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As a lender, I wish we could approve every loan application that hit our table; unfortunately it’s not possible. We deal with mostly very small businesses seeking small loans, usually less than $250,000. Lending to inexperienced, new business owners is one of the riskiest arenas for a lending agency. Still, we manage to keep our losses to a minimum. The amazing thing about these business plan killers is that they rarely travel alone; they almost always appear in clusters. Here are the top ten business plan killers and what you can do to avoid or fix them:

1. Dreadful Personal Financial Profile

What is the likelihood that one who demonstrates abysmal financial management in his or her personal affairs will miraculously become an effective manager of finances for a business? It’s highly unlikely. It’s a lot more likely that poor practices in one’s personal situation are simply carried into the business. The main difference is that in business a much broader range of people and organizations usually get burned as a result of mismanaged business finances. Red flags pop up in business plans in the form of high credit card financing, garages full of toys (trucks, Seadoos, Skidoos, bikes, boats) 90% financed, poor credit history and no savings.

Strategy One: Tidy up your personal finances before applying for a business loan. Pay down loans, clean up any bad debts, collect some business-related equipment and save some money.

2. Insufficient or Non-Existent Owner Equity or Security

Business is always risky, but new business is infinitely more so. Lenders will want to see you personally “invested” in your business. The part of the business you personally own is called your equity. Another way to describe equity is the amount of cash or equipment you put into the business. A lender wants to see that you are invested to the point that you will not be inclined to walk away when the going gets tough. How much owner equity is enough? The amount varies from lender to lender, but less than 10% is inviting scrutiny while 20% or more will make your proposition more enticing. Any savvy lender will insist on seeing you invested to the degree that any financial complications result in you, not them, laying awake nights stressing over how to pay the bills. Security is the surly sister of equity. Your loan application will be stronger if you bring some sort of asset to the table as security. Lenders will be more attracted to assets with a clear resale value of more than the loan. Inventory is usually less desirable because it tends to grow legs and disappear when the going gets tough.

Strategy Two: Create some equity to bring to the table. Save money, sell some toys, borrow some love money, or get a second job for a while.

3. Inadequate Market Research

Inadequate market research manifests itself in various cruel ways. It can surface in the business plan as an unconvincing business case. It can reveal itself in the form of too much secondary information (from other sources) and not enough primary market research (that which you gather yourself). Lack of market research can lead to a business plan that is too general – not specific enough. Perhaps one of the most common and perplexing indicators is that the entrepreneur has not talked to or listened to the potential customers. A lender will want to see that you have “turned over all the rocks” in search of knowledge about your business. After reading your business plan, if I feel that I know more about your business than you do, I will not be inspired to approve your loan.

Strategy Three: Prove your business case to yourself and to your reader. Persist in your market research efforts until you become “the expert” for your business. You will feel more confident and have an easier time convincing your readers that you know what you are doing.

4. Transmitting and Not Receiving

It’s your responsibility to find that elusive balance between being bullheaded enough to bulldoze your way to success, yet sensitive enough to receive critical information. Your ability to listen to your clients is the key to your success in business. Falling in love with your business idea at the high cost of closing your ears to input will not help you acquire a loan. Business analysts, bankers and customers vote with their money. They have no need to yell at you to get their points across. It’s important to listen attentively when they speak at normal volumes.

Strategy Four: Listen and learn. Listen to those who agree with you AND to those who do not. Listen to all who shoot holes in your business idea, they might just be pointing you toward success. When you think you’ve heard it all, listen harder!

5. Dishonesty, Discrepancies, Inconsistencies One sure way to cheat yourself out of a loan is to give the appearance, intentionally or accidentally, that you are anything less than above board. Any form of dishonesty in your business plan, or during your dealings with the targeted lending agency staff, is a sure way to have your application rejected. Blatant untruths are the more obvious offence, but it is entirely possible to communication underhandedness in other ways. For example, missing or inaccurate information invites questions and sends the wrong message. Conveniently leaving out some of the less obvious, non-flattering financial information (like unpaid long overdue taxes) is a sure way to a “NO”.

Strategy Five: Be honest, thorough, and accurate.

6. Not Answering the Key Business Questions Clearly

Your business plan is a tool for communicating with others. What is your product or service? Who are your customers? How will you market and distribute your product or service to your customers? Will you make money? Will your business be able to repay the loan? Does your plan communicate these things clearly?

Strategy Six: Answer the basic business questions. Who, what, where, why, when, how. There are many business planning systems (although none surpass the Roadmap!) that will provide a framework to keep you on track. A proper business planning system will provide you with a framework in which to place the assortment of information you will gather. Choose a system and use it.

7. Shoddy Presentation

You can do the best market research on the planet, but if you can’t communicate it clearly and package your business plan professionally, your target audience might not even read it.

Strategy Seven: Provide a professional presentation. Ask a friend or pay someone to proof, get someone to keypunch the plan if you need to, but do a professional job. Demonstrate that you care and you will increase your odds with the lender.

8. Pie-In-The-Sky

Inflated, over optimistic sales forecasts or cash flow projections will derail your loan application every time. A future too bright will blind the lenders and scare them off the loan.

Strategy Eight: Be realistic in your expectations, even if you believe you will be floating on a sea of cash within months. No matter how lofty your financial aspirations might be, know that businesses are usually not profitable for the first while. Estimate your sales conservatively and your expenses a bit higher than you think they will be. Keep that cash flow realistic and be sure to include ALL expenses.

9. Fish-Out-Of-Water Syndrome

This is what happens when someone tries to get into a business they know nothing about. It becomes evident when the owner background reveals that the applicant has no prior experience in the area of expertise that is the main focus of the business. For example, a heavy-duty mechanic might seek to start a small restaurant. Not an impossible leap, just risky.

Strategy Nine: Know your business. It is so important to have a base of knowledge about your business and experience where possible. Many successful businesses arise from disgruntled or displaced employees who feel they can do as good as or better than their employer. Enhance this background experience with solid market research, the Internet, courses, books, tapes, and trade publications. Knowing your business will increase your confidence and enhance your loan options.

10. Too Little Too Late

This point pertains to existing businesses in search of financial assistance after things have already gone sideways. Too often we see the application when the accounts receivable is out of control or major suppliers have already been hung out too long for scary large sums of money. Other aspects of this condition are collectors hot on the trail and long overdue taxes. It’s really difficult to get excited about loaning money to pay for bills that should already have been paid.

Strategy Ten: Be decisive when your business gets into rough financial waters. Make the tough decisions early and then act on them quickly. If your recovery plan involves a loan, you are far stronger coming to the table early with a well thought out plan, than later with a plea for assistance to pay back taxes.

My neighbor asked me, “Why would anyone sell a successful company?”. He could not understand why anyone would leave a business that was doing well. Of course successful companies get sold all the time.

So why do these business owners sell? The short answer is that most closely held businesses sell for human reasons, such as burn out, retirement, illness, partnership disputes, family issues or other personal reasons. Usually the business is fine but the human being running the business needs a change. To understand this better it is key to understand the other options for exiting a business.

Close the Business/Liquidation

Closing a business that is profitable never makes sense. Even if the assets are liquidated the price is likely to be pennies on the dollar versus selling the business as a going concern with employees, customers and a reputation that is intact. Not only does the business owner get the lowest value but the employees, vendors and customers are hurt by this type of exit.

Accident, Illness or Death

No one wants to exit their business this way, but many do. The loss of an owner not only creates tremendous issues for the family but also creates a leadership void in the business. Even the most competent management can struggle when a key business leader is lost to a serious accident, illness or death. No one plans for this type of exit but many end up exiting the business this way because they failed to create an alternate plan.

Succession

Succession by a family member or key employee has its benefits. They know the business, its product or service, employees, customers and vendors. Succession can be operationally successful for the exiting owner if they make sure the successor is carefully selected, qualified and groomed for the position. The owner must be careful not to make an emotional choice of a relative or favorite employee but instead choose the successor with the right skills to lead the company into the future. You are not seeking an “Employee” mentality but an “Owner” mentality. If that rare person can be found in the business who can make the transition to Owner, they often do not have the cash needed to purchase the business. They are also likely to want to pay less for the business as familiarity will blind them to many of the value drivers of the company. So although succession can be operationally successful it is rarely a financial success for the outgoing owner.

Sell

Closing or liquidating the business minimizes the value to the owner. Accident, illness or death forces the issue on the owner. Succession provided a very limited pool of options with limited financial reward.

Selling on the other hand allows the business owner to decide their ideal timing, maximize the value of the business they worked so hard to build, coordinate the use of the sale proceeds for financial planning and align their personal goals with the sale of a business. Selling the business allows the business owner to create a wealth event and often significant on-going passive income without having to run their business.

Whatever they are, human reasons are always pushing and pulling on a business owner. Burn out, stress, divorce, illness, partner disputes and limited growth capital are some of the human reasons that push owners out of the business. Retirement, enjoying life, relocating, a new business opportunity and passive income are some of the reasons that pull a business owner out. Whatever the motivation, the fundamental reason a business owner chooses a sale as their ideal exit plan is control. The business owner chooses to understand the value of their business and to proactively pursue the right buyer and the right price. By selling a business you choose to exit your business by choice, not by force.

The professional team at Sunbelt Midwest can help you confidentially sell or buy a business in Minneapolis, Milwaukee, Chicago, and surrounding areas. For more information check out our site at http://www.sunbeltmidwest.com.

These days, depending on the type of daily driving activity you carry out, it is worth considering starting a personal injury protection plan. When you have other responsibilities, especially of a financial nature then this is no longer an option. Personal injury protection or PIP may be a part of a larger personal insurance plan or a specific plan in itself. These insurance plans are all worthwhile but the average American family cannot always justify the additional strain on their monthly budget.

It is important to remember the protection should cover everything that is required otherwise it is a waste of time and money. Personal injury and property insurance are usually required by law throughout most parts of the USA, though the required amount may differ considerably in each state. In Alaska for example a car driver will require ten times the amount of coverage that a driver in Florida will need. Although there are still some states that have not passed a law on personal injury protection at this time, there is no reason why you should wait until it has before you arrange it.

The cover will pay around 80 percent (depending on the plan) of the costs of the insured and passengers. As a no fault policy though, the plan pays for loss of earnings, medical expenses and various other costs for the policy holder and his passengers even if the insured was responsible for the situation. Before you purchase this type of cover, you would be advised to take a look at your current policies and see whether or not the areas covered by the proposed plan are not already duplicated in other insurance plans. Conditions like medical costs and even lost time form work can be part of your current health insurance plan which will save a considerable sum.

If this is the case, then you may need minimal amount of coverage or even none at all. An additional factor to consider is the driving ability and record of the policy holder because this will not only dictate the need for personal injury protection but can affect the overall cost. Fortunately most drivers will probably find themselves covered by their own health insurance policy which will also protect family members that happen to be passengers. If any of your regular passengers are inadequately covered or not covered at all, you will need personal injury protection in order to keep them covered.

Remember, the safety of a passenger in your car is always going to be your responsibility. Ensuring you have adequate personal injury protection if you are a driver should not just be about the legal requirement for you to have it, even if you are in a state that has not made it mandatory yet. This is one area where age and driving experience can be on the driver’s side and insurance policy costs can be lowered. Whatever your circumstances, you need to research it carefully so that you can rest easy knowing that you and your passengers are safely covered.

Getting a small business loan for the first time can be a stressful experience, especially during these hard times. Getting a loan from the bank, especially now has also fallen into hard times. So here are plans A and B to help you start your own small business. Plan A is for acquiring a small business loan from the bank, and plan B is your contingency plan, so take notes,

PLAN A

Know yourself. Before approaching a bank or any other lender, be sure you know your own history in terms of personal credit. Is your credit history good or bad? Due to the current recession, you can be sure to see that banks have become more strict in reviewing records before making any decision for business loans. You can obtain your credit history from companies like TransUnion, Experian, or Equifax via fax, mail or online.  Also, be sure to check if the records are right. Companies with credit card services sometimes make errors in logging cancellations or adjustments to your credit limit. These misreported transactions in the past  may appear as available credit to the bank.

Prepare a competitive business presentation. A good presentation should initially be able to make the bank understand what you plan to do with the money and not simply WHY you need the money. Remain objective in your explanations and try not to attach too much personal reasons in your answer. The bank’s concern is not with you, but with the money they will give you. A cash flow projection will be of good help during your presentation because the bank can quickly assess the benefits and risks for them. However, a cash flow projection is different with a cash flow statement. The projection is an expectation on how money will come in and out, while a statement shows how money arrives and leaves the business. You can make a projection on a monthly basis over one year for a better outlook of your expectations for the business.

Prepare other documents. You may need to present other documents like a credit rating report. Though this is not an actual requirement, it will still be useful for the bank to know your loan payment history and other dealings with other credit card services. After all, most banks only approve businesses that are able to accept credit cards.

Get to know the bank. It is also important to do a little research on your lender’s point of view. Again, the first question in the bank’s mind is, “what are you going to do with our money?” The second question would be, “Why should we risk our money for your business?” Providing the bank with the right answer boosts your chances of getting that business loan by more than 50% of the time.

Bear important facts. You need to be honest to the bank on certain areas like, how much money are you willing to put in to the business, the collateral you currently have, and how much do you really know about the industry you’re planning to venture in. Enduring the bank that you’re not completely in the dark on your planned business will somehow put their minds at ease with regards to the loan they will be giving you.

PLAN B

If all else fails with the bank, do not despair. There are other means of acquiring small business loans for yourself. Many business cash advance companies are now available to serve you. Borrowing money from these companies are relatively easier than getting one from a bank. They will review your credit record but they are less strict in terms of seeing a few bad records on your history. With a business cash advance, you will be able to start your own small business, expand, pay off debt or taxes, and get emergency funding. However, make sure that the company you will be applying to is legitimate with negotiable terms with payment.

Good luck!

Health is one such an aspect of human life which does not remain stable and it keeps on changing with the growing age. So, it is always better to insure yourself against the major accidents and illnesses by taking health insurance coverage. Health insurance coverage is one such method by which you can get away from paying exorbitant medical and hospital bills in the times of causalities. Although, cost of health insurance is rising everyday and with the growing needs, it becomes impossible to find suitable and cost-effective health insurance plans, but Florida’s insurance policies are exceptional in this case. There are numerous cost-effective and lucrative health insurance policies available for Florida’s residents.

Health insurance is a contract between two parties, insurer and insured. Insurer is a person or company who provides the insurance and insured is a person who gets an insurance coverage. The person insured has to pay the regular premium for specified period of time in return for facilities and services provided by insurer. Since, human beings are unlike therefore, their needs are also dissimilar. It is quiet difficult that one plan can gratify the entire insurance needs of students, kids, office employees, families etc. Considering the fact, Florida offers various health insurance plans such as student’s health insurance, group health insurance, which are specifically designed keeping in mind the needs of entire segments of the society. The terms and conditions do vary in each plan, but hospital and surgical coverage is provided in almost all of the Florida’s health insurance plans.

Usually, the cost of health insurance plans do vary from companies to companies, but in Florida the story is other way round. In Florida, health insurance rates are determined by State’s own department therefore, cost of various plans will remain same, irrespective of your source of purchasing. This is an additional benefit for Florida’s people as no insurance company, service providers or local agents can charge excessive prices in lieu of their services.

Today, numerous insurance company and local agents are making continuous effort by offering attractive and beneficial various individual and group health insurance plans for Florida’s people. With the advent of internet, a person can easily avail insurance facilities by online comparing the quotes of various insurance companies and selecting the most suitable health insurance plan for his family.

Some Body told health is the most valuable wealth of a person. People have always tried to maintain their health. Nowadays multiple affordable health insurance quote is available in the market. The quotes are based taking into account the different financial conditions. These wide ranges of affordable health insurance quote enable people to select the plan depending on their own financial capability.

One way of looking at the choice between term and permanent affordable health insurance is as a lease and a purchase. When you take out a term policy, you lease the right to death benefits during the term. But when you buy a permanent policy, it stays in force during your lifetime and accumulates a cash value from a tax-deferred savings component. So a permanent policy is term insurance plus an investment account and many buy this kind of policy because you can borrow from the cash component or surrender a part of the policy during your lifetime.

Depending on the requirements and budget the financial plans are recommended. If a man is covered by a group health insurance plan then he would have to accept all the terms related to it. These types of insurance plans are generally made by the employer for his employees. However an individual can opt for an individual health insurance plan and select it depending on his budget.

The wide range of affordable health insurance plans often creates confusion among the customers who are at a loss regarding what plan to choose and what is best for them. To avoid the confusion one needs to have a proper knowledge of health insurance plans. The personal health insurance policies can cover an individual and his family. In that case this type of health insurance plan is also called the family health insurance plan. The whole family is covered under this plan for an extended period of time. Short-term insurance policies are also available.

The individual health insurance often costlier than the group plans as an individual has to bear the cost solely. Some measures are suggested which would help a man to get the most effective personal insurance. If a man is having any home or auto insurance plan then he should first take a look that if those companies offer any personal insurance. If they offer then it is suggested to check if they are providing any discount on the health insurance. A man is suggested to set a deductible as high as possible to get better benefits.

There are various health insurance policy. Before a person decides to buy any health insurance it is suggested that they check the terms and conditions properly. He should collect the personal health insurance quotes before buying any health insurance. While buying health insurance it is essential that a customer has a proper understanding of the terms. He should clearly know what areas are covered by the insurance and what are left. To get hold of the proper quotes a man needs to fill a form. He should clearly state his requirements in the form. Based on that he would be given the quotes.

Online free health insurance quotes are also available in Affordable Health Insurance Options nowadays which have made easier for a man to select a plan of his own choice. These plans are easily available on the website of different health insurance companies. One needs to follow the terms and conditions properly before he selects any online insurance forms.

A man can also get a affordable health insurance quote if he spends some of his time and labor for doing a market research and selecting a plan which best suits him. This would let him know about the cheapest plan that covers all his necessities.