From the March 2000 issue of Startups

If time is money--or even if it's not--there's a new online site that can save you both time and money. Designed for small and midsized businesses, BizBuyer.com particularly benefits start-ups. It reduces time spent sourcing business products and services, enables you to become operational sooner, and helps jump-start your business by providing an instant national market for your products or services.

In essence, BizBuyer.com is an online marketplace. Entrepreneurs describe services or products they want to buy, and qualified vendors bid to fill those specific needs. In a matter of hours, you can obtain competitive quotes from pre-screened sellers coast to coast. In most cases, responses are limited to the first five vendors who submit bids; however, you can resubmit your request to receive additional bids. You can review all bids--both individually and in a side-by-side comparison table--and contact a vendor to close or refine the deal. Until then, you remain totally anonymous.

"Our ability to source multiple vendors at once--and furnish the buyer with the most competitive bid within a few hours--dramatically simplifies the way small businesses purchase goods and services," says Bernard Louvat, 35-year-old president, founder and CEO of the Santa Monica, California, company, which launched in June 1999.

Starting out, most entrepreneurs are "all charged up to execute their concept, but they get bogged down for weeks or months finding the best phone system; getting the right computer and Internet connection; and searching for a copier, an attorney and a logo," adds Paolo Consiglio, general manager and senior vice president of BizBuyer.com. "With BizBuyer.com, you can submit 20 different requests for quotes in one hour and receive multiple bids on each request within the next 24 hours. You quickly--and at no cost--get the detailed information you need to make an informed decision." The service is free to buyers; vendors pay a nominal fee.

"Many of us here have been through the start-up experience," says Consiglio. "We know the pressure of entering an empty office and saying `What do I do first? Where do I begin?' We help ease such pressures, and help business owners save money in more than 50 different categories of products and services." These range from computers and financial services to cars and office space. For example, long-distance service represents about 20 percent of BizBuyer.com's business, says Consiglio. "An entrepreneur asking for quotes on long-distance service hears directly from Sprint, Qwest Communications Inc. and three other suppliers that offer savings averaging 40 percent," he notes. Once your business is up and running, you might want to consider becoming a BizBuyer.com vendor, too. As of January, the company had an estimated 20,000 registered vendors, 30 percent of whom have submitted requests for bids. "It's an excellent vehicle to kick-start a new business," says Consiglio. "Entrepreneurs who register as vendors have immediate access to a market consisting of thousands of businesses."

Words To The Wise

How do you raise funds to launch or expand a business? Addressing that question from distinct perspectives are two new books from insiders: 2000 Financing Start-Ups (Harcourt Brace Professional Publishing, $139, 800-831-7799) and The SBA Loan Book (Adams Media Corp., $12.95, 800-872-5627).

2000 Financing Start-Ups may be the most comprehensive and informative book ever written on the subject. Authors Robert Brown and Alan S. Gutterman, international attorneys who have worked closely with start-ups for many years, reveal practical strategies for finding and securing financing and guide entrepreneurs through the entire funding process. The 600-page tome helps you zero in on the amount of funding needed, develop an effective business plan, find alternative financing sources, value a business, negotiate terms, and ensure compliance with federal and state regulations.

Brown and Gutterman explain in their book that it was designed to help readers "understand what it takes to raise money. Its focus is small businesses operating in the corporate form, since most lenders and investors will insist on a corporate structure." They go on to describe financing instruments and provide an overview of related regulations and laws. Then they discuss the specifics of all types of financing, including internal funds, vendor financing, strategic partners, private loans, commercial loans and leases, government funding programs, private primary transactions (such as sales to a small group of private or institutional investors and venture capital financing), and public offerings.

The financing guide comes with a CD-ROM that, like the book, includes a sample business plan and other documents, as well as listings of and useful details on thousands of venture capital firms, banks and SBA offices nationwide.

If you're put off by the magnitude or price of 2000 Financing Start-Ups, or if your sights are set on an SBA-backed loan, consider Charles H. Green'sThe SBA Loan Book. Green enlightens readers by painting a clear picture of the government agency and its financing options. And, as a veteran banker, he provides unique insight on dealing with lenders. Now vice president of the Bank of Commerce in San Diego, the author has held executive positions with three other banks and a venture capital firm over the past 20 years.

The 200-page handbook, subtitled How to Get a Small-Business Loan, Even With Poor Credit, Weak Collateral and No Experience, uses plain English to uncover the lender's decision-making process, at the same time acknowledging that perseverance is the ultimate key to SBA funding. In the short time it takes to read The SBA Loan Book, you'll learn how to fill out a loan application, explain extraneous circumstances, and improve your odds of getting a loan--or know what to do in the event the lender still says no.

No Love

Question: A national casualty insurer wants our home-remodeling business to become one of its "affiliated" contractors. Is this a good deal?

Answer: I've seen this before. Be wary! Read on for the sad tale of my friend Frank.

He lost control of pricing to the insurance company. The saga begins when Frank was required to use the insurer's damage-estimating software. The estimating program was designed to satisfy the insured--at the lowest cost to the insurance carrier. With this, one can expect revenues to drop 10 percent or more, while costs stay the same.

Frank was flooded with damage insurance claim referrals. Afraid to offend the all-powerful insurance company, he added new employees, supervisors, office equipment and office space. He built in lots of new overhead expenses.

Cash flow went up in smoke. Previously, Frank got paid 50 percent of a job when the homeowner signed the con-tract and the remainder at completion. However, with insurance claim repairs, he got no money upfront and was paid 45 days after completion. To cover cash shortages, his line of credit quadrupled, as did interest expense.

Frank's banker didn't take the time to understand the business. He lent money based on a credit bureau loan-scoring model. When the banker finally received Frank's financial statement, he was unpleasantly surprised and tried to call the loan--which Frank couldn't repay.

With cash flow and profits crashing down, Frank dropped his marketing programs and laid off his estimator. He was a captive of the insurance company.

Today, the IRS is at the door. Frank does not have enough cash to make his payroll-tax deposits. At best, he will have the IRS hammering him for a long time. At worst, he may lose his business. The moral of the story: Don't saw off more than you can chew. Talk to other remodelers working with this insurance company in other parts of the country. Is it working for them? Get your accountant to run cash-flow projections based on the problems that plastered Frank. Most importantly, don't be afraid to say no.


George M. Dawson (gdawson@txdirect.net) is a small-business consultant and author of Borrowing to Build Your Business: Getting Your Banker to Say "Yes" (Upstart Publishing, $16.95, 800-235-8866). Send him your financing questions at bsumag@entrepreneur.com.

Card Sharks

Has your credit card company hit you with an unwarranted late fee? Have you been charged interest even though you paid your bill in full? Has your purported delinquency resulted in a usurious interest rate?

Facing increased competition, credit card issuers are becoming more creative--and not always principled--in generating revenue. "It's a problem that directly impacts business owners as well as consumers," says Linda Sherry of the nonprofit organization Consumer Action in San Francisco. Some issuers hit cardholders with charges ranging from exorbitant late fees to excessive interest rates. Hundreds of cardholders have filed lawsuits against credit card companies, accusing them of delaying the posting of payments (intentionally triggering late penalties), charging for products not ordered, arbitrarily raising interest rates and other outrageous moves, according to the nationwide consumer rights group.

Starting a business is hard enough without having to worry about getting ripped off. But if you're one of the millions of entrepreneurs using plastic to help finance your business, it may pay to worry-or at least to be more diligent about credit card matters. What you can do:

  • Review the accuracy of each statement.
  • Check payment due dates, as they can vary each month.
  • Remit payments well in advance of the due dates.
  • Have payments made automatically each month from your checking account.
  • Reschedule payments for your convenience.
  • If you are contesting a late fee, keep and use the canceled check to prove the payment was made on time.
  • Reduce your use of credit cards.
  • Make paying off credit card debt a priority.
  • Never accept credit insurance.
  • Don't accept invitations to skip a payment.
  • Resist using unsolicited blank checks.
  • Visit Consumer Action online at http://www.consumer-action.org

Paul DeCeglie (MrWritePDC@aol.com) is a former staff reporter for Journal of Commerce and American Banker.