Starting a Home Business – First 10 Steps

April 5, 2013

Starting a home-based business involves planning, key financial decisions, and a series of legal steps. The 10 easy steps below can help you plan, prepare, and launch your business. Click on the links to learn more from the Small Business Administration (SBA).

Don’t forget to consider a business name and verify if the name is already in use.  Chose a short, catchy, memorable name that sounds good and is easily marketed and branded.  A tag line or catch-phrase for your business is important too.  Do it once, do it right, never do it again.

Step 1: Write a Business Plan

Use these tools and resources to create a business plan. This written guide will help you map out how you will start and run your business successfully.

Step 2: Get Business Assistance and Training

Take advantage of free training and counseling services, from preparing a business plan and securing financing, to expanding or relocating a business.

Step 3: Choose a Business Location

Get advice on how to select a customer-friendly location and comply with zoning laws.  Home-based business owners are subject to many of the laws and regulations that apply to other business owners.  These include: traffic, noise, changes in physical appearance, and nature of the business.

Step 4: Finance Your Business

Find government backed loans, venture capital and research grants to help you get started.  Other sources include using part of a retirement plan, crowd funding, personal savings, and friends and family.

Home Business

Home Business

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10 Creative Ways To Get Your Business Funded

November 3, 2011

Forget applying to banks to get a loan for your business. Most of them stopped being in the “give a loan to a small company who has no collateral” business in 2007. This does not, however, mean that you are out of options to fund the growth of your company.

In his new book, Get Your Business Funded, author Steve Strauss discusses creative ways to get the money that you need. Here are 10 options to try:

1. Factoring

This method allows you to sell your accounts receivable to a third party (i.e. The Receivables Exchange) for immediate cash. It’s a $150 billion industry and goes back to the ancient time of Babylonia. Remember: Factoring is expensive since it can cost up to 15 percent of the receivable. This may work for a growing company, but is not a method of financing for a company that is shrinking or losing money.

2. Retirement accounts

Borrowing money from your IRA or 401(k) can be tempting. First consider a 60 day interest free loan from it. There are no fees if it is paid back in this time frame. Remember: This is your retirement money, so using it is risky and potentially devastating if you lose your business.

3. Government grants

These programs require research at local, state and federal levels. According to Steve, these agencies include the USDA, the Department of Commerce, and the Treasury Department. They come with names like SBIR, STTR and SBIC. Remember: Typically they are very specific and technical in nature and come with reporting strings attached.

4. Peer to peer lending (P2P)

It is now possible to go online and get funding from people you do not know at sites such as and Lending Club. The amount paid for the loan depends on your credit score, the economy, the length of the loan and “your story.” Remember: P2P loans are not easy to get and the interest rates can be very high.

5. Crowdfunding

A sister method to P2P, you can now get people to invest in “your cause” in exchange for something (other than money). This is a different source of funding since the money is not repaid. The rewards for donors range from receiving your first products to having a product named after them. Popular sites that facilitate crowdfunding include IndieGoGo and Kickstarter. Remember: Crowdfunding is very emotional and its success is based on the appeal of your idea.

6. Microfinancing

While this is relatively new in the United States, these small loans up to $10,000 are gaining popularity. Loans are based on your experience, passion, market opportunity and sales. Organizations include Accion USA, Grameen Bank and Kiva. Remember: It is a good alternative if you have an appealing idea and need a small about of money.

7. Supplier or wholesaler financing

This method works with your supply chain to get the money that you need. It usually works best with a smaller, local supplier who really wants your business and is willing to work with you. Tony Hsieh, CEO at Zappos said this type of financing was critical to the company’s growth. Remember: Don’t personally guarantee this loan.

8. Business plan competitions or other contests

When all else fails, try to win the money! There are a lot of regional and national competitions giving away substantial amounts of money. These include the MIT $100K Entrepreneurship Challenge, The GE Ecomagination Challenge and the Amazon Web Services Start Up Challenge. Remember: This is really show business that loves a great idea and very competent team. You also need to be a good presenter.

9. Business incubators

If your business is new, it can get seed money, mentorship and other similar services to get started. These types of organizations have a great track record of success which include Excelerate Labs and TechStars. Remember: There is a lot of competition to become part of an incubator these days so focus on a handful of organizations which match up best with your goals.

10. Barter

Swap products or services, not money. Before there was currency, there was only barter (trading). The U.S. Department of Commerce estimates that 25 percent of the world’s trade is still done this way. Barter can save money, move unused inventory and find new customers. Bartering can be done directly with another business or through a barter exchange like IMS Barter. Remember: Barter selective goods and services. You still typically can’t pay your employees or rent without cash.

By Barry Moltz

Barry Moltz is a Small Business Speaker, Consultant, and Author

4 Reasons Not to Launch a Startup

February 25, 2011

Yin and Yang.  Sunny and stormy.  Happy and sad.  Success and failure.  For every action there is an equal and opposite reaction.

Business is no different: It is subject to these same principles.

Many articles and posts on this blog focus on the positive aspects of launching a business, offering tips, expert advice, and opportunities.  Today’s opinion, by Susan Payton, offers potential drawbacks to consider before launching a startup.  This article is not to dissuade anyone from creating a business success story; I simply wanted to offer an intelligent view of potential pitfalls.  I strongly believe the correct combination of creative ideas, research, planning, and hard work ultimately yields success in many startup attempts.

4 Reasons Not to Launch a Startup

By Susan Payton

Startups are the new shiny toy these days. Groupon and Mint are among the constantly quoted examples of what can go right with a business startup, but what percentage of startups actually enjoy that kind of phenomenal success?

Before you jump right into a startup, consider these four reasons it might be worth thinking through.

1. Money Burns Like Kindling

Whether you’re bootstrapping your startup or actually get seed money or VC capital, I guarantee the money will disappear quicker than you planned. A VC in Silicon Valley wants you to meet in his office…tomorrow. Bam: $2,000 for travel expenses. Another mobile carrier said they’d consider hosting your app, if you make 20 hours’ worth of programming changes. Bam. Another $1,000 gone, with no guarantee of revenue as a result. Things break. Conferences come up. Money dwindles.

Even getting money can be problematic. VCs are the equivalent of journalists: they’re getting pitched from every angle, and being heard above the din isn’t always easy.

How to Circumvent the Money Drain: Having money, period, for your startup already puts you ahead of the crowd. Make a budget upfront and build in as many surprises as you can. Pad the budget for travel and discretionary funds, and make sure you always have enough to pay your staff.

2. The Learning Curve Is Tough

Unless you’ve done this before, I’m guessing you’re winging the whole startup thing as you go. Reading Hacker News and OnStartups; attending industry conferences; finding other startups in your area (or maybe you’re not doing these things?). There’s only so much you can glean about crafting a startup pitch to VCs from blog posts. You need inside advice, and what you lack may show when you’re pitching investors.

How to Get Your Startup Degree: Self-teaching and sticking with it is what helps the big startups get acquired or funded. Don’t give up. Find a local mentor or startup organization that will rally around you and give you inside tips on what investors (even specific firms) are looking for. Ask for advice in putting together your deck and business plan. You are not operating in a bubble; ask for help. Repay it on the other side.

3. You May Kill Your Co-Founder

You and your best bud came up with a fantastic idea for a startup…only now he’s dragging his feet at getting coding done, or disagrees with you on every point. How are you supposed to grow a business if you can’t even agree on a logo? Starting a business with a friend can be stressful and put a strain on a relationship. Do you have to choose between getting rich or having a friend?

How to Keep Your Friend and Make Money: At the outset of your startup, determine what each of you will do. What are each of your strengths? What will you each be responsible for? It’s a good idea if one of you takes the CEO role and can make executive business decisions. Make it clear who has what authority. Stay in constant contact, and don’t let aggression build up. Go out for beers together every once in a while.

4. The Competition Beats You to It

After months of development, you’re ready to release your app or service. The day before launch, you find out a formidable competitor has just launched the exact same product. Do you throw all your work down the toilet?

How to Keep on Truckin’: The thing about startups, especially tech ones, is that you can’t focus on a single product or solution. You have to be multifunctional and find different ways to reach your audience. If this was your only product, you must decide whether to go up against a competitor with deeper pockets. The smart thing to do is to start out working on multiple projects so you can shift your focus if need be.

If you’re still reading, congrats. If these reasons didn’t scare you away from creating a startup, I wish you the best. Ben Yoskovitz talks about why you should begin a startup. You’re passionate. You want to change the world.  You’re a control freak. But you don’t need me to tell you that.

Startups are like babies. They require a lot of care, and many people start them on a whim. But they need constant nurturing or they’ll die (taking your $100,000 second mortgage with them). Be fully prepared for the responsibility a startup entails, and you’ll be fine. You can thank me after you’ve sold to Google.

Susan Payton is the President of Egg Marketing & Public Relations, an Internet marketing firm specializing in blogger outreach, social media, and PR. She is also the blogger behind The Marketing Eggspert Blog.


The Silver Bullet of Cash Flow

February 1, 2011

It is rare that a day goes by without me hearing from entrepreneurs about cash flow concerns. Some have a “take-over-the-world” idea, and their lack of venture capital is the only thing holding them back. Others are expanding, and their cash flow never seems to catch up to growing expenses. Still, others are suffering operating losses and need cash to bridge them to profitability. Whatever the exact reason, the need is the same — cash on hand.

Getting funding can be tough, whether you’re pursuing investors, a bank loan, or bootstrapping via family and friends. But there is a silver bullet that will lead you to the cash you need to fund your business — paying customers.

Yes, the silver bullet really is that simple, with one general disclaimer — you have to have a decent business model that leads to profitability and, ultimately, self-sustainability.

1. Get Funding from Your Customers

Some of them may even be willing to pay you in advance for the products and services they desire. Don’t hesitate to develop your pricing and invoicing strategies to accelerate your cash flow as much as possible. For example, allow customers to pay for one or multiple years of services or products in advance for a modest discount.

2. Add Customers Now, Features Later

A commonality between the bootstrapping and lean-startup movements is this concept: Building out the features of your product or service just enough to start gathering paying customers, and then using profits from those customers to carefully add more features to attract more customers. These companies continue to repeat this cycle, sometimes for years.

3. Customers Can Improve Your Valuation

If you still need cash once you get everything directly from your customers, you are in prime position to find additional funds because you have cleared the “proof of concept” stage and broken into the coveted “paying customers” stage of financing a business. Why is it coveted? Because your business-funding options significantly increase at this point.

Why did your funding options increase? Because your risk just went down. Getting individuals or another business to actually part with their hard-earned cash for your product or service is a milestone in your progress. You now represent a more calculated risk, and your valuation goes up as well. In fact, the more satisfied, paying customers you have, the better your valuation. Repeat customers are even better.

4. Friends and Family Will Notice

Friends and family will feel better about financially helping you, and you will feel better about taking their money, knowing your chances to repay the money have improved.

5. Business Plan Competitions are in the Bag

Have you ever been to a business plan competition? Have you noticed who usually wins? It’s usually one of the plans that has become a real business and has real, paying customers. And business plan competitions can be a great source of startup and growth capital, both in terms of the prize money and free services, as well as the financing relationships that usually follow the winners.

6. Angel Investors Love Customer Feedback

Did you know that angel-investor due diligence usually focuses on customer feedback? Angels know your business plan is a best guess and your financial projections are so full of not-yet-validated assumptions that it is obsolete within hours of its completion. They will ask for a list of your customers, and they’ll likely call a bunch of them. Paying customers are the best way to convince investors to open their checkbooks along with an “A” management team, a strong business model, and a definable and sizeable target market.

7. Banks are More Likely to Loan

Banks like to loan money to companies with paying customers — the more the better. Whether the bank is financing working capital (which is often collateralized by the amount of money your current customers owe you) or equipment, they almost never make a loan to a company without paying customers.

8. Even More Financing Options are Open to You

Paying customers can create several other financing options, including invoice factoring, PO financing, inventory financing and more. Without paying customers, none of those would even be an option.

9. Investors Will Notice

Private equity, venture capital, and even IPO investments are primarily about one thing — paying customers. Without them and the ability to demonstrate how the investment will directly and exponentially increase the volume of paying customers, those deals usually fall apart very quickly.

So, You Need Cash?

If you need cash, then you should ask yourself this one question: “Am I doing everything I can to keep my paying customers and acquire new ones?” If you hesitate in any way to answer yes, then you should start your financing strategies there with specific focus on reasons number one and two above. If you still need money once you’ve exhausted those options, then you can focus on reasons three through nine and leverage your paying customers into additional financing.

If that still isn’t enough cash for you to succeed, then you may need to revisit the viability of your business idea and model. I just don’t know of many companies that have run out of cash because they have too many paying customers; their failure is usually the result of another problem with their management or execution of their business plan and financing strategies.

By Ken Kaufman

Jan 28, 2011

Ken Kaufman, Founder & CEO of CFOwise®, serves as the Chief Financial Officer for a dozen startup, emerging and medium-sized businesses. With almost two decades of experience and as an adjunct professor and author of Impact Your Business, Ken focuses his professional efforts on helping entrepreneurs obtain clarity and improve cash flow with the six scoreboards every business needs.


5 Questions to Ask Before Going for Funding

December 17, 2010

Dec 08, 2010

Need extra cash to move your business forward? Maybe you want to hire new people, buy a building, expand your inventory, or take your business to the next level, whatever that may be. Word on the street is that banks have money to lend.

Here are five questions you should consider before you begin the funding process:

1. How much is my business worth, today?

This is crucial for banks and investors. Is your company/business worth enough to cover the investment? Hiring new workers is a key motivation in today’s high market of unemployment. Even with an investment or a loan, hiring new workers means having a sustainable business model that is going to last more than another year or two. Those new workers want some long-term security, as do your investors.

2. What is the money really for?

If you tell your banker that you need to hire new workers, you better be prepared to support that statement. How many new workers? What will they do? What are the working conditions? Do you have people in mind, already? Being able to describe the roles you need to fill and how much they need to be paid, along the ability to say, “I have four people I’ve been working with on a contract basis who are ready to be full-time employees,” goes a long way to building credibility.

3. Can’t you fund your expansion yourself?

For many of us, that’s a no-brainer. If you can help it, don’t take on an interest-bearing loan or become indebted to investors. The problem is that while many businesses today are doing well enough to limp along, they’re not well enough to hire new people or mortgage a bigger building. Without additional workers or extra space, these companies will not be able to grow.

4. What is your projected revenue for the next five years?

Some folks predict five years out, while some are only looking three years. Regardless of how long you’re willing to predict forward, you still need to show a revenue line that covers the growth and the investment. No one is going to give you funds if you’re merely trying to stay alive. You must show the opportunity for growth.

5. Do I have a strong executive team to manage growth?

Existing companies looking for growth funds need to show the ability to manage a solid executive team and the growth that follows. You can’t expect a bank or other investor to approve new cashflow if Cheryl from marketing hasn’t produced anything for the company except lunch expenses, or if Patrick has hired two mediocre sales people for his team and failed to meet quarterly goals, or if the head of Business Development needs some new development. If you’re doing all the work yourself despite having an executive team, you’re essentially asking someone to invest in you. And, seriously, how much are you really worth?

There are more questions to ask than just these five. In an economy that is struggling to bring back the good old days, establishments in the business of investing funds to small business owners are only doing so when the small business owner can justify those funds and show a profitable return.

If you think it’s personal, you’re right. It is personal — personal enough to ask you a lot of questions about prior year’s income, to the point of asking why you purchased a new car last year. Really, did you need a new car? It can get personal enough to ask why you haven’t used the $25,000 you have in savings, which they know you have because you gave them permission to review your finances. It’s even personal enough to include questions about why you haven’t tapped into family and friends first.

The act of supporting businesses with added funds, whether from family and friends, a bank or a VC, involves pretending you can guarantee a return on the investment. Everyone knows there is no guarantee.

“How much of your own money are you going to put in?” a banker asked a friend of mine looking for funding to expand her two year old business.

“If I had my own money,” she said, “I wouldn’t be here asking you for yours.”

She didn’t get the loan. Will you?

By Yvonne DiVita

Yvonne DiVita, President of Windsor Media Enterprises, LLC: Books, Blogs and Beyond, is focused on consulting with businesses on how to effectively use new media tools. She blogs at LipSticking, with a focus on the women’s market.


Should Your Startup Apply for the sFund?

November 13, 2010

Esteemed venture capital firm Kleiner Perkins launched a new fund called sFund last month.

That’s not specifically remarkable; VC firms launch new funds all the time. What makes the sFund remarkable are its other key investors: Facebook, Amazon and Zynga. Not only are these major tech companies investors, but they’re also offering startups funded by the sFund advice, perks and “relationship capital” to give them an advantage over their competition.

What is the sFund all about? What are the advantages and disadvantages of the fund? And finally, is it something your startup should consider applying for?

Let’s take a quick look.

sFund Q&A

Q: What exactly is the sFund?

A: The sFund is a $250 million venture capital fund designed to fund startups and companies focusing on social media-related initiatives. Its manager is Kleiner Perkins partner Bing Gordon, current board member of Zynga and Amazon and former chief creative officer of EA.

Q: What makes the sFund unique?

A: The first thing that makes it unique is its investors, which include Facebook, Zynga, Amazon, Comcast, Allen & Company and Liberty Media. All of these companies have committed to providing assistance in their areas of expertise to startups funded by sFund. Facebook, for example, is giving startups early access to its platform and APIs, while Amazon will give them a free year of access to Amazon Web Services. sFund also has a broad mandate within social and is allowed to make investments as small as $100,000 and as large as $100 million.

Q: Who has been funded by sFund?

A: Cafebots is the first and only company to receive funding from sFund so far. It raised a $5 million Series A.

Q: What is the biggest advantage to being funded by sFund?

A: While the money is nice, the biggest benefit to being part of sFund is the direct access to some of technology’s most important companies. Priority access to Facebook, Amazon and Kleiner Perkins could be what helps a startup launch quicker, secure big partnerships or get substantial press. sFund companies also get access to some of tech’s most successful entrepreneurs.

Q: What is the biggest disadvantage to being funded by sFund?

A: Unfortunately, the answer to that question is not clear quite yet, as it’s also an untested fund. But one disadvantage may be that joining sFund will tip off these companies to exactly what you’re doing. There’s no guarantee that Facebook won’t like your idea so much that they build their own version.

Q: I have a startup and I’m looking for funding. Should I apply for sFund?

A: Here’s a question to ask yourself: will my startup benefit greatly from priority access to Facebook’s platform, Amazon Web Services or Zynga’s gaming platforms? If access to these companies could make all the difference for your company, then it doesn’t hurt to try. Once you tie the knot with an investor though, it’s almost impossible to break off the relationship, so the most important thing is figuring out whether or not you and your potential investor are on the same page.


7 Ways To Fund Your Start-up

October 22, 2010

Who knew that coming up with a business idea was the easy part of being an entrepreneur? The hard part is trying to get funding to bring your idea to life. It would be great if we all had rich uncles waiting to invest in our dreams, but unfortunately that’s not how the world works. In reality, there are only a few options available when it comes to funding a start-up. So, instead of dwelling on what you don’t have, lay your options on the table, and decide what you’re going to do to get the money your business needs.

Not trying to burst your bubble, but regardless of how great your business idea is, the revenue never starts coming in fast enough. You’re going to have to pay to play, so use the advice below to learn how to get your business funded.

Here are 7 ways to fund your start-up:

1. Personal Savings– If you’re thinking about quitting your day job to start a business, first take time to stash money away– lots of it. When you’re serious about becoming an entrepreneur you are more than willing to modify your lifestyle to free up extra dollars to put toward your dream. Instead of blowing your money at the mall or at restaurants, focus on your business, and stack your savings account so you can self-fund your start-up and call your own shots. You should at least save enough money to cover your business and living expenses for 6-months to a year.

2. Personal Investors– When starting your company, don’t overlook the resources that are closest to you. Anyone can be an investor. That includes your family, friends, colleagues, etc… You’ll be surprised to see who’s willing to back your play. People want to be a part of something great, they just don’t want to do the work themselves. Use that to your advantage, by giving them a chance to invest in you. Prepare your business plan, share your vision, and make your best pitch. Remember to explain what’s in it for them, and when they can expect to get a return on their investment. It’s easier to convince someone who knows you to take a chance on you, so start recruiting personal investors to get your business going.

3. Bank Loans– Take a trip to your local bank to find out what it takes to qualify for a business loan. Off the bat, you should know that your credit history, collateral, and business plan will play a major role in determining your eligibility. To increase your odds of getting a bank loan, stop by an SBA office in your area, and let a small business counselor review your business plan to make sure it has all the components the bank needs to see to approve your loan. The SBA office can play a major role in making it possible to get your bank loan, so make that critical connection and then head to the bank.

4. Home Equity Loans– If you are one of the lucky ones who still manages to have equity in your home– you can take out a home equity loan to fund your business. It’s always easy to get new money when you can easily prove that you have the assets and collateral to offer in return. A home equity loan is probably one of the easiest loans to get under normal circumstances, but this route may be challenging for a while, since the market knocked down the value of so many homes. If you do qualify for one of these loans, you should make this one of your first options.

5. Moonlighting– As much as you want to quit your day job to focus 100% on your business, it may make sense to continue working your job in order to fund your dream. In the start-up phase, you need to be able to cover your expenses and pay for resources your company needs. If you work during the day, moonlight at night, or take part-time gigs to keep money flowing in, you can self-fund your business and build a strong foundation for success.

6. Investors– I know it’s hard to believe, but there really are people with money to burn, who are willing to invest in your start-up. Whether you are looking for Angel Investors or Venture Capital Investors be prepared to give away a piece of your business in exchange for some serious start-up cash. When dealing with investors, you have a great chance of getting the big money you need to make your full vision come alive. If you have to give up a portion of your company in the beginning, you should have an exit strategy in place to buy out the investor when the profits start rolling in. Also, before accepting an investor’s offer, make sure you understand what the investor wants in return for his money. Some investors are supportive, silent partners, while others will want to have a more prominent role in your business. Know what you’re getting into, and make sure it’s worth signing that dotted line.

7. Peer Lending– Nowadays, there are social networking websites available to help you raise money for your business. You can actually go online, pitch your idea, and have your business funded by a community of your peers. Aspiring entrepreneurs can raise thousands of dollars online by persuading regular people to support their business ideas. If you’re looking to fund your start-up, you may want to give one of these peer lending networks a try. Check out sites like, and to learn more about how these peer funding programs can work for you.

Whatever you do, don’t let lack of funding shut down your new business idea. Use the tips and resources mentioned above to fund your start-up and bring your great ideas to life. Finalize your business plan, practice your pitch, and then go out there and get the money your business needs.

Good luck!

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