Are You Loan Worthy?

The economy may have dried up some sources of funding, but that doesn’t mean you can’t get the capital you need to start, operate or expand your business. The key is to make yourself look as loanworthy as possible, says Steve Bloom, past chair of SCORE Atlanta, a former angel investor and a longtime mortgage lender. “Small-business owners need to think the process through before they approach lenders. You get one shot. Lenders don’t tell you why they’re turning you down, and they’re not there to help you figure out how to ask for money.”

Bloom suggests devising an elevator pitch that briefly states who you are, what you do and what makes your business special. “What are the challenges and threats in your industry, and what solutions do you bring to be able to deal with those external forces?” he asks. “Small-business owners talk about opportunities and forget to talk about land mines.”

To help you get started, the SBA suggests thinking through questions like these before you fill out your first loan application. 

1. How badly do you need the money, and how quickly must you have it? The less urgent your needs are, the less risky you appear to lenders. By anticipating your needs instead of reacting to them, you’ll be able to negotiate the best terms.
   
2. What do you need the money for? The more specific you are about your financing needs, the more likely you’ll be able to find a lender for them.
   
3. Does your need for capital reflect your business plan? If not, consider whether you’ve strayed from your purpose or if your business plan needs to be rewritten before you approach lenders.
   
4. Do you have the right people in the right jobs? Lenders will look at your management team before making a lending decision.Bonus question: Do you actually need more capital, or can you restructure your current cash flow to finance operations more efficiently?

Help Them Help You
Sure, you’re doing everything you can to keep costs down; you have your eyes on the bottom line. Your employees, however, may not have the same unbending motivation to save your company money. Here are five tips to encourage employee cost-cutting.

Lead by example. Don’t fly first class if you expect everyone else to fly coach.

Offer incentives. Give a gift card (or cash) to employees for a percentage of the amount saved.

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Sponsor a contest. Have employees submit cost-cutting ideas and reward the winners with a gift or an afternoon off.

Catch them at it. When an employee does something cost-effective, publicly recognize and praise him for it.

Involve employees. Give them a say in decisions concerning health insurance and other programs that affect them.

Repair or Replace?
When the printer starts inexplicably spewing out multiples of every print job, don’t just automatically kick it to the curb--or worse, let it keep on keepin’ on. Both will cost you in the long run. Here are some dos and don’ts for deciding whether your business equipment is worth saving.

Do check to see if the problem or malfunction can be easily fixed. Electronic equipment may have lost a charge; a screw holding part of a chair or table together may have come loose. A quick but thorough examination can help rule out simple causes for equipment failure.

Do check to see if the item is covered under a warranty. Take a look at the purchase paperwork or call the manufacturer. If the item was purchased with a credit card, an additional warranty may apply.

Don’t forget that replacements can have hidden costs. If you replace an item that uses consumable supplies, like a printer, ink cartridges and paper may not be compatible with the new equipment. 

Don’t forget to figure in the cost and time needed to install the new equipment and learn how it works.