Save Up before You Start Up: How to Obtain Startup Capital

by Jason Dieter 12. June 2013

Startup Business Plan

So, you've decided that it's time to start your own business - that you no longer wish to work for "the man" as they say. You have your product or idea, you have your goals and objectives outlined in the form of a working business plan, you've formed your company legally with the state you plan to operate in, you’ve obtained your Federal Tax ID number and now you’re all ready to roll. But wait, we have forgotten one all important step in the process. The most important step perhaps. How do you obtain the loan (startup capital) to get the business off the ground? This step is arguably the toughest task of all for any new startup business. Why? Let's explore.

It's first important to note that most lenders, including banks as a whole, view startup business loans similarly to unsecured personal loans - very risky. Tim Carroll, Vice President for Deluxe Corporation, a company that helps small businesses with marketing, estimates that generally 50 to 70 percent of new startup businesses fail within the first 18 months. Certainly an alarming rate, yet it sheds light on why lenders tend to shy away from making a loan of any size to a new business.

So where does one turn to obtain such capital to kick start their business into existence?

You may start by considering dipping into your own personal savings from what you previously earned in your former line of work. Other resources could be personal credit cards, a loan from a family member or friend, or perhaps a loan secured by your most valuable personal asset, your home. Truth is, in my experience as a business banker, the sources listed above may be your best initial line of attack when looking to secure capital for your new business.

Now, if by chance you are not having any luck with obtaining startup capital from any of the sources mentioned above, it then becomes time to look elsewhere. Start with your local bank, but you should know, as mentioned above, most banks are somewhat conservative in their lending decisions when it comes to startup businesses. If the bank does express interest in funding your startup request, it's often typical that they will ask you to pledge collateral acceptable to them to secure the loan.

You may also want to look into an SBA (Small Business Administration) loan. The qualifications for an SBA loan are specific, although their programs are varied. The SBA will typically facilitate the loan for you with a third party lender, such as an SBA preferred bank.

A third option to look into is an angel investor. Such investors are typically affluent individuals who provide capital for a business startup in exchange for partial ownership in your company. It should be noted that while an angel investor is helpful in obtaining the startup capital you require to get your business off the ground, the risk you need to consider is in giving up ownership in the company and oftentimes the say to do as you please when making future business decisions. Proper research and careful review of the angel investor you go into business with is strongly encouraged.

So there you have it, some resources, but not all, to consider when looking for working capital to start your new business. Keep this in mind, Mark Zuckerberg of Facebook had to start somewhere and according to Forbes.com, as of March 2013, he's worth a cool $13.3 billion dollars at the ripe age of 29. Maybe you can ask him to fund your new startup? I suggest you start with a simple friend request.

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The Finances of Eating and Living Healthy

by Erica Starr 5. June 2013

Healthy Produce

When it comes to considering the cost of food, most people generally go for what’s the most affordable and convenient at the time. It’s understandable, right? We all know that fast food isn’t the ideal healthy meal, but between dropping the kids off at school, getting to work, taking the dog to the vet and getting the kids to their soccer games, the McDonalds Dollar Menu starts to become a more attractive option with every passing day. Going to the gym? Forget about it…didn’t you just see what my typical day looks like? Let’s not forget to mention tight household budgets and the perception that you have to take out a small loan to eat healthy, and BOOM… many of us are forced to let healthy living habits fall by the wayside. Or are we?

So let’s do some math:

Equation Today:
Crazy family/work/social schedules + Dwindling household funds + Higher priced “healthy” foods - Daily exercise = Fast, convenient and unhealthy meals

But wait...what everyone tends to overlook is the future value of that equation. Let’s fast forward a few years and take a look at that equation again:

Equation Tomorrow:
Crazy family/work/social schedules + Dwindling household funds + Higher priced “healthy” foods - Daily exercise = Fast, convenient and unhealthy meals + Higher healthcare costs + A preventable chronic disease diagnosis

According to Dean Ornish, founder of the Preventive Medicine Research Institute, “About 75 percent of the $2.8 trillion in annual health care costs in the United States is from chronic diseases that can often be reversed or prevented altogether by a healthy lifestyle.” In plain English, investing in your health is very similar to investing your finances. What you invest today (eating well/getting daily exercise), can and will save you A LOT of money in the future – and not to mention tack on a few extra years to your life.

Here are a few tips on how you can start investing in your health today.

Yes, organic is better – but not EVERYTHING has to be organic.

Meat, dairy and any vegetable or fruit with soft skin (apples, berries, carrots etc.) are the most important foods to buy organic as they are more highly exposed to pesticides. If you have to, you can probably get away with eating non-organic bananas and other produce with thick and protective skin. Check out sites like ewg.org to help you decide which foods to go organic with and which ones you can go the cheaper route with.

Buying in bulk and freezers are your friends.

Wholesale clubs like Sam's Club and BJ's Wholesale Club are in business for a reason - it's usually cheaper to buy in bulk. If you can, start buying some of your favorite foods in bulk and freezing what you don’t immediately use. That being said, you still need to be strategic and smart about which bulk items you purchase. Buying a 132-ounce jar of pickles for 2 people is getting a little out of hand. Also, don’t forget the bulk-buying rule of thumb: only buy in quantities you’ll use within 3 months. The most expensive food is the food you buy and never eat.

Summer is upon us – HELLO Baltimore farmers’ markets.

With the summer months quickly approaching, Baltimoreans are lucky enough to be in the middle of what seems to be a sea of local Baltimore farmers’ markets. Contrary to popular belief, farmers’ markets are often much more affordable compared to supermarkets, especially if you are opting to go organic. According to The Atlantic, studies show that organic items are almost 40% cheaper when purchased at a local farmers’ market. How can you go wrong with 100%, just came from the ground fresh fruits and veggies?

Grow your own.

That's right; grow 'em if you got ‘em. The benefits of having your own garden go far beyond cost savings nowadays. Having your fruits and vegetables come from your very own backyard can pretty much eliminate the risk of pesticides and/or other chemicals coming into play. While it might be a lot of work up front, a garden can really be a great way to save some extra cash and be healthy at the same time.

Get out and move!

It's not rocket science. You know the deal…it’s calories in vs. calories out. The more you move, the more you lose. The sayings go on and on but the bottom line is this: regular daily exercise can help prevent you from getting heart disease, high blood pressure, noninsulin-dependent diabetes, obesity, stress etc. and can even help increase your mood. We’re not saying you have to go out and join a gym (although you can), just get outside, start moving and enjoy the nice weather. We can take it from there…

If you found this article useful, be sure to check out these related articles:

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Home Improvements You Never Knew You Could Do Yourself

by Renee' Anderson 31. May 2013

Home Improvements

Spring is here, the weather is beginning to get warmer, and I’m ready to kick back and relax!

Wait, there are some things around the house that need to be tended to first. After all, I’d rather kick back and relax on a nice patio than the dirt/mud area in my backyard.

Wait, I don’t have the money to pay a contractor to come out to my house, design and build me a patio. Wait, I’ll do it myself. Seriously, how hard can it be? I mean it’s not like my husband and I work full time and have small children running around getting into as much as they possibly can…sure, we have the free time to build a patio (if we don’t sleep at night). But, do we have the “know-how?!”

DIY Patio

Google?

Google says- YES!

I decided to get this patio started while my darling husband was at work one day. The kids were running around the yard and I walked past a pile of patio pavers that we had lying around from our fire pit project (another DIY), LAST YEAR. I was tired of looking at them lying there and decided I’d fill up the wheel barrel, take them around the house to where I wanted my “patio” unload, and get to work.

I use quotes around patio because my patio and your patio are not the same. There are some elaborate patios that are fantastic, but would that be practical for me to do myself? No. (I didn’t have to Google that one.)

Setting realistic goals (based on the small amount of patio pavers I had and the small amount of money I had to purchase more), I grabbed our pic axe and began loosening the ground. Then I started throwing the patio pavers down, until I realized they were completely uneven. At this point, the kids were done entertaining themselves and were now “assisting” me in building the patio (a.k.a. digging in the dirt to find worms and “cool” insects).

About 10 patio pavers in, my husband arrives home J “Wow!” he says. From there, he got on his smartphone, Googled “make your own patio,” went to the hardware store to buy rocks and sand, leveled the ground and put the patio in! In the end, it took about a week’s time (could have been one day but again, we work full-time and have crazy kids), and $450 for a 150 square foot patio (I told you it was small) vs. $2,500 to have someone else do it for us.

So, I’ve demonstrated one home improvement project you can do yourself, but there are lots more! See our Pinterest page for more DIY ideas.

If you found this article useful, be sure to check out these other realted articles:

5 Home Improvements That Add Value

The Imaginary Mortgage: Fake It Til You Make It

How to Decide: Home Equity Loan or Line of Credit?



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