These are all important decisions; however there is one decision that stands above everything else. Who will my team consist [...]]]> Going into Business with Friends and Family

There are several decisions to consider when you are first starting a business.

• Where should I locate?
• Who is my target market?
• How much will my overhead cost?

These are all important decisions; however there is one decision that stands above everything else. Who will my team consist of? Finding the right group of people to work with is crucial for many reasons. First, these are the people you are going to be working with for countless hours each week. Therefore, it is best that you see yourself getting along very well with these people. Second, the success of your business is going to be directly related to the amount of work that the founders put in. Simply put, if you choose to work with lazy and unmotivated people, then it is likely that your business will not succeed. Finally, you want to work with people who have strong moral character and people who you can trust. As a business grows, more decisions and money will be involved. You want to make sure that the people you work with are not the types who are going to take advantage of you if the opportunity presents itself. These decisions are just some of the reasons why it can be a good idea to go into business with your family and friends. The benefits of going into business with friends and family are discussed below.

1. Work Well Together

As mentioned above, working well with your team is crucial to the success of your business. Starting a business with friends and family can be a great thing because you have known those people for years. By partnering with friends and family, you should already have answers to questions such as: do I work well with this person? Do we understand each other’s strengths and weaknesses? How does this person respond under pressure? Do I enjoy spending long hours with this person? If you are close with your friends and family, then you should know the answers to these questions and can understand why it would be wise to go into business with them.

2. Understand Their Motivation and Work Ethic

Running a business is not easy, especially when first starting out. It is critical that you partner with people who are going to put in the same, long schedule as you are. Partnering with someone you don’t know all that well may end up haunting you because you will soon find out that he or she does not have the work ethic that you anticipated. Having known your friends and family for such a long time, you learn and see who likes to put in the extra effort and who has no interest. Similarly, you understand what motivates your friends and family. Do they hate to see a job go unfinished? Do they like making money? Do they not like letting other people down (especially their friends and family)? People are motivated by all sorts of things, so it is important to work with people whose motivations will help your business succeed.

3. Trust

Never go into business with someone you don’t trust, you are setting yourself up for failure. Everything may be fine initially, but once difficult decisions need to be made, will they be for the good of the company or for the good of that person? Will that person do things behind your back? Will he or she take advantage of you if the opportunity presents itself? You should have the answers to these questions if you go into business with friends and family, making it easier for you to decide who to work with.

4. Financing

If you choose to work with your friends and family, one of the best ways to finance your business is by pooling your money. The advantages to this include: not having to meet a strict payment deadline as you would have to with any type of loan, not having to pay interest on the money over a set period of time, and not having to go through the extensive process of getting financing from various sources. Finally, when the founders put in their own money, it is another form of motivation because you want to see your hard earned money put to good use.

The combination of a strong team, built with friends & family, and financing from each partner is one of the best and most effective ways to get your business up and running.

During the recession, it has been difficult for small businesses to acquire the financing they need in order to get off the ground.   Fortunately, there are a variety of ways to get the capital you [...]]]> In the current economic situation, where can businesses that are small or just starting out  go to acquire  financing?

During the recession, it has been difficult for small businesses to acquire the financing they need in order to get off the ground.   Fortunately, there are a variety of ways to get the capital you need, even during these tough times.

1. Friends, Family, or Acquaintances

One of the best and most reasonable  places you can borrow from today is from family, friends, or acquaintances. That doesn’t necessarily mean that they will lend you money, or that they want to, or that they should.  Family members, like anyone else, are enjoying a rotten return in their local Bank.   The central discussion when convincing potential investors in your new or existing  Business  should center on the fact that money in the bank means getting paid 1/2 of 1% (which amounts to nothing in terms of a return on their money sitting in the local Bank).  On the other hand, your potential friendly investor lending money to you  (you being a reliable business owner or entity) at a reasonable interest rate (say  a minimum of 6% interest per annum) is a superior rate of return for your friendly lender and I might note a minimum of 12x  better than they would receive annually by keeping that same money in a checking account or Bank account. The small, private business that has an excellent idea and is operated by a motivated business person  and somewhat established with a seasoned track record, would be a great place to loan money. It is important that you clearly lay out your plan to the potential friendly lender so that they understand the risk that they are taking.  They are after all your Family, friends or acquaintances and you may want them to continue being your Family, friends or acquaintances; so make sure you plan to pay them back as agreed.  Of course, we aren’t attorneys so always seek that advise if in doubt.

2. Small Business Administration (SBA) Backed Loans

The Small Business Administration offers a variety of programs to assistant you in securing financing for your specific type of business. The SBA does not lend you the money directly, but its programs help you through the process so that when you present your idea at your local bank, you will have the best opportunity to secure the capital that you need. The SBA also guarantees that you will pay back your loan. This reduces the risk that the bank must factor in when considering your idea, giving you a better opportunity to receive your financing.

For detailed information on SBA Loans and how they can help your business, please visit:

http://www.sba.gov/

3. Home Equity Loan

A home equity loan is a loan that is backed by a home as collateral. A borrower receives a lump sum amount up front, and pays back the loan in monthly installments over a set period of time. When considering a home equity loan as an option for your business, it is important to understand the risks involved.

To learn more about home equity loans, please visit:

http://www.entrepreneur.com/article/54720

4. Home Equity Line of Credit

A home equity line of credit is similar to a home equity loan, except that the borrower can draw funds over a set period of time against a fixed credit line. Once the time period and credit line are established, the borrower can then borrow and pay back money over that set period of time. So the borrower is still using the home as collateral, but instead of receiving a lump sum, the borrower can borrow and pay back various amounts over that set period of time. Like a home equity loan, it is important to consider the risks involved and determine if this course of financing is correct for you.

5. Credit Cards

Using credit cards is another viable option for making purchases for your small business. Credit cards can be useful if you do not require a significant amount of capital and are able to pay back the money. Many small business owners rely on credit cards to grow their businesses because of the easy access to funding. It is important to understand the negative impact that can happen as a result of not paying back the money you borrow. Paying off your credit cards in a timely manner is vital to your option to borrow in the future. Maintaining a strong credit score by paying your bills on time will open more doors for your business in the future. Credit cards also carry very high interest rates, so it is important to repay the money you borrowed so that you avoid having to pay interest.

To learn more about the types of credit cards for businesses, please visit:

http://www.creditcards.com/business.php