Accounting & Finance

Business Owner's Guide to Profit Planning

Owner's Guide to Profit Planning

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Can't get a bank loan? Learn more about non-bank financing alternatives -- today at 10 a.m. on Business Next.

Non-bank financing alternatives for small businesses. Michael Rogers talks with Julius Talley of James Capital LLC in Kalamazoo.  Listen today at 10 a.m., 3 p.m. and 8 p.m. on the Michigan Business Network. Listen to archived programs anytime at your convenience on your PC or mobile device by going to the Business Next show page

Get Business Next audio seminars delivered three times a week automatically to your iPhone or other mobile device. Subscribe in iTunes using this URL.

What has been your experience with non-bank financing? Leave a comment below.

Steven Strauss: Shark Tank

Question:
Lately I have been watching the TV show Shark Tank and really like it. What always amazes me is that the people whose products I don’t like often get money and those that I do like get nothing. Why is that?

Answer:
Like you, I enjoy Shark Tank as well, and for any entrepreneurs or inventors out there who are looking for investors, making Shark Tank part of your weekly viewing is highly recommended. (Actually, even if you simply own a small business and have no need for investment capital, the show is worth your while – its educational, fun, and entertaining to boot.)

For the uninitiated, people who have businesses and products in need of angel investments go into the “Shark Tank,” give their best elevator pitch, and try and get the five millionaire and billionaire investors (the “sharks”) to put their own money (and intellectual capital) into the venture. The sharks are people like my pal Barbara Corcoran (NY real estate legend) and Mark Cuban (NBA Mavericks owner.) As with any angel or VC deal, the entrepreneur has to be willing to give up a percentage of their business to the shark. How much? Well, that’s part of the fun.

People come on the show at all levels of skill, abilities, experience, and needs. One guy might be pitching an alarm clock that wakes people up with the smell of bacon, needing $10,000 while another might pitch a toy company that allows parents to rent toys for a few months, and later send them back for new ones, a la the Netflix model. That entrepreneur might need $100,000 for a 10% equity stake in the business.

So why do some of the people get the money and the opportunity to have someone like Daymond John (creator of FUBU) be their business partner while others go home empty handed? Why do some entrepreneurs get VC funding while others don’t?

Here are 5 lessons for money seeking entrepreneurs from the Shark Tank:

1. Know your numbers: I can’t tell you how many times variations on the following conversation occurs on the show:

Kevin O’Leary [shark]: “Let me get this right. You are offering 20% of your company in exchange for an investment of $50,000?

Entrepreneur: “You bet, we have a great product!”

O’Leary: “But that means that you are valuing your company at $2.5 million. You only have $120,000 in sales. Your company is not worth close to that my friend.”

Entrepreneur: “Uh, uh . . .”

Investors want to know how you are valuing your business, how much money you are going to make, how much profit you have made, and why you need their money. Potential is great and all, but numbers talk, BS walks.

2. Understand that money has no feelings: Kevin O’Leary is fond of pointing this out. This is about making a profit for the investors, nothing more, nothing less. How, exactly, will you do that? How you feel about your business is fairly irrelevant.

3. Have a real business that can be scaled: The business cannot be you doing labor, unless that labor can be duplicated en mass. If you make homemade cedar toy chests that cost $300 but take 25 hours to build, it is difficult to see how that is a business that can be ramped up to sell mass quantities. A business that makes widgets for $2 that retail for $4 is a business that is scalable.

4. Have real (not false) confidence and be emotionally intelligent: Yes, it’s all about the numbers, but then again, it’s not all about the numbers. You have to be a cheerleader for your business while being able to read the room.

Says Barbara Corcoran, “Make sure you can sell your product, because if you as the head of the company can’t sell it, who will? Also be sure you’re ready to answer the two key questions too many of the entrepreneurs who come on the show can’t: 1) What will you do with my money? and 2) How will I get my investment back?”

5. Be unique in the marketpla

Visa, AMEX, Master Card: are you getting the best terms and service on your credit card processing? Learn more at 10 a.m. today on Business Next!

Whether you're a credit card veteran or new to credit card processing, get all the money-saving facts today at 10 a.m. when Michael Rogers talks with Charlie Creamer of Midwest Transaction Group (SBAM's Approved Partner for merchant services.) Listen today at 10 a.m., 3 p.m. and 8 p.m. on the Michigan Business Network. Listen to archived programs anytime at your convenience on your PC or mobile device by going to the Business Next show page

Get Business Next audio seminars delivered three times a week automatically to your iPhone or other mobile device. Subscribe in iTunes using this URL.

Got a questions about credit card processing? Submit it in the comments below!

SBAM members get terrific discount for March 20 "Economic Gardening" learning program in Grand Rapids

New “economic gardening” resources and programs designed to help small businesses achieve rapid growth will be showcased at an SBAM event March 20 in Grand Rapids. Click here for registration details. Tickets are $60, but the price for SBAM members is $30. Plus, SBAM members who purchase a ticket will receive a free one-year subscription to Crain’s Detroit Business (a $24.50 value. Must be a new subscriber.)

Sponsored by SBAM in partnership with Crain’s Detroit Business, the event will be held 7:30 a.m. – 10 a.m. March 20 at the Amway Grand Hotel in Grand Rapids. A keynote address will be presented by Mark Lange, executive director of the Edward Lowe Foundation. Panelists include SBAM President and CEO Rob Fowler; Bonnie Alfonso, president and Chief Embellishment Officer for Alfie Logo Gear for Work and Play in Traverse City; and Yan Ness, Chief Executive Officer for Online Tech Inc. of Ann Arbor. Alfonso and Ness will share what they learned from their participation in the Pure Michigan Business Connect Economic Gardening Pilot Program.

The Title Sponsor for the event is the Michigan Economic Development Corporation. Premier Sponsors are Clark Hill PLC and Consumers Energy. The Major Sponsor is Comcast Business Class. The Supporting Sponsor is hiredMYway. The Location Sponsor is the Amway Grand Plaza.

Photo by http://www.flickr.com/photos/programwitch/

Cutting the regulatory paperwork that burdens small business owners. Today at 10 a.m. on the Business Next audio seminar!

Dave Jessup, director of government relations, reports on latest developments at the Capitol. Plus, spreading broadband Internet, and entrepreneurial success stories: "Tag Marketing", Inner City Skateboards, business track leadership for high school students. Listen today at 10 a.m., 3 p.m. and 8 p.m. on the Michigan Business Network. Listen to archived programs anytime at your convenience on your PC or mobile device by going to the Business Next show page

Get Business Next audio seminars delivered three times a week automatically to your iPhone or other mobile device. Subscribe in iTunes using this URL
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