Chet Billingsley, CEO of Mentor Capital, Inc.
(�Woman�s Voice� Contributing
even for you, it is impossible to get money from a bank. The SBA is
from the government, but not here to help you, and the vulture
capitalists are only interested in bigger game. How then can you,
and the other eight million American women, who are seriously
considering starting their own businesses, finance their dreams?
starters be cheap. Don�t spend a dollar if you can spend a dime and
come close. Set up shop in your bedroom or on the kitchen table, and
don�t move on to an office until you are absolutely forced to.
Reject the perfectionist impulse to �Do it Right.� This otherwise
commendable attitude, inevitably leads to a plan that expands to
fill the limits of every penny of savings you have, no family should
be exposed to risk in the unexpected case of occasional business
maximum return-on-investment, instead of maximum return. To
internalize this concept, reflect on how a 30% return on $15,000 is
much better, though less, than a 8% return on $60,000 when both are
invested in yourself to start your own business. If you are already
at the planning stage, a better approach is to limit your planned
expenditures to the absolute minimum you can possibly get by with �
then double that number. This attitude and reserve will give you the
best chances of surviving that crucial first year.
Even with a
properly tight, only if you need it, second-hand desk approach,
you�ll still need a shoe box full of twenty dollar bills to go into
business for yourself. You�re ready when you can�t get the lid on
the box. You probably have something in savings but you need to beef
Banks will not
consider you for a true business or SBA loan for your first three
years of operation, so I�d suggest not wasting your time in that
direction. Surprisingly, although they will not give a
secured-by-the-business loan, banks will give a secured-by-nothing
loan in the form of one or several credit cards. Especially if you
are employed and have reasonably good credit, this is an amazingly
easy path to follow to assemble up to $100,000, or so of financing.
card applications for a month and apply for twenty or more credit
cards at the same time. Also, ask each of your existing card issuers
to increase their respective lines for you. You should get five to
ten approvals. For any rejections, send off for a copy of your
credit bureau reports. Using these techniques, a young California
couple just opened their dream of a college town bar in the Midwest,
even though all classic financing was denied.
In a similar
fashion, banks will readily refinance that paid-in-full Mercedes
which is parked in your driveway. This may raise $10,000-$15,000 for
you. You can even sell the car to your husband or vice versa to
directly finance the purchase and indirectly move bank financing
into your family unit.
equity lines, if available, are highly recommend because the
interest is tax deductible, but you have probably thought of that
already. For all of these bank sources it is important to have a
job, so be sure to get the credit and then quit to start your
business, not the other way around.
Once you have
successfully tapped the banking avenues, your next source is to mine
your reputation. Here, the three C�s of credit are Character,
Character, and Character. If you have developed a solid track record
of hard work and fair dealing you should be able to raise $2,500,
$4,000, or even $10,000 (these are good investment amounts) from
about half-a-dozen people.
Even with a
great history, asking people for money is difficult. You can ease
the way by trying these two techniques. Try paying yourself no
salary, only a percentage. That way, the investors know you will get
something and whenever you get paid, they get paid also. If you need
a salary, then that is all you get until the investors get all their
words are �The Investors get an ongoing 25% annual return, or a
double on their money in the first year or two, then you can keep
80% of the overage beyond their share,� and they will be happy. You
can set up these programs or partnerships by copying other
businesses documents, or use do-it-yourself kits when you are small.
When you have
significant personal assets or have grown past $1 million in size,
it�s time to find a good lawyer. At that point, you will be on the
Go for it!
Chet Billingsley is the Chairman
& CEO of Mentor Capital (Symbol: MNTR) that invests in hedge funds
and smaller companies. The firm has no debt and no exposure to the
financial, sub-prime or real estate sectors. Information on the firm
may be found at www.MentorCapital.com.
(Disclosure: Bob Meyer owns stock in Mentor Capital.)