The challenges of securing capital for your business.A major challenge entrepreneurs face is how and where to get the money to fund that brilliant business idea. While there are many sources of business capital, the two most common are personal savings and bank debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay . Outside of having an excellent business and personal relationship with your banker, a thorough loan application is a must to getting the funds needed. A typical loan application will request background information on the owner(s), amount of funds requested and purpose for the loan along with a business plan to support your ability to repay. Loan applications also request current personal financial statement, a description of the pledged collateral and a personal guarantee to repay the loan Let's use Quick Serve Restaurants (QSR QSR Quick Service Restaurant QSR QoS (Quality of Service) Satisfaction Rate QSR Quality System Regulations QSR Quality Status Report QSR Quality System Review QSR Quarterly Status Report QSR Quality System Requirement ) such as McDonald's, Burger King or Wendy's as an example here. The loan application must first describe the owner's career background, how that experience translates to the QSR's business environment, and the skills possessed that will lead to a successful location. The QSR's in this example could cost between $300K & $2.8M, not including real estate, so the loan application must describe the amount of money contributed by the owner(s), and the balance of the amount needed that will come from either debt or equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. . It may be possible to acquire an existing business plan from an existing franchisee, however you will need to modify the plan to meet your current situation. Your business plan must also exhibit positive cash-flow projections to be able to repay the loan, a sufficient level of cash injected in·ject·ed adj. 1. Of or relating to a substance introduced into the body. 2. Of or relating to a blood vessel that is visibly distended with blood. injected 1. introduced by injection. 2. congested. by the owner (usually a minimum of 20%), and address the owner's Collateral and Credit necessary to meet the loan requirements. If we assume the QSR in question will cost $1.0M and the owner also has a net worth of $1.0M, a satisfactory loan application may include liquid capital contributions from the owner of $250K (25%), and a loan request for the remaining $750K. Bankers like to see your net worth equal the total cost of the project. That way, they know the bank has avenues to collateralize collateralize To pledge an asset as security for a loan. A loan to a broker is collateralized by pledging securities. your loan with some of your personal assets. Another popular means of securing is capital is equity financing. Equity financing can come in the form of venture capital or angel investors An individual who invests his or her own money in a private company, which is typically a startup. An angel investor is not an employee or member of a bank, venture capital firm or other financial institution that normally makes such investments. . Let's investigate a Choice Hotel Property like Comfort Suites, or a Wyndham Garden Hotel, which would both be at least $4.0M to build. If we used our 20% liquid investment rule of thumb, the owner(s) would be required to inject in·ject v. 1. To introduce a substance, such as a drug or vaccine, into a body part. 2. To treat by means of injection. $800K of capital, and finance the remaining $3.2M. You could raise the balance by offering equity in the hotel, giving investors a percentage ownership in return for their money. Maybe you'd be willing to give up 32% ownership of the hotel in return for $3.2M equity from investors. You may construct the equity deal where 1% ownership of the hotel costs $100,000, however you guarantee a return before owner's profit of 10% per year, plus some additional incentives should you hit preset preset Cardiac pacing A parameter of a pacemaker that is programmed permanently when manufactured profitability targets. In addition to equity financing, other sources of funds are grants offered by local and state governments. A loan specialist or financial advisor should be able to help you compare the differences between those capital-intensive businesses, and more service oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. businesses such as Century 21 or Coldwell Banker. These two opportunities represent the well established real estate service model, however they can be started with a fraction of the cost of a hotel. At the low end, the total investment is in the $20K range, where the upper end could be greater than $400K. What surprises many first-time entrepreneurs is that an investment in a service business for $20K could lead to the same profit level as a $4.0M Comfort Suites Hotel There is no guarantee that the higher the investment, the higher the return. This is where the help of a professional business advisor, loan consultant or CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. could help you create a business plan that incorporates their experience and knowledge of the industry you're pursuing. Something as simple as a best and worse case Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma , or a comparison of debt vs. equity investors might make the difference between a loan advisor approving your loan request. RESOURCES PUBLIC U.S. Small Business Administration (SBA SBA abbr. Small Business Administration Noun 1. SBA - an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government )--www.sba.gov Small Business Investment Companies--www.nasbic.com Small Business Development Center--www.sba.gov/sbdc/ SBA LowDoc Application--www.sba.gov/sbaforms/sba4-L.pdf Federal Resources--www.business.gov PRIVATE Creating a business plan--www.sba.gov/library/pubs/fm-14.doc&www.bplans.com Venture Capital Firms--www.vfinance.com & www.vcfv.com Wall Street Journal Small Biz Center--www.startupjournal.com Entrepreneur Magazine Entrepreneur Magazine is a publication that carries news stories about entrepreneurialism, small business management, and business opportunities. This magazine is published monthly, with a total of 12 issues annually. (No special extra issues are published. Biz Center--www.entrepreneur.com National Community Capital Association--www.communitycapital.org SBA Angel Investor Network--www.sba.gov/opc/pubs/co71.html Loan Consultants--www.businessresourcestore.com & www.businessbroker.net/diamond.ihtml Private Funding Sources--www.cit.com & www.wellsfargo.com International Franchise Association--www.franchise.org The UPS Store In 1999, Jane Lockett, of Dana Point, California Dana Point is a city located in southern Orange County, California. The population was 35,110 at the 2000 census. As one of the few harbors along the Orange County coast, and with ready access via California State Route 1, it is a popular local destination for surfing and is home , embarked on a new journey when she opened a The UPS Store location (formerly Mail Boxes Etc.). By following her entrepreneurial spirit, she has changed not only her life, but also the lives of others. Jane's desire was to be an independent businesswoman and find an opportunity to create a relationship with her community and give something back to the people who supported her. Upon learning about Laura's House The inception of Laura’s House was inspired by a true story about a woman called Laura from Orange County who was a victim of domestic violence. Unfortunately the end of her particular story is a very tragic one….her life was cut short with her untimely death at age 38. , a local shelter for victims of domestic abuse and their children, she organized a back-to-school drive for the children at the shelter, to coincide with her business opening. Since that day, she has conducted a number of events to benefit the children at Laura's House, and each woman coming into the shelter is provided complimentary mailbox A simulated mailbox in the computer that holds e-mail messages. Mailboxes are stored on disk as a file of messages, a database of messages or as an individual file for each message. The standard mailboxes are usually In, Out, Trash and Junk (Spam). services through Jane's store. "In addition to giving them a safe place to receive mail, it helps them achieve a sense of control over their own lives," says Jane. It's a situation Jane understands all too well, having lived through an abusive relationship as a teenage mother. Jane is also pleased that she has been able to turn her business venture into a multigenerational mul·ti·gen·er·a·tion·al adj. Of or relating to several generations: multigenerational family traditions. family affair, with her husband and daughter heavily involved in day-to-day operations. Jane's mother serves as family cheerleader and advisor. The concepts of family and community have long been an integral part of the African-American culture. For women like Jane Lockett, entrepreneurship has provided them with a way of honoring those traditions while pursuing the American Dream American dream also American Dream n. An American ideal of a happy and successful life to which all may aspire: . Choice Hotels Choice Hotels International is one of the world's largest hotel franchising companies with over 5,000 hotels open and under development worldwide: The company franchises under the Comfort Inn, Quality, Sleep Inn, Clarion A family of application development systems for Windows from SoftVelocity, Inc., Pompano Beach, FL (www.softvelocity.com). Clarion provides a comprehensive set of tools for development, including a screen builder, 4GL and application generator. , MainStay Suites Mainstay Suites is a brand of mid-priced extended stay hotels franchised by Choice Hotels International. Mainstay Suites hotels provide comfortable and affordable accommodations to extended stay travelers as well as provide many amenities to its guests. , Econo Lodge Econo Lodge is an economy motel chain based in the United States. Econo Lodge is the second largest brand in the Choice Hotels system. It is one of the best known names of its category and provides affordable rooms to budget travelers. , and Rodeway Inn Rodeway Inn is an upper-priced economy chain of motels in the United States and Canada. Rodeway Inn is a brand of the Choice Hotels group. There are over 150 locations in North America. brand names. With over 60 years of successful hospitality and franchise development experience, we understand what it takes to succeed and how to get there. Choice Hotels is focused on providing franchisees with a solid return on investment by offering a proven portfolio of hotel resources.... All designed to help you create and maintain the best hotel for your unique needs. Choice Hotels International provides you with: * $50 million national, multi-brand marketing and advertising campaign * Powerful reservation delivery via 800.4CHOICE and choicehotels.com that booked $1.3 billion in room revenue in 2003. * Effective property management systems that ensure that your hotel operates at its most cost-efficient. * New hotel services to assist you with every detail of opening your hotel. * Ongoing training to ensure you and your staff are always up to speed on the latest principles and practices in hospitality. * Continuous field support though your personal Franchise Service Director. And, Choice Hotels currently is offering a program to attract African American African American Multiculture A person having origins in any of the black racial groups of Africa. See Race. , Hispanic, and Native American entrepreneurs to the world of hotel ownership. Subject to certain terms and conditions, we will provide up to $125,000 in incentives for a new or converted midscale brand hotel or $50,000 for a similarly franchised economy brand hotel. We are committed to recruiting new minority franchisees and invite you to join the Choice Hotels family. For more details regarding this incentive program and applicable terms and conditions, or to learn more about franchise opportunities with Choice Hotels International call 800.547.0007, visit choicehotelsfranchise.com, or email us at franchise_sales@choicehotels.com. Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, MainStay Suites, Econo Lodge, and Rodeway Inn are proprietary trademarks and service marks of Choice Hotels International, Inc.[C] 2004 Choice Hotels International Inc. All rights reserved. Golden Krust Bakers of Superior Quality * Hardo Bread * Buns * Patties * Etc. 3958 PARK AVENUE, BRONX, N.Y. 10457 * 718-655-7878 * FAX 718-583-1883 Golden Krust Caribbean Bakery and Grill is the home of the World's best-tasting Jamaican Style patties and delicious Caribbean meals. Our franchise offers forty-three high quality Caribbean food items that customers can enjoy for breakfast, lunch and dinner. In 1996 Lowell Hawthorne decided to parlay An open programming interface (API) to a service provider's network (the network operator), developed by the Parlay Group (www.parlay.org). By enabling the customer's application to talk directly to the network, it allows the end user to have greater access to network information as well the success of Golden Krust into franchises, becoming the first and only Caribbean baked goods producer to hold this distinction. Today, Golden Krust Caribbean Bakery and Grill operates a chain of 73 stores in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , New Jersey, Connecticut, Pennsylvania and Florida. There are currently 6 other stores under construction and the company plans to open an additional 250 stores within the next five years as it moves from being a segment industry to a major player in the quick service industry. The success of Golden Krust has led the company to be featured on Fox 5 News, New York Views on WABC-TV-Channel 7, New York One and on CNN CNN or Cable News Network Subsidiary company of Turner Broadcasting Systems. It was created by Ted Turner in 1980 to present 24-hour live news broadcasts, using satellites to transmit reports from news bureaus around the world. . Extensive features have also been written about the company in ForbesMagazine, New York Times, New York Daily News New York Daily News Morning daily tabloid newspaper published in New York City. It was founded in 1919 by Joseph Medill Patterson and his cousin Robert McCormick as a subsidiary of the Tribune Co. of Chicago. The first successful tabloid-format newspaper in the U.S. , Emerge, Black Enterprise Magazine, Crains New York Business Magazine and several local and community newspapers. In 2002 Lowell Hawthorne was named Entrepreneur of the Year for the Tri-State area There are a number of places in the United States known as tri-state areas where three states or holdings meet at one point (a tripoint), or in proximity to each other. The two most well-known are for the New York and Chicago metropolitan areas. by the accounting firm Ernst & Young. Black Enterprise Magazine named Golden Krust as one of the "Top 100 National Black-owned Companies in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and in 2003 the company made Entrepreneur Magazine's list of top 500 franchise opportunities. Franchise Fees: $25,000 Total Initial Investment: $$148,000-$380,000 We provide training, field service, manuals detailing operations, design/constructions site selection and site approval. Franchisor reviews and makes recommendations regarding the franchise lease. Start your information process by visiting us online at www.goldenkrustbakery.com and fill out the pre-application form, or call us at 718.655.7878. Lowell Rawthorne Golden Krust Caribbean Bakery & Grill President/CEO Express Personnel Services Join the #1 full-service staffing franchise. Express Personnel Services provides temporary and flexible staffing, evaluation and direct hire, professional/contract staffing and business solutions to individuals and businesses in the United States, Canada, South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. , and Australia. Focusing on light industrial, office services and professional employment, Express is a sales-focused business-to-business opportunity with company sales totaling $1 billion in 2003. Our mission is to professionally market and provide quality human resource solutions through an international franchising network to help as many people as possible find good jobs and as many clients as possible find good people. Express employs more than 240,000 people and services over 70,000 clients annually. With nearly 500 offices, an established brand and proven system, and a dedicated support team, you can't go wrong with Express. Call us today at 877-652-6400 or visit us online at www.ExpressPersonnel.com, if you're ready to join a $60 billion industry. JAN-PRO JAN-PRO, the nation's premiere commercial cleaning franchise, continues to expand and welcome new franchisees in all levels of the business. Our program assists you every step of the way--from financing your business to growing it into the size that fits your dream. At JAN-PRO you not only benefit from our proven business model, but you also have the ongoing support of a network of seasoned professionals at the corporate level and in the field. Customer service and franchisee support are key reasons for JAN-PRO's success. This twofold focus is apparent throughout the company--from the president to the newest franchisee. In the May 2004 issue of Black Enterprise, Dennis Jarrett, President of JAN-PRO Franchising International, summed up the excitement that runs through the company. "The most gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. part of our job at JAN-PRO is helping others succeed through franchising. Our program enables people from all walks of life to achieve financial freedom through our proprietary systems and procedures. JAN-PRO's program is synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. in the sense, the better the Unit Franchisees performs, the better the Master Licensees do and the better the parent company does. This means that all the incentives are aligned properly." Success stories are everywhere at JAN-PRO. Three years ago, Diane Gist of Charlotte had dreams of owning her own business. A friend referred her to Jan-Pro and Diane purchased the smallest franchise package available. "Coming into the business, I had management and customer service skills, but no experience in the technical aspects of commercial cleaning management. Jan-Pro's training program provided me with everything I needed to know, and their reputation in the industry paved pave tr.v. paved, pav·ing, paves 1. To cover with a pavement. 2. To cover uniformly, as if with pavement. 3. To be or compose the pavement of. the way for my success", claims Diane. In three years, Diane's business is currently at $300,000 gross volume per year and she's adding with new customers daily. With over 4,000 franchises, Jan-Pro is committed to recruiting new minority franchisees and to helping you succeed. Visit www.jan-pro.com or call toll-free (866) 355-1064. |
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