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Category Archives: Finance & Accouting

How to Save a Retail Store That’s Losing Money Every Month

By | Business By The Book, Business Improvements, Cash Flow Management, Increasing Profitability, Organization & Strategy | No Comments
Avoiding Business FailureQ: I launched a retail store about nine months ago, but I need immediate help. My business is losing several thousand dollars per month and I am not even drawing any salary for me or my family. My revenue has flattened out due to the economy and is around $40,000 per month, but my expenses are running around $46,000. I have an SBA loan payment of $6,600 per month and a building lease of $3,300 per month. I" />

Q: I launched a retail store about nine months ago, but I need immediate help. My business is losing several thousand dollars per month and I am not even drawing any salary for me or my family. My revenue has flattened out due to the economy and is around $40,000 per month, but my expenses are running around $46,000. I have an SBA loan payment of $6,600 per month and a building lease of $3,300 per month. I’m thinking about trying to refinance my SBA loan to get a lower payment. Any suggestions? A: The first thing I would suggest…

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Business Planning in a Down Economy

By | Business By The Book, Buying a Business, Buying a Franchise, Growing a Business, Growth Strategy, Increasing Profitability, Investing in Small Businesses, Planning, Starting Up, Valuing a Small Business, Writing a Business Plan | No Comments
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Q: Should the economic forecast be an important factor in determining the type of business to start or acquire? A: Most businesses that are acquired or started are done so with a long time horizon in mind. Add to that the fact of the typical continuous cycles of any economy: (downturn, bottom out, upturn, and peak). Given that long-term view and the necessary expectation of economic cycles that almost defy the ability to forecast the timing of those trends, it’s more important to pick an industry/market in which you have loads of experience and create a superior offering with a…

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How to Win in the Midst of an Industry Consolidation

By | Business By The Book, Exit Strategies, Growth Strategy, Organization & Strategy, Selling a Small Business | No Comments
Big Fish Little Fish

Industry consolidation is the process when a few companies start buying up other companies in the same industry and the number of competitors in an industry shrink dramatically. The main goal for the consolidators is to grab market share, cut costs, boost productivity, and improve investment returns through scale economies. I’ve studied industry consolidation in business school, participated in a few industry consolidations as a consultant, and I founded a company in my current portfolio to take a lead role in consolidating its target industry. Industry consolidation is almost inevitable: over time, most industries will consolidate to where the largest three…

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Raising Small Amounts of Capital

By | Business By The Book, Financing a Small Business, Financing a Startup, Planning | No Comments
Seed Capital

One of the most frequent questions I get is how to raise relatively small amounts of capital, such as $25k to $500k. Believe it or not, raising small amounts of capital is actually harder than raising large amounts of capital. The reason small amounts are more difficult are manifold, but here are a few: Amounts below $5m fall below normal “institutional” fund minimums and the institutional equity financing process, therefore the entrepreneur is left to chase down angel investors, which is a fairly difficult process because they usually do other things for a living rather than getting paid to invest…

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Are Surety Bonds Biblical?

By | Business By The Book, Insurance and Risk Management, Legal Issues, Ownership & Purpose | No Comments
Surety Bonds

Q: I have a lawn care business and I would like to provide landscaping services as well, but in my state I have to get licensed, insured, and bonded in order to do that. When I called the insurance company they called the bond a surety bond. I wonder if that has anything to do with surety in Scripture that we are to avoid? Thank you for any help you can give. A: There are six references to the concept of “surety” in the book of Proverbs (Pr. 6:1, 11:15, 17:18, 20:16, 22:26, and 27:13 – see below), but none…

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Dazed and Confused About Working from Home

By | Business By The Book, Ownership & Purpose, Running a Business, Taxes and Tax Management | No Comments
Home Office

Of all the deductions our tax code allows, the home office deduction should win the prize for “most likely to confuse and frighten.” So let’s shed a bit of light and dispel some myths.   As always, note this is intended to be general in nature and not all-inclusive of tax regulation.   Who can take the home office deduction? You don’t have to be in business for yourself to take the deduction, but it is easier to qualify if you are.  The IRS applies the “regular and exclusive use” rule for the area of your home used for business in order…

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How Should I Evaluate a Venture Capital Firm?

By | Business By The Book, Finance, Finance, Financing a Small Business, Financing a Startup | No Comments
Evaluating a VC Firm

Q: I’m raising a seed round for a consumer web startup and I’m getting good interest from VCs. What questions do I need to ask of them to gain insight into how well we’d work together? A: I suggest that there are two stages of research/questions to determine fit with you and your company: Prior to Contact: Research prior to making contact to qualify them in terms of the broader fit and, Prior to Commitment: Questions you want to ask once you’ve made contact to further qualify them since you will be partnering with them for years Prior to Contact:…

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Looking for Small Business Accounting Services

By | Accounting, Business By The Book, Finance, Finance & Accouting, Financial Reporting, Planning | No Comments
Looking for accounting services

Q: I have a small business with a handful of employees and, although I am not ready for a full-time accountant, I know I need better reporting and control of the company. Any recommendations for me? A: The good news is that in the virtual outsourcing world, there are numerous options for you to explore. One way to think about it is to organize the overall tasks in finance and accounting and decide which tasks you can easily perform and which ones you would prefer to outsource to a finance and accounting (F&A) outsourcer. A typical task list might be…

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Why Crowdfunding Doesn’t Work for Early-Stage Companies

By | Business By The Book, Financing a Startup, Investing in Small Businesses, Organization & Strategy, Planning | No Comments
Crowd Funding

The concept of crowdfunding seems to be a cool idea with good buzz, but I’m not convinced that crowdfunding will work very well besides small projects. A typical early-stage company that is burning cash and going through a “J” curve for years as they attempt to create a product, test market demand, and scale the company to profitability carries a lot more risk than sending a musician five dollars in exchange for getting an MP3 download and a bumper sticker the following month. The crowdfunding process via sites like Kickstarter and Indiegogo works well for small projects where the “investors” get a CD, MP3,…

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Healthcare Product Company Needs Seed Capital

By | Business By The Book, Channels and Alliances, Financing a Small Business, Financing a Startup, Planning, Selling Your Idea or Invention | No Comments
New Healthcare Product

Q: I’ve developed an innovative product for the healthcare industry, specifically for the hospital environment that improves patient health and safety while lowering the healthcare provider’s time and cost. We are looking for $250k to $500k to fund the manufacture of the first few prototypes and to perform the early sales and marketing effort to get our product to market. What suggestions do you have for me? A: Given the fact that your capital need is $250k – $500k puts you in the realm of angel investors and seed capital investors. While there are many angel investors in the U.S.,…

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