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Posts Tagged ‘Small’

I. What is a Strategic Plan?

Business Owners or Managers are often so preoccupied with day to day immediate issues in their business they lose sight of their ultimate objectives. Taking a step back and reviewing their business is essential. There is no guarantee of success, but without it a business is much more likely to fail. A strategic plan is NOT a Business Plan. It is likely to be a very short or short document whereas a Business Plan is very detailed and much more substantial. A sound plan will:

• Serve as a framework for making decisions or for securing future support or approval as required

• Provide a basis for more detailed planning

• Explain the business to others in order to inform, involve and motivate

• Assist in performance monitoring or benchmarking as required

• Stimulate change, and become a foundation for the next plan

II. Why make a Strategic Plan?

Making a Strategic Plan is an exciting exercise, and gets the adrenaline going! It should be visionary, conceptual and directional, and because it must be realistic and attainable too, it will provide owners and/or managers to think strategically and act operationally. Being able to think strategically means that, when you make decisions and choices, you settle for the best strategic option. Operational issues are all taken care of, but without having to think too hard about it, you ensure that your decisions and choices are supportive of your long term strategic objectives.

Setting goals and focusing on them causes these goals to become subconscious drivers that guide your actions. Doing this in terms of a structured strategic planning system, means that you will tend to steer your business in the right direction all the time, and you will do this without consciously thinking about it.

Starting with developing a Vision and working from there means that the Vision becomes firmly entrenched in how you think about your business, and becomes a subconscious part of your thinking process.

The effect can be really powerful and rewarding. By putting the necessary effort into creating a comprehensive Vision and building on it, you become a strategic thinker. Taking the right strategic action becomes easy.

III. What is involved?

A critical review of past performance by Owners and/or Managers of a business, and the preparation of even a short Strategic Plan beyond the normal annual budgetary horizon requires the type of thinking described above. Some essential points which should be observed during the review and planning process include the following:

• Consider the medium term of 3-5 years

• It must be undertaken by Owners/Directors

• It must focus on matters of strategic importance

• It must take place outside normal day to day work

• It must be realistic, detached and critical

• It must be written down

• It must be reviewed periodically

IV. What does it contain?

In developing a Strategic Plan, it is necessary to clearly identify the current status of the existing business, its objectives and strategies. Correctly defined, these can be used as the basis for a critical examination to probe existing or perceived Strengths, Weaknesses, Opportunities and Threats. Also forming part of a Strategic Plan are the following requirements:

• Vision

• Mission

• Strategic themes

• Strategic Objectives

• Measures or Key Performance Indicators

• Targets or Goals

• Initiatives or Action Plans

V. Summary

The preparation of a plan is a multi step process, but is not difficult to carry out, and can be done reasonably quickly. For business Owners who want to drive their businesses to the next level, a plan for the future is essential.

In the midst of the global economic crisis, many small businesses are on the brink of closing down if not enough capital infusion is found. It is now even more difficult to get small business loans from banks, though. Ironically, the exact reasons why small businesses need such small business loans – the fact that business has slowed down and profitability has plummeted – are the same reasons why banks turn them down for loans.

Small businesses now have to be more resourceful in finding alternatives to small business loans.

Government Grants and Contracts Instead of Small Business Loans

The American Recovery and Reinvestment Act signed by President Obama in February 2009 caused the pumping of billions of dollars for the revitalization of the economy. Because of it, there are plenty of government grants and contracts available to small businesses. These can be alternatives to small business loans.

But how can small businesses avail of the stimulus program?

The Association of Procurement Technical Assistance Centers (APTAC) has the responsibility for helping small businesses obtain and perform federal, state and local government contracts. It has Procurement Technical Assistance Centers (PTAC) throughout the country, ready to help small business owners to get registered and find opportunities in the area of government grants and contracts. Counselors assist small businesses in filling out bids, proposals and quotations.

The PTAC holds seminars teaching small business owners all the ins and outs of government legalese, including acronyms and registries. A one-day seminar with PTAC covers what small business owners may take months to learn on their own.

The PTAC then helps small businesses with Central Contractor Registration (CCR), a requirement for doing business with the federal government. This registration can be so complicated that some companies take two days to do it when the PTAC counselor can help them get through it in 15 minutes.

Local PTACs will be of help in acquiring state and municipal contracts.

Other resources that small business owners should consult include the Small Business Administration (SBA) which also coordinates with the APTAC; the General Services Administration (GSA) which acts as the government’s purchasing department and provides information on becoming an approved vendor; the Federal Business Opportunities website (fbo.gov) where federal contract opportunities currently available are posted; and the Small Business Innovation Research website (sbir.gov) where grant and funded research opportunities for small businesses are listed.

Cash Advances from Credit Card Services Instead of Small Business Loans

Another alternative to small business loans are cash advances from credit card services. This option is much easier than winning government grants and contracts.

Most small businesses are already availing of credit card services that enable them to accept payments by credit cards or debit cards. This is practically a requirement to doing business these days, with people hardly paying cash for goods and services. Many small business owners do not know that they could avail of cash advances from these credit card services, though, and that such advances can actually equal small business loans.

The amount that a small business can borrow is based on its average monthly income from credit card sales. This is so because the cash advance does not require collateral and future sales receivables from credit cards stand as the collateral. Payment will also be done through automatic deductions from those future credit card sales. There will be no set monthly amortizations. Instead, a certain percentage of the sales will be allotted as payment. The small business owner, therefore, need not worry over where to find cash for loan payments.

Cash advances from credit card services are the best bet of small business owners as alternatives to small business loans.

More and more people are setting up home businesses these days. Some of them may have been laid off from work. Others may have found difficulty finding employment. Still others may have chosen to change careers midstream after finding their true passion and deciding to make a living out of it.

Setting up a home business gives you much more freedom than regular employment. You are now your own boss. It gives you more time with your family and for yourself. It eliminates the stresses of the workplace and the fatigue of commuting to and from work. This redounds to better physiological, psychological and emotional health and greater productivity. It is also a good way to start going into business because of the lower start up costs. You save a lot on overhead expenses by having your office in your own home.

Despite the low start up costs of a home business, it is not a free ride. You will definitely still need some additional capital as you go along. The good news is that you can start very small and, because of this, you need not approach those intimidating banks and financial institutions for small business loans. After all, it is common knowledge that not only is the process of applying for small business loans lengthy and complicated, but approval is also mostly withheld anyway.

What you should do is approach a merchant service, instead, and apply for credit card services. What has this got to do with your need for small business loans? A lot. Through the same merchant service from whom you get your credit card services, you can get cash advances that are just like small business loans, albeit with lower ceilings. That would not be a problem given your smaller capital needs.

But what are credit card services? Is this the same as applying for a credit card? No. It is actually the other end of the equation. Credit card services allow you to accept payments through credit or debit cards in person, through the internet, by phone and by fax. The merchant service provides you with terminal equipment for physically swiping the cards and the software and high speed IP solutions necessary for all kinds of transactions.

Having credit card services is actually necessary for practically any home business that is involved with sales. The ability to accept debit and credit card payments will boost your income. Having multiple payment options, such as person-to-person, online, phone and fax payments, will further attract more customers.

Most merchant services require only a short minimum period to determine your business’ capability to generate credit card and debit card sales. Your average monthly income through your credit card services will be the basis for the amount of cash advances you will be allowed to make. You will not be required to put up any collateral at all. It is like getting pre-approved small business loans. But there’s more good news. You need not scrimp and save to muster enough cash for loan repayment every month. All you need to do is attend to your business and its profitability. As your credit and debit card payments roll in every month, a certain percentage is automatically paid to the merchant service for your loan. You need not worry about it since you will always be able to afford your payments. Your customers will ensure that.

As your business grows and your sales multiply, you may qualify for bigger and bigger cash advances that you can use to further expand your home business. And you’re on your way to the big time.

Since June 15, 2009, the United States Small Business Administration has been processing deferred payment small business loans of as much as $35,000 to be given out to 10,000 small businesses. This is covered by the SBA’s America’s Recovery Capital (ARC) Loan Program.

To qualify, companies should be private enterprises that are for-profit. They should have up to five hundred employees only and should be at least two years old. Furthermore, they should be able to prove financial need with a twenty percent decrease in sales, revenue or working capital. On the other hand, they should be able to prove that one of their two years in business has been profitable, and that with the infusion of cash they will be able to meet their existing and future debt obligations. This means positive cash flow projections. The ARC small business loans are intended to be used to pay outstanding debt such as payables to vendors.

For this batch of small business loans, there are no fees or costs involved, except if the borrower defaults on the loan later. In that case the SBA-approved lender can charge costs for securing and liquidating collateral.

The ARC small business loans also do not charge interest. Actually, the SBA pays the interest for the borrowers. Disbursement of the loan can take as much as six months but payment of the principal is also deferred for the next 12 months. After that, the borrower has five years to repay the loan principal.

Each small business can only avail of one ARC loan. SBA-approved lenders will offer the loans until September 30, 2010 or until available funds run out, whichever comes first.

There are, however, an estimated 30 million small businesses in the United States and only 10,000 of them can avail of the government’s small business loans. What if you do not happen to be among the 10,000 lucky recipients? How will your small business survive?

There are even doubts being raised on whether as much as 10,000 businesses can indeed avail of the ARC loans. There are fears that there may not be enough lenders willing or able to participate in the program. Lenders will have to advance the full amount of the loan, will not receive payment on principal for a full year, and will not be able to charge any fees, thereby absorbing all administrative costs. This may be too steep for many lenders. They may not be able to afford to participate at all.

This is where you as a small business owner can and should maximize your credit card services. We are not talking about your personal credit card services here. Instead, we are referring to the merchant services that enable your small business to receive credit card  and debit card payments. Surely, any business these days avails of these types of credit card services. After all, more people pay by credit card or debit card rather than cash.

Most credit card services offer small business cash advances that can be as substantial as small business loans. These small business loans do not require any collateral because they are secured by your company’s future credit card receivables. This is even more convenient for your business because repayment is also built into those receivables. Credit card services automatically deduct a percentage from your income to go toward loan repayment. For as long as you have incoming sales, you can support your loan. Interest rates are often quite affordable considering how the loan can help your business.

Small businesses should therefore look into maximizing these credit card services for small business loans. The survival of your business could hinge on this.