May 2023 - Page 10 of 12 - BOLLYWOOD SURKHIYAN

Start a Small Business

The sad reality is that so many people dislike what they do for a living. Take a moment to think about your daily grind. Do you enjoy what you do for a living, day-in and day-out? If the answer is no, then why do you keep at it? There are so many different things you could do to earn a living in this world. The trick is to sit down and brainstorm your countless income opportunities. If you have yet to do so, it is high time you go started. While you may have not considered it yet, you can start a small business from the comfort of your own home. This is a wonderful idea that far too many men and women overlook. Can you imagine being your own boss?

When it comes to starting a small business, the toughest obstacle is initial income. While you may have your golden idea, and you may even have the supplies or know-how to get started, there is that notion of not being able to earn a living and pay the bills right off the bat. Okay, this is where you take a deep breath. There are business loans at your disposal, which can assist you with getting the financial stability you need in order to get started. One thing is for certain; you cannot let this minor obstacle prevent you from starting a small business. If you never take the chance, you will never get away from that job you dislike.

If you would prefer a little guidance, then you should consider helpful websites that can further assist you. Some sites that can help you start a small business are BeneTrends.com, FlyCti.com, and MyLLC.com. Go ahead and take a look at these websites and see what all they offer in regards to information and tips regarding small business startup. The website known as sba.gov can also aid you with your small business plan. This is actually a small business planner site that provides free information to business owners. Finally, you may want to check out entrepreneur.com for tips and info as well. There is plenty of data at your fingertips.

You might be amazed at how many small businesses are started every day in the United States alone. Often the key is simply being driven to succeed. If you know your business will be successful, and you really pour your heart and soul into it, you can make it work for you. In this day and age location is no longer such a major issue. Especially when so many small businesses are started online. If you make the entire world your potential customer base, then you are likely to make a higher income when you start a small business. However, if your live in a large community, you can make a good living with the right small business, as long as your product or service is needed there.

Raising Finance For Starting Or Buying a Business

The most important thing is raising business finance once you have thought of a new business idea. An idea is just like a seed. You need to grow the same by raising the business finance to buy equipment or establish a workplace or even manage marketing. There are many ways through which you can arrange for money when you intend to start any business. You may borrow some from a friend, family member, or financial institute as per your needs.

Guide To Arrange Start up Funds For Business

* First, find out how much you need to invest in the business. Then check your savings. Starting your business might be risky; hence you need to arrange for the capital very wisely. Never use the retirement funds.

* Approach your friends or family members to arrange money for investment. But ensure that you make business agreements even while raising business finance from them also.

* You can also approach venture capitalists to arrange for venture capital. They contribute the money for new companies but ask for higher returns. But they usually lend for very big projects.

* Try to get the loan from a bank. Various loans facilities are available in different banks. Banks usually check for the history of the company for which you intend to borrow the money. Since you intend to start a new business, you can begin with small banks.

* Approach angle investors. Angle investors are those who intend to make more out of the capital they have invested. They act as investors in your business and also provide guidance for it.

* You can use credit cards to obtain funds. You should use this option only if you do not get funds from anywhere else. Although nowadays various people who are starting a new business use credit cards for raising business finance.

* You can even place an advertisement on the Internet or in the newspaper, citing the business for which you want the funds. The advertisement that you place should tell in detail the plan for your business and amount of funds needed by you.

* Another important way for raising business finance is to borrow money from life insurance. You can obtain loans against various policies.

* Various states also have Business Development Commissions. They help in the establishment of new business. They along with business expertise also offer money for starting new business.

Before you actually start raising business finance, take care of the following points:

* You must have detailed business plan ready in your hand. As when you approach investors for funds, they will like to see your business plan. Only if they like the same will they invest in your business. Hence ensure that you have detailed business plan.

* Always be confident in front of the investors and show them that you will do what you intend.

* You may intend to make a person partner in your business who has given you money. But before doing so, ensure that you can work with them.

Strategic Planning in the Czech Republic

In developed market economics, well-managed businesses are expected to all have a strategic plan; whereas, in the Czech Republic (country in the middle of Europe with exciting history as well called as ‘heart of Europe’; capital Prague; population 10.5 million; area 78,864 sq km) and the rest of the post-communist countries, having such management tools in place is all too frequently overlooked and missing.

Unfortunately, the above statement about management practices in the Czech Republic is an objective description of the current state of affairs. Times are changing however and the days when running a profitable business was a relatively simple task are long gone.

This change had to come some day; but, with the arrival of the current economic crisis, this change has come about more quickly than many could have expected. Thus, the existing management and business planning practices of most Czech businesses are facing a major test. For those businesses that have entered this tougher economic environment well prepared, this could be a favorable time; but, for those businesses that have failed to modernize and update their management practices, their very survival may be at stake.

It goes without saying that back in the 1990´s, a person with an average level of education and average skills could start practically any kind of business and make money. Back then, most business plans were put together, as they say, “on the back of an envelope”; and, ignoring the less-than-legal entrepreneurial activities and the money made through them, the majority of these business startups succeeded. They usually did so without any thorough analysis of their local business environment, without any long-term vision or strategy and without many predefined (or only very few) basic business objectives or plans for their accomplishment.

I recall a story in which a colleague of mine came back from a meeting with one of our clients – a medium-sized business and the leading (or if not then the number two) service provider in that field. The company’s owner, who is emblematic of the generation of entrepreneurs that grew their businesses in the early years after the fall of communism – in other words a successful man, who is currently in his mid-50’s – and his sales manager were having a discussion where tools such as SWOT analysis, long-term business planning and corporate strategy were mentioned. I was told that both the business owner and his sales manager had a blank look on their faces when these terms were mentioned. I couldn’t believe two such successful business people were unfamiliar with these concepts. It was almost hard to believe that a business with this type of an approach to corporate management was able to do so well. From all appearances, from the outside this looked like a modern, well-run business that had no problem getting orders from both the private and public sectors. However, internally it was running by the seat of the pants, lacking any long-term planning or business strategy. It was almost too startling an encounter with the state of many Czech businesses today.

At the time, we weren’t being asked to judge how this client was running his business, which had somehow managed to do well for nearly two decades, or to tell him what to do. We did, however want to prepare them in terms of their ability to assess potential future risks to his business and help him maintain his standing on the market and continue to grow in the future. At that time, our client may not have felt the need to come to us and request the use of some of our services – however, when times get tough, with orders down and harder to come by, it is companies like the one I just described that will come to us, asking for advice. We’ve seen how a tough economy can find a company desperately trying to hang in there with hurried and impulsively made decisions, which are usually too late and ignore the long-term ‘big’ picture. Such rushed decisions, with the absence of any in-depth analysis or proper management, usually – and, in today’s environment especially – can lead to financial losses, which could have been easily prevented or at least mitigated.

The above business example is unfortunately not an isolated situation. Rather, just the opposite. But, in the sense that the glass can be half-full (rather than half-empty), the above example points out the opportunistic tools the Czech business community now has available to it to help its businesses succeed. Strategic planning and strategic management, a wide range of business analysis methodologies and approaches and market studies can all be combined with creative thinking to produce long-term visions and long-term objectives to guide the management of each and every business. Unfortunately, the use of these tools and concepts still remain confined to just a small percentage of the business community and those companies, which use them, are usually the ones that set new market trends and which are able to maintain their long-term profitability.

By taking the ‘glass half-full’ approach, Czech companies can look forward to a very successful future. Competitors operating in the same segments of an industry segments have a greater opportunity to get ahead of others and those that start to take advantage of and put to use the concept of strategic planning and related business tools can look forward to gaining a competitive advantage.

How to Prepare a Financial Plan for a Hotel

Isn’t your childhood dream to own a high-rise building with an elegant interior and one of the city’s best hotels? What would be the next step if you suddenly decided to open a hotel? The next step is to make a financial plan. It’s like a blueprint for the hotel’s day-to-day operations and activities. Entrepreneurs are submerged in troubled waters at this point.

Many entrepreneurs face a dilemma in the planning stage of their businesses, whether they are new to the industry or have been in it for a long time. One of the most common problems they experience is with their finances. When you don’t know how to plan for business finances, who wouldn’t get grumpy?

Your hotel budget should be as clear as a crystal to you. It will assist you in developing a feasible plan or strategy for allocating budget to key areas that can generate profit.

Here are some tips on how you can prepare a Financial Plan for a hotel:

1. Determine the type of hotel you want to open.

This is critical because it will serve as a guide and a starting point for understanding your target market. It’s important to remember that different types of hotels require different budgets.

2. Make a list of all the factors that could affect a hotel’s profit generation and all the accommodation units, services, and amenities that you have.

All the factors that may affect the hotel’s finances must be considered, and all the hotel’s offerings and services must be acknowledged. You will have a better idea of what you can offer your customers this way.

3. Make a budget for the hotel’s expenses.

Even if you are still in the planning and development stages, you must anticipate or estimate how you will allocate the budget for all the services, accommodations, and amenities you will provide. This will assist you in gaining insight and determining whether it is necessary for the long run to generate profit despite its costs.

This will also serve as a guide for keeping your company running smoothly. Forecasting startup costs will help you decide how to adjust and allocate your finances to finally open your hotel. 4. Use a plan to project or predict assumptions.

4. Use a plan to project or predict assumptions.

If you’re starting from scratch, creating a plan that projects your forecast of the overall performance of the hotel will help you determine the probable profit, cash flow, and risks. These forecasts or assumptions will assist you in predicting the hotel’s demand and future performance.

Forecasting or generating forecasts is an important component of managing finances or creating a financial plan since it will better prepare you to deal with future uncertainties. You must be ahead of the game in order to make modifications to maximize revenue, resources, and prevent any dangers, as they say, “If you plan to fail, you plan to fail.”

If you’re having trouble organizing your business’s finances and don’t have a basic understanding of how to plan and anticipate cash flows, as well as prepare reports and analyses, we offer a simple and painless solution for you. You can check out our best-tailored fit financial model for your business at http://www.efinancialmodels.com.

Have a great time, hustlin’!

Finding Funding For Your New Business

Although there are some businesses that were started with pocket change, most new businesses require money when starting up. The majority will need to buy equipment, establish a workplace and incur marketing costs – all before a sale is even made. As soon as the business starts trading, then there will be a requirement for cash to pay the bills and keep the business running.

There’s a range of financing options when starting up and running a business so it’s essential to choose the right ones to match your current status and your future requirements. Good planning will make it easier to raise the money the business requires.

It’s essential to have a written business plan to explain your business to banks and other potential resources. A good plan helps convince investors that you know what you are doing and that it’s worth risking their money in your business.

When you are choosing the best financial options, you might explore the advantages and disadvantages of the following resources:

1. Using your own money from savings, investments, equity, etc.

When starting a business, you’ll most likely have to put up at least some of the money. Most banks or investors will not put money into a business that the owner isn’t willing to fund.

2. Borrowing from family and/or friends

Friends and family may be more willing to lend money to you than a bank. Their repayment terms could be easier for you, but do treat them like any other serious source of funding by having a business plan showing how their money will be used. Understand that this could put a strain on your relationship particularly if your business starts to struggle. Never ask them to lend you more than they can afford to lose.

3. Bank loan

Overdrafts, credit cards and bank loans are the most common sources of finance. The overdrafts and credit cards are the most expensive way of borrowing. Banks will certainly want to know that you are a good risk. They’ll ask for a business plan, evidence of a successful track record, security and your own investment.

4. Outside investors or partners

Acquiring outside investment can be suitable for promising businesses that don’t expect to produce a lot of extra cash in the short term, but offer the potential of greater returns over a longer period. Business angels typically invest $10,000 and more along with offering business expertise. Whereas, venture capitalists usually invest more than $2,000,000 in businesses when they believe they will receive a high return on their investment when exiting,

5. Grants and government support.

The main advantage of grants is that it’s cheap financing. Check into subsidized or zero interest loan along with possible outright cash grants. Quite frequently the support schemes will offer advice, information or subsidized consulting. However, it’s important to note that there’s strong competition for grants.

Using a combination of these alternatives could be a consideration for many businesses depending on their needs and circumstances. As an example, you might invest your own money in market research; and then seek outside investors to share the risk and borrow from the bank to fund equipment and machinery purchases. Carefully explore your options to make the best choices when you are starting and growing your business.

Calculated Risk Mangement for a Successful Startup

What is Risk Management?

It is basically taking risks for your startup in a controlled environment. So, when you take the risk you have got a backup plan to cover fire in case you run out of ammunition in the war zone (market). This is known as Risk Management in the world of startups. I will provide a brilliant example.

A person just started a small business of mobile accessories online. He knows there is enough market out there already that he needs to compete with to outreach his customers. So, before getting into the game he needs to understand that his product is unique and cheap at the very same time. Now, if the product is cheap; how can it be unique. For this particular purpose he needs to visit whole sale markets. When he finds what he needs, next step is placing a bulk order. Now, when he is selling his item online; he will get customers sooner or later. But, what matters is he took a risk placing a bulk order; at the same time he did research for uniqueness and price control. This is what exactly known as Risk Management in the world of startups.

Any start up in this world fails only when it runs out of a credit line. So, it’s completely clear that money is the lifeline of your startup. What needs your attention is Risk Management to check on the expenditure? How can you do that?

1) STOP SPENDING STUPIDLY:- You are not here to impress your girlfriend on a date. Don’t be a show off no one needs to know your spending capacity. Your clients are only seeking some brilliant product packaged with good services. They are not here to see your costly machineries, your heavily salaried employees and your mind blowing infrastructure. This is a big NO. It’s the beginning phase; focus only on good products, good services and amazing marketing. That’s all you need.

2) Don’t run with a blindfold on your eyes:- Another stupid reason for a startup failure is when you keep spending in the wrong product or services without seeking the market survey report. Why? You could lose a big fortune of money that’s why. Your customers are looking for something else and you are not ready to see that with your open eyes instead you choose to cover your eyes like a horse and run straight. Look around understand your market don’t get intimidated by a product or a service you like. Understand what the market needs, the customer’s demands and work accordingly.

I am not saying don’t take a risk. I am just saying don’t take one without a plan.

Why You Should Never Buy A Business That Is For Sale

If you are thinking about buying an already existing business, then the information in this article can save you a lot of time, money and frustration.

Listen to this:

A little while back I was talking to a guy who knows how to analyze and value businesses.

And he started telling me why it is such a mistake to buy any business that is advertised or listed with a business broker.

“Why is that?” I asked. I had never heard this before. In fact, I had always been told you MUST buy businesses through a broker. And that doing so was the easiest and safest way to go.

“Because, unless the owner is simply retiring and wants to cash out, there is usually a more sinister reason why they are selling,” he replied.

“What do you mean?”

“Well, would you sell your business right now?”

I thought about that a moment and it became clear what he was getting at.

People don’t usually sell good businesses.

I know I wouldn’t sell mine right now…unless it started causing me undo stress or it was going so well I could “cash out” for tens of millions of dollars.

Unfortunately, with most businesses for sale, it’s usually not a retirement issue…it’s a stress or some other problem issue.

And if you simply analyze the numbers, the financial statements and the sales…it will usually be clear as a bell what the “real” reason the owner is selling is — whether good or bad.

And that was my friend’s point.

If you are going to buy a business you must do two things:

1.) Learn how to analyze a business or find someone who does.

2.) Be very skeptical of anything that is for sale or listed by a broker.

In fact, the best businesses to buy are the ones not for sale.

The ones where the owner hasn’t thought about selling…because everything is going well. But who, at the same time, would still be very interested if someone approached him with a letter or phone call making a lucrative offer.

Keep these simple facts in mind when you are looking to buy a business and you will save yourself a lot of money, time and hassle.

Top Challenges Faced by Family Business and Its Team Leaders

Like every business organization family business has a unique set of challenges and problems.

The Keyword is CHALLENGE

Family Business mixes pride and passion with pain and glory and a very hardworking pathway to success. Sometimes a family finds peace and prosperity without apparent effort, while others seem to lurch from one crisis to the next.

We can define Family Business success as achieving, A Happy Family within a Strong Business. Success is more of a challenge at a family owned business because we strive to produce both desirable outcomes, within set time frames. We have twice the responsibility that is the happy family and the strong business.

Obviously Family Businesses go through various stages of growth and development and it becomes more challenging for the second generation or the subsequent generation that enters the business.

A famous saying about family owned business in Mexico is “Father, founder of the company, son rich, and grandson poor”. The founder works and builds a business, the son takes it over and is poorly prepared to manage and make it grow but enjoys the wealth, and the grandson inherits a dead business and an empty bank account.

Family Business is Hardworking Pathway to Success

Below we have listed some of the paramount challenges faced by family owned business which determines the success, growth, and continuation of a FAMILY BUSINESS.

1. EMOTIONS – Family problems will affect the business. Divorce, separations, health or financial problems also create difficult political situations for the family members.

2. INFORMALITY – Absence of clear policies and business norms for family members.

3. RESTRICTED VISION – Lack of outside opinions and diversity on how to operate the business.

4. CARELESS DOCUMENTATION – No documented plan or long term planning.

5. FAMILY MEMBERS COMPENSATION – Dividends, salaries, benefits and compensation for non-participating family members are not clearly defined and justified.

6. CONFUSED ROLES – Roles and responsibilities must be clearly defined.

7. PRESSURE TO HIRE FAMILY MEMBER – Hiring family members who are not qualified or lack the skills and abilities for the organization. Incompetency should not be tolerated.

8. GREATER COMPENSATION TO NON FAMILY MEMBERS – It is a common myth that family members will receive more compensation in a family business and develop a attitude of incompetency towards management.

9. PLANNING FOR SUCCESSION – Great conflicts and division are the result of no proper plan for handing the power to the next generation.

10. ESTATE PLANNING AND RETIREMENT – Long term planning to cover the necessities and realities of older members when they leave the company.

11. PROBLEMS IN COMMUNICATION – Difference in level of seniority and emotions like envy, fear, anger invoke zero communication in members.

12. DISABILITY TO CONTROL – Difficulty in controlling the operations of the organization, other family members and lack of supervision in day to day activities leads to more problems.-

But as we all know that Families and Businesses come from different worlds. Like oil and water… they cannot be mixed. But, families have always built businesses together… and they always will.

One of the challenges in family business is working together in teams. It is a fact that team work offers huge rewards but some frustrations are likely. Working within teams needs improvement in the power of creativity. The team leader needs to encourage this creative power, harness it, and channelize the creative fuel.

Andrew Carnegie- “Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.”

It is vitally important that the team leader unleash the power of team members with a collaborative leadership style to fuel the creative fire within the team.

Below are our top ten tips for channelizing the creative fire of Family Business Teams.

1. BE CLEAR ABOUT THE EXPECTATIONS – Only after the team members know what is expected of them can they deliver the perfect output. So understanding the difference between expected and derived results is necessary for both the team leader as well as the team members.

2. Faith in the Team Members – Being optimistic and challenging helps when you have total faith in the members of your team. As the leader, you need to expect the best from your team, keeping your expectations high and realistic. This is a challenging balancing act, but people need to be inspired to perform at their best. Instilled faith helps the group to perform better and come up with creative innovative ideas and solutions. Like Mike Litman says Improve at 1% each day and thus raise the bar for top performance one step at a time.

3. Encouragement accompanied with respect goes a long way in generating new thoughts. Fresh perspectives and courage too make up for new ideas easily. the leader needs to master the art of creative mindset.

4. Avoid making judgment while generating new ideas. If you are open to new solutions then the process of idea generation is not suppressed and sometimes best ideas are generated.

5. Brainstorming sessions are a great way to get numerous ideas. While brainstorming avoid judgment, look for quality, make notes to capture the idea and moreover combine two good ideas.

6. Communication is the keyword again, which helps to build strong relationships. Communication with open channels helps to trust the team members and know each other better.

7. Employees need to be given responsibility to bring out the best in them, give them the power to decide on a solution to a problem and watch the creativity grow by leaps and bounds.

8. Praise works like reward for the individuals and team alike. Acknowledgment in the form of encouragement is another word for praising the team members. Making sure that the team is cared for and recognized for its hard work is a reward in it self.

9. Be daring and build a brave team. Accept that mistakes are made at times and it is challenge to build on failures and see them as opportunities to learn and succeed further.

10. Unity in Diversity is the final mantra – build a strong team with diverse people, diverse backgrounds and combine the experience, culture, creativity and align them for the success of our family Business.-

Adding humor as a fuel to creativity is the last but not least step to see the team working happily together and productivity of business soaring to great levels.

Common Mistakes When Planning Your Medical Spa

Everything starts with a business plan: If you don’t have one. Write it. A good business plan will help you get a handle on all of the things that get glossed over in the excitement of starting a new business. It’s also a usual requirement for getting financing.

Remember that this is a medical business and comes with special requirements. Non-physicians can not employ physicians, medical oversight, HIPPA compliance, and a host of other regulatory issues need to be addressed. Play fast and loose with these rules and you’re asking for trouble. (One of our local competitors in Utah was not providing adequate physician oversight. The state walked in one day, confiscated all of their technology and patient records and closed them down.) All lenders want to know how you’re going to handle these issues. ADVERTISEMENT

Financing is easy. Financing smart is hard: Speak the words “medical spa” as a physician and you’re everyone’s best friend. Banks, lenders, technology companies will all have big smiles on their faces and papers in their hands, ready to lend money or finance everything you need. If you’re not a physician it’s going to be harder.

If you need money or a line of credit for needs other than technology, a bank will probably be your first stop. Banks will provide the best rates but are the most rigorous in investigating borrowers and have the least tolerance for risk. Banks will require that you have spotless credit and that the entire loan is secured. In most cases, everyone who owns 10% or more of the business will be personally responsible for the loan and have to provide two or more years of tax returns. Be prepared for a blizzard of paperwork. Banks will want to see financial statements, cash flow, a business plan (although they don’t read it), and have a little visit.

The bank is going to want to know what the funds are intended to be used for. They want to see tangible assets that have a market and can be sold if the business fails or you can’t make the payments. They don’t want to hear that you need more money for marketing and advertising or salaries that don’t have any resale value.

The money that banks will lend you will take the form of a loan, or a line of credit. Loans have a set schedule and payments. A line of credit is somewhat different. The idea is that the bank extends a line of credit that you may draw on. Interest is paid only on the amount of money that is used. However, banks usually require that the entire balance is paid off and unused for one month every year to ensure that the business is liquid. If you can’t meet this requirement, the entire line reverts to a loan.

Some bankers are helpful and some are not. In one instance a branch manager told one of our accountants that wanted some information that “he didn’t need our business and we could just live with that”. Avoid these types if you can. A friendly banker can go a long way in securing loans and providing a little flexibility if things don’t go exactly as you planned. If you find a great banker, send him a Christmas card and some cookies once in a while.

If you are in the fringe of what a bank can tolerate risk wise, they will often suggest or apply on your behalf for an SBA (Small Business Administration) loan that’s partially guaranteed by the government. (sba.gov/financing)

Half of something is better than all of nothing: If you’re going to need more money than you have in assets, you still have a couple of options. These involve partnerships, joint-ventures, venture loans or equity.

Most start-ups involve some form of equity trade. Partnerships are a good example. Sweat equity in the early stages provides ownership in lieu of payment or salary. It’s very common for entrepreneurs to take little or no money, sometimes for years, until the business is on its legs. Sweat equity at this stage usually extends only to the founders but may extend to badly needed partners. When we started Surface, I took more than an 80% reduction in income.

Equity: The simple rule is; the more money you need and risk you entail, the more equity you’re going to give up.

Angels: This is the first stop for most entrepreneurs. Angel financing (also called seed money), is usually raised from friends and family or “high net-worth” individuals. In some cases you may find “Angel Groups” that meet together and look for investments. Angels are usually found a the early stages of a business and are often bought out when larger investors come in.

Venture Debt: A recent surge in venture debt has made its way into the market and is worth discussing. Venture debt is basically a venture loan. The lender charges a higher interest rate than banks are allowed to (often around 14%) and accepts more risk in return. In addition, you will have to give up a small percentage of your company in what are called warrants. This small percentage (usually less than 5%) allows the lender to share in any potential upside. Venture debt is worth considering if you’re sure of success and you don’t want or need to give up a large equity position in you company. But you’ll still be personally responsible.

Venture Capital: When most people think of raising large amounts of money, they’re thinking of venture capital. For most start ups, venture capital is not an option. VC money has some downsides though. It is hard to get and extremely expensive. When you add up the entire enchilada, you’re looking at about 80% compounding interest each year in return for that money. VC’s are looking for an investment term of three to five years and a ROI (return on investment) of 700% or more. Whew. You’re also going to loose complete control of your company and have someone constantly looking over your shoulder. There are cases where this actually makes sense. Many VC are extremely well connected and bring these resources to the table.

So, now you’ve got the money you need. What are you going to do with it?

Most medical spas have grown out of an existing physician practice. The idea of having technicians producing revenue, low additional overhead, increased patient flow, and the feel that “I could do that” is attractive to a large number of doctors who are tired of the grind of medicine. (We’ve been approached by a surprising diversity of physicians looking to enter this market including; anesthesiologists, cardio-thoracic surgeons, and even podiatrists.)

Multiple Locations: After some initial success, many physicians and MedSpa owners attempt to open additional locations. (For some reason, these second-clinic startups are often opened by a relative, usually a wife or daughter.) These second locations never achieve the success of the first clinic for a very simple reason; their a completely different animal. If you’re thinking of opening multiple locations you’re work load just tripled. Multiple location sites are outside the abilities of most physicians and involve a much greater financial risk. Staffing and human resources, legal issues, medical oversight… most fail within the first year.

Successful multi-location practices are built around systems. If your first clinic doesn’t run without you there, you’re not ready for a second. Expanding to fast is a sure why to overextend your resources. Then you’re in big trouble. If you’ve closed a second clinic, lenders are going to be very wary of lending you money.

The Turn Key Solution: Franchises and consultants love to drop this phrase. The idea is an attractive one. Experts will guide your steps to financial glory. Marketing, financing, training, everything will be delivered in a nice little box with a bow on top. But, knowing a number of franchise owners and the problems they’ve encountered, I would give this advice; beware.

The current crop of franchises have a lot of problems. (One of them in California was shut down for selling medical practices to non-physicians. They’ve since reopened and are among the most aggressive advertisers.) Franchises are attractive because they claim to have all the answers. If you’ll just write the checks all of your troubles will be over. Not so fast. What you’ll really get are some manuals, pre-written scripts for sales, and bad ad-slicks. You’ll also get: locked into specific technologies that might be second-tier (the franchise gets kick-backs), spend money you could use elsewhere, and pay royalties on all of your income. (The franchises that offer a flat fee are an even worse idea. They have absolutely no motivation to help you.)

Big dogs eat little dogs. The next five years will see dramatic and disruptive changes in this marketplace. Large, well-financed medical businesses with smart physicians and high-quality care are going to open up next door to you. (You’re the corner store, they’re Wal-Mart) These businesses will be category killers and if you’re not well established with a broad market presence and multiple revenue streams, you’ll be gone.

The $80,000 towel dryers. Choosing the right technology is one of the things that will let you move ahead a step, or put you in cement boots where you stand. I always think of the way one physician described the pair of IPLs [Intense Pulsed Light devices] that he’d bought; as $80,000 towel dryers. Before you decide on which system to buy you’re going to need to crunch the numbers. How many shots will the IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does the device work better than its competitors? Before you sign your next few house payments away, make sure of your technology decisions.

Buy or lease. Leasing is the best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of the technology companies have delayed payment plans as long as six months. Buying used equipment is often the best way to save money if cash flow is not an issue. (We purchase used medical lasers and IPLs online from a broker we trust and sometimes negotiate with our buying power for other physicians.) You can often save up to 40% off the price of a new machine if you have the cash on hand.

Don’t guild the lily: Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in the excitement of a new business. Before you invest in embroidered leather treatment tables, make sure you can pay your bills. One medical spa startup spent $350,000 on build out and didn’t have any money left to attract patients. They were out of business in four months.

A few simple finance rules:

o The Golden Rule is actually translated as: He with the gold makes the rules.

o You will end up being personally responsible for the money: Physicians sometimes think that they can use equity in their medical practice or future earnings as security. Nope.

o Be frugal: Take only the amount of money you need. It’s tempting to take as much money as you can get. Don’t. All the money you take will come with strings attached.

o Take enough money: Lenders hate it when you need additional money. They worry something’s going wrong in the original plan.

o Sometimes you can’t get there from here: Competition is fierce. If your market is already “owned” by a competitor, think carefully before going into debt to compete in a market you can’t win.

Tighten your belt: Financing is like anything else. In order to really find the best solutions you’re going to need to do some research. Find a mentor, someone who’s done it before and knows what to avoid. And remember, the most common reason that businesses fail is not lack of capital, its poor decision making.

Resource links for all of the businesses and information discussed in this article are available online at MedicalSpaMD.com

Choosing the Right Business Loan For Your Company

Operating a business takes money and just about everyone has heard the expression you have to spend money to make money, but where do you get the money if you aren’t independently wealthy, or established? A business loan is the answer to most business needs. It doesn’t matter what size a business is, almost every business owner at some point has to consider a loan. A business loan can help a business get started, expand once it’s on its way and growing, or get a business through the tough spots that happen occasionally. Deciding on a business loan is a key step, but which loan is right for you and how do you decide between the many different various types?

Skip the Loan and Use Plastic

Some business owners opt for a slight variation on a business loan and choose to use credit cards to back their startup, expand on an existing business, or help their business through a tough stretch. The positive reason for using credit to fund your business is that it is often easier to get, or already existing in a personal credit card, but there are a couple of serious negatives to using this type of business financing. The first negative is that unless your existing credit line is unlimited there might not be enough funding on your credit cards. The second negative to using personal credit cards is that your personal and business cash flow is not separate. This can create havoc if you need to use your credit for important personal needs and it can have a similar effect on business funds if you suddenly have to tap into your credit for personal reasons. Lastly, the interest rate on credit cards is normally much higher than any of the various types of business loans.

A Bridge Between Credit Cards and Business Loans: Lines of Credit

A line of credit operates much the same as a credit card. You apply for a business loan line of credit and based on your qualifications you are approved for up to a certain amount. You are not charged on the loan until you actually use the money and are only charged for the amount you actually use. Another similarity between lines of credit and credit cards is the loan is often an unsecured loan meaning no assets are used to guarantee the loan such as homes, cars, the business itself. However, unlike a credit card business lines of credit have interest rates much closer to a traditional loan level.

On the downside those interest rates are usually variable like a personal credit card and go up or down over the period of the loan. Another downside to lines of credit is that like a credit card your payments will usually be only a little more than the interest rate each month.

This may seem like a plus at the start because the monthly payments are so low. The catch there is that lines of credit to not extend forever. There is almost always a set number of years for the loan amount to be available. At the end of that time (and sometimes within the last two years of the payback) money is not longer available. After that period, the payments are higher to make sure the money is completely paid back by the end of the loan.

If you have the discipline to make yourself pay more than the minimum every month in order to pay down the loan, this can be a good loan to get. It allows for times when money is tight. You can pay the minimum at those times without risking a default on your loan.

Traditional Types of Business Loans

Even if you do not have an extensive amount of credit, and if you don’t think a line of credit is right for you, all is not lost. There are many more traditional styles of business loans to choose from:

– Working Capital Loans: These loans are what most people think of when they consider getting a business loan. They come in two types, secured and unsecured. Unsecured versions of working capital loans are usually only available to those business owners with stellar credit, a sound business plan, and an established business with a proven track record. Startups are usually too risky to be granted unsecured working capital business loans. Secured working capital loans are a little easier to get although the amount of collateral needed to obtain these loans is often based on the credit of the borrower. These loans make it possible for all types of business to conduct their affairs on a day-to-day basis with available cash. Loans are commonly secured with homes, and other valuable assets.

– Accounts Receivable Loans: These are short term types of financing available when you hit a tough spot and now you have money coming in at a particular time. Your business’ records of accounts receivable act as a security for such loans. On the downside the interest rates of these short term loans are usually higher than a long term standard loan, and you can end up in a vicious circle of using your assets (receivables) before you get them and then not have money left before your next income period. This type of loan should only be considered in a select few types of cases of emergency such as the need to meet payroll, purchase inventory at a value, or other necessities.

– Business Only Loans: This type of loan is applied for using the capital and assets of the business alone and not any personal credit or credit history of the owner. It is only available to a business with a solid record of reliable income, the long-term prospect of fluid operation, and very strong business credit scores.

Other Function Specific Loans

There are times during business operation when you need a loan for a specific type of purchase such as to buy new or replace old equipment, the purchase of real estate for the business, or other dedicated needs there are loans designed to be separately available for just those times.

Getting The Loan

The best way to ensure success in getting your business loan is to be prepared. Enter your bank with a well-formulated business plan in hand and make sure your credit is up to par. If you know of any spots on your credit history, be prepared to explain them. Lenders are human too, and know that there are situations that are unavoidable but if you can prove your trouble is in the past and you are on more solid footing it will help a lot in getting the loan you desire. Letters of explanation to go along with your loan package help if there were situations such as illness, or caring for a sick loved one that caused problems in the past.

One of the things that stops most people from attempting to get a loan is fear of rejection. Knowing what to expect can alleviate that fear.