Business Information for Entrepreneurs by an Entrepreneur

The tough economy has put many companies out of business. However, it has also created a new generation of entrepreneurs: the ‘Reluctant Entrepreneur.’ An article from the Boston Globe points out that many new entrepreneurs are starting their own business out of necessity as a result of layoffs and being unable to get hired in their chosen field.

The usual paradigm of an entrepreneur is one who wants to work for himself or herself and create a business from scratch. In contrast, the reluctant entrepreneur was once happy working for someone else, as long as he or she received a regular paycheck and health benefits. However, this new class of entrepreneur is forming home-based businesses as a survival response,

They never intended to start a business and are finding the challenges more demanding than they ever imagined. Though they enjoy continuing to do what they love, be it accounting, architecture, or computer programming, they also must manage a business, including all the marketing, cash flow, invoice collecting, etc. These extra duties, though necessary, are what made these entrepreneurs ‘reluctant’ in the first place.

If you fit into this class of entrepreneur, you are not alone. Here is some advice to help give you encouragement as you grow your new business:

• Grow your network – An entrepreneur’s success can be measured by the number of contacts he or she has. You must generate your own business, and simply hanging a shingle is not sufficient. Call your old boss. Call your friends. Call everyone you know to start drumming up business. And get involved with networking events to extend your contact base.

• Be persistent – Did you encounter a potential client who said no? Keep trying. A successful entrepreneur is persistent and doesn’t let a single decline stop him from trying again.

• Create a plan – And change it often. Business plans are a great way to keep you on track of what you want to accomplish. However, remember that change is the only constant, so review your plan regularly and update it as needed.

Just because you formed a business out of necessity doesn’t mean you will fail or have a tough time succeeding. Remember, you are doing what you love. With that in mind, you will find the way to make your business succeed.

2010 is supposed to be a big transition year for small business. Indicators show the economy is improving. More guaranteed loans are available for small business owners. So within a year, happy days will be here again, right?

Perhaps, but according to a recent study published in February 2010 by Forbes, most small business owners are cautiously optimistic and still expect to have hard times in 2010. The study, “U.S. Small Business Outlook 2010,” shows the current temperature of business owners as 2009 came to a close.

One question about cash flow was not surprising. When asked if it was harder to manage cash flow now than 12 months ago, 64 percent said it is harder, while 26 percent said it was the same. Lower revenues were the biggest contributor to harder cash flow, while slow or non-paying customers were in the #2 spot.

And when asked about company revenues in 2009, 73 percent said their revenues either stayed the same or declined in 2009, with 26 percent having significant declines in revenue. 63 percent of small business owners reduced their budgets to help with lower revenues, while 55 percent cut back on entertainment. 45 percent actually cut their workforce to get by with lower revenues.

The hardships seem to be a blessing in disguise, however. While 66 percent of small business owners say they are working harder and longer than ever, 80 percent agree that they are smarter about operating their business as a result of the economic crisis, and 70 percent agree that they have become stronger leaders.

Looking ahead, small business owners do see 2010 as the year the financial crisis bottoms out and financial markets turn around. But the optimism stops there for 2010. Most small business owners see business stability happening in 2011, while 2012 will be the year for the return to growth.

Happy days are not quite here again. If the projections of current small business owners are accurate, it will be another two years before prosperity returns. But the good news is that small business owners are smarter than they were before the financial crisis started. Entrepreneurs are smarter about the way they run their businesses. They see the importance of planning and want to spend the time doing it. And they recognize that they will need to do business in new ways in order to succeed.

Everywhere there are signs – and the signs are showing that small businesses are emerging through the recession and beginning to thrive once again. According to data released by CDC Small Business Finance in Los Angeles, a non-profit Certified Development Company, small business real estate loans rose 40% in January 2010.

Signs of Revival

L.A. area loans for real estate purchases were up to $71.6 million, compared to $50.9 million in December. This is good news, especially from an area that was hit hard by the recession and has suffered some of the highest property foreclosures in the country during the last two years.

How the SBA 504 Loans Work

The loans are a part of the SBA 504 loans, aimed at helping small businesses acquire real property, large equipment, and other fixed capital needs. With the help of this program, small business owners have an easier time qualifying for and getting access to much needed capital to expand their business.

The SBA 504 loan is structured so that the borrowing business must pay only 10% down for the property, and the rest is financed as a split between a traditional lender and a non-profit corporation set up under the 504 code to help support economic growth in their local area. 50% of the loan is disbursed by the bank lender, with a guarantee from the SBA should the borrower default. The remaining 40% is disbursed by the non-profit corporation, known as a Certified Development Company (CDC).

What are the eligibility issues for obtaining a 504 real estate loan? Borrowers must have less than $2.5 million in net income over the last two years. Also, the net worth of the company must not exceed $7.5 million. Loans must be used to purchase improved real property, vacant land with the intention of constructing new buildings, renovating existing buildings, or for purchasing long-term equipment or machinery.

So many small businesses can benefit from this helpful guaranteed loan. If your small business meets the eligibility mentioned above, and you are ready to start expanding your business, look up your local CDC and find out how you can get access to money that will help your business grow.