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The Many Types of Small Business Loans

Posted on May 22, 2019 in Uncategorized

When you’re ready to start your own small business, one of the first thoughts that comes to mind is how to fund the business start up. After all, starting a business usually involves buying supplies, getting licensed, possibly renting office, retail or warehouse space, and so on. If you’re starting a small business which will involve selling products, then you also need funding to buy your initial sales stock too. And that’s where small business loans tend to be a huge help.

Getting a small business loan can make the difference in your businesses success or failure. Some experts estimate that at least 90% of brand new small businesses fail because they lack capital – a.k.a. funding. When you don’t have enough money to buy products which you will sell, or you can’t afford to buy supplies to make your products, you will not be able to even get your business off the ground, let alone make it successful.

Now, there are many types of small business loans out there in the world. Unfortunately sometimes you have to search high and low to find ones that will meet your personal needs. Not everyone has collateral they can put up to secure a loan, and not everyone has impeccable credit ratings either. So sometimes you have to look for creative options with small business loans.

Government small business loans are a popular option for many start ups, because they can be easy for some people to get. If for instance, you’ve served in the military or you’re in a minority group, you may find it fairly easy to get a government small business loan. Check with your local Small Business Association (SBA) to find out what kinds of government small business loans you might be eligible for.

Fast small business loans are usually gotten through more expensive means. If you needed just $1000 or so to get your small business started though, and you feel you really need to have it as fast as possible, then you might try some of the online payday lending sources. Many of these fast lenders will not even run a credit check either. They’ll simply require that you have a bank checking account.

Women and Minority small business loans are often available through private organizations and groups. To find these you’ll need to search your local library or the Internet, because they’re not often publicized widely. You might also find small business and minority loans by talking to an SBA counselor, or talking to a college or other school counselor as well.

Bad credit small business loans are one of the hardest to get, and they’re also the most expensive over time. Bad credit small business loans can still be gotten however. There are hard money lenders which specialize in lending to higher credit risk customers, and there are payday loans available that usually involve no credit checks. You might also want to try some of the private lending groups that can be found online too.

Why Are Strategic Alliances Important to Your Small Business?

Posted on May 19, 2019 in Uncategorized

Global Edge defines a strategic alliance as a “collaborative agreement between two companies designed to achieve some strategic goal.” Traditionally, strategic alliances take place between larger companies and encompass formal arrangements such as “international licensing agreements, management contracts, and joint ventures” – but more and more small businesses are banding together in less formal ways to form strategic partnerships of their own. What are some of the benefits of forming small business strategic alliances? As a small business owner, how can you reach out to start conversations with potential allies and what should you look for in a strategic partner?

Sharing Resources

Strategic alliances offer an opportunity to pool and share resources. Many small businesses have to operate within a limited capital resource framework – both from an economic and intellectual point of view. Shortages of cash and certain types of skills make it difficult to build your small business.

“Strategic alliances are extremely useful to small business owners – Many times small business owners have limited resources, one of these is man power; another is money,” says Ross Karp, Chapter President and Founder of My Networking Group Inc. in New York City. “By forming a strategic alliance you have partners to bounce ideas off of to help go after the clients that you are marketing to. Karp goes on to say that strategic alliances help small businesses develop or gain access to different skill sets. “We all have different skill sets that can compliment each other. By working to our strengths and having help with our weaknesses we are maximizing our time and energies.”

Eric King, VP Business Services at Delta Community Credit Union in Atlanta, Georgia, also feels that the right type of strategic alliance can benefit a small business. “Strategic alliances can be highly beneficial – particularly if the partnerships are based on complimentary core competencies and cultures. The concept of cost sharing, especially in start up mode, can be a great balance sheet management tool.”

Expanded Service Offering

Small businesses can also use strategic alliances expand their service offering. Establishing strategic alliances with (like minded) vendors that share the same target market and provide products/services that compliment your brand can help your small business prosper. In the case of my small business, I have used strategic partnerships to offer clients access to a wide variety of marketing related service providers – becoming a conduit to “best of breed” talent for my clients has helped my small business develop a compelling value proposition.

More Benefits

In addition to sharing resources and expanded services, strategic alliances present small business with a number of other benefits. “Businesses that are close geographically (and share a target market) can combine resources to double their advertising efforts,” says Hilary Hamblin, an Independent Marketing and Advertising Professional in Florence, Alabama. “They can share database information and mail information to two or more mailing lists instead of one. Businesses can refer clients to other businesses in the alliance and even get discounts for bulk purchases on certain products.” Guy Timberlake, Chief Visionary and CEO for The American Small Business Coalition (The ASBC) in Washington, D.C., adds “gaining access to competitive intelligence” and access to prospective customers as two more possible benefits associated with forming small business strategic alliances.

Marci Tomascak, an Independent Public Relations and Communications Professional in New York City, shares a story that highlights another benefit – the opportunity to engage in co-marketing programs. “I went into a well known bridal shop to pick up a catalogue for researching purposes. While I was there the “greeters” at the front of the store talked with me for a bit and we got chummy. Before I left the store, catalogue in hand, they had also given me an intuition razor. THAT was a great alliance where there is no competition. Not only does the bridal store have a great give away for prospective brides and bridal parties but the razor company gets new people to try out their product.”

How to Get Started

How do you start the process of creating strategic alliances? In my experience, the best way to reach out to potential strategic partners is to start networking. I like to research other small business in my immediate market area and try to find products or services that compliment my brand and provide solutions for my clients. As a next step, I usually send an email introduction outlining how our small businesses might benefit from working together. What really works for me is a casual meeting over a coffee – I find meeting people face to face in a non-business setting is a great way to quickly find out whether or not you can envision working together.

Ross Karp agrees that forming alliances through networking works best. He also feels it’s important to understand your own target market and to establish what services (offered by potential allies) compliment your product/service offering. “For example, a real estate broker could team up with a mortgage broker, an attorney, insurance planners, etc.” says Karp.

Things to Consider Prior to Forming an Alliance

An important component of any business arrangement, be it formal or casual, is the performance of due diligence. “Like the level of effort required to effectively and efficiently pursue new business, the same research and scrutiny should be leveraged when seeking to develop partnerships,” says Guy Timberlake of The ASBC. “Simply put, consider the business case for developing and utilizing such a relationship.”

Eric King also suggests looking to see “how the partnership impacts the aggregate market share. Is there overlap in target markets? Is the overlap mutually beneficial? Does one part of the alliance stand to benefit more than the other?”

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Samples Of Small Business Subcontracting Plans

Posted on May 18, 2019 in Uncategorized

Small business subcontracting plans necessarily mean a large business enterprise sub letting or taking help from small businesses. In large business outfits, the amount of office supplies is great hence a small business firm is contacted and a contract is signed with them to provide office materials regularly.

o A subcontract is broadly defined as an understanding agreed upon by a prime contract and subcontractor to provide goods or services needed for complementing the performance of the prime contract.

o The service a small business provides, however, is not necessarily under the prime contract; it should satisfy the prime contractor’s ordinary overhead requirements attributable to the prime contract.

This entire process of contracting out a part of the project to a small business firm is known as small business subcontracting. The contract is made formal only if the costs involved in providing materials exceed $500.000 for the entire period of performance.

o a small business subcontracting plan must state an expected amount of business that the prime contractor expects to award to small business contractors

However, it is untrue that all business concerns need subcontracted businesses to reach the stage of completion.

o In order to ensure completion, each subcontracting plan must name a manager or contract person, called a plan administrator, in charge of promoting compliance under the plan.

Only when the magnitude of the business project demands calculated subcontracts sub recipients are brought into discussions.

The subcontractor’s SBSP mentions the materials to be purchased, the total amount of money that will be spent on each small business outfit and the percentage of money that has been stipulated for supplies and/or services that these purchases represent.

Small business concerns usually used as sub recipients of such huge business projects are:

o Small Disadvantaged Business concern
o Minority Institutes
o Veteran Owned Small Business concern
o Women Owned Small Business concern
o Historically Black Colleges and Universities

Rather than waiting for communication, a small business can contact prime contractors directly to inform them of its small business.

A small business can approach agencies themselves to show inclination of its availability for subcontracting.

A SBSP is prepared by the principal investigator of the project. The principal investigator takes up the responsibility of meeting the goals set in the plan. If the SBSP fails for any reason, the contractor may be made responsible for the damage and the business concern handling the project may be denied new contracts.

Once the SBSP is prepared, it is presented as a part of the business proposal. It is open to negotiation.

o In soliciting subcontracts, prime contractors often seek several small business sources to insure they are obtaining a fair price

o If a small business is dissatisfied with the treatment it receives from the prime contractor, it cannot protest to the agency or General Accounting Office.

The principal investigator informs the Procurement Resource Services (PRS) administrator of the need of subcontractors. The PRS then aids investigators in identifying suppliers as per the requirement of the project.

o Prime contractors are increasingly aware of the need to subcontract with small businesses for delegating work.
o Certain small business contracts stress the possibility of dollar penalties on those failing to meet their subcontracting plans.

Typical samples small business subcontracting plans require the following information:

o Identification Data – name of the company, address, date of preparation of SBSP, Solicitation Number and Item or Service required
o Type of Plan – individual, master or commercial
o Goals – estimated dollar value of all planned subcontracting, estimated dollar value and percentage of total planned subcontracting to large business concerns, estimated dollar value and percentage of total planned subcontracting to small business concerns etc
o Details of Program Administrator
o Equitable Opportunity
o Reporting and Co-operation time line
o Record Keeping
o Timely payments to Subcontractors
o Description of Good Faith Report

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