year and kisses most of his or her stock good-bye.
“If you ask a VC what value they add, and you get
them after a few drinks, they’ll say, ‘We replace the CEO’ “,
he said. And that, he indicated, does not vary
with the economic climate.

So your odds of being a successful venture capital-backed founder/CEO are actually only 1:1000.

The Funding Problem

Here’s what typically happens when a company needs to chase outside capital in order to commence or expand operations. After about 6 months one of three things occurs:

1. The lucky 1 in 500 finds investors.

2. Most die on the vine. In many cases, the wannabe entrepreneur simply abandons the project and moves on to something else. (As the joke goes, “That’s why God created ‘jobs’ “.)

3. A savvy and tenacious tiny minority of entrepreneurs finally gets mad at having wasted so much time. Then it begins to figure out a creative way around the funding problem by focusing on creating cashflow with the resources and opportunities at hand, instead of continuing the futile quest for outside capital.

Don’t waste money on these resources: Lesson: put very little faith in these services and never pay up-front fees.

* Matching Services: We’ll match your project with one of our many accredited angel investors. Call now! Operators are standing by! Just $199 to register.

* Business Plan Services: We’ll write a business plan for you which will attract funding. Only $999.

* Finders: I can help you raise money for a fee…and, by the way, I require a retainer up-front.

* Money-Raising Bootcamps: Attend our weekend bootcamp for $1,195, and you’ll discover that it’s not what you know but who you know that counts when it comes to raising money.

* Online Business Plan Repositories: Post your b-plan on our site for 6 months. Only $59.

* Venture Capital Directories: VC’s are waiting to fund you! For just $49 you can buy our CD directory with 12,952,734 venture capital firms listed on it. (How these can sell in the age of Internet search engines is beyond me. PT Barnum was correct about a sucker being “born every minute”.)
in a nutshell, most of these middle-man services don’t work in 99% of instances. This is also why they won’t tell you the Three Dirty Little Secrets of Raising Capital.

Part 2: The Good News

Real Entrepreneurship is About Cashflow Creation

It’s all about positive cashflow. If you can make it happen, you get respect and investors to fund you so that you can make even more.

Repeat three times daily until the delusion goes away:

With cashflow I’m a somebody; without it I’m a nobody.
With cashflow I’m a somebody; without it I’m a nobody.
With cashflow I’m a somebody; without it I’m a nobody.

Fact: Successful entrepreneurs invest the same level of time and energy into creating cashflow during the first year that wannabes invest in polishing their business plans and offering them to complete strangers.

The Solution

Once you have cashflow life becomes much simpler. Cashflow not only enables you to pay your bills but it places your company into the “stream of opportunities” that established businesses enjoy. Cashflow also earns you respect and gives you the ability to say, “No thanks!”, to those notoriously outrageous offers made by venture capitalists and private investors.

Cashflow = Respect from Investors

* Cashflow–any cashflow–earns respect from investors, lenders, customers, suppliers, and even your Aunt Mabel. Cashflow attracts equity capital from investors.

* Cashflow will place you in a stronger bargaining position with potential investors since it will allow you to walk away from a bad deal. Pre-deal cashflow equals power. Power for you.

* Cashflow will give your company a higher valuation which in turn will allow you to hold onto more of your equity if a deal is done.

If you are truly committed to building your business then do everything you can today to achieve this goal.

Don’t kid yourself.

So ask yourself, in 3 months from now do I want to:

* still be polishing my business plan and chasing investors with nothing to show for my efforts, or
* do I want to have an operating company with positive cashflow?

The decision is yours.

Projecting your cash flow is a bit like preparing your budget and balancing your checkbook at the same time. You’ll begin with a starting point—say, the first of the year—and then you’ll outline your anticipated income and expenditures for the next several months or year. Be careful about assuming too much—and don’t forget to factor in everything from insurance payments to raises in employees’ salaries.

Cash flow projections should be updated on a regular basis with the most accurate numbers. For instance, a customer who’s been reliable in the past might suddenly flake on paying. Or a vendor might decide to raise prices or tack on extra fees. Plugging in that new data will help you predict any cash crunches that might arise as a result.

Let’s take a closer look at why a cash crunch might occur in the first place. Not all are predictable, of course. When the economy hit the skids in 2008, many business owners found themselves suddenly worrying about making payroll or paying bills. Aside from the economy, here are other reasons why cash crunches happen:

 A big customer falls behind in payments
 A normally busy season is unexpectedly slow
 Manufacturing, shipping or other business costs rise
 Inventory is mismanaged
 Expansion into new space or territory is overly expensive or poorly timed

Because it’s tough to predict the circumstances your business will find itself in weeks or months down the road, it’s always smart to have a cash cushion. The next best thing is to have a line of credit to cover short-term cash shortages, which might happen if there’s a lag time in accounts receivables coming in.

If your company has forecast or found itself in an unexpected cash crunch, there are some ways to fix this cash emergency:
 Get out there and sell. Jump-start cash flow by finding new customers or tending to existing ones. Even if your gut is wrenching, it’s critical to make sales calls. Keep in mind that your competitors may be waiting to steal your business—especially if word has gotten out that you’re in a bind.
 Step up collection efforts. Analyze your receivables. Do your customers owe you money? If so, then it’s time to get aggressive about collecting debts. (For more on that, read related article, “Business Owners Find Creative Ways to Collect the Bills.”) You might also consider giving some customers discounts for early payment.
 Review your line of credit. See if there is room to borrow, or ask your banker to increase the ceiling if you need more money to cover the deficit. While the credit crunch still lingers, the situation is not as dire as in 2009.
 Ask vendors/suppliers for a favor. The people who supply your merchandise, equipment or other products or services don’t want to lose your business. Especially if you’ve been a good customer, your suppliers might extend repayment terms or issue a line of credit. If you haven’t already built a relationship with a vendor, check with industry groups, trade associations or even owners of similar businesses to see which vendors offer financing. Make sure to check a vendor’s credentials before signing up—and shop around to get the most favorable terms.
 Cut costs. Downsize to a smaller space, or consider moving back home (to your garage or spare bedroom). Sell off excess furniture or office equipment. Trim principals’ salaries. Conduct layoffs, as unpleasant as that may be, if it means keeping the business alive.

What many start-ups don’t realize is that the seed capital they raise – often from friends and family – is just the first step in a fundraising journey that can drag on for months or even years.
Here are some of the lessons learned along the way:

• Don’t expect to raise all the money at once. While the purpose of a business plan is to show investors your company’s true potential, but don’t fold your cards if you can’t raise the money you need to execute your entire plan right away.

• Be prepared to give investors more. Even in good times, investors in early-stage companies expect to be compensated for the risk that your company might fail and they’ll walk away with nothing but a write-off. With early-stage capital in short supply, start-ups need to be ready to give away a larger chunk of their company than they might have when times were flush and to pay higher interest on the money that they borrow. As an example a company raised $800,000 in convertible debt at 12% interest in 2008. After the market crashed, they raised another $600,000 but at 15% interest in April 2009. The new note will convert to equity upon a $5 million capital raise.

• Adapt your business plan to the funds available. If you wait to fund your entire plan before starting operations, you may never get your company off the ground. At the same time, you may need to scale back your plans if you decide to start your company with less. Reformulate the business plan in a way that will allow you to execute on a reduced scale.

• Be ready to survive on a shoe-string. Many entrepreneurs think that, once they raise capital from investors, the pressure is off and they can get back to running their company. The truth is that you’ve got to keep a laser focus on expenses – especially if your company is burning cash and you don’t know where the next check is going to come from. When you raise money in pieces rather than all at once, you have to stretch the money as far as possible, particularly tricky is managing your payables to keep your suppliers current while waiting for payments from your customers.

• Be honest with your investors. Whether your investors are friends, family, angels or VCs, nobody wants to be kept in the dark. It’s better to break the bad news about money concerns, such as missed revenue projections or cash-flow gaps, before there’s nothing left in your company’s bank account. Communicate!

With the market for small-business capital still tight and the recovery lackluster at best, start-ups looking for capital would be wise to take a page from the Score playbook. Raise money when you can, be prepared to pay a premium for your capital and scale back your plans if necessary, but do whatever it takes to get your business up and running and your product out the door.

For Help preparing Private Placement Memorandums or Angel/VC investment presentations contact SCORE.

The Goals feature uses pop-up windows where users can quickly input data, like annual salary, to get estimates on how much they can afford to spend on things like a vacation, as well as how much they need to save for that vacation. Monthly savings estimates can be set to aggressive savings plans or conservative ones with just a mouse click.

Finances in One Place
Mint.com has been around for almost three years and is used by millions of people. Its proprietary algorithms encrypt data so people will feel confident enough to input their usernames and passwords for their online financial accounts, allowing them to see all of their financial activity in one place. These accounts include those tied to credit cards, banks, retirement savings and others. Mint is known for displaying colorful visuals like pie charts and graphs, so it’s easy for people to see where they’re spending their money or how it’s being invested.
Mint Goals is a new tab on the Mint.com site, and clicking on it directs users to a group of eight popular goals and one that can be customized (more will be added over time). The preset list includes goals to get out of debt, buy a home, buy a car, save for college, take a trip or save for retirement. A digital checklist in each goal called “Next Steps” gives people serious, doable tasks to complete, so they can actually make progress toward a goal in ways other than just putting money aside. This instant gratification saved me from doing a lot of calculating.

The Best Account
When you set up a goal for the first time, Mint suggests what type of account would work best for saving toward it. Examples include a 529 savings plan for people who are saving to put their kids through college or a Roth IRA for retirement savings. Mint will also tell you the provider with the best interest rate.
Each goal includes the overall amount of money intended to be saved, today’s balance, planned and projected dates for reaching the goal and how much has been saved this month (like $200 of $750). You’ll like looking at Mint’s colorful thermometers, which quickly showed how you was progressing in a particular goal.

Ads With Context
The Goals feature comes with contextual ads, which help it remain free. One checklist item suggests opening a high-yield savings account and also offers links to the Discover and American Express websites, which offer the accounts. If you’ve started a Mint Goal to save for a trip to Iceland, travel insurance is suggested, along with Web links to sites that sell trip insurance.
While these links might allow people to get started right away on a particular task, they also beg the question of whether these are the best options for users—or just the biggest advertisers on Mint. Goals can be linked to several of your accounts on Mint so they’re updated with real-time data. A long-term retirement goal can link to a 401(k), brokerage account and retirement account. If the stock market takes a dive and money is lost in an account, that loss is automatically reflected in the overall goal’s balance. If you tie a savings account to a goal to save for a house, every dollar added to that account (on the bank’s end) is automatically reflected in the goal.
Mint already gave people a visually engaging way to know more about what their money is doing, but Mint Goals give people a real reason to come back to the site more often.

Profit-and-loss statement.
This is a historical record (also known as an income statement) that shows how much you’ve made in revenues, how much you’ve spent and what your net income is over a specific period of time. The time period could be a week, a month, a quarter or a year, although monthly is the most common. The P&L tells you whether or not you’re making money, and how much you’re either making or losing. A further benefit: if structured properly, the P&L can show you which products or services are selling the best and where you are spending too much on expenses ranging from office personnel to advertising.

Balance sheet.
This is a snapshot of your company’s financial health, providing a summary of your company’s assets, liabilities and net worth. In other words, the balance sheet (sometimes called the statement of financial condition) tells you what you own and what you owe. Your assets will be the resources that your business controls: cash, equipment, buildings, furniture and money owed to you. Your liabilities will be the debts or other obligations that you owe others, such as accounts payable, taxes, loans and payroll. Your net worth (also known as equity) is what’s left over— or assets minus liabilities.

Cash flow statement.
This captures how cash has flowed in and out of your company over a specific period of time. Think of it like the ledger of your personal checkbook, which shows money coming in, money going out and the remaining balance. The cash flow statement is a very important financial statement because even though your P&L may be showing a profit, the business may not be generating cash. And the reverse is also true. For instance, your sales may be growing as billings increase to new customers, but your new customers may be slow to pay, she says. At the same time, you might be spending more on inventory in anticipation of growth. The cash flow statement will show how all those changes affect your cash position.

1. “Innovation distinguishes between a leader and a follower.”

Innovation has no limits. The only limit is your imagination. It’s time for you to begin thinking out of the box. If you are involved in a growing industry, think of ways to become more efficient; more customer friendly; and easier to do business with. If you are involved in a shrinking industry – get out of it quick and change before you become obsolete; out of work; or out of business. And remember that procrastination is not an option here. Start innovating now!

2. “Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.”
There is no shortcut to excellence. You will have to make the commitment to make excellence your priority. Use your talents, abilities, and skills in the best way possible and get ahead of others by giving that little extra. Live by a higher standard and pay attention to the details that really do make the difference. Excellence is not difficult – simply decide right now to give it your best shot – and you will be amazed with what life gives you back.

3. “The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”
I’ve got it down to four words: “Do what you love.” Seek out an occupation that gives you a sense of meaning, direction and satisfaction in life. Having a sense of purpose and striving towards goals gives life meaning, direction and satisfaction. It not only contributes to health and longevity, but also makes you feel better in difficult times. Do you jump out of bed on Monday mornings and look forward to the work week? If the answer is ‘no’ keep looking, you’ll know when you find it.

4. “You know, we don’t grow most of the food we eat. We wear clothes other people make. We speak a language that other people developed. We use a mathematics that other people evolved… I mean, we’re constantly taking things. It’s a wonderful, ecstatic feeling to create something that puts it back in the pool of human experience and knowledge.”
Live in a way that is ethically responsible. Try to make a difference in this world and contribute to the higher good. You’ll find it gives more meaning to your life and it’s a great antidote to boredom. There is always so much to be done. And talk to others about what you are doing. Don’t preach or be self-righteous, or fanatical about it, that just puts people off, but at the same time, don’t be shy about setting an example, and use opportunities that arise to let others know what you are doing.

5. “There’s a phrase in Buddhism, ‘Beginner’s mind.’ It’s wonderful to have a beginner’s mind.”
It is the kind of mind that can see things as they are, which step by step and in a flash can realize the original nature of everything. Beginner’s mind is Zen practice in action. It is the mind that is innocent of preconceptions and expectations, judgments and prejudices. Think of beginner’s mind as the mind that faces life like a small child, full of curiosity and wonder and amazement.

6. “We think basically you watch television to turn your brain off, and you work on your computer when you want to turn your brain on.”
Reams of academic studies over the decades have amply confirmed television’s pernicious mental and moral influences. And most TV watchers know that their habit is mind-numbing and wasteful, but still spend most of their time in front of that box. So turn your TV off and save some brain cells. But be cautious, you can turn your brain off by using a computer also. Try and have an intelligent conversation with someone who plays first person shooters for 8 hours a day. Or auto race games, or role-playing games.

7. “I’m the only person I know that’s lost a quarter of a billion dollars in one year…. It’s very character-building.”
Don’t equate making mistakes with being a mistake. There is no such thing as a successful person who has not failed or made mistakes, there are successful people who made mistakes and changed their lives or performance in response to them, and so got it right the next time. They viewed mistakes as warnings rather than signs of hopeless inadequacy. Never making a mistake means never living life to the full.

8. “I would trade all of my technology for an afternoon with Socrates.”
Over the last decade, numerous books featuring lessons from historical figures have appeared on the shelves of bookstores around the world. And Socrates stands with Leonardo da Vinci, Nicholas Copernicus, Charles Darwin and Albert Einstein as a beacon of inspiration for independent thinkers. But he came first. Cicero said of Socrates that, “He called philosophy down from the skies and into the lives of men.” So use Socrates’ principles in your life, your work, your learning, and your relationships. It’s not about Socrates, it’s really about you, and how you can bring more truth, beauty and goodness into your life everyday.

9.“We’re here to put a dent in the universe. Otherwise why else even be here?”
Did you know that you have big things to accomplish in life? And did you know that those big things are getting rather dusty while you pour yourself another cup of coffee, and decide to mull things over rather than do them? We were all born with a gift to give in life, one which informs all of our desires, interests, passions and curiosities. This gift is, in fact, our purpose. And you don’t need permission to decide your own purpose. No boss, teacher, parent, priest or other authority can decide this for you. Just find that unique purpose.

10. “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”