Forkids Business Guidelines

Many hardships have occurred due to the down economy, but lucrative opportunities have risen from the rubble of the slump. If you’ve been displaced by job loss, or just feel your current position does not offer the flexibility and upward mobility you desire, consider entering into the commercial finance industry as your next step. The opportunities are endless, but be mindful of these ideas before making the leap.

1. Understand your lenders. Get to know each of your lenders and what they have to offer. What types of loans and transactions are they willing to engage in? By understanding what each lender can offer your customers, you can tailor your presentation and match needs with resources. Understanding a lender’s underwriting guidelines can not only help you close more deals, but it can dramatically increase the effect of your marketing campaign by helping you target your message to the appropriate audience. You’ll be more successful in fulfilling loans and increase the amount of transactions you partake in and ultimately close, increasing your personal income.

2. Act as a consultant..not a broker. The word “broker” tends to have a negative connotation in the financial industry. A recent survey that asked people what they thought of when hearing the word “broker” yielded results like “a person gaining financially at my expense”, or “sleazy salesmen”. These thoughts may be due to brokers, no matter what industry, approaching clients in the wrong manner. As a commercial finance broker, you are essentially a solution for a widespread problem for businesses: access to capital. So in essence, you are a gateway to capital for businesses. When talking to new clients in need of financing, it is best to act as a consultant to their problem rather than just giving them applications to complete and a 15 min conversation. You should speak with a client for at least an hour. Find out how their business works, what problems do they currently have, and outline a plan of how you can help them. By doing this, you will not only win the trust of your client or borrower, but also lay the ground work for repeat business for future financing needs that they may have.

3. Know how to market. There are a plethora of marketing tactics to use to “get the word out” about your commercial finance business. You need to find the right tools to spread your message. Think about what customers you are targeting – where do they spend most of their time? Use tactics that pinpoint your audience. Maintain sharp, easily read marketing collateral and websites that get right down to the message of your business. Regardless of what kind of marketing you use, always, always focus on the “benefits” of your products, not the features. How will your service or product help your target audience? What are the benefits that your target audience will receive by buying what you’re selling? This will help you create an effective marketing campaign.

4. Operating with the right agreements. Numerous legal documents are necessary for successfully operating a commercial finance business. This fact is often overlooked by most brokers today. One must have the proper fee agreement in place with a client that protects the broker and ensure he or she is properly paid for successfully closing a transaction. Poorly worded fee agreements only give rise to problems down the road when working on a transaction that can ultimately cost a broker their commission. It is also good to have Non Disclosure / Non Compete agreements for your business as certain situations might require these, such as a client needing capital for the development of a proprietary product or service. By having sound agreements in place to handle any given situation with a client, your finance business will always be protected from common issues that arise in this industry.

5. Stay on top of industry news. Finally, when considering being a commercial finance broker, be aware of new finance and lending updates. In the commercial finance industry, things change all the time so you have to be up to speed on what those changes are and how it affects your potential customers. For instance the world of SBA lending has changed dramatically in the last 2 years and is changing month by month these days. If you’re involved in brokering SBA loans you have to know what each of these changes are and how it affects your clients. You are responsible for learning new techniques and methods. Stay abreast of opportunities and be proactive in pursuing them. What you know is up to you. By staying informed, you will prove to your customers and lenders you are competent and able to meet their needs. Also by identifying changes in the economy you can go after niche markets that might need a particular financial product due to that change.

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A local lease is the contract signed with the owner or owner of premises at the time of lease or rent its premises for the operation of our business.

This agreement sets the term of the contract which will (rent) and amount (income) per month to pay for it.

The contract time varies by type of business, but the average and the recommendation for small to medium businesses, is to sign a two-year renewable contract at a minimum, otherwise the local owner (lessor) may choose to stay with our business when it comes to success.

Also, before signing the contract must include exit clauses that are in our favor, for example, we consider the possibility of dissolving the contract without paying the entire agreement, in case we do not go well with the business.

Another aspect to consider is the potential for sublease (rent a part or all of the premises to a third party) or assign (transfer the rights and duties of the contract to a third party) the lease without having to refer it to landlord.

We must also consider the possibility of construction or improvements on the premises, we must agree on what we do and what not, what should make the landlord, etc.

Finally, note that not only should we study it before signing the contract, but do this with the landlord, for example, investigate their police records and credit.

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Let’s look at what are the most common mistakes entrepreneurs often make when creating your business or company.

Common mistakes to which we must pay attention and avoid, if we start a successful business:

Not having a business plan

A common misconception among entrepreneurs is to obviate the development stage business plan.

Many entrepreneurs do not give due importance to the business plan, and this often results in a miscalculation of investment, excessive costs, a lack of direction, the need of having to improvise all, in a undue delay to create the business, to get the first customers, a lack of organization, control, etc.

Not knowing customers well

Many entrepreneurs do not have very clear on what type of consumers to go to target their products or services and those that do not perform a proper investigation and analysis of its characteristics.

Do not analyze it needs, desires, tastes, preferences, habits, etc., And this is reflected in the design of products that fail to meet the needs of consumers, distribution channel design cannot efficiently distribute consumer products design of media that are not effective on them, and other strategies that fail to perform well in their target audience due to lack of knowledge on them.

Underestimating the competition

Many entrepreneurs underestimate the competition, do not give due importance, not because they take the time to investigate it and analyze it.

They think that having a unique and innovative product, can easily circumvent competition. But do not take into account is that as your business or company starts to become known, the competition will know them, and not stand with folded arms.

And if we have not previously taken the time to study it and analyze it, it will be difficult to design strategies that allow us to address them promptly.

Overoptimistic

The starting a new business always carries an enthusiasm and optimism of the fact themselves embarking on a new project, but when this enthusiasm or optimism is excessive, the entrepreneur can lose objectivity.

Resulting in a lack of realism in your projections, overestimating revenues and underestimating costs (miscalculation of investment), or it can also mean inadequate staffing (thinking it could do everything yourself) or an excess of investment expenses (making money later end missing).

Hire untrained staff

The entrepreneur often think you can do and solve everything, and only need to hire staff just to follow him in his decisions.

Not considered that to create a solid business needs to have even trained people are smarter or know more than one in a particular topic or aspect of the business that are complementary to each other and thereby achieve a good team.

Overspend

Because of the enthusiasm that crosses the start to build your business, it usually does not measure well their expenses, and buy everything at your hand, or buy more expensive products, until it finally runs out of capital before we even start their business.

Not take into account that many of the goods, wax or equipment purchased, may not be needed initially, and later purchase. Or do not take into account that if you do not hurry to buy the first thing you are, always find a place where they can acquire the same at lower prices compared with those of others.

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Whether you need money to deal with daily operations, or invest in growing our business, the most common way to get that money, is requesting a loan to a bank or any financial institution.

To request a credit or loan from a bank or financial institution, we must first determine what amount we will apply, and analyze in the first instance if we are able to pay that amount.

Second, we must evaluate the various financial deals that exist, taking into account the loan amount, term and each bid costs (fees and commissions).

At this point we must consider the interest rate indicated banks or financial institutions is often not actually the only cost to pay for the loan, but there are often other costs not mentioned in the first instance, such as maintenance fees.

In evaluating the various financial deals, we must also take into account the bank or financial institution itself, that is, regardless of their reputation, their attention quickly to assess your application and to give us the loan, etc..

Third, once we know the amount, cost, and time, we evaluate whether we will be able to pay the amount to pay for it, we must find the monthly fee to pay (which can give us the same bank or financial institution), and then include that amount in our income and expenditure projections (projection of our cash flow), and thus whether the revenue we generate, we pay these fees.

Fourthly we must find out what the requirements requested by the bank or financial institution we have chosen, it is usual that we ask the following:

* Experience in the market: 6 months to 1 year at least, to demonstrate it is necessary that the company is legal.
* Be eligible for credit, i.e. not be classified as a paying customer or deficient in meeting its obligations.
* Have borrowing capacity.
* Historical financial statements.
* Projected financial statements (forecasts or projections, especially cash flow projections).
* Declaration of income tax.
* Trade references.
* Ratio of 3 major customers (past billings).
* List of major suppliers.
* Commercial guarantees.
* Business plan (for investment, for example, to expand the business): This requirement can prove that one has full knowledge on what is going to invest, can also assess whether the business is profitable, and if one be able to repay the loan with the fruit business.
* Formal presentation.

Several of these requirements will vary according to the bank or financial institution, and according to the amount requested.

For example, if a bank or financial institution specialized in microfinance or the requirements may be more accessible, for example, can you ask for only 6 months experience in the market?

Even in some cases, the staff of such entities, not expected, but goes directly into our business to collect the information himself.

Even these institutions do not ask for collateral or guarantees up to certain amounts, just call or submit a draft business plan, showing income, show the movement of business, etc.

Following the steps, in fifth place, we must prepare to answer the questions we do about our company, ready to say why we need the money, provide details of the investment, demonstrate ROI, and prove that we are able to pay the debt.

And finally, it shall wait for the bank or financial institution to assess and measure the risk of extending credit and, accordingly, decide whether to approve the loan.

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Planning is the process by which a company analyzes the external environment, analyzing the internal situation; develop goals based on this analysis, and design strategies and courses of action to achieve those goals.

Importance of planning

Whatever the size of a business, planning is critical to its success for the following reasons:

Provides a basis for other functions

The base serves as a stop planning other administrative functions (organization, coordination and control), used to organize resources, serves to coordinate tasks or activities, and serves to monitor and evaluate results (allowing to compare the results with those planned).

Reduces uncertainty and minimizes risk

Planning can reduce uncertainty and minimize risks by analyzing the current situation, possible future events, objectives and outline proposed courses of action.

Builds commitment and motivation

Planning generates commitment and identification of members of the company’s objectives and, therefore, motivates them in their achievement.

Planning features

All good planning should have the following characteristics:

Is accurate

The planning should include specific objectives, i.e., no general objectives that can be measured but equally, includes strategies and concrete actions to achieve these objectives.

It is feasible

Planning, before being made, you must consider the resources and the true ability of the company, and should not propose objectives or strategies that are outside the scope of possibilities for the company.

Is consistent

Planning should take into account all plans of the company, whether long, short or medium term should be consistent with all other plans and, thus, achieve efficiency in their execution.

Is constantly evaluated

Planning should be evaluated constantly, constantly be monitored and evaluated its development and its results.

It is flexible

Planning should not be written in stone, must be sufficiently flexible to allow changes or corrections when necessary, for example, when necessary to adapt to sudden changes in the market.

Generate participation

The planning must involve the participation of all members of the company; everyone must contribute in their design and development.

Generates motivation

Planning should identify and engage all members of the company in achieving the objectives and thereby encourage their achievement.

Is permanent

Planning is a continuous ongoing process, once the objectives, new goals should be proposed.

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There are many ways to expand or grow a business, for example, can make it through the opening of new stores, create new sales channels or outlets, direct our products to new market segments, making the decision to export, etc…

But the problem arises when there has been no proper planning, and suddenly the employer is without the resources or capacity to sustain this growth.

For example, suddenly no longer has the necessary funding to purchase the goods requested, it has the capacity to meet the new demand, there is no supply to meet new customers, it has no knowledge or experience to meet the new requirements, etc.

So before you decide to expand or grow a business, it needed a good plan that allows us, among other things, whether we have the resources and capacity needed to maintain growth.

The expansion plan should identify the growth strategies we will use the investment required to implement these strategies, sales forecasts and expense that will be generated with the extension or expansion of the business, products or services we need to produce and deliver.

The first thing that will allow the expansion plan is to verify that the project really is profitable, i.e. that profits will outweigh the costs that will be generated as a result of the implementation of the plan.

The second thing that will allow the expansion plan, will know the resources (financial, human, technological, material) and capacity (production, distribution, knowledge, experience) that we need to enforce the extension or expansion of business and thus, assessing whether we have those resources and capacity, or in any case, if we are able to obtain them.

If you do not have the resources and capacity, prior to implementing the expansion plan, we get, for example:

* We may need to obtain external funding (always making sure that we will be able to repay the loan with the profits generated).
* May need to hire or train new staff we already have (for this would need to develop our skills before hiring, evaluating and training staff).
* We may need to delegate more responsibility and authority, for example, if we have to climb or promote workers.
* Ourselves might need more training on specific management issues that have not mastered very well.
* We may need more experience in some or all aspects of our business, for example, if we will open a new branch, knowing that the delegate tasks, workers cannot deceive us about the operation or the possible results.
* We may need to perform an internal analysis of business, for example, to ensure that the business is functioning properly and have no weaknesses, before opening a new branch or business unit.
* We may need to install new information systems, security or control, for example, if we’re going to open new branches or business units, and no longer have direct control over operations, it is necessary to have systems that enable us to control each unit, measure their performance, get regular reports, etc.

In this expansion plan must be said about what the next steps to implement growth strategies, as well as those responsible for it, scheduling tasks, and the dates and time required to implement the plan. This will give us a better organization and coordination, and be more efficient in implementing the strategies.

The key to good growth does not hurry, be cautious, careful evaluation of the problems, obstacles or difficulties that could arise, and, above all, make a good plan for growth. We should not assume, for example, if a business was successful, a branch of it will be as successful in another geographical area.

Finally, note that in business there is always a gap when passing, everything else becomes much easier, for example, the most important expansion for most businesses is to grow the first unit to the second, and once taken that first step, make it easy to become a chain. Once this first challenge, the business can grow exponentially, and is no longer limits.

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