by Keith Larson

The final step for many is obtaining financing.  An effective business plan requires an understanding of the following.

Competitive Advantage: Why would someone buy from you instead of a competitor? Build your plan around your competitive advantage.

Target Market: Define your customers by location, age group, income level, etc.

Marketing: How will you reach your Target Market - TV/Radio/Newspaper advertising, e-mail, internet, mailers?

Competitors: Who are they? What do they charge? How is their service?

Financial Projections - Create a spreadsheet with startup & monthly costs for 12 months. Add projected income to see monthly cash flow. KISS: Keep it short and simple, no more than 12 pages (put the boring stuff in attachments), and back up statements with numbers. Conversely, explain where the numbers came from. E-mail me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it for a business plan guide and generic spreadsheet.

Bank & Credit Union loans - Banks are hesitant about lending to startups, even in a “normal” economy. They usually want to see 2-3 years of solid cash flow. However, if you have a great credit score, a dynamite business plan, proven expertise in the business and equity in your home you may be in luck. Suggest you try community banks (such as Commerce Bank of TV in Murrieta) first before hitting the big guys. Get to know the manager. He/she can give you tips on preparing a loan app, even review your business plan and provide referrals. Be aware that banks have their own preferred industries, so find one that favors yours.

There are also SBA loan programs that target women, minorities and veterans. www.sba.gov. The local office is in Santa Ana. Contact Douglas Dare at (760) 560-7467. Note: SBA does not make loans; they guarantee them (up to 90%) through banks, etc. so it is up to the banks to determine who gets them. Also check out CDC Small Business Finance at http://www.cdcloans.com/. They offer a $35,000 SBA microloan (startups “considered” with 25% owner’s capital, 2 years’ industry experience, biz plan, collateral & good credit).

Retirement Account -The IRS may allow an IRA or 401(k) to be used as a “Rollover as Business Start-up (ROBS)”. It is risky and not entirely OK by the IRS. Do a search on ROBS at www.irs.gov and read the IRS articles. After that, you can Google “Rollover as Business Start-up” to find providers.

Grants - Unless you have a cure for cancer you probably don’t qualify for a grant. There are many urban myths and websites that will try to convince you otherwise. One is www.businessgrants.com.

Peer-to-Peer lending websites claim to match borrowers directly with investors. I’m not going to list any here. To find them, Google “peer to peer lending” and see what pops up. Beware of scams.

Crowd Funding - Raise cash from many small donors over the internet; and since they aren’t loans, it doesn’t have to be paid back. However, many entrepreneurs give their contributors products or services to show their appreciation. Peerbackers.com, Indiegogo.com, kickstarter.com and Rockethub.com are a few that provide Crowd Funding services.

Angel Investor(s) - If your business idea will be an immediate and huge success, there are investors who will provide funding (for a share of the company). Visit San Diego Connect at http://www.connect.org/ & Tech Coast Angels at http://www.techcoastangels.com/.

Keith is one of 30 experienced volunteers providing FREE business counseling in the Inland Empire. To make an appointment e-mail k.larson@%20cox%20.net">k.larson@ cox .net or This e-mail address is being protected from spambots. You need JavaScript enabled to view it "> This e-mail address is being protected from spambots. You need JavaScript enabled to view it . or visit the SCORE website at http://www.inlandempire.scorechapter.org/