It turns out getting a bank loan to finance your new business startup is NOT the right way to get that money.

If you are considering starting a new business, either post-”retirement” or just in general, you’re probably going to need money. And you’re probably going to go out and look for a bank loan. But don’t go run out and start speaking to banks yet. Listen to an expert - David Gass, Founder and President of Business Credit Services, Inc., about the ideal way to go about financing a business startup. Here is what he says:

Q: You state people starting a business do the wrong things. What do you mean?

A: The first thing people do when starting a business is to get capital – they take out loans for more money than they actually need, they rely on personal credit, and they look for investors. But these are the wrong steps, and they’ll doom a business to failure.

Q: What are the right steps?

A: The correct first step is to get the business established as an entity, putting the foundation in place. That includes deciding on the type of business entity (LLC or corporation), making sure all the licenses and basics like phones and World wide web are in place. Looking like a real business is an important step for getting creditors and lenders to take your business seriously.

Q: What’s the second step?

A: Then, go out and get trade credit – buy office supplies, personal, basic marketing things. Use that trade credit to set up the physical business. You can also use trade credit to get your initial inventory of products or materials. There are lots of financing options for inventory. Only after you have established your business and set up creditors who can vouch for you should you take into account bank financing.

Q: This is an interesting new concept. What do you use the bank financing for?

A: The bank financing should be used for leverage – to generate revenue and grow the business. It should not be used to buy office furniture. Leverage your bank financing to buy things that will generate a return.

Next, David answers the question “If I don’t need bank financing, do I need a business plan?”

Tags: baby boomers, Business Credit Services, business startup financing, David Gass, small businesses

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I found an interesting video called “Did You Know?” about the globalization and the technology that is increasing our knowledge base and changing our world. I remember 1995 when the World wide web “came of age” and people began to use it for real (before that it was used primarily by us techno-geeks and people at major universities and the government).

The question posed by this video is very defining: What are we doing to prepare our kids (and our grandchildren) for life in the 21st century?

Watch and think:

Tags: 21st century technology, did you know, Shifthappens, wikispaces

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Filed under: Estates

Can it really be a year since I’ve checked out a house on Lake Drive in Boca Raton. Florida? I suppose so, it’s been a year since I’ve been there to visit my family. Today’s home is a seven-bedroom mansion right on Lake Boca. The home, created by architect Tom Benedict and builder Bill Szymanski, is luxurious but not quite as exceedingly lavish as some in the area. The open foyer and floating concrete staircase make for a grand entrance. The living room faces the lake and pool and has a bar with aquarium and multiple sitting areas. The home has two full kitchens, a home theater, study, library, gym and an elevator to tie it all together. The grounds include gardens, infinity edge pool, summer kitchen and private terraces. The home has 150 feet of waterfront with a boat and jetski lift and full power dock. And if there is anything I’ve learned about Lake Drive it’s that the yacht out in front is at least as important as the automobile in the driveway. This home is listed at $19.95 million. You are going to need a big boat.

For more prime properties and lush locations, see Luxury Homes and Mansions.

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Continue reading Lake Boca Raton, Estate of the Day

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Image details: Coffee Shop served by picapp.com

As I’ve written before on this blog, I love coffee.  And I have a wonderful vision of sitting in a tiny coffee shop, serving biscotti, bagels and all kinds of coffee and tea.  People are chatting, using their laptops, resting.  And I’m having a great time chatting, making fantastic-smelling and looking latte’s, and raking in the money.

OK, it’s a dream.  Have you ever thought about running a coffee shop?  It’s a growing business, despite Starbuck’s recent downturn and its announcement that it is closing 600 stores.  In a current article, Business Week stated there are over 26,000 coffee shops (including kiosks and carts) in the U.S., and 60% are independent. 

The trade association for coffee, the Specialty Coffee Association of America (SCAA), says that coffee shops/kiosks/drive-ups are a $12 billion industry in the U.S. While Starbucks might be closing stores, independent coffee shops are finding their niches and thriving.

What makes a coffee shop successful? An SCAA poll showed these characteristics to be most important:

• Coffee quality and convenient location (70% of adults cited this factor)

• Friendly and knowledgeable staff (40%)
• Variety (35%)
• Price (26%)

A story on ABC News in Chicago a year ago said people consider coffee like “fine wine.” I think this is going a tiny too far. And most people don’t drink that much wine each day. On the other hand, there are several people who consider coffee a necessity, not a luxury.

Do you think the speciality coffee business is (pardon the pun) running out of steam? Or will it survive the economic downturn and come back again stronger? Would you take into account opening a coffee shop?

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Just a reminder about the contest I’m running - submit a suggestion for a book each baby boomer business owner should have. Win a opportunity to receive the two top business books (in my opinion). Use the link in my July 24 blog post for more information and to comment.

Tags: baby boomers, business books, Michael Gerber, starting a business, Warren Buffett

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