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Building a Solid Business Foundation for Financing

The single most important thing a business owner can do for their business is to build their business to sell it.

Sell it you ask?

Yes. Build to Sell.

Every decision a business owner makes should be based on that thought. If an entrepreneur can base their business decisions with that underlying idea (in terms of financing), they will be set up for long term success.

The lending institutions base their acceptance or declination on one thing.

Is the business an attractive lending risk.

There are 20 key points every business owner must have in place to be approved by financial institutions when their underwriting team is determining to approve or decline a loan app. Many of these are small, seemingly meaningless ideas. However, lets take a look at it from the eyes of the lenders.

Banks and lending institutions get so many applications from business owners who, quiet frankly, have no business applying for a loan. Their business is not set up to be lent to. The banks are not even viewing these entities as a viable businesses. So the first stage of getting past the computer guidelines is to have these in place.

Additionally, if you were to go to the bank and not have these in place, the loan officer would get a two digit code back from the computer system and all it was say was “Loan application declined.” Your loan officer, without investing some time into the issue, would not know exactly what you needed to do differently to be approved. The loan officers surely do not have the underwriting guidelines for their firm.

In this article we will examine the top three reasons business owners fail at business credit building and business financing.

The first is simply the business owner does not have all the I’s dotted and the T’s crossed in their business. Things like having an 800 number, being listed in the 411 directory, and having a dedicated fax line is a must to a business owner seeking financing. Many business owners I speak with are small businesses, who are just seeking their financing options. It’s impressive to see the amount of businesses that do not even have these first three steps accomplished. Remember, the goal here is to have your business look attractive on paper. In the eyes of a lender, if you do not have an 800 number it is suggested you own a “mom and pop shop” and are not setup for success.

Secondly, business owners have not started to build their business credit. There are right ways and wrong ways to go about building your business credit structure. In the eyes of the lender business owners who go out seeking to open revolving lines of credit and are turned down (due to reasons outside the scope of this article) it appears as though they are fishing for financing. It’s imperative to apply for the right types of credit lines and being approved for those lines when establishing your business credit from the get go.

Thirdly and most relevant to most entrepreneurs: they have not separated their personal liabilities from their business. It’s important for a business owner to have good receivables in his/her business. But, and what’s equally important, is that business owners personal credit is not tied to the business, in any possible way. There are two reasons why you’d want to separate yourself from your business. If something happens to your personal financial situation, you do not want that to be the reason your business is unsuccessful in obtaining financing. Secondly, should something happen to your business, you do not want that to affect your personal credit.

Successful Networking For Your Business

During the past five years and throughout what has been a difficult time financially for many businesses, more and more entrepreneurs, small businesses and medium sized companies have realized that active networking is absolutely essential to business growth, particularly for start-ups and small businesses which may not have a large advertising budget, or a long list of contacts they can reach out to or rely on to spread the word about themselves or their company and the type of services or products they offer. Love it or hate it, networking for business is here to stay and it is fast-becoming a big part of the overall strategic plan for our business now and in the future.

While many people still prefer to stay away from networking events citing reasons such as “It’s a waste of time”, “No one ever gets me any business” or “All I’m doing is selling to other people who are trying to sell to me, it’s a pointless exercise”, the majority of us are realizing the enormous benefits to networking. When done properly, networking is an invaluable tool in helping us to meet others, grow our business and our network of contacts and also helping others to grow their business in the process.

While I am a big fan of social media marketing and using the power of social networking to attract new clients and customers through sites such as Linked In, Facebook, Twitter, Google + and Pinterest, for the purposes of this article I am going to focus specifically on B2B networking and how you can use this form of networking to grow your business and reach potential customers and clients you may never have met otherwise.

People Buy From People

During the past few years in particular, there has been a shift in the way people are buying and who they are buying from. The “hard sell” no longer works quite as well as it did in the past and people are now buying from people they know and trust. It is true of course that we also buy from big, well-known brands, but the reason we buy from these companies is the same as the reason we are buying more and more from people we know – because we trust them. The difficulty facing many smaller businesses is that our advertising budgets don’t quite stretch to the same size as those of bigger brands, so we must engage and interact with people as much as possible through networking to promote ourselves and our brand and gain maximum exposure. By circulating and meeting others on a regular basis, we build up trust and relationships with others. This is a valuable way to attract new business and it is, without doubt, the simplest way by a clear mile.

“Word of Mouth” has, for a long time, been the easiest and most cost-effective way for any company to attract new clients. No big advertising fees, no sales calls, no direct marketing, no “hard sell” – just the good, old-fashioned way of passing on of information, recommendations and referrals from one person to another.

What About My Marketing Plan?

Many businesses today utilize in-depth marketing plans which contain many of the tools and strategies we need for our business to succeed – social media marketing, content marketing, direct marketing and inbound marketing are just some of the buzzwords and phrases we have become familiar with in recent years, but many of us have realized that while these marketing strategies are essential and have their place in our business plan, we must not forget the value of “Word of Mouth” marketing and the opportunities that networking can bring.

Networking by its very nature is a form of inbound marketing, as you are attracting others to you effortlessly and easily by using networking events to meet people who may be interested in your products or services, promoting your business while you are there, having discussions about what you do and the types of services or products you provide and, hopefully, converting those people into customers and clients and, sometimes more importantly, fans of your business so that they will tell others about you… now that’s effective marketing!

The Low-Down On Business To Business Networking

B2B networking events have sprung up in every country, city, county, town and village all over the world in the past couple of years, so the good news is that it is very easy to find a networking group to join and become an active member of, regardless of what line of business you are in. There are many different types of networks and depending on your long-term or short-term goals, you may wish to join a hard contact network (one in which you are actively encouraged to obtain referrals for others within the group and in return they actively seek referrals for your business) or you may prefer to get involved in a more casual contact network (where you meet up once every few weeks, or even once a month to have a coffee and a chat, exchange business cards and get to know others in a more informal setting).

Whichever type of networking event you prefer, B2B networking is invaluable in today’s business environment and it is something that should become an active part of your business. Networking has its place alongside the other marketing strategies I mentioned earlier, however it is very important to remember that networking for business only becomes successful when it is utilized properly and there are a number of ways in which you can do this.

How Do I Use Networking Effectively?

Networking is all about building relationships with others and getting to know people. The aim is to make new friends and contacts who, over time, you will get to know well and build up trust with. Networking is a two-way street and it is worth keeping this in mind, particularly if you are new to networking. It is natural to want to get in there and start telling everyone about what your business does best and how you can change people’s lives with your services, but the reality is that if you really want networking to work for you, you do have to take a more measured and relaxed approach and allow things to unfold at a natural pace.

The ROI of networking is similar in ways to other business practices such as marketing and advertising – you may not see immediate results and it can take a few months of active attendance at networking meetings before you start to see any benefits at all, so it is worth bearing this in mind before you start! Effective networking takes time and can involve early morning meetings and also evening meetings, so be prepared to put a little bit of effort in – the long-term rewards and benefits really are worth it.

Some Dos and Don’ts…

Do try a few different networking groups to see which ones suit you best. You might find that a hard contact network is the one for you if you want to see a faster ROI and actively attend meetings regularly, or you may prefer a casual contact network, particularly if you are time-poor and cannot commit to attending every week. Contact your local Chamber of Commerce and City or County Enterprise Board to find out about networking meetings and events taking place near you and also keep an eye on local newspapers and magazines where you will often see events advertised. Another great resource is of course the internet, so a few searches should point you in the right direction.

Don’t join a networking group with the sole idea of selling to others. You will receive a frosty reception if your plan is to turn up once or twice and then give people the hard sell every time you are there. Remember – networking is a two-way street and no one likes to feel as if they are being sold to at every opportunity. At two networking events I attended recently, one guy asked me directly if I could “find” him some clients and another person just came straight over and asked, “I need to get some clients asap, so what can you do for me?” Needless to say these are two people I now avoid like the plague whenever I see them.

Do practice your Elevator Pitch and try to keep it to between 30 and 60 seconds – any longer and people will be excusing themselves to get more coffee.

Do listen to others and take the time to get to know them, their business and what they do. If you take the approach that you can only actively refer business to people you get to know well and build a relationship with, then your success rate at networking effectively will be much, much higher. By referring business to people we know we can be absolutely sure that the particular business or service we are recommending really is fantastic. Who wants to recommend a business or service they don’t really know anything about? All you’ll end up with is an unhappy client or friend who comes back to you afterwards with complaints about the service they received – and you definitely don’t want that.

Don’t forget to bring your business cards and lots of them. Networking events are the perfect opportunity to hand out business cards and take cards from others. There is nothing worse than arriving at an event and then realizing that a potential client or customer is right there but you have nothing to give them.

Do try to mix as much as possible and “work” the room effectively. If you only go to one networking meeting per month, make it count. Talk to as many people as you can and get there early so that you can maximize your time.

Don’t be nervous – I know this is easier said than done when you are not used to networking and it can be daunting walking up to a complete stranger and introducing yourself, but remember that everyone is in the same boat and even the most seasoned networkers had to start somewhere. Everyone who attends these events has a common goal – to grow their business and grow their network of contacts so take a deep breath and be brave!