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Money Coach

February 2011 - Posts

  • Angel or devil? Research thoroughly before you decide

    If you’re a small business owner who is seeking funds for expanding your business, or if you’re an entrepreneur seeking to start a business, you have no doubt found that there is a lot of confusion out there about angel investors, the groups they form and the groups that help you find them.

    Angel investors provide money for business startups and expansions, for a return on their investment. Seems like a simple concept, but there are so many angel groups, networks, brokers, consultants and wannbe’s out there that it has become harder and harder for a businessperson to tell who the real investors are.

    Here is some information that may help you make sense of the whole thing.

    • Angel Groups – These are membership clubs that are comprised only of qualified investors who have made or are willing to make investments into small private companies. A true angel group has screened its members and works aggressively to educate them. These are the investors you want to talk to.

    • Angel Organizations – There’s only one real one, although many claim the title. Angel Capital Association is a national group that coordinates and lists angel groups all over the country. It’s legit.

    • Angel Network – This is code for an online brokerage or intermediary; they’re not investors.

    • Angel Event – Although an event that puts you in front of some qualified investors, you don’t know for sure who will be there and what their qualifications will be. Some of these events are exclusive; others just invite anyone and everyone. Enter into any such event with caution.

    • Hybrids and Specialists – They train and meet. They consult. They do not invest. Specialists, on the other hand, are good if you are a highly specialized entrepreneur.

    If you are seeking angel money, it is wise to keep your search close to home and highly personal. Leverage your own social network before you buy into any professional networking opportunity. If you do buy in, check them out thoroughly in advance.

    Better safe than sorry.

    Posted Feb 24 2011, 01:35 PM by moneycoach with 1 comment(s)
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  • Do your part before – and after – you sign on the dotted line for that business loan

    Your business loan has been approved. Congratulations. Your business has now received the financing needed to open or expand your business. But before you pop the champagne and propose a toast, you should remember a few key rules before signing on the dotted line and picking up your check.

    Make sure you thoroughly review all loan documents, and understand what they mean before you sign and accept the loan. If you don’t understand something on the documents, ask the lender to explain. If the explanation is not clear, ask for further clarification, or ask for a copy of the paperwork to take with you to review. Don’t hesitate to consult your attorney or accountant if you have questions.

    Return all the required documents to the lender on time when your business loan is approved. There will be a number of documents and required paperwork the lender will need before you can close on the loan. You obviously made a good impression with the lender, or you wouldn’t have been approved. Keep that good impression by promptly responding to requests for additional documents, information and credit references.

    Now that you have the loan, be sure to take the time to review your business’ situation. Take another look at the goals and objectives of your business. Review them weekly if need be, to keep you business on track.

    You should also take another look at your loan proposal. But you should remember why you applied for the loan in the first place. Review the ideas behind obtaining the loan, and work toward achieving those goals.

    Maintain close contact with the lender after the business loan is approved, and let him know how things are going. This could prove advantageous in the future if your business has need of the lender’s other services.

    And remember, if there are any problems immediately after the loan is approved, contact the lender immediately. If you’ve hit a snag, inform the lender before anyone else does. Lenders don’t like surprises, but they can also be helpful and can offer solutions or assistance to aid you in resolving your problems and getting back on track.

    The key to the whole business loan process, clearly, is good communication. By making sure you understand the process, the paperwork and the progression both before and after you sign on the dotted line, you’ll make good use of the loan you’ve acquired.

    Posted Feb 17 2011, 10:19 AM by moneycoach with no comments
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  • When it comes to your finances, the easy way isn't always best

    Your financial path is littered with alluring options like credit cards, bad payday loans, reverse mortgages and 401(k) raids. The economy is starting to look stronger, but the employment rate is still fairly high, currently at 9.7 percent. Many families are skipping contributions to savings or retirement funds just to keep up with bills.

    When treading waters like these, it can be difficult to keep your head up high enough to allow you to breathe. But don’t compound your problems by making these common mistakes.

    • Stay away from your 401(k). Don’t dip into it even if you can’t figure out a way to pay your bills. It’s particularly foolish to dip into a 401(k) if you’re in danger of bankruptcy, since retirement accounts are protected under bankruptcy laws in most states. You won’t have to surrender your retirement savings to get a fresh start. If you dip into it as a temporary fix now, you may find yourself broke now and in the future.

    • Don’t walk out on your mortgage. This isn’t your only option, providing you still have an income. If the situation is short-term, meaning you can see a way to keep making the payment, then stick with it. If the problem is long-term, then the fact of the matter is that you can no longer afford your home. The sooner you realize this and make plans to sell it, the better.

    • Don’t ignore your credit card balance. Credit card usage is down, however, many families still owe more than 40 percent of the income. Don’t just pay the minimum on your balance; pay as much as you can and pay the card off as soon as possible.

    • Don’t fall victim to those debt consolidation firms. Many of them are scams.

    • Be cautious about payday loans. This type of loan is a short-term loan in order to meet emergency expenses between paychecks – it’s not meant to be a long-term financial solution.

    • Be leery of reverse mortgages. These mortgages often carry fees and other costs that can be considerably higher than other loans. Instead of this type of loan, take out a home equity loan, or sell your home and move to a smaller, less expensive one.

    The bottom line is this: don’t look for the easy way out. It takes time to get yourself into trouble financially, and it will take time to get yourself out. Take the time to do things right.

    Posted Feb 10 2011, 11:43 AM by moneycoach with 1 comment(s)
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  • Women can overcome obstacles toward business ownership

    All business owners face certain challenges, but women often have additional obstacles that their male counterparts are less likely to encounter.

    But this doesn’t mean women are less successful than men. In fact, statistics show that women are starting businesses at more than twice the rate of male-owned businesses. This shows that women are resourceful, and able to succeed no matter the circumstances.

    Women often have life skills and natural abilities that are useful in business. Women tend to be great networkers, have inherent skills for negotiating and the ability to multi-task. Single mothers are often good at delegating and budgeting, skills they rely on to manage their families.

    But all of that means nada if a woman can’t get the startup funding she needs to launch her business. The following is a list of funding resources for women entrepreneurs.

    • Accion USA is a private, nonprofit organization that offers small business loans up to $25,000 to business owners who may have trouble accessing commercial loans. They offer special programs for women- and minority-owned businesses.

    • Angel Capital Association is a nonprofit alliance of nearly 200 angel organizations in the U.S. and Canada.

    • Association for Enterprise Opportunity provides assistance with micro-loans, training, technical assistance, access to services and more. Works with small businesses employing five or fewer people, with startup needs of $35,000 or less.

    • Count Me In For Women’s Economic Independence is a nonprofit that offers access to loans for women business owners, as well as training scholarships for women seeking higher education.

    • U.S. Small Business Administration offers many loan programs but does not offer funding itself. It serves as a guarantor of loans made by private and other institutions and can help a business owner attract venture capital. The SBA offers programs for women and minority business owners.

    There are other programs as well, so do your homework. Figure out what would work best for you in your particular situation, and apply for the money. You’ll never know if you don’t try.

    Posted Feb 03 2011, 10:42 AM by moneycoach with 1 comment(s)
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