ENTREPRENUERSHIP EMPOWERMENT STEPS TO BUILD A POWERFUL & PROFITABLE BUSINESS By: Myra Good
5 STEPS TO BUILD A POWERFUL AND PROFITABLE BUSINESS PERSONAL CREDIT BUSINESS CREDIT SECURE FUNDING SOUND BUSINESS STRUCTURE IN-DEMAND PRODUCTS & SERVICES
BETWEEN 2007 and 2018 THERE WAS AN INCREASE OF BLACK WOMEN OWNED FIRMS BY 164% (Source: American Express Women Owned Business Report) (Source: American Express Women Owned Business Report)
THERE ARE 2.4 MILLION AA WOMEN OWNED BUSINESSES AGES BETWEEN 35 TO 54 (Source: American Express Women Owned Business Report)
• Children What this • Elderly care means? • Highest Earning Years • Shift in Retirement Goals
The he Pro roblem blem . . . . . . Where re Would d You Go If You Ne Need ed Money ey?
The Old Way HOW IT CURRENTLY WORKS ✓ Over 75% of business owners go to friends and family 75% ✓ Most also use personal assets ✓ And almost all business owners use their personal credit to grow 7
ALTERNATIVE PATHS TO FUNDING
Cash Flow Financing ▪ Cash Advances that look at bank account management for approval ▪ Need more than $10,000 in deposits ▪ Must manage your bank account and have consistent deposits ▪ Can typically get as much as 12% of your annual revenue advanced ▪ This is high risk lending as NO collateral is pledged
Collateral Based Financing Some e Types pes • Accounts Receivables and Purchase Orders • Stocks, Bonds, and 401k’s Even as a startup with bad credit, you • Inventory and Equipment can still secure collateral financing , if you have collateral • Real Estate • Even an Insurance Book of Business Collateral-based financing Rates are super low, much can be obtained if you have lower than with conventional some type of viable collateral SBA loans…. as low as 2% to offset what you’re borrowing 10
Credit Based Financing HO HOW IT IT WORKS ✓ Unsecured, credit based financing is a great way to get money for you business if you have good personal credit or know a guarantor who does ✓ You can secure credit up to 5 times of what your highest revolving limit account has now… up to $150,000 ✓ Rates are usually 0% for 6-18 months ✓ This is NO DOC funding, so even startups can qualify ✓ Accounts report to the business credit bureaus 11
Other Alternative Financing Options OPTIONS Specialized Private Money Crowdfunding You can receive specialized Is also available if you Doesn’t require cash flow, funding to buy equipment, have good tax returns collateral, or good credit . signs and vehicle wraps 12
Where ere Woul uld d You u Go Go If You u Needed ed Fu Funding? nding?
Business Credit is credit that is obtained What is Business in a Business Name . With business credit Credit? the Business builds its credit profile and credit score for its EIN number. This credit is in the business name and based on the business’s ability to pay, not the business owners.
Business Credit Benefits DOUBLES Your NO PERSONAL LIABILITY Borrowing Ability Business Credit Scores are Fast Initial Based on Only ONE Main Establishment of Credit Factor Profile and Score 15
Business Credit Benefits Credit Score Factors Your Personal Credit Your Business Credit Is based on 5 factors Is based payment history Expect Early Payment (100) Payment History (35%) Payment is Prompt (80) . Payment comes 14 days beyond terms (70) Utilization (30%) Payment comes 21 days beyond) terms (60 Payment comes 30 days beyond terms (50) Length of Credit History (15%) Payment comes 60 days beyond terms (40) Payment comes 90 days beyond terms (30) Accumulation of New Credit (10%) In Payment comes 120 days beyond terms (20) . Credit Mix (10%) In 16
Why Building Business Credit is Better NO NO CASH FL FLOW RE REQUIMENTS NO NO PER ERSONAL LIABILITY NO NO COLLATERAL PER ERFECT FOR STARTUPS RE REQUIRMENTS ESS SSENTIAL TO SE SELL YOUR BUS USINESS EASI SIER TO GR GROW A BUS USINESS 17
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START TODAY: THE CREDIBILITY CHECKLIST EMAIL EIN BUSINESS ADDRESS PHONE YOUR ENTITY NUMBER BANK ACCOUNT WEBSITE LICENSES 19
Build Business Credibility HO HOW IT IT CU CURRENTLY WORKS ✓ Over 75% of business owners go to friends and family ✓ Most also use personal assets ✓ And almost all business owners use their personal credit to grow 20
Buil ild Busin siness ss Credibil edibilit ity y • The perception lenders, vendors, and creditors have of your business is critical to your ability to build strong business credit. • Before applying for business credit a business must insure it meets or exceeds all lender credibility standards • There are over 20 credibility points that are necessary for a business to have a strong, credible foundation
Busi siness ness Na Name me • It is very important that you use your exact business legal name • Your full business name should include any recorded DBA filing you will be using • Insure your business name is exactly the same on your corporation papers, licenses, and bank statements
Co Corp rporate orate Enti tities ties • You can build business credit with almost any corporate entity type • If you truly want to separate business credit from personal credit your business must be a separate legal entity not a sole proprietor or partnership • Unless you have a separate business entity (Corporation or LLC) you might be "doing business" but you are not truly "a business “ • You need to be a Corporation or an LLC in order to separate personal from business
EIN IN • Just like you have a Social Security Number, your business has an EIN • Your Tax ID number is used to open your bank account and to build your business credit profile • Take the time to verify that all agencies, banks, and trade credit vendors have your business listed with the same Tax ID number
Business siness Address dress • Business Address • Must be a real brick-and- mortar building • Deliverable physical address • Cannot be a home address • Cannot be a PO Box • Cannot be a UPS address • Some lenders will not approve and fund unless this criteria is met
Busi siness ness Ad Address ress Business Address Solutions • Address Only - Receive mail and packages at your dedicated business address • Virtual Office - Professional business address, dedicated phone and fax numbers, receptionist services, and part- time use of fully furnished offices and meeting rooms • True Office - Your own full-time private office with receptionist services, dedicated phone and fax, internet, full furnishings, meeting rooms, and more
Busi siness ness Lis isti ting ng - 411 11 • You must have a dedicated business phone number that is listed with 411 directory assistance, under the business name • Lenders, vendors, creditors, and even insurance providers will verify that your business is listed with 411 • A toll-free number will give your business credibility, but you must have a LOCAL business number for the listing with 411 directory assistance
Pho hone e Nu Numb mber er • Lenders perceive 800 Number or toll-free phone numbers as a sign of business credibility • Even if you're a single owner with a home- based business, a toll-free number provides the perception that you are an even bigger company • It's incredibly easy and inexpensive to set- up a virtual local phone number or a toll free 800 number
Pho hone e Nu Numb mber er • A cell or home phone number as your main business line could get you "flagged" as an un-established business that is too high of a risk. • DON'T give a personal cell phone or residential phone as the business phone number • You can forward a virtual number to any cell or land- line phone number
Fa Fax x Nu Numb mber er • Lenders perceive a credible business as one with a fax number • As a business you will need a fax number to receive important documents, you will also need it to fax in some of your credit applications • You can setup an e-fax that goes directly to your email
• Credit providers will research your company on the internet • It is best if they learned everything directly from your company website • Not having a company website will severely hurt Website their chances of obtaining business credit • There are many places online that offer affordable business websites so you can have an internet presence that displays an overview of your company's services and contact information
Ema mail il • It is important to get a company email address for your business • It's not only professional, but greatly helps your chances of getting the thumbs up from a credit provider • Setting up a business email address is just too easy and inexpensive to neglect
• Your business banking history is vital to your future success of being able to secure larger business loans • The date you open your business bank account is the day that lender's consider your business to have started • So if you incorporated your business 10 years Bank Account unt ago, but you just opened the business bank account yesterday, then your business started yesterday • The longer your business banking history, the better your borrowing potential will be
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