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Now that you have read strategies in The Express BusinessBriefs for Clinton County real estate investments, it may be time to "dig for easy start up money." Sixty-four percent of small business owners and start-up entrepreneurs garner funding from personal and family savings, 18% from banks and unfortunately, over 18% from personal credit cards.
While money may be a prerequisite to starting a new business or investing in real estate, Bradley Vincent wrote "Money is a tool. Use properly and make something beautiful; use wrong, it makes a mess!"
The newbee investor will most-often visit their local bank for a business loan or mortgage. One should always choose a banker, not a bank. The first step is to prepare a Business Plan to include a cash flow projection and profit analysis with the focus on an accurate forecast of revenue. Information on how to write a Business Plan, and all of the other topics contained in BusinessBriefs articles, can be found in the Stephen Poorman Entrepreneurship, Business, Finance and Banking section at The Ross Library.
Sadly; many banks lend money only to people who can show they don't need it as they review your personal financial statement and evaluate the five C's: Character, Capacity, Capital, Conditions and Collateral.
Many lenders also require a personal guarantee of the loan.
Before approaching family and friends for financing, one should ask important questions such as whether that person can afford to invest, what return should be offered on the funds, how much money is required for the transaction and whether they should be given an equity position.
The Small Business Administration (SBA) may be helpful for an entrepreneur to launch a new venture by lessening the risk for a bank. You can learn more about SBA programs by contacting SEDA-COG in Lewisburg at 570.524.4491. Funding could be available from the City of Lock Haven or through the Clinton County Revolving Loan Fund. Perhaps you may wish to investigate government grants, floor plans, consignment arrangements and this columnist's favorite: wealthy individuals.
Funding, acquiring, building and maintaining a business empire or real estate portfolio is not an accident; it must be earned and is not a matter of luck. As Margaret Thatcher wrote, "I wasn't lucky. I deserved it." So, to begin your new entity, define its legal structure by contacting an attorney.
One of the primary "mistakes" made by the entrepreneur is failing to protect their assets from future losses. While a bank personal guarantee may be required under certain circumstances, there are legal ways to protect your residence.
Should you have questions on the funding topics in this BusinessBriefs article, you may contact us at 570.748.7000, and we hope you will follow upcoming BusinessBriefs in The Lock Haven Express.
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Stephen Poorman is an author-entrepreneur and consultant who is certified emeritus by the Institute of Management Consultants.