8 Great Food And Restaurant Franchises To Open In 2019

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What You Need To Know About Funding Your Startup With A Home Equity Loan

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The Complete Guide To Home Equity Loans For Business Purposes

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Maryland Small Business Loans

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How To Start And Fund A Consulting Business: The Step-By-Step Guide

Do you have a tendency to share your knowledge and experience with others? Do you enjoy giving advice that helps others better their businesses … or their lives? Did you know that you could get paid just for sharing your expertise?

While it may sound too good to be true, that’s exactly what a consultant does. A consultant is an expert that provides knowledge, expertise, and training to others for a fee. Consultants advise their clients on a variety of topics, from how to implement the latest technology to how to create a successful marketing campaign.

Becoming a consultant does not require special training, credentials, or education. You simply need to be an expert in your field. You also need to have passion — not just for your industry but for helping others truly find the right solutions for their problems.

Consultants are organized, know how to network, and are always willing to learn more about their field to provide the best services to their clients.

If this sounds like you, becoming a consultant may be your new career path. The great thing about consulting is that anyone with knowledge and expertise can do it. Starting your own consulting business has low overhead costs and doesn’t require a lot of capital from the get-go. In fact, you can even start your own business from your home office.

But maybe your goals are much bigger. Maybe you want to have the top consulting firm in your area. It doesn’t matter if you want to simply be your own boss and make a decent income or if you want to grow your business to epic proportions — this guide is for you.

We’ll explore the steps you need to take to get your business off the ground. From finding your niche to funding expenses and spreading the word about your business, this guide explores what it takes to open and operate a successful consulting business. Let’s jump in and get started!

Pick Your Niche

business loan reasons

We’ve all heard the saying, “Jack of all trades, master of none.” When clients are seeking a consultant, they don’t want someone that knows a little bit about everything. Instead, they want to work with a consultant that knows everything about one thing. This is why it’s so important to pick your niche.

To get started, consider your skills and knowledge. What industry are you familiar with? Clients are looking for an expert in their field, so identifying the industries you already know is important when selecting your niche.

Next, you need to consider what problems and pain points your chosen industry is facing. You can do online research to find out what challenges are common in this industry. Check out blogs and industry forums to get an idea of common complaints and problems. You can even talk directly with people in the industry to find out what obstacles and setbacks they face.

Once armed with this information, you need to identify your own skills and knowledge that could be applied to this field. For example, let’s say you’re knowledgeable about the construction industry. One of the common pain points in this industry is a lack of communications. Are you familiar with mobile and cloud-based software? Great! You could use this knowledge to help businesses streamline communications and improve efficiency.

When you start your consulting business, your goal shouldn’t just be something generic like, “I want to help other business owners.” Instead, you should have a more specific purpose in mind. “I help businesses in this industry find and implement the newest and best software solutions to grow their business in just 3 months.” This also serves as your value proposition. In other words, this is the value you offer; something that sets you apart from other consultants. Remember to effectively communicate to your clients what you can do for them.

Still unsure of where to get started? Consider one of these niches for your consulting businesses:

  • Biotech
  • Cannabis Business
  • College
  • Construction
  • Customer Service
  • Dental
  • Financial
  • Food Safety
  • Grant Writing
  • Human Resources (HR)
  • Information Technology
  • Leadership
  • Management
  • Marketing
  • Medical
  • Nutrition
  • Project Management
  • Real Estate
  • Safety
  • Sales
  • Security
  • SEO
  • Social Media
  • Supply Chain
  • Technology

After you’ve selected your niche, do your research to find out what certifications and licenses you need to legally operate your business. In most instances, you’ll find that a business license in your state of operations is all that you need to open your consulting business.

One last thing to remember is that even if you’re knowledgeable about your niche right now, industry trends and changes can occur in an instant. Make sure you stay up-to-date on what’s happening in the industry to ensure you’re always qualified to assist your clients.

Make Your Business Plan

Even if your consulting business seems pretty straightforward, it’s still necessary to have a business plan. There are a few reasons you need a business plan. The first is that your plan maps out your goals and how you plan to reach those goals. A business plan is also necessary when you seek funding through banks or other lenders.

Because every business has a different vision, no two business plans are exactly alike. However, there are a few common components that should be included in all business plans. Those components are:

  • Executive Summary: Highlights what will be discussed in your plan and summarizes what your business hopes to accomplish
  • Company Description: Includes key information about your business and the customers that you will serve
  • Competitive Analysis: Who are your competitors, and what are their strengths and weaknesses?
  • Organization & Management: An outline of the setup of your organization and names and summaries of the job responsibilities of your management team
  • Market Analysis: An analysis of your industry now and in the future
  • Marketing Plan: An outline of the marketing strategies you will use to draw clients to your business
  • Financial Projections: Your expectations for future revenue based on market research

Register Your Business

Before you launch your business, you have to register with federal, state, and local agencies. You will need to register your business name with the state in which you operate. In addition, you must register with the Internal Revenue Service to get an Employer Identification Number (EIN) if you ever plan to hire employees. It’s imperative to obtain licenses and permits to operate your business based on state and local regulations. You must register your business if you plan to seek business funding now or in the future — or if want to open a business bank account. Establishing a business is legally required, but it also makes you look more professional and legitimate to your clients.

One important step to take when registering your business is choosing your business structure. Your business structure will be important in determining what you’ll pay in taxes. Your business structure may also offer protection from personal liability for the debts and obligations of your business. The different types of business entities include:

Sole Proprietorships

This structure is the easiest to form and does not require filing with the state. With a sole proprietorship, profits and losses from the business are reported on the business owner’s personal tax return. The major drawback of this business structure is that the business owner – you – are held personally liable for the debts and obligations of the business.

Partnerships

A partnership is established by businesses with two or more owners. There are three common types of partnerships: general partnerships, limited partnerships, and limited liability partnerships.

  • General Partnership (GP): This type of partnership has the fewest ongoing requirements. These are also the easiest to form and don’t require state filing. The drawback is that partners in a GP are personally liable for the debts and obligations of the business.
  • Limited Partnership (LP): In a limited partnership, only the general partner(s) has unlimited liability. The other partners — known as limited partners – have limited liability. This simply means that personal assets can’t be used to cover the debts and liabilities of the business.
  • Limited Liability Partnership (LLP): In a limited liability partnership, all partners have limited liability. However, partners may be held liable for their personal actions. This structure is reserved for professional service businesses.

Limited Liability Companies

A limited liability company, or LLC, is independent of its owners. The personal assets of the owners are kept separate from business debts. An LLC is taxed similarly to sole proprietorships and partnerships.

Corporations

If a corporation is the right structure for your business, there are two options to consider: C corporations and S corporations.

  • C-Corporations: C-corporations are independent of their owners. There is no limit on the number of shareholders in a C-corporation. C-corporations are taxed on shareholder dividends and corporate profits.
  • S-Corporations: An S-corporation is also independent of its owners. Owners report their share of the profits and losses on their own personal income tax returns. There are limitations to the number of shareholders with this structure.

When choosing your business structure, you need to keep a few considerations in mind. If you have multiple owners, a partnership is a good route to take. If you want to protect your personal assets but don’t want a higher tax rate, consider establishing an LLC. If you plan to raise large amounts of capital in the future, a corporation might work best for you. You can learn more about what business structure best fits your needs by consulting with an attorney or accountant.

Get Business Insurance

Do I need business interruption insurance

Business insurance is critical for the protection of your business. From property insurance that protects your office building to liability insurance that safeguards you from lawsuits, there are a few different types of business insurance to consider for your consulting business.

General Liability Insurance

If you operate a brick-and-mortar business, you need general liability insurance. This protects your business in the event that something happens to a client on your property. For example, if a client slips and falls in your office, they could file a lawsuit against you. With general liability insurance, you won’t have to pay all associated costs out-of-pocket.

Professional Liability Insurance

Professional liability insurance is also known as errors and omissions (E&O) insurance. This type of insurance protects you from lawsuits that may be filed by clients. Let’s say that you consult with a client on a project, and the project ultimately ends up failing. The client believes that the failure of the project was your fault and files a lawsuit. If you have E&O insurance, attorney’s fees, settlement expenses, and court costs will be covered up to the full amount of your policy.

Worker’s Compensation

If you have employees, worker’s compensation is another type of insurance your business needs. Worker’s compensation covers the medical expenses, wages, and legal fees of an employee that is injured on the job or suffers a work-related ailment. Most states require all W2 employees to be covered under worker’s compensation insurance, but laws vary by state.

Commercial Property Insurance

If you have a commercial property for your consulting business, consider getting commercial property insurance to protect your assets. This type of insurance protects you from losses that may occur from burglary, fire, or natural disasters.

Separate Personal & Business Expenses

It may be tempting to simply use your own personal bank account and credit cards for your business. Since the business is yours, there’s no harm in mixing your business and personal finances, right?

Actually, the wisest move is to keep your business and personal finances separate. One of the most important reasons for doing this is because it will make filing your taxes much easier. Imagine that the deadline is ticking to file your return with the IRS, and you (or your accountant) are stuck spending hours separating business and personal records. If you’re audited after filing, having separate records for business and personal income/expenses will make the process go much more smoothly.

Keeping your business and personal finances separate is also helpful in limiting your liabilities from creditors. If there is no clear separation between you and the business, creditors could potentially use your personal assets for unpaid debts and obligations, even if your business is structured as a corporation or LLC.

Separation of personal and business expenses is also important for building your business credit. If you’re using your own personal credit cards, you may increase your personal credit score. However, this won’t affect your business credit history. If you plan on applying for business loans in the future, boosting your business credit profile is critical to qualifying for higher loan amounts and the best rates and terms.

The first step to separating your business and personal finances is to open a business checking account. This bank account can be used for depositing money, writing checks to vendors, making online payments, and keeping an eye on the expenses and income of your business. To open an account, you will need your EIN, Social Security Number, business address, and business license. You may also need other documentation, such as a copy of the articles of incorporation on file with your state.

Even though you can keep an eye on your finances through your business bank account, it’s also important to set up a dedicated accounting system for your business. This will allow you to closely keep track of the money coming in and going out of your business. You may opt to hire a bookkeeper for this task, or you can use accounting software to track everything yourself. We’ll go into more details on this type of software a little later.

Finally, you can apply for a business credit card to cover recurring expenses for your business, such as your lease or utility payments. Using and paying off your business credit card responsibly will help strengthen your business credit profile.

Unsure of which card is right for you? Start with these recommendations.

Chase Ink Business Cash

Chase Ink Business Cash



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Annual Fee:


$0

 

Purchase APR:


15.49% – 21.49%, Variable

The Chase Ink Business Cash card rewards you just for using your card on business expenses. You can receive 5% cash back on internet, cable, phone services, and purchases from office supply stores. However, this is capped at the first $25,000 spent each anniversary year.

You can also earn 2% back on purchases at gas stations and restaurants. This is also capped at the first $25,000 spent per anniversary year.

For the rest of your purchases, you can take advantage of unlimited 1% cash back rewards. As a new cardholder, you can receive a bonus of $500 cash back if you spend $3,000 within 3 months of opening your account.

This credit card has a 0% introductory APR for the first 12 months. After the introductory period, interest rates are 15.49% to 21.49% based on creditworthiness. There is no annual fee associated with this card.

Additional benefits for Chase Ink Business Cash cardholders include free employee cards, purchase protection, and extended warranty protection. You must have excellent credit to qualify for this credit card.

Spark Cash Select For Business

Spark Cash Select From Capital One


capital one spark cash select
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Annual Fee:


$0

 

Purchase APR:


15.24% – 23.24%, Variable

Capital One’s Spark Cash Select for Business is designed for borrowers with excellent credit scores. One of the standout features of this card is the unlimited 1.5% cash back you receive just by using your card. You can cash out your rewards at any time.

If you become a new cardmember and spend $3,0000 within the first 3 months of opening your account, you’ll receive a $200 cash bonus.

You’ll also be able to enjoy a 0% introductory APR for the first 9 months. After the introductory period, your APR will be from 15.24% to 23.24% based on creditworthiness. This card does not have an annual fee, and you can receive employee cards at no cost.

Seek Business Funding

One of the best things about setting up your consulting business is that you may be able to get started with very little capital. Ultimately, though, this depends on the goals of your business. For example, if you plan to only consult with clients online, you can work right out of your home office. This eliminates the need for a dedicated commercial office, which comes with expenses such as monthly rent and utility payments.

On the other hand, you might want to open a brick-and-mortar business immediately. This would require more capital from the start. Even if you start small, you may later expand your business by purchasing or leasing a larger building and hiring employees.

Whether you start off big or you plan to grow in the future, you’ll need capital. In some cases, you may be able to use your revenue to fund your expenses and growth. In other instances, you’ll need a financial boost from a business lender.

Fortunately, there are many financing options out there if you know where to look. Let’s explore the types of funding available to you, along with our lender recommendations.

Personal Savings

If you would prefer to not work with a lender, using personal savings is an option available to you. If you use your own money, you don’t have to worry about making payments to a lender. You’ll also save money because you won’t pay interest or fees that are charged by a lender. On the downside, if your business isn’t successful, you risk losing your savings.

Friends & Family

Have a friend or family member with cash to invest? Pitch them your business idea and let them know why investing in you is a great idea. Have your business plan in hand and present your ideas to them just as you would any other lender. If they decide you’re worth the investment, make sure to get everything in writing to protect all parties.

There are two ways to get loans from someone you know. You can choose debt financing, which means that you’ll make payments toward your principal balance plus interest on a regularly scheduled basis, just like a traditional loan. Or you can receive money in exchange for ownership in your business – also known as equity financing. While you won’t have to repay immediately, your friend or family member will collect a share of the profits over time. Depending on your agreement, they may also have some level of control in the decision-making process of your business.

Unsure of which route to take? Learn more about debt vs. equity financing to determine which option is best for your business.

Rollovers As Business Startups (ROBS)

What if there was a way to get the capital you need to start or grow your business without taking on debt? Sounds too good to be true, doesn’t it? But with a rollovers as business startups (ROBS) plan, you can do just that. The only catch? You have to have a qualifying retirement plan.

Early withdrawal of your retirement funds results in penalties. However, a ROBS plan allows you to leverage your funds without having to pay these penalties.

With a ROBS plan, you set up a new C-corporation. Then, you create a retirement plan for your newly created corporation. Next, you roll over funds from your existing retirement plan. These funds can be used to purchase stock in your new business, providing you with the capital you need to start or expand your business.

The best part of a ROBS plan is that you’re using your own funds. This means no debt, no interest or fees, and no repayments to a lender. However, you are putting your retirement funds at risk if your business fails.

Recommended Option: Guidant Financial

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Pre-qualify

Many small business owners that get capital through a ROBS plan hire a ROBS provider to do the heavy lifting. Guidant Financial is a ROBS provider that can help you get started.

To set up a ROBS plan with Guidant Financial, you need to have a retirement plan or pension account with at least $50,000. Most plans qualify, including:

  • 401(k)
  • 403(b)
  • Traditional IRA
  • Keogh
  • TSP
  • SEP

Guidant Financial can help you roll over up to 100% of your account balance. In addition to having a qualifying plan, you must also meet these requirements:

  • Must be an employee of the business
  • Must have a business to fund

You can use your funds for any business purpose, whether you’re buying an existing business, funding startup costs, or paying expenses related to expansion.

To get started, you must pay a $4,995 startup fee. Since this isn’t a loan, you won’t have to make debt repayments. However, you will have to pay a monthly administration fee.

If you don’t qualify for a ROBS plan or you’re seeking other types of funding, Guidant Financial offers other options including Small Business Administration (SBA) loans, unsecured business loans, and equipment leases.

Lines Of Credit

A line of credit is one of the most flexible forms of financing. This is a type of revolving credit (similar to a credit card) that allows you to make multiple draws. As you repay your principal balance (plus fees and interest), funds will become available to use again. Fees and interest are only charged on the borrowed portion of funds.

With your line of credit, you can initiate draws as needed. Once you draw funds, they’ll be transferred to your bank account and are available to use in 1 to 3 business days in most cases.

You can spend up to and including the credit limit set by your lender. Most lines of credit can be used for any business purpose but are particularly useful for unexpected expenses, filling revenue gaps, or covering extra expenses due to a seasonal increase in business.

Recommended Option: Fundbox

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Fundbox is a lender that has lines of credit up to $100,000 for qualified small business owners. The lender charges set draw fees starting at 4.66% of the borrowing amount. You can choose to repay Fundbox over terms of 12 or 24 weeks, and payments are automatically deducted from your linked business checking account.

You can be approved instantly and put your line of credit to work for you immediately. Once you initiate a draw from your account, funds will hit your bank account within 1 to 3 business days.

Qualifying for a Fundbox line of credit is easy. The minimum requirements are:

  • Must have a business checking account
  • Must have a U.S.-based business
  • At least 2 months of activity in accounting software or at least 3 months of transactions in your business bank account
  • At least $50,000 in annual revenue

Your credit limit will be based on the performance of your business.

Equipment Loans

Whether your consulting business is home-based or you operate out of a commercial property, you will need some equipment to get started. Some equipment you may need for your business includes a computer, printer, office furniture, and computer software. If you don’t have the funds available in your bank account, consider applying for equipment financing.

Equipment financing is a type of funding used to purchase equipment, furniture, and fixtures for your business. Equipment loans can also be used to purchase a commercial vehicle if one is needed to drive to meet your clients if you don’t want to take out an auto loan. There are two types of equipment financing available: equipment loans and equipment leases.

With an equipment loan, you’ll make regularly scheduled payments to a lender over a set period of time, such as five years. Each payment will be applied to the principal – the amount you borrowed – as well as fees and interest charged by the lender. Once you’ve made all payments as scheduled, the equipment belongs to you. You can continue to put the equipment into use or sell it.

With equipment leases, you also make scheduled payments to a lender. However, your lease terms are typically a few years shorter. Once you’ve made all scheduled payments, you return the equipment and sign a new lease for new equipment. You never truly own the equipment, but this is a good option for anyone that wants to update their equipment every few years.

Recommended Option: Lendio

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Lendio isn’t a direct lender. Instead, it’s a loan aggregator that can connect you with its financing partners to help you get the best financing offer for your situation.

One of the financial products offered through Lendio is equipment financing. You may qualify for funding of $5,000 to $5 million for the purchase of your equipment. Loan terms are 1 to 5 years with interest rates starting at 7.5%.

Your funds can be used for almost any equipment purchase, including software, furniture and fixtures, and even appliances and HVAC units for your office.

To qualify, you must meet these minimum requirements:

  • Time in business of at least 12 months
  • At least $50,000 in annual revenue
  • Personal credit score of 650 or above

If you don’t meet these requirements, Lendio may still have an option for you. Just fill out a quick application to find out what you can qualify to receive. Lendio also offers additional financial solutions, including SBA loans, lines of credit, term loans, and startup loans.

Personal Loans For Business

If you’re a brand-new business, you may not qualify for other financing options. This is because lenders look at annual revenue, business credit profile, and your time in business to determine if you’re a risky borrower. If you don’t meet these qualifications, you won’t be able to get affordable small business funding.

However, there is an alternative solution. You can apply for a personal loan to use for business purposes. With this type of financing, a lender considers your personal credit history and income to determine if you qualify.

In most cases, you can use a personal loan for business for any purpose, from purchasing needed equipment to hiring new employees, using as working capital, or paying startup costs.

Recommended Option: Upstart

upstart logo

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Upstart personal loans are available in amounts from $1,000 to $50,000. APRs range from 7.54% to 35.99%. Repayment terms are 3 or 5 years.

Upstart’s lending partners consider more than just your credit score when determining whether to approve your loan. Your years of credit, education, area of study, and job history are also considered during the application process.

To qualify for an Upstart personal loan, you must have:

  • Personal credit score of 620 or above
  • Solid debt-to-income ratio
  • No bankruptcies or public records
  • No delinquent accounts or accounts in collections
  • Less than 6 inquiries in the last 6 months

Business Credit Cards

We’ve already discussed business credit cards earlier as part of keeping your business and personal accounts separate. Business credit cards are great to have on-hand for unexpected expenses or recurring expenses for your business.

You can even score rewards just for using your credit card. Look for a rewards card that offers cash back or points to use toward perks like travel to get the most out of your card.

Recommended Option: Spark Classic

Spark Classic From Capital One


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Annual Fee:


$0

 

Purchase APR:


25.24%, Variable

Capital One’s Spark Classic for Business card is available to business owners with average credit. This card offers a 25.24% variable APR and no annual fee. Using your card responsibly helps build your business credit profile so you can qualify for other cards and financing offers in the future.

You can earn unlimited 1% cash back on all purchases with no minimum required to redeem. Other benefits include fraud coverage and alerts and employee cards at no additional cost.

Choose Business Software

card-not-present online shopping

Choosing the right business software can help you run your consulting business more efficiently. The first type of software you should invest in is accounting software or an online bookkeeping system. This allows you to keep track of your income and expenses, run financial reports, send invoices, and access your financials for tax purposes. As your business grows, you may opt to hire a bookkeeper or accountant, but in the beginning, you may be able to tackle this task yourself using the right accounting software.

New to accounting? Download our free ebook, The Beginner’s Guide to Accounting, to get a handle on the basics.

You’ll also need software that’s used for managing clients — from keeping updated contact information all in one place to setting and tracking appointments. There are programs designed specifically for consultants that offer client management, project management, tasks, and other features.

To accept payments other than cash, you’ll also need payment processing software. This software communicates between your bank and the bank of your client, allowing you to accept debit cards, credit cards, and other forms of payment. If your business is going to be based solely online, you can sign up for an online payment solution.

Finally, if you plan to do online consulting, you must invest in video conferencing software. There are multiple options available — some at no cost and others that charge a monthly fee.

Set Your Rates

In order for your business to be successful, you have to have revenue. Without revenue, you won’t be able to pay your expenses or the salaries of yourself or your employees. Without revenue, you also won’t be able to grow your business.

To make sure your business is successful and profitable, you need to set your rates. This can be a balancing act for most consultants. If you set your rates too high, it may scare away potential clients. If you shortchange yourself and set your rates too low, clients may not take you seriously or you might not bring in enough revenue to cover your expenses.

To set your rates, first decide how your pay structure will look. You have three options: per project, hourly rates, and retainers.

If you charge per project, you will need to figure out how long the project will be, what expenses may be incurred, and other factors. You may choose to bill for the entire project or break it down into monthly payments.

You can also charge an hourly rate. Take a look at your expenses and determine how much you would need to charge to be profitable. Also, be aware that the higher your rate is, the more your clients will expect from you. If you have the credentials, training, and education to justify charging $500 per hour, your clients will have high expectations of what you’ll provide.

Finally, you can also work on a retainer basis. With a retainer, you will work a specific number of hours for one set monthly fee.

When calculating your rates, make sure to list all of the expenses of your business. You will need to make at least enough revenue to cover these costs.

You also need to find out what your competitors are charging for their services. You can do this by going online to their websites, checking out their brochures, or making a quick phone call. Unless you have an obvious advantage over other consultants in your area, you want to make sure that your fees are competitive.

Bolster Your Web Presence

webbased

Prospective clients are going to have a difficult time finding you if you don’t have a web presence. This doesn’t mean that you have to invest thousands of dollars in setting up a fancy new website. However, you do need to have at least a basic website and social media profiles to provide clients with critical information about your business.

You can get started by setting up free social media pages on sites including Facebook and Twitter. Your pages should include your contact information, the services you offer, and office hours. As your business grows, you can post news and updates, videos, photos, and other media to draw in clients.

You also need to set up a company website. You could pay a web designer, but at this stage, you can certainly tackle the task yourself. Easy website builders make it simple to set up your website in just minutes, even if you’ve never created a website before. Make sure that you include your contact information, areas served, and the services you offer. If you have any credentials or training, add that information to your website, as well.

Later, you can add additional features to your website, such as videos, online appointment scheduling, and client testimonials.

If you want to learn more tips and tricks, check out our article on creating and maintaining your online presence.

Market Your Business

business loans for HVAC

Building your web presence is one way to get your name out to the public, but you should also implement a marketing and advertising campaign to further boost your business. The strategy you choose is based on a number of factors, including your marketing budget and your goals for the campaign.

One great way to market your business is through Facebook ads. You can easily set your budget and select your target audience. It only takes a few minutes to get your Facebook ads up and running. Learn more about social media marketing for your business.

Another advertising method you can use is a newsletter. Your newsletter doesn’t need an over-the-top design. Instead, a simple newsletter with important information is most effective. Use your newsletter to discuss current industry trends, current news about your business, and other relevant information. You can send a physical newsletter by mail, but this comes with costs including paper and envelopes, printing, and postage. A more affordable option is to offer an email newsletter. Make sure to include a sign-up option on your website and social media pages.

Another idea is to print up brochures for your business. Your brochure should include your services, your value proposition, the industries you serve, and biographical information, such as your credentials or training.

You can also take your knowledge and leverage it as a guest speaker at an event. You can speak at dinners, luncheons, and other functions for industry events or service organizations. If you don’t want to be a public speaker, you can attend industry events and network with potential clients. Networking is key to running a successful consulting business.

Cold-calling is also a way to attract new clients. Prepare your script before calling local businesses that could use your services. The goal of cold-calling is to get a meeting with the decisionmaker to sell yourself and your services to gain a new client.

Finally, word-of-mouth advertising is one of the easiest ways to bring in business. Satisfied clients that tell their friends, family, and colleagues about you or who take the time to write a referral or testimonial that you can use on your website can help drive more clients to your business.

Final Thoughts

Sharing your knowledge and expertise with others can be extremely lucrative if you know how to set up your consulting business. With careful planning — selecting your niche, setting your fees, and effectively marketing your business — you’ll have a better chance of reaching new clients and meeting your financial goals. Good luck!

The post How To Start And Fund A Consulting Business: The Step-By-Step Guide appeared first on Merchant Maverick.

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How To Start And Fund A Coffee Shop


opening a coffee shop

Coffee shops are vital places. Not only do they sell brewed happiness, without which I could not function, but they are important for communities as well. A coffee shop is where people meet up, whether to catch up with friends, go on a first date, or conduct a casual business interview. Thanks to the WiFi revolution, coffee houses have also become destinations where remote workers and freelancers can connect from their laptops and students can study for exams.

Coffee shops these days even have significance in the culinary world. Ten or fifteen years ago, you could go to a coffee shop to get a coffee and a muffin. No one had heard of third-wave coffee, latte art, single-origin pour-overs, acai bowls, or even avocado toast, but today, these are probably standard fare at the most happening coffee shop near you.

The high customer demand for an enhanced coffee house experience means lucrative opportunities for local business owners who want to enter the coffee shop business. By opening a coffee shop, you have the potential to create a unique business that could become one of the hottest destinations in your city. But first, you’ll need to do your research on how to establish a successful coffee shop, and perhaps most importantly, figure out how you’ll fund your business venture.

In this post, I describe the main steps for opening a coffee shop. I also outline the best ways to finance a new coffee shop business, with suggestions for recommended lenders in each category.

Preparing To Start A New Coffee Shop Business

If you’ve decided you want to open your own coffee shop (or are at least pretty sure), here’s what you need to do to get started.

1. Decide Whether To Buy A Franchise

Becoming a franchisee isn’t for everyone, but it might be right for you. There are a lot of benefits to purchasing a turnkey business where most of the elements you need to run the business are already in place. You might want to at least consider which coffee shop franchises you could potentially open in your area, and the costs associated with franchise ownership vs. the costs of opening and operating an independent coffee shop.

2. Determine What You’ll Sell

What do you envision your coffee shop’s menu looking like? Do you want to sell only coffee/espresso drinks and pre-made pastries, or have a larger offering that would require a kitchen where food is prepared onsite? Will you serve lunch or just snacks? What about mugs, t-shirts, or other non-food merch? It’s important to have at least a general idea of what you’ll sell early on in the process because this will determine what type of business space you’ll need, as well as your overall vision for your business.

3. Choose A Name & Theme

Next to your menu, the overall vibe and branding of your coffee shop will play a huge part in determining your success. A lot of thought must go into your business’s name and logo, both of which should reflect your theme. If you want to set your business apart from other offerings in your area, it will need to have a unique appeal. In marketing, this is called your business’s “unique value proposition” or “unique selling proposition.” Determining your UVP now will also help you down the road when you’re applying for financing — and also when marketing your business with signage, on social media, etc.

4. Create A Business Plan

Your business plan is essential in guiding the development of your business. In fact, it’s a document that most lenders will require when you apply for financing. Your plan will describe your UVP, and will also have information about how you intend to run your coffee shop. The plan might include specific information about how much financing you need, projected profits, information about ownership and management, relevant market research, competitors in your area, and other details. You should be able to find some sample business plans for coffee shops online to help you get started.

Some more things to consider when creating your coffee shop business plan include:

  • Business hours
  • Floor plan, including the layout of outlets for laptops, whether you’ll have community tables, etc.
  • Decor—Will you go eclectic hodgepodge or streamlined/modern? Keep your theme in mind.
  • What type of music you’ll play
  • Whether you’ll appeal to kids with offerings such as board games and kids’ drinks
  • Community events you might host—For example, open mic night, family board game night, jazz night, etc.

5. Find A Location

An essential component of starting any business is finding a place to set up shop. Maybe there is a vacant business space in town that you’ve already been eyeing, or perhaps you aren’t sure where to look yet. The design of the space itself needs to meet your needs, while the location in relation to other places of interest is just as important. Foot traffic, proximity to competitors, and convenience for university students are all aspects to consider. You should also consider whether you want to have the sort of space where people can feel comfortable working all day, or if you’d rather have minimal seating so people will be on their way shortly after making their purchase. Depending on your budget and theme, you might consider choosing a former coffee shop or restaurant space so that you won’t have to do extensive remodeling.

Funding Your Coffee Shop

business line of credit loan

Assuming you don’t have personal savings to open your business, you’ll need to get creative in order to secure financing for your brand-new business—traditional lending institutions such as banks and credit unions will usually want to see that you have at least two years in business. However, once you have a solid business plan and prospective location for your coffee shop, it will be easier to find parties who are willing to lend to you. Prospective business owners with good credit and business experience will have the most options, but there are even options for startups with bad credit.

1. Family & Friends

While most of us aren’t blessed enough to have a wealthy aunt willing to fund our wildest dreams, if you do have such an aunt, now is the time to hit her up. You can even hire a lawyer to draw up a contract for a loan between you and your aunt (I’m starting to feel like I know her now—let’s call her Aunt Judy), or use a service like LoanBack that formalizes loan contracts between friends and family.

If you don’t have an Aunt Judy but have personal and/or business contacts that might be willing to invest smaller amounts in your business, you might consider using a platform like Kiva. Kiva lets you crowdfund a small business loan up to $10K, provided you meet their terms and have a certain number of friends/family members from your personal network willing to back your loan.

2. Short-Term Business Loan

Most traditional business loans, which are repaid in installments over a number of years, require you to have at least a couple of years in business. An alternative business lending option available to newer businesses (and sometimes even startups) is a short-term loan. These loans can potentially carry high interest rates and you could be required to repay your loan in a matter of months, or sometimes even weeks. However, STLs can be a viable lending option for businesses that don’t have much time in business or business revenue, and many such lenders don’t even require you to have good credit.

Recommended Option: Lendio

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Lendio is an online loan marketplace where you can apply for and compare multiple business loans at once — including short-term loans — potentially up to $500,000. Lendio offers terms as long as 1–3 years, which is a more comfortable repayment frequency compared to many of the predatory short-term lenders you’ll find online. If you don’t have much business experience and aren’t sure what business loans you might qualify for, Lendio is a good place to start. When you can compare multiple loan offers as you can with Lendio, it is much easier to choose the best loan you qualify for.

Lendio Borrower Requirements:

Lendio’s borrower requirements vary depending on which of their lender partners you’re applying with, but the majority of loans in Lendio’s marketplace have these minimum requirements:

  • Time In Business: 6 months
  • Credit Score: 550
  • Business Revenue: $10K/month

3. Personal Loan

A personal loan can be used to fund a business startup such as a coffee shop, as long as the terms of the lender allow you to do so. Personal loans typically have an upper borrowing limit of $30K–$50K and carry higher interest rates than a business loan. You also usually need to have good personal credit. You do not need to have good business credit or any particular business credentials.

Recommended Option: LendingPoint

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LendingPoint is a reputable online lender offering personal loans that can be used for business. These loans are quick and easy to apply for, and you can qualify even if you have a fair personal credit score in the 600s. These are smaller loans—the upper borrowing limit is $25K—but they are accessible to almost anyone with decent credit. You will have between 2–4 years to repay, which is pretty good for an online loan.

LendingPoint Borrower Qualifications:

  • Time In Business: N/A
  • Credit Score: 600
  • Business Revenue: N/A
  • Personal Income: At least $20K/year

4. Short-Term Line Of Credit

Like short-term loans, short-term lines of credit are also open to young businesses that are just getting started. With this type of business financing, you only have to repay what you borrow, similar to a credit card. The downsides are that you’ll have to pay back the principal pretty expediently, with potentially high interest rates and other fees. Nevertheless, a line of credit can be an important source of working capital or expansion funds for a new business. It’s also a smart choice if you don’t know exactly how much money you’ll need.

Recommended Option: Fundbox

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Fundbox is a short-term LOC you might want to consider once you’ve opened up shop and have at least a couple months of coffee-brewing under your belt.

Fundbox offers one of the quickest and easiest business lines of credit with Fundbox Direct Draw. The main requirement for this revolving line of credit is to have been using Fundbox-compatible accounting software for at least two months. Fundbox will use your software account information to evaluate the health of your business, but there are no time-in-business requirements or specific credit score requirements. They will want to see that you’re on course to make at least $50K/year, however. You can borrow up to $100K (depending on how much they approve you for) and will have 12–24 weeks to repay the principal.

Fundbox Direct Draw Borrower Qualifications: 

  • Time In Business: N/A
  • Credit Score: N/A
  • Business Revenue: $50K/year
  • Other: Use of compatible accounting software for 2+ months

5. Startup Loan

A startup loan is a loan specifically for startup businesses with 6 or fewer months in operation. Often, these loans do not have any time-in-business requirements. Similar to a personal loan, a startup lender will want to look at your personal track record as far as credit history, and may possibly even delve into your job history and education level. It is pretty difficult to get this type of loan from a bank, but there are several online lenders that cater to startups.

Recommended Option: Upstart

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Upstart is an online lender aimed at younger borrowers, though applicants of any age can apply. Upstart helps fund startup businesses, as well as personal expenses and debt refinancing. Through Upstart, you can borrow up to $50K to finance your coffee business, with up to 5 years to pay back the loan. The main criterion Upstart cares about is your personal credit score, but having a strong job history and/or a college degree will also help you secure a loan with a good interest rate.

Upstart Borrower Qualifications:

  • Time In Business: N/A
  • Credit Score: 620
  • Business Revenue: N/A

6. Vendor Financing

Some popular coffee shop POS systems offer vendor financing. That is, a POS vendor may offer users of their point of sale system or payment processing service a business loan. These financing products usually have a low barrier to entry and are suitable for coffee shops that have recently opened. Typically, the main requirement is that you are an active user of the vendor’s product.

Recommended Option: Shopify Capital

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If you use Shopify Payments at your coffee shop, you may be eligible to get a short-term loan or merchant cash advance through Shopify Capital. You cannot apply for this loan; rather, Shopify will let you know if you are eligible. You can borrow a maximum of $500K, and Shopify will deduct a portion of your sales each day until the cash advance is fully remitted (paid off). With a STL from Shopify Capital, you have up to a year to pay it off. We like Shopify POS system a lot, but if you use another POS system, you will not be eligible for Shopify financing.

If you use Square as your coffee shop POS, Square Capital is a similar financing product you may be eligible for. Or, if you let customers pay with PayPal, PayPal Working Capital is an option.

Shopify Capital Borrower Requirements:

  • Time In Business: N/A
  • Credit Score: N/A
  • Business Revenue: N/A
  • Other: Have a US-based Shopify Payments account, with a low-risk profile, and process a certain amount per month

7. ROBS

Rollovers As Business Startups (ROBS) is a strategy to leverage your retirement account to start a new business. Because this method is technically a rollover, you won’t be penalized for removing funds from your 401(k), IRA, or another retirement account prematurely. Also, since you’re not borrowing money, there is nothing to pay back and no borrowing fees. The downside is that if your business fails, you could lose your investment, and potentially your chance to retire comfortably if you don’t have any other savings. A ROBS is a somewhat complicated transaction, but a ROBS provider will help you set up the new account to fund your business in exchange for a setup fee and a monthly service fee.

Recommended Option: Benetrends

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Benetrends’ financing options include ROBS as well as loans. Benetrends’ popular ROBS “Rainmaker” plan has financed more than 15,000 small business owners to date and is one of the top ROBS plans out there. Benetrends has clear, fair terms and excellent customer service. This ROBS provider charges a one-time $4,995 setup fee, and an ongoing monthly service fee of $130/month.

Benetrends Rainmaker Borrower Qualifications:

The only borrower requirement is that you have an eligible retirement account with at least $50,000. Eligible accounts include:

  • 401(k)
  • 403(b)
  • Traditional IRA
  • Thrift Savings Plan (TSP)
  • Simplified Employee Pension (SEP)
  • Keogh

Ineligible plans include Roth IRAs, 457 Plans for non-governmental agencies,  and distribution of death benefits from an IRA other than to the spouse.

8. Purchase Financing

Similar to purchase order financing, purchase financing is an alternative lending product that allows you to repay your vendors for business purchases in installments. The purchase financing company pays your invoices upfront, and then you repay the financing company in installments. Purchase financing lets newer businesses, such as a coffee shop startup, acquire the materials and equipment needed to open up shop, without having to pay for their supplies all at once. You can think of purchase financing as somewhere between a line of credit and a credit card.

Recommended Option: Behalf

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Behalf is a purchase financing company that offers financing for business purchases, at interest rates of 1%–3% per month. Behalf pays your merchants, and then you repay Behalf in weekly or monthly installments over a period as long as 6 months. This service has a very simple application, with transparent terms and no hidden fees. You can borrow up to $50K, depending on how much you are approved for.

You can use Behalf to fund purchases for most inventory or services, such as coffee beans or business consultant fees, but you cannot use the service for things like paying off existing debt or covering payroll.

Behalf Borrower Requirements

  • Time In Business: N/A
  • Credit Score: N/A
  • Business Revenue: N/A

Note that even though there is no stated credit score minimum, Behalf does do a hard pull on your credit during the application score, and will evaluate your business finances as well.

9. Credit Card

A business or personal credit card has its limitations, as your credit limit probably won’t be high enough to pay for all your startup costs. However, a credit card is a lot easier to get than a business loan, and if you play your cards right (ha ha) you might not have to pay any financing fees at all. Credit cards offer more cash-back and other rewards than ever before, particularly for business cards, and many cards also offer a 0% introductory APR for the first year. Moreover, opening a business credit card will help your new businesses establish and build your business credit profile.

Recommended Option: Chase Ink Unlimited

Chase Ink Business Unlimited


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Annual Fee:


$0

 

Purchase APR:


15.49% – 21.49%, Variable

There’s a lot to like about Chase’s newest business card, Ink Business Unlimited℠. This card offers unlimited 1.5% cash-back on all purchases, combined with no annual fee, a $500 credit if you spend $3K in the first 3 months, and a 12-month 0% introductory APR. This card also carries other useful benefits such as purchase protection against damage and theft, and additional employee cards at no extra cost.

Ink Business Unlimited℠ Eligibility

To be eligible for this card, you need to have good to excellent credit.

If your credit score isn’t your strong suit, no worries. Check out this list of Business Credit Cards For People With Bad Credit.

Opening Your Cafe

Now that you have your business vision, location, and funding in place, it’s time to get ready to open to the public. If you take all of these steps, you should have everything you need to run a successful business, including a demand for your product.

1. Assemble Your Professional Team

Starting a business usually requires you to hire professionals such as accountants, attorneys, architects, and business consultants. At the very least, you will want to have an accountant you trust, as this person can also act as your business consultant in many ways. Professional fees can be high, but can save you a lot of money and headaches down the road.

2. Begin Remodeling

Unless you are building from scratch, you will most likely need to do at least some remodeling to your coffee shop business space to make it fit your needs and vision. At the very least, you’ll need to add signage and repaint. Be thoughtful when choosing the decor, from floor to ceiling. If you need to do extensive remodeling, an SBA 504 Commercial Construction loan might help you finance the renovations. Of course, if you are renting, there will likely be limitations on what changes you can make to your business space.

3. Acquire Equipment & Materials

Before you can start brewing, baking, and all that, you’ll need the proper equipment and raw ingredients. This will require careful consideration, particularly when choosing vendors for coffee beans and other food and drink materials. Make sure you do your research and do plenty of taste tests, because the worst thing a coffee shop can have is yucky-tasting coffee. When selecting vendors for your coffee beans and other raw ingredients, be sure to consider things that your customers might care about, such as whether the coffee comes from sustainable farms or is organic.

In terms of coffee shop equipment, you may have the option to lease or buy. Equipment financing is one way a lot of restauranteurs acquire kitchen equipment, and one you might consider also. Proceeds from SBA 504 loans can also be used to purchase kitchen equipment.

4. Create A Buzz With Marketing

There are so many innovative ways to start creating a buzz around town before your coffee shop even opens. Some of these include:

  • Giving out samples of your coffee at local events
  • Updating your building’s exterior with signage and other eye-catching improvements
  • Setting up a direct mail campaign in targeted regions
  • Alerting the media to your grand opening
  • Social media marketing (more on that in a minute)

Essentially, you want people to be excited about your coffee shop before it even opens. Fortunately, social media and the internet makes this easier than ever.

5. Bolster Your Web Presence

Your business website and social media profiles need to be in place before your coffee shop opens. If you don’t have the time or budget to hire a web designer, you can still create a functional and attractive website using a website builder such as Squarespace or Wix. Posting to Instagram and other social sites before the grand opening will also help you create a buzz and establish an online presence.

Here are a couple of resources that will help you build your online presence for your coffee shop:

  • Guide to creating/maintaining a web presence
  • Guide to social media marketing

6. Hire & Train Employees

Your employees and the level of customer service they provide will ultimately make or break your coffee shop. You will need to be smart and careful in your hiring process, and train the employees thoroughly so they know not only your processes but also the atmosphere you are trying to create. It’s important to value your employees and offer competitive wages and perks, even if that means cutting costs somewhere else; if you pay minimum wage, employees will ultimately be grumpy with one foot out the door. By establishing a positive corporate culture and showing employees you value them, you will create an awesome team that will take your business to the next level.

7. Choose A POS System

Your point of sale is where you make all your money, so it’s super important that you choose a good one! You do not want a system that is unreliable or only pairs with a crappy merchant service provider that charges exorbitant swipe fees. Thus, you will need to test out multiple systems and read reviews before selecting a system. You’ll also need to figure out which features you need and which you can live without. Many modern cloud-based POS systems are essentially complete business management software programs, with built-in inventory management, employee management, accounting integration, loyalty software, and even more functions. You also have the choice to go all out with POS hardware add-ons such as digital menu boards and self-order kiosks, or keep it simple with a single iPad register.

More important than having a POS with all the bells and whistles, it is essential that the POS system you select integrates with a high-quality merchant services provider (or choice of merchant service providers). Your merchant service provider will determine what percentage of your credit card sales you’ll hand over, how issues such as chargebacks are handled, and how much you’ll pay to exit the contract if you’re not happy with the level of service.

To start your POS research, I recommend reading our article on the best POS systems for coffee shops.

Final Thoughts

There are so many things to consider when starting any business, particularly a business in the restaurant industry. However, as long as you have a solid business plan and financing in place, the rest is really just details. Opening a coffee shop is a practical choice for a lot of prospective business owners, as there will always be demand for good coffee and a place to drink it. Not only that, but it’s also a choice that will allow you to express your individuality and become a vibrant part of the local community in a way that many business types aren’t suited for.

If all this sounds good to you, I encourage you to get started so you can open the go-to coffee shop in your city before someone else does.

Oh, and don’t forget the free WiFi!

The post How To Start And Fund A Coffee Shop appeared first on Merchant Maverick.

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The Best Business Loan And Financing Resources For Michigan Small Businesses

The state of Michigan has one of the fastest growing economies in the nation, a welcome relief to residents following the fallout from the 2009 recession. Cities like Detroit are bouncing back from this bleak period, unemployment is lower than it was in the early 2000s, and more people are opening or moving their companies to Michigan.

Michigan is ranked top in the nation for auto manufacturing, and other industries are emerging throughout the state. This includes cybersecurity, defense, aerospace, and agribusiness. Michigan is earning a reputation as one of the most business-friendly states in the nation.

It isn’t just large companies that are headquartered in the state, either. More residents are opening their own small businesses to pave the path for a successful future. If you’re reading this, you’re one of those entrepreneurs … or the thought of business ownership has at least crossed your mind. One of the most important factors in owning and operating a successful business is having access to capital and resources. Fortunately, the state of Michigan has many opportunities for business owners — whether you’re just getting started or you own an established business.

In this post, we’ll take a look at the funding opportunities open to Michiganders. From national online lenders to local credit unions, nonprofit lenders, and startup resources, we’ll cover it all to help you get the capital you need to start or grow your small business.

Online Business Lenders For Michigan Businesses

The internet has made our personal and business lives easier than ever, so it should come as no surprise that you can get capital for your business straight from your computer. Online lenders make it quicker and easier to receive business financing.

Not only is the lending process so much more convenient, but online lenders typically have less stringent requirements for qualifying. For example, getting a bank loan is difficult, even for established businesses owned by people with high credit scores. But many online lenders will approve borrowers with less-than-perfect credit scores and histories, newer businesses, and businesses that aren’t bringing in high revenues just yet.

Many online lenders provide capital to small business owners in Michigan, but you can start your search for capital with these options:

Lendio

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The loan aggregator Lendio lets you shop your financing options without spending hours filling out applications. Lendio has over 75 lending partners in its network – lenders you can reach with just one application.

Through Lendio, you can apply for the financing you need for your business, including:

  • Small Business Administration (SBA) Loans: $50,000 to $5 million
  • Term Loans: $5,000 to $2 million
  • Short-Term Loans: $5,000 to $200,000
  • Lines Of Credit: $1,000 to $500,000
  • Credit Cards: $1,000 to $500,000
  • Equipment Financing: $5,000 to $5 million
  • Commercial Mortgages: $250,000 to $5 million
  • Accounts Receivable Financing: Up to 80% of receivables
  • Startup Loans: $500 to $750,000
  • Merchant Cash Advances: $5,000 to $200,000

Borrower requirements, rates, and terms are based on a number of factors, including the type of financing you receive, the lender you work with, and your creditworthiness and/or business performance. Turnaround times also vary, but you may be able to receive funding in as little as 24 hours. Filling out an application to receive offers through Lendio’s network has no impact on your credit score. However, a hard pull on your credit may be performed once you select a lender offer to pursue.

OnDeck

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OnDeck offers small business owners two financing options: term loans and lines of credit.

With an OnDeck term loan, you may apply for up to $500,000. With the short-term loan option, you have 3 to 12 months to repay your loan. This option is best for funding marketing campaigns, purchasing inventory, or hiring new employees. Short-term loans from OnDeck come with a simple interest rate that starts at 9%.

Long-term loan options are also available. These loans have repayment terms of 15 to 36 months. Long-term loans are best for larger projects, such as business expansion, opening a new location, or purchasing equipment. The annual interest rate for long-term loans starts at 9.99%.

Both short-term and long-term loans have an origination fee of 0% to 4% of the loan amount. Payments are made daily or weekly and are automatically deducted from your business bank account.

To qualify, you must meet these requirements:

  • Time in business of at least 1 year
  • At least $100,000 in annual revenue
  • Personal credit score of 600 or above

The other financing option available through OnDeck is a line of credit. You may qualify for up to $100,000 to use for any business purpose, including paying for unexpected expenses and managing gaps in revenue. The APR for OnDeck lines of credit starts at 13.99%. Payments are made weekly and are automatically deducted from your business bank account.

OnDeck lines of credit come with no draw fees. However, there is a $20 maintenance fee charged each month. This fee will be waived for 6 months if you make a draw of at least $5,000 within 5 days of opening your account.

To receive a line of credit from OnDeck, you must have:

  • Time in business of at least 1 year
  • At least $100,000 in annual revenue
  • A personal credit score of 600 or above

IOU Financial

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If you need up to $500,000 to fund your small business, try applying for a loan from IOU Financial. With IOU Financial, you can prequalify in just minutes. In fact, 85% of all applicants are pre-approved for funding, according to the lender. You can receive funding in as little as 24 hours through IOU Financial.

With this loan option, you can receive $10,000 to $500,000 with terms between 6 and 12 months. Fixed daily or weekly payments are automatically debited from your business bank account.

Once you’ve paid off 40% of your loan, you may qualify for a loan renewal for additional capital for your business. There are no prepayment penalties, and you can save money on interest by paying your loan off early.

To qualify for funding through IOU financial, you must meet these requirements:

  • Own at least 80% of your business
  • Time in business of at least 1 year
  • At least 10 monthly deposits in your business bank account
  • Annual revenue of at least $100,000
  • Average ending balance of at least $3,000 per day in your business bank account

Credibly

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Credibly is an online lender that offers three financing options for small business owners. You may qualify to receive a working capital loan, a business expansion loan, or a merchant cash advance (MCA).

Credibly’s working capital loans are available up to $400,000 with repayment terms of 6 to 18 months. Instead of your traditional interest rate, Credibly uses a factor rate to determine the cost of borrowing. Learn more about factor rates and how they affect the cost of your loan.

Daily or weekly payments are automatically deducted from your bank account to repay your loan. Despite its name, these loans don’t have to be used for just working capital and can be used for other business purposes.

To qualify for a working capital loan, you must have:

  • Time in business of at least 6 months
  • Personal credit score of 500 or above
  • An average of $15,000 or more in monthly deposits

If you’re ready to grow your business, consider applying for Credibly’s business expansion loan. This loan program provides up to $250,000 with terms of 18 or 24 months and interest rates starting at just 9.99%. Weekly payments are automatically deducted to repay your loan.

To qualify for this financial product, you must have:

  • Time in business of at least 3 years
  • Personal credit score of 600 or above
  • Average of $15,000 or more in monthly deposits
  • Average daily balance of at least $3,000

Finally, you may qualify for a merchant cash advance. This is a little different from a loan because the lender agrees to purchase a percentage of future receivables. Daily repayments are made from your bank account based on a percentage of your sales.

With this financing option, you can receive up to $400,000. Terms are typically 3 to 18 months and factor rates start at 1.15.

To qualify for an MCA, you must have:

  • Time in business of at least 6 months
  • Personal credit score of 500 or above
  • Average of $15,000 or more in monthly deposits

Kabbage

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If flexibility is the most important factor for your small business financing, consider applying for a Kabbage line of credit. Instead of one lump sum, you’ll have access to a revolving account you can draw from whenever you need capital. You can use your line of credit for emergency expenses, revenue gaps, working capital, or for any other business purpose.

Kabbage’s lines of credit are available up to $250,000 for qualified borrowers. Repayment terms are 6 months for draws under $10,000. For loans of $10,000 or above, you can choose from 6- or 12-month terms. Kabbage charges a monthly fee between 1.5% and 10% of your principal loan amount. If you pay your loan off early, you can save money on fees. If you haven’t made a draw on your line of credit, you won’t be required to pay any fees.

Kabbage bases its approval decisions on the performance of your business, so even business owners with credit challenges may be approved. You can be approved in just minutes for up to $100,000. Lines of credit exceeding $100,000 require manual approval by the lender.

To receive a line of credit from Kabbage, you must meet these minimum requirements:

  • A business that is at least 1 year old
  • At least $50,000 in annual revenue OR at least $4,200 per month for the last 3 months

LendingPoint

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Sometimes, you have to get a little creative with your small business funding. One option to consider is taking out a personal loan to use for business expenses.

Why choose a personal loan instead of a business loan? For starters, your time in business, business credit score and history, and annual revenues will not be a requirement to qualify. This is great if you’re a new business, have low revenues, or haven’t yet established business credit. Instead, lenders like LendingPoint will evaluate your personal credit history, income, and other factors when determining whether you qualify for funding.

LendingPoint has personal loans from $2,000 to $25,000 for qualified borrowers. You’ll have 24 to 48 months to repay your loan, with payments due twice per month. APRs start at 15.49%.

To qualify for a personal loan through LendingPoint, you must meet these requirements:

  • Be at least 18 years old
  • Have a U.S. ID and SSN
  • Have at least $20,000 in annual income
  • Have a verifiable personal bank account
  • Have a personal credit score of at least 585

Banks, Credit Unions, & Nonprofit Lenders In Michigan

Prefer to go the more traditional route? Banks, credit unions, and nonprofit lenders throughout the state of Michigan offer financial solutions for your small business. If you don’t have a relationship with a financial institution or you just want to shop around your options, try these lenders first.

Comerica Bank

Comerica Bank has provided financial services since 1849. Today, Comerica has over 400 banking centers nationwide. In the state of Michigan, banking centers can be found in cities including Dearborn, Detroit, and Battle Creek.

For small businesses, Comerica offers financial services including:

  • Lines Of Credit: $10,000 to $500,000
  • Term Loans: Up to $500,000
  • Commercial Real Estate Loans: Bridge loans, land acquisition loans, development loans, commercial construction loans
  • Equipment Leases: Up to 100% financing
  • SBA Loans: Up to 90% financing
  • Letters Of Credit

Comerica also offers corporate lending services for public and private companies, including working capital loans, asset-based loans, and acquisition financing.

Lake Michigan Credit Union

Lake Michigan Credit Union is one of the largest credit unions in the state with branches located in areas including Grand Rapids, Kent County, Kalamazoo County, and Saginaw County.

In addition to business checking and savings accounts, you can apply for financing options through LMCU, including:

  • SBA Loans
  • Lines Of Credit
  • Business Credit Cards
  • Commercial Real Estate Loans
  • Secured Term Loans
  • Letters Of Credit

To apply for financing, you must be an LMCU member. Members must meet one of the following requirements:

  • Live, work, or worship in the Lower Peninsula
  • An immediate family member is a member of LMCU

Opportunity Resource Fund

Opportunity Resource Fund is a nonprofit community development financial institution (CDFI) that provides financial support to small businesses throughout the entire state of Michigan.

Through Opportunity Resource Fund, qualified borrowers may receive funding for starting or growing a small business. Business loans are available in amounts from $10,000 to $250,000 with flexible terms and competitive interest rates.

This nonprofit lender considers several factors when approving loan applications. The first is collateral. All loans must be secured with collateral including real estate, inventory, accounts receivables, equipment, or a personal guarantee. Loans also require an equity investment of 10% to 15%.

Opportunity Resource Fund also requires borrowers to meet certain social criteria. This includes aspects such as demonstrating alternative business practices, providing employment to low-income individuals, and empowering woman- and minority-owned businesses.

Applications are available to download on the Opportunity Resource Fund website. If you’re interested, you can also fill out the online form to learn more about the application process and timelines for submissions and approvals.

Small Business Grants In Michigan

Reaching out to an online or local lender isn’t your only option when you need capital to start or expand your business. You can also look to small business grants to get the funding that you need.

Grants differ from small business loans and other types of financing because grant funds do not have to be repaid. Why, then, isn’t every small business owner leaning on grants?

The problem is that grants are few and far between. While you can search online and find multiple lenders in your area, finding grants is a bit more difficult. Even when you do come across grants, you’ll often find that you won’t qualify. Grants typically have very specific requirements, and many are only open to certain industries or women- or minority-owned businesses. There is also a lot of competition from other small businesses pursuing the same grants.

This isn’t meant to be discouraging. It’s simply a warning not to rely solely on receiving grants to fund your business. However, there’s no harm in applying for grants that you do qualify to receive. To kick off your search for a grant, check out these options that are open to small business owners in Michigan.

Community Ventures

The Community Ventures initiative is led by the Michigan Economic Development Corporation. Through this program, employers can receive wage reimbursements of up to $5,000 for each eligible “structurally unemployed” employee that is hired. A structurally unemployed employee is defined as:

  • Someone with a lack of education or functional literacy
  • Someone with a long-term disconnection from employment
  • Low income hires
  • Ex-offenders
  • At-risk youth

Reimbursements are given in monthly installments until the $5,000 per employee limit is reached. These funds are used to offset costs for training and hiring participants in the CV program. Businesses are required to report each month on hired and retained talent for up to one year. If you’re interested in learning more, you can contact the MEDC Customer Assistance Center by phone or email.

NEIdeas

If you live in Detroit, Hamtramck, or Highland Park, you could receive $10,000 for your small business through the NEIdeas $10k Challenge. A total of 26 winners are each awarded $10,000 for coming up with the best ideas for growth.

To qualify, businesses must meet the following requirements:

  • Be an existing, for-profit business
  • Majority owner must be a legal U.S. resident at least 18 years old
  • Business must be in good standing with the IRS
  • Businesses must be based in Detroit, Hamtramck, or Highland Park
  • Gross annual revenues should not exceed $750,000

Home-based businesses and regional businesses based in Southeast Michigan can also apply. Franchises are ineligible to enter.

Program guidelines can be found on the NEIdeas website. Applications can be submitted online, mailed, or turned in to an NEIdeas Ambassador.

SCIP/TCA

Michigan Corporate Relations Network’s Small Company Innovation Program Technology and Commercialization Assistance (SCIP/TCA) program is designed to help businesses grow through collaborations with local universities. Through this program, small businesses can receive matching grants up to $40,000 to fund the cost of research projects at any public university in Michigan.

Any existing, LARA-registered business in Michigan that plans to remain in the state is eligible to apply. Getting accepted into the program is not a guarantee of funding. All guidelines for the program can be found on the Michigan Corporate Relations Network website. Applications for the program are also available online.

Loans & Resources For Startups In Michigan

Taking the leap into entrepreneurship is an exciting time, but it can also be intimidating, especially if you have no prior experience running a business. Fortunately, there are many resources available to Michiganders, including educational materials, workshops, mentorships, and funding opportunities.

SCORE

SCORE, a resource partner of the SBA, is one of the leading resources for small business owners. There are hundreds of SCORE chapters across the nation that provide essential resources to small business owners for free or for a low fee. SCORE chapters are located throughout Michigan in cities including Kalamazoo, Grand Rapids, and Detroit.

Through your local SCORE chapter, you can receive free business mentoring from an expert. You can meet with your mentor face-to-face or connect through email or video chat. You can also pick up business tips through SCORE’s webinars that are held every week. If you miss a webinar, don’t worry — SCORE offers an on-demand library of recorded webinars. You can also educate yourself on a variety of business topics through SCORE’s on-demand online courses. Workshops, events, and educational materials are also offered through this organization.

Michigan Small Business Development Center

The Michigan Small Business Development Center offers great resources for startups and established businesses. There are multiple business resource centers, regional centers, and satellite offices throughout the state in cities including Hastings, Kalamazoo, Lansing, Dearborn, and Detroit.

All resources through the Michigan SBDC are free or low-cost. Services include business consultations, workshops, training sessions, templates, and educational materials.

Michigan Women’s Foundation

The Michigan Women’s Foundation provides capital and resources to women-owned businesses in the state of Michigan. Women that own startups or established businesses are eligible for the programs available through MWF.
Programs offered include business consulting, training and educational sessions, and portfolio management. The Michigan Women’s Microloan Fund also provides loans of $2,500 to $50,000 with 5-year terms and an 8% interest rate to qualified business owners.

What To Consider When Choosing A Lender

The good news is there are many lenders both online and in the state of Michigan that are ready to give your business the capital it needs. The bad news? You have to narrow your selection down to one, preferably the lender that offers the best, most affordable financing for your small business.

Sorting through your options to choose the right lender doesn’t have to be too difficult or time-consuming, though. When searching for your lender, keep the following points in mind.

Application Process

The application process varies across lenders. With some lenders, a little bit of business and personal information and a few bank statements are all it takes to get approved. Other lenders, however, may have more extensive documentation requirements and a lengthier, more complicated application process.

If time is of the essence and you don’t want to go through a difficult application process, choose an online lender with a more simplified process.

Speed Of Approval

You have an emergency that needs to be taken care of immediately. In this scenario, waiting weeks to get the capital you need could be damaging to your business. Or maybe your situation looks a little different. You don’t have an immediate need for funding, and you have time to shop around for the best rates and terms available to your business, so time to funding may not be as important.

Evaluate your situation to determine if time to funding is an important factor for you. If so, work with a lender that approves applications quickly. Some lenders can even have the funds in your bank account in as little as 24 hours.

Loan Restrictions

How do you plan to use your funds? This could be a determining factor in what lender you select. Let’s say you need capital to hire new employees. Lenders that offer equipment financing for fixed asset purchases could be crossed off your list.

Borrowing Limits

The type of financing and the lender you choose may be based on how much capital you need. For instance, if you need $500,000 to fund your new expansion or a new location, lenders that have $250,000 borrowing limits won’t be a good fit.

Rates & Terms

It’s always important to make sure you’re getting the best rates and terms for your situation. If you have credit challenges or you’re a new business, your options may be more limited. However, if you have a solid credit score, an established business, and a steady flow of revenue, you’ll have more lending options available to you.

No matter what options are available, always make sure you’re getting the best rates and terms. Think of the long term and not just the short term. Sure, you could have funds in your account in just one day with one lender, but high fees and interest rates and shorter repayment terms could spell trouble in just a few months.

Unsure if you’re able to afford a small business loan? Learn how to know if you’re ready to take on this financial responsibility.

Borrower Requirements

You may think a lender is right for you, but are you right for the lender? Every lender has different requirements for its borrowers, and you need to meet all of these to get approved for financing.

Before you start shopping lenders, start by getting your free credit score online and reviewing your credit history. Negative items like unpaid tax liens and recent bankruptcies may prohibit you from working with some lenders and qualifying for certain types of loans.

You’ll also need to know your time in business and annual revenues and have proof to present to the lender if needed. Also, be aware of documentation requirements and make sure that you have everything you need to be approved for a loan.

One last thing to remember is that meeting a lender’s minimum requirements does not guarantee that your application will be approved.

Final Thoughts

While no one is ever guaranteed success, having access to capital and the right resources can boost your chances of owning and operating a successful, profitable business. As you’ve read, there are plenty of opportunities available for Michiganders. Whether you’re in the planning stages of your startup or you want to take your small business to the next level, know and understand your financing options, evaluate the needs of your business, do your research, and move forward when you know that the return-on-investment will outweigh the risk of taking on debt.

If you didn’t find what you’re looking for in this post, check out some of our additional resources to help you find the right financial solution for your small business.

  • Minority Business Loans
  • Best Small Business Loans For Veterans
  • The Best Small Business Loans For Women
  • The 7 Best Business Loans For Bad Credit

The post The Best Business Loan And Financing Resources For Michigan Small Businesses appeared first on Merchant Maverick.

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The Step-By-Step Guide To Starting And Funding A Cleaning Business

Entropy is a powerful force. If there’s one thing you can rely on, it’s that everything gets dirty sooner or later. If it doesn’t get dirty, it gets cluttered. Add in the increasing prevalence of two-income households, the pace of modern work, and long commutes and it’s not surprising that more and more people are letting their chores slide. And that’s not even taking into consideration the huge messes businesses make. The fields are ripe for the harvest — why not cut yourself a piece of the action and start a cleaning business?

Luckily, the overhead costs of starting a cleaning business are fairly low (at least up until you start adding staff). Still, you’ll want to have a good sense of what you’re getting into before you dive into the cleaning industry. It’s vital to have a plan to tackle the expenses and challenges you’ll encounter along the way.

Not sure where to start? We’ll break starting and funding a cleaning business into a step-by-step process below.

Make A Business Plan

What separates a business from a side gig? Well, a lot of stuff, but one of the bigger points of delineation is whether or not you have a business plan and a clear strategy.

Creating a business plan can be an intimidating prospect, but you don’t need to have a business degree to write one. You don’t even need to have taken a class.

A business plan is, essentially, an outline documenting what your business is, what it does, how it’s organized, its financial means, and a strategy for how you intend to grow.

There are a lot of resources online that can give you an idea of what a business plan looks like, as well as templates to help you get organized, but a typical business plan has the following parts:

  • Executive Summary
  • Company Description
  • Market Overview
  • Sales & Marketing Strategy
  • Operating Plan
  • Organizations & Management Team
  • Financials

Calculate Startup Costs

The good news about launching a cleaning business is that it’s possible to start one with relatively little overhead.

At a bare minimum, you’ll need cleaning supplies. This assumes you’ll be doing the cleaning yourself and aren’t taking on any additional employees right away. If you’re cleaning residential homes, these supplies will more or less be the same ones you use to clean your own home. If you’re getting into commercial cleaning right away, you’ll likely have to invest in equipment (and possibly personnel) that can handle larger volume messes and expansive spaces.

If you plan on cleaning as more than a side gig, you’ll also need to pay fees to register your business. This isn’t a very big expense if you’re content with running a sole proprietorship (or partnership, if you’re starting it with someone else) –usually less than $50. You can also file a DBA, which allows you to legally do business under another name (the name of your company). We’ll get a bit deeper into it in the next section.

Additionally, you should factor in any initial advertising costs, as well as transportation costs for getting yourself or your employees to the work sites.

Register Your Business

Registering your business may sound intimidating, but it can actually be one of the easiest parts of starting a business.

Why should you register your business? At minimum, it protects the name you’re using to do business so that no one else in your area can (legally) use it. It can also help you qualify for business-to-business services and services that require an EIN number.

Incorporating, on the other hand, is a more complicated and expensive process that comes with its own advantages and disadvantages.

Here are the most common types of businesses you can register as:

  • Sole Proprietorship: By default, this is the type of business you’re running when you initially create one. You and your business are, for tax and liability purposes, considered the same entity. In fact, if you want to do business under a name other than your own, you’ll need to file a DBA (doing business as) with your local county clerk.
  • Partnership: Essentially the same as a sole proprietorship, except you started it with one or more other people. By default, you’re each considered to own an equal share of the business for tax and liability purposes.
  • Limited Liability Corporations (LLCs): If you’ve seen LLC after a corporation’s name, you’re dealing with this type of company. LLCs offer limited liability protection for their owners without the full complexity of a corporation. Each state has its own rules for how to start and maintain an LLC, and you don’t necessarily have to register your LLC in the state where you’re doing business (although you’ll generally want to). LLC owners report their business earnings and losses on their personal taxes.
  • C-Corp: This is the “basic,” default form of incorporation. Shareholders are considered the owner(s) of the company and receive limited liability protection; however, the business decisions are made by corporate officers who may or may not be shareholders. The corporation is taxed separately and shareholders pay income tax on dividends. To form a C-corp, you’ll file articles of incorporation with your state.
  • S-Corp: S-corps are similar to C-corps in most ways, but come with a few additional restrictions: you must have fewer than 100 shareholders and they have to all be U.S. citizens or residents. Unlike C-corps, profits and losses are reported on personal taxes, not unlike an LLC. In addition to filing articles of incorporation, you’ll also need to file IRS Form 2553.

Get Business Insurance

Depending on your local and state laws, business insurance may or may not be optional. However, given that cleaning involves a lot of physical contact with valuable items (not to mention the fact that you will be in the profession of making floors slippery), you may want to consider getting insurance even if you’re not required to have it.

General liability insurance can protect you in the case of lawsuits or accidents, including property damage and personal injury claims against your business. It can also make your business seem more professional to prospective clients.

Your own equipment is also subject to wear and tear, as well as accidents, so you may want to consider property insurance for any items that aren’t easily replaced.

While those are the big two worth considering, you may also want to consider other types of business insurance to help cover anything from worker’s comp claims to vehicle damage.

Seek Business Funding

Now that you have a sense of what your expenses will be, it’s time to see if you can cover them out of pocket and still pay your rent. If you can’t, and are unable to tighten your belt without sacrificing the tenets of your business plan, you may need to seek some source of external funding.

Where should you look?

Personal Savings

If you’ve saved up for a rainy day, the weather might start looking pretty stormy right about the time you’re starting a business. The nice thing about dipping into your savings is that you’re not taking on debt and all the expenses that go with it.

On the other hand, you are risking your own money, along with the lost-opportunity costs of not being able to invest that money in something else.

And, of course, you may not have been able to save enough to cover your expenses anyway.

Tap Your Support Network

If you don’t have the money handy, another option is to ask your family or friends for a small loan. Generally speaking, your support network will give you a better deal than even the most competitive bank will.

Asking your friends and family for money can be tacky and awkward if you don’t put their concerns at ease. You also may damage your relationships if you aren’t able to pay the money back within the expected period of time. It’s important to take a professional and organized approach.

If you do go this route, strongly consider formalizing any agreements you make so that all parties are fully aware of what they’re risking and stand to gain from the arrangement. Create and sign a contract, just as you would do with a traditional lender.

Credit Cards

For purchases you can pay off quickly, it’s hard to beat the convenience and incentives of credit cards.

Credit cards come in both personal and business varieties. You don’t actually have to own a business to get a business credit card, but their rewards programs are generally more geared towards business expenses.

If you’re going to use credit cards, be sure to use them wisely. That means paying them off within the interest-free grace period offered by your card’s provider. For personal credit cards, this is legally at least 21 days from the time you receive your bill. For business credit cards, there is no legal minimum, but most extend a similar one as a courtesy.

Just remember, if you fail to pay your card off with that window, carrying a balance on a credit card is an extremely expensive way to finance your business. And avoid taking out cash advances on your cards unless absolutely necessary.

Recommended Option: Capital One Spark Cash Select For Business

Capital One Spark Cash Select For Business


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Annual Fee:


$0

 

Purchase APR:


14.74% – 22.74%, Variable

Spark Cash Select for Business is great for businesses that don’t have their expenses concentrated in a single area, or that don’t want to worry about complex reward programs. You’ll simply earn 1.5% cash back on every purchase you make. There’s also no limit on the reward, so you don’t have to worry about exceeding a maximum threshold: whether you spend $20 or $500,000 in a year on your card, you’ll still get 1.5% back.

You will need to have excellent credit to qualify, however.

Recommended Option: Capital One Spark Classic

Capital One Spark Classic For Business


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Annual Fee:


$0

 

Purchase APR:


24.74%, Variable

If you don’t qualify for Spark Cash Select for Business, Capital One offers an equally versatile card that’s much easier to qualify for. Spark Classic offers a similar cashback reward program, but the rate of return is 1% rather than 1.5%.

While not the most exciting card, it’s a good one for repairing your credit.

Loans

Business loans are frequently out of reach for brand new businesses–even the more risk-taking lenders generally want to see that you can keep your business together for at least six months before they’ll lend to you. That said, there are exceptions to the rule, with some lenders focusing on new businesses.

And remember, when you’re starting out you don’t necessarily need a “business” loan; personal loans can leverage your personal credit for an early cash infusion even you need it. If you’re buying a specific piece of equipment, you should also consider equipment financing.

Recommended Option: Lending Club Personal Loans

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Lending Club is a good option for individuals who may not have the strongest credit, but have a good debt-to-income ratio. The borrowing range is fairly narrow at $1k to $40k, but when you’re just starting out you don’t want to go too deeply into debt anyway. You’ll have three-to-five years to pay it off, which makes it fairly manageable while you’re building up your business.

Recommended Option: Lendio

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Lendio takes some of the frustration out of applying for a loan by allowing you to apply to their entire network of lenders all at once. If you’re thinking about tapping the alternative lending market for the first time, it’s a pretty good place to start.

They can’t necessarily help every business, but a shotgun approach can sometimes be easier than finding that one special lender.

Recommended Option: Upstart

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If you’re having trouble finding a lender who will work with you, take a look at Upstart. You’ll need to have at least fair credit and a regular source of income, but otherwise, Upstart’s way of evaluating potential borrowers is pretty unconventional (good news if you’re starting a business).

Better yet, Upstart’s rates are pretty reasonable and you’ll have three or five years (one or the other, not between) to pay your balance off. Unfortunately, they don’t currently lend within West Virginia or Iowa.

Need more options? Check out our feature on startup loans. Need a vehicle for the business? Read our auto loans guide.

Choose The Right Software

As your business grows and becomes more complex, managing the logistics of your company can become quite labor-intensive. If you don’t want to sink too many man-hours into keeping track of all that stuff, you’ll want to delegate it to a software program.

This doesn’t necessarily mean you have to enroll in a bunch of expensive SaaS platforms if it’s just you cleaning for a handful of clients, but it doesn’t hurt to know what kinds of options are available.

Types of software you may want to consider include:

Field Service Management 

This type of software centralizes processes and workflows for businesses that have employees who are dispatched to external sites for work. They often include features like scheduling, dispatching, and booking. Some also come with invoicing, payment processing, and customer notifications, so it’s quite possible to find an all-in-one service that meets your needs.

Scheduling Software

If field management software sounds like overkill, you can try scheduling software to manage your appointments and those of your employees.

Inventory Tracking

If your business is growing, and you no longer have time to run out to buy supplies every time you need them or use your clients’ stash, you may find it helpful to formally keep track of your inventory.

Accounting Software

It’s always a good idea to keep track of your expenses, accounts receivable, payroll and related issues, especially as your business grows and becomes more complex.

Data QuickBooks Online Xero Wave Zoho Books FreshBooks

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Best Cloud Accounting Software

Best Cloud-Based Accounting Software

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Bolster Your Web Presence

A cleaning business can get pretty far on word-of-mouth and savvy networking, but expanding your reach in the digital age usually means you’ll want to bolster your web presence.

A website is still a very important way for potential clients to find out information about your business and what services you offer. Happily, for a cleaning service, it doesn’t have to be all that complicated. If you don’t want to contract the job out, there are plenty of services online that make it easy to build your own decent-looking website.

A spiffy website is only one aspect of an online strategy, however. You still need to get people to visit it. You’ll want to consider factors like search engine optimization (SEO) so that, for example, the phrase “kitchen cleaning Rochester” will return your website in the top results.

You may also want to use social media to build brand recognition, steer traffic to your site, and announce specials or changes to your services.

Delegate Work

If it’s just you and a cart full of cleaning supplies, you can skip this part. However, if you’re planning to grow beyond what one mere mortal can clean in a day, you may be taking on more people.

Employees

Taking on additional people as employees come with many advantages: you’ll be able to get significantly more work done, have a larger pool of expertise to draw from, and be more flexible with scheduling. This does come with some additional costs, as you’ll be paying some of the taxes on their salary as well as offering benefits (at least in theory), so be sure to grow your staff wisely and at a pace that fits the amount of business your generating.

In exchange, you’re allowed greater control over the parameters of how your employee works, where, and at what time. Setting a wage that’s fair and not abusing this relationship will generally improve morale and help you avoid the costly process of employee turnover.

Contractors

If you aren’t quite ready to take on employees but need additional help, you can hire contractors. Contractors are free agents who work for themselves even though they may be regularly and continuously used by a particular client (that’s you). Since they’re self-employed, you don’t have to worry about additional expenses beyond paying their fee.

Beware that many businesses make the mistake of treating 1099 contractors as employees, which can get you into pretty serious trouble. If you want to have employees, you have to hire them. As a general rule, you have no say over what jobs a contractor decides to take, the methods they use to complete the job, or the precise time they choose to do it.

Advertise Your Business

A strong web presence and social media campaign can get help get your name out, but we aren’t quite at the point where advertising is obsolete.

Since a cleaning business is constrained by geography, you have to physically send someone out to do the job. That means you can use your modest advertising budget to buy ads in your local market, which is usually cheaper than trying to grab eyeballs from several states away. Ideally, you’ll want to seek ad platforms utilized by the types of people who are likely to buy your services. Cash-strapped kids at the local state college campus probably don’t have a budget for cleaning services, for example (although some fraternities or sororities may), while busy soccer moms might.

Once you know who you’re advertising to, you can select a medium that fits your target demographic. Once you start getting new customers, ask them where they heard about your business so you can get a sense of which ads are working and which aren’t.

Even if you don’t have money to spend on advertising right away, put the word out to your own social network that you’re offering cleaning services. Word can spread fast, especially if you have a reputation as a trustworthy person.

Final Thoughts

We still haven’t invented self-cleaning spaces, so you have a potentially bottomless demand for your services. With relatively low overhead, a housekeeping or cleaning business is one of the more accessible industries to jump into, so if you have the skills and the inclination, why not give it a try?

The post The Step-By-Step Guide To Starting And Funding A Cleaning Business appeared first on Merchant Maverick.

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How To Start And Fund A Catering Business: The Step-By-Step Guide

Does serving delicious food to a crowd of partygoers sound like a dream? Do you want to take your love of desserts to weddings and other special events? If so, becoming a professional caterer could be the right career path for you.

Sure, you could search your local job listings to find a catering position, but wouldn’t it be great to be your own boss? If creating your own menu and serving up delicious food and beverages at events interests you, why not start your own catering business?

Maybe it’s been a lifelong dream to operate your own catering business. Or maybe you just love to cook and want to turn it into a career. Whether you’ve already taken steps to launch your own business or you don’t know quite where to start, this post is for you.

In this article, we’re going to explore exactly what it takes to start and fund your own catering business. We’ll start by discussing how to create a business plan and why a plan is a necessity for a successful business. Then, we’ll delve into the expenses you’ll encounter and how you can cover those costs. We’ll also talk about choosing your business structure, building your web presence, and advertising methods that can bring in new customers.

Ready to go? Let’s get started on your path to entrepreneurship!

Create Your Business Plan

What Information to Bring Accountant for Small Business Taxes

Starting a business without a detailed business plan is similar to taking a cross-country trip without a GPS or a map. In short, it’s not a wise move. Your business plan should not only include details about your business in the present — your management team and your mission statement, for example– but it should also serve as an outline for how your business will hit future targets.

Your business plan acts as a blueprint, outlining how your company will become successful and profitable. For that reason, your business plan won’t look exactly like the plan of another business — even one within the same industry. However, even though details may vary, there are a few common sections that can be found in all business plans. Those include:

  • Executive Summary: Describes the content of the business plan
  • Overview: Includes background of the business, legal structure, and other key details
  • Industry Analysis: Overview of the industry, including the size, nature, and any current trends
  • Competitive Analysis: Overview of your competition
  • Marketing: An outline of your marketing strategy and how you’ll reach customers
  • Operations Plan: Description of the operations of your business
  • Management: Bios and skills of your management team
  • Financials: An overview of current and future revenues

Your business plan not only helps you hit your goals, but it’s also critical when it’s time to obtain financing. Banks, nonprofit lenders, and even some alternative lenders may require a business plan as part of a loan application, especially for startup loans.

Pick Your Niche

While it may be tempting to try to cater for every event in your area, you’re going to stretch yourself thin … and likely set yourself up for failure. Instead of trying to offer services to everyone, pick a niche.

You may already have an idea in mind. For example, maybe it’s always been your dream to be a wedding caterer. Be sure to also consider the type of food you like to make. If you prefer to make salads, sandwiches, and other lighter fare, consider catering for business or school functions, luncheons, and other daytime events. If you prefer to serve fancier entrees, consider catering for weddings and special events.

Another step to take before selecting your niche is to do some market research in your local area. Where are there gaps in catering availability? What niche is overcrowded with the competition? You may find that there a large number of wedding caterers already in your area. Unless you can bring something new to the table (being the only caterer to serve Southern-style barbecue, for example), you might want to consider filling a different customer need.

There are a wide variety of catering niches to consider, including:

  • Weddings
  • Corporate Events
  • Adult Parties
  • School Events
  • Children’s Parties
  • Festivals
  • Sports Events

With an idea of your niche and the type of food you need to prepare, you can move into the next step: planning your menu.

Create Your Menu

KDS Kitchen Display System

Once you have a niche in mind, you’ll be able to narrow down your menu choices. Let’s face it — if you’re planning to focus on children’s parties or school functions, you won’t exactly need filet mignon on the menu.

You also want to consider what type of food you’re experienced at making. While you can certainly test out new ideas in the future, you want to put your best foot forward when starting out. You also want to offer a variety of options while keeping your menu at a manageable size. Having a menu with too many items or items that contain ingredients that are difficult to source could cause unnecessary stress for you and your clients.

It’s also important to remember those with dietary restrictions. Consider adding a few options to your menu that are vegetarian, vegan, gluten-free, or dairy-free to help expand your customer base.

Performing a test run or two can help you further improve your menu. Once you have your menu in place, test it out on a few friends and family members. Get their honest feedback on where you excel, as well as where you fall flat. Tweak recipes as needed, change techniques to become more efficient, and be honest with yourself about what works and what doesn’t. Then, alter your menu accordingly.

Source Your Ingredients

After you create your menu, you’ll have a better idea of the ingredients needed to prepare your food. When you first get your business off the ground, you may be able to get the ingredients you need by purchasing from a wholesale club in your area. However, as your business grows larger and you have more events to cater, you’ll want to purchase your ingredients from other sources.

You can get fresh produce from local farmers. Start building these relationships by visiting your local farmers’ market. You can also build relationships with restaurant suppliers and food service vendors to purchase bulk ingredients at reduced prices.

Calculate Startup Costs

In many states, you will be unable to use a residential kitchen to prepare your food. If you plan to cater from home, you must contact the health department in your area to find out more about the regulations of home-based catering businesses, including inspection and permit requirements.

In most cases, you’ll need to rent space for your kitchen. There are two ways to go about this.

The first is renting your own commercial space. This is the more expensive option but is a necessity if you plan to cater full time.

If you only plan to cater events occasionally or on weekends, you may be able to rent a commercial kitchen for a few hours on the days when you need it. This is a more affordable option since you won’t have to invest in equipment, but it’s not ideal for full-time caterers.

If you aren’t renting space in a kitchen that’s already stocked, you’ll also need industrial equipment that is used to prepare your food. Some of the items you’ll need include:

  • Commercial Ovens
  • Stoves
  • Deep Fryers
  • Sinks
  • Refrigerators
  • Walk-In Freezers
  • Mixers & Blenders
  • Pots & Pans
  • Knives
  • Cooking Utensils & Tools
  • Storage Containers
  • Dishwasher

You’ll also need equipment that you’ll bring on-site for serving and keeping food at the optimum temperature, including:

  • Serving Dishes & Trays
  • Serving Utensils
  • Chafing Dishes
  • Carving Stations
  • Grills
  • Heat Lamps
  • Soup Kettles
  • Beverage Dispensers
  • Coffee Station

An additional cost to add to your list is a catering van. This van will be used to transport your food and equipment to venues. You may save money initially by purchasing a used vehicle. However, you need to ensure that you know the complete history of the vehicle. You may also incur additional costs if your used vehicle needs repairs soon after purchasing it.

Some caterers also provide table settings, glassware, and utensils, but this adds to your initial investment. You may also provide additional items for your events, including chairs and/or chair covers, tablecloths, and centerpieces, but again, this will add to your startup costs.

Before starting your business, sit down and make a list of your total expenses. You can tailor the list to your own business. For example, if you don’t serve fried food, you won’t have to invest in deep fryers. If you specialize in only desserts, you may have pastry tools, cake displays and stands, and bakeware sets on your list.

Once you’ve made your list, start shopping around to get an idea of costs. Check out prices online or visit local commercial kitchen equipment and supply stores. Once you have an idea of how much funding you need, it’s a smart idea to add about 30% to those costs to prepare for the unexpected. For example, if you’ve priced everything at $100,000, apply for a loan of $130,000 to make sure all of your bases are covered.

Register Your Business

Before you begin catering to clients, you need to register your business with federal, state, and local agencies.

First, you need to think of a business name. Brainstorm ideas to find a name that’s catchy and is a reflection of your brand. When you’ve come up with a great name, check your Secretary of State’s website to ensure that this name is not already being used by another business.

Next, you will need to select your business structure. This is an important step because your business structure determines how your business is taxed and your personal liability for debts incurred by the business. The types of business structures include:

Sole Proprietorship

This business is owned and operated by one person. This is the easiest business structure and does not require registration. Setting up a sole proprietorship is easy. However, this structure does not provide you with any protection against the debts and liabilities of your business.

General Partnership

This type of legal structure is made for businesses with two or more owners. These are the easiest to create, have a low cost of operation, and the fewest requirements. No state filing is required for a general partnership.

Limited Partnership

This is another type of structure for businesses with more than one owner. General partners in a limited partnership have unlimited liability. The remaining partners – limited partners – have limited liability. In most cases, the personal assets of limited partners are protected from being used to satisfy the liabilities and debts of the business.

Limited Liability Partnership

This type of structure is designed for professional service businesses. Personal assets of any partner can’t be used to cover the debts and liabilities of the business. However, all partners in an LLP are liable for their own acts, such as medical malpractice.

Limited Liability Company

An LLC is separate from its owners. This type of legal structure protects owners from personal liability without the higher tax rates and stricter requirements of corporations.

Corporation

Owners in a corporation are protected from personal liability for the debts of the business. Corporations are the most difficult to set up. However, it is necessary to choose this business structure if you plan to sell stock or raise large amounts of capital in the future.

The type of business structure you choose for your catering business will vary based on the number of owners and your plans for the future. Consult with an accountant or attorney to learn more about your options and which is best for you.

After you choose your business structure, you will need to register with the state where you will operate. You can register through your state’s Secretary of State website. Application and fee requirements vary by state. If you plan to offer services in more than one state, you will need to register with each state.

Another important step in registering your business is obtaining an Employer Identification Number (EIN) from the IRS. This is a necessary step if your business will have employees now or in the future.

Get Permits & Licenses

After registering your business, it’s time to apply for the permits that you need to legally operate your business. It’s necessary to do this early in the game, as it may take weeks or even months to receive your required permits.

State and local laws surrounding permit and license requirements vary. Some of the permits and licenses you may need to legally operate your business include:

  • Business Licenses
  • Health Permits
  • Food-Handling Licenses
  • Liquor Licenses

You can contact the local health department, the state Alcoholic Beverage Control board, and other state and local agencies to learn more about the licenses required in your area, how to apply, and any applicable fees.

When working with food, you also face inspections from your local health department. The temperature of prepared and stored food, waste disposal, and the safety and condition of your cooking equipment are just a few of the things that will be inspected periodically.

Get Business Insurance

Protecting your catering business is important, and there’s no better way to protect yourself and your business than with business insurance. As a caterer, there are multiple insurance options to consider.

General liability insurance protects you from lawsuits that occur during events. This type of insurance covers physical injuries, property damage, and even damage to your reputation.

Another type of insurance to consider is errors and omission insurance, also known as E&O insurance. This insurance protects you from lawsuits that may be filed if a mistake is made. For example, if a client warns of an allergen and you include an ingredient that triggers an allergic reaction, this insurance would protect you from a potential lawsuit.

Property insurance should also be a consideration. This insurance protects your equipment, fixtures, and other property from damage or theft.

If you have employees, you will also need worker’s compensation insurance. This covers medical costs and lost wages from employees when they are injured or become sick. This also protects your business from lawsuits as a result of injuries.

If your business serves alcohol, you may also be required to carry liquor liability insurance, which protects your company from alcohol-related lawsuits.

Insurance requirements vary by state. Talk to your local insurance agent to find out more about the laws in your state and to create a personalized insurance policy for your new catering business.

Seek Business Funding

We’ve already reviewed many of the costs you’ll encounter when opening your own catering business. Now, it’s time to determine how to pay for those costs. Whether you have money in the bank or your bank account is looking a little slim, there are financing options available for you. Start your search with these options.

Personal Savings

If you’ve been putting away money into a savings account, now may be the perfect time to withdraw your funds. The great thing about personal savings is that you won’t take on debt with a lender. This means no payments, fees, or interest. The downside, though, is that if your business goes downhill, it may take your savings with it.

Friends & Family

Consider taking a loan from a friend or family member that’s willing to invest in a potentially lucrative new opportunity. Prepare your presentation, have your business plan in hand, and explain why your opportunity is worth investing in.

If you come to a mutual agreement, make sure to get everything in writing. It also goes without saying that this friend or family member should be treated like any other lender. That means paying back your loan as scheduled.

Instead of a loan, you may consider equity financing. In this scenario, your friend or family member would own part of your business. The major benefit is that you wouldn’t have to immediately start making loan payments. However, you would give over some ownership (and a slice of your future profits) and control over your business if you go this route. Undecided? Learn more about the pros and cons of debt vs. equity financing.

ROBS

If you have a retirement account, you may be able to leverage these funds for your new venture. Normally, if you withdraw before you reach a certain age, an early withdrawal penalty and income tax penalties apply. However, you can avoid these costs through a rollover as business startups (ROBS) plan.

A ROBS plan allows you to use your retirement funds for starting or expanding your business. Four steps are required to access your funds. First, a C-corporation is created. The next step is to create a retirement plan for the new C-corp. Then, you can roll over funds from your existing retirement account into your newly created plan. Finally, you will use these funds to purchase stock in your C-corporation, giving you access to the capital you need for your new business.

The process isn’t complicated, but there are rules you have to follow to ensure you maintain compliance. To take the guesswork out of ROBS, many aspiring business owners work with a ROBS provider. For a fee, ROBS providers will set up your ROBS account for you and will maintain it to ensure everything is done by the book.

Using your ROBS is a great way to fund startup costs. Other than a setup fee and a monthly maintenance fee charged by your ROBS provider, you do not pay additional fees. After all, you’re using your own money. However, if your business fails, you put your retirement funds at risk.

Recommended Option: Guidant Financial

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Guidant Financial can help you roll over your retirement funds into capital you can use for your catering business. In about three weeks, you can have the funds you need to start or grow your business with Guidant Financial’s ROBS plans.

To qualify, you must have a retirement account worth at least $50,000. Most retirement plans qualify, including:

  • 401(k)
  • 403(b)
  • Traditional IRA
  • TSP
  • SEP
  • Keogh

There are no credit score, time in business, or annual revenue requirements to qualify. However, you must have a business to fund, and you also must be an employee of that business in order to set up your ROBS plan.

Since you’re using your own funds, you don’t have to worry about monthly loan payments. However, you will have to pay a one-time setup fee of $4,995 followed by a maintenance fee of $139 per month to maintain your account.

In addition to ROBS plans, Guidant Financial also offers additional small business loan options including Small Business Administration loans and unsecured business loans.

Equipment Financing

As we discussed earlier, there is a lot of expensive equipment needed to start your catering business, from a catering vehicle to commercial kitchen equipment. A financing option to consider when you need new equipment is equipment financing.

With equipment financing, you can take possession of the equipment you need without paying the full cost up front. Instead, you’ll pay a down payment (typically 10% to 20% of the purchase price), then repay a lender in smaller, more affordable payments over time.

There are two main types of equipment financing to consider: equipment loans and equipment leases. With a loan, you’ll make a small down payment, then put the equipment into use immediately. You’ll make regular payments to the lender that are applied to the principal balance as well as interest and fees. Once you’ve repaid the loan as agreed, the equipment is yours to keep, sell, or trade.

The other type of equipment financing is an equipment lease. You’ll also pay a down payment and regular payments. However, at the end of your lease, you return the equipment. At this time, you can sign another lease for new equipment. This is a better option if you plan to upgrade your equipment frequently, although this option can be more expensive over the long term.

With equipment financing, you typically do not have to put up collateral. Instead, the equipment being financed is the collateral and can be seized by the lender if you don’t make your payments as agreed.

Recommended Option: Lendio

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Lendio’s network of over 75 lenders can provide you with up to $5 million to finance your equipment. Loan terms are between 1 to 5 years with rates starting at 7.5% for the most qualified borrowers. With some lenders, you can get your funding in as little as 24 hours. Some applicants may even qualify for 0% down financing.

To qualify for equipment financing, you must meet the following requirements:

  • At least $50,000 in annual revenue
  • Personal credit score of 650 or above
  • Time in business of at least 12 months

If you have credit challenges, you may still qualify provided you have proof of solid cash flow and revenue for at least 3 months.

The funds can be used to purchase the equipment you need for your catering business, including but not limited to commercial kitchen equipment, office furniture and fixtures, software, appliances, and commercial vehicles.

If you don’t qualify for equipment financing through Lendio’s network, you can shop around for other financing options. Through Lendio, you can apply for financial products including SBA loans, business credit cards, lines of credit, and startup loans.

Lines Of Credit

Running your own catering business comes with its challenges. Some challenges are expected — rushing around to cater a big wedding, for example — while others come when you least expect it. Whether it’s a slow season that has impacted your incoming cash flow, equipment that needs repairs, or an unforeseen emergency, even the most successful business face the unexpected.

For these times, it’s great to have a backup plan, like a flexible line of credit. A line of credit is different from a traditional loan because you don’t receive one lump sum that you immediately start repaying. Instead, a lender assigns you a credit limit — much like a credit card — and you can withdraw money from your line as needed.

Your line of credit is ready to use whenever you need it. You don’t have to immediately draw funds if there’s no need, and most lenders don’t charge fees if you don’t use your line of credit. When you do use your line of credit, you’ll repay your balance plus any fees and interest charged by the lender. Since this is a revolving form of credit, funds will be replenished and available to use again as you pay off your balance.

Recommended Option: Fundbox

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Fundbox offers lines of credit that can be used for any business purpose. One of the standout features of Fundbox is that the lender looks at the performance of your business — not just your credit score. Even if you’ve been turned down by other lenders in the past, you may still qualify for a Fundbox line of credit.

Through Fundbox, you may qualify for up to $100,000. Once approved, you can immediately make draws on your account. Repayment terms are 12 or 24 weeks, and rates start at just 4.66% of the draw amount. Weekly repayments are automatically deducted from your business checking account. There are no prepayment penalties, all remaining fees are waived if you pay off early, and there are never any fees if you don’t make a draw.

To qualify, you must meet the following minimum requirements:

  • At least $50,000 in annual revenue
  • Holder of a business checking account
  • At least 2 months of activity in accounting software OR at least 3 months of transactions in a business bank account

Business Credit Card

Another source of financing that’s great for covering unexpected expenses is a business credit card. A business credit card works just like your personal card. You can use your card online and in stores to make purchases anywhere credit cards are accepted. When you use your card, the lender charges interest on the borrowed portion of funds. If you don’t use your card, you aren’t required to pay interest. However, annual fees and other charges may apply.

Business credit cards are great for emergencies or for quickly resolving cash flow issues. You can also use your credit card for recurring expenses, such as gas for your catering van. If you go this route, apply for a low-interest rewards card that gives you cash back or other perks just for using your card.

Recommended Option: Chase Ink Business Cash

Chase Ink Business Cash



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Annual Fee:


$0

 

Purchase APR:


15.49% – 21.49%, Variable

With Chase Ink Business Cash, you can earn rewards just for using your card to pay for your business expenses. Using this card gets you 5% cash back on the first $25,000 spent at office supply stores and on internet, cable, and phone services. You can earn 2% cash back on the first $25,000 used at gas stations and restaurants. These offers renew each year on your account anniversary. For all other purchases, you can earn unlimited 1% cash back.

New cardmembers can take advantage of a $500 cash back bonus offer when $3,000 is spent within 3 months of opening an account. This card also comes with additional benefits including purchase protection, extended warranty protection, and free employee cards.

There is no annual fee for the Ink Business Cash credit card, and it comes with a 0% introductory APR for the first 12 months. After the introductory period, the card has a variable APR of 15.49% to 21.49%.

This card is recommended for borrowers with good to excellent credit scores.

Vendor Financing

As a caterer, you’ll establish relationships with vendors. You’ll purchase your ingredients, supplies, and other necessary items from these vendors. Many times, you’ll purchase these items up front. Other times, however, you may need a little help in the form of vendor financing.

With vendor financing, a lender will pay your vendors up front so you can get the supplies necessary for running your business. You’ll then be able to spread your purchase out over several smaller payments. Like other financial products, you’ll pay fees and/or interest for the convenience. While the cost of borrowing may be higher than making a purchase up front, the extra expense may be well worth the cost if you’re in a financial bind.

Recommended Option: Behalf

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You can pay your vendors immediately without putting up the money up front by working with Behalf. Through Behalf, you can get up to $50,000 to pay your vendors. Then, you have up to 6 months to repay the lender.

Monthly fees start at 1% of the borrowing amount and are based on your creditworthiness. There are no origination fees, membership fees, or other hidden costs to borrow from Behalf.

There are no time in business, annual revenue, or credit score requirements to qualify. However, Behalf will perform a hard pull on your credit once you submit your application.

Personal Loans For Business

You have a solid credit score, but small business lenders won’t even give you a second glance. What gives?

Many small business loans have time in business and annual revenue requirements. This is fine when your business is already operating, but what do you do when you need a loan before you even open your doors? Try applying for a personal loan for business.

As a startup, you may find it challenging to qualify for a small business loan. However, you can use your own personal credit score and income to qualify for a personal loan that is used for business expenses.

These loans don’t have time in business, annual revenue, or business credit score requirements, so you can qualify even if you’ve not yet catered a single event. Personal loans are available for a wide range of credit scores. However, having a high credit score can help you qualify for the best interest rates and terms.

Recommended Option: LendingPoint

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LendingPoint specializes in personal loans, offering qualified borrowers $2,000 to $25,000. Rates range from 9.99% to 35.99% with repayment terms of 24 to 48 months. An origination fee of 0% to 6% of the borrowing amount may apply. Payments are made twice per month.

You can quickly and easily qualify for a LendingPoint personal loan. To receive an offer in just minutes, you need:

  • Proof of employment & income
  • Bank statements
  • Voided check
  • Driver’s license or government-issued ID

To qualify for a loan, you must:

  • Be at least 18 years old
  • Have a social security number
  • Have at least $20,000 in annual income
  • Have a verifiable bank account
  • Live in a state serviced by LendingPoint
  • Have a credit score of at least 585

Choose The Right Software

pos with raw ingredient tracking

From keeping track of events to accepting credit cards, the right software can help you do it all. As a caterer, there are several types of software you should consider investing in to keep operations running efficiently.

Accounting Software

This software allows you to perform functions such as tracking expenses, sending invoices to clients, managing payroll, and keeping up with inventory. With accounting software, you can keep up with your financials and run reports, which is especially helpful when you’re seeking financing from a bank or traditional lender. Accounting software also makes it easier for your business when tax time rolls around.

New to accounting? Download our free eBook, The Beginner’s Guide to Accounting.

Catering Software

There are specific software programs designed to help caterers manage all aspects of their businesses. Features include invoicing, billing, employee scheduling, event bookings, and other tools to keep your catering business on track.

Payment Processing Software

Not all of your clients will have cash, especially when they’re paying off large bills for their catering expenses. To make payments easier for your clients, invest in payment processing software. This software acts as the communicator between your bank and your customer’s bank, allowing you to accept debit cards, credit cards, and other methods of payment. Most payment processing software comes with monthly subscription fees, and some companies even offer free hardware that makes it easier than ever to accept multiple forms of payment.

Hire Employees

When you first start your business, you may be a one-man operation until you start bringing in revenue. However, you will eventually need to hire employees if you want to grow and scale. If you’re like many caterers, you may opt to hire an employee or two right from the start.

Employees that you may hire for your business — either now or in the future — include:

  • Chef: Your chef will be in charge of preparing the food. For large events, consider hiring sou chefs for additional assistance.
  • Servers: Bring food and drinks to guests
  • Bartenders: Serve alcoholic beverages to guests
  • Busboys: Responsible for clearing off tables
  • Host/Hostess: Help guests find their seats
  • Event Planner: Meets with the client to discuss details about the event
  • Supervisor: Ensures that other staff members are doing their jobs efficiently

Until your business grows and brings in revenue, you may opt to hire just a few staff members, such as a chef and a server. As your business gains more customers and becomes profitable, you can add additional employees to your staff.

Do your research to get an idea of the average pay range in your area for each position. It’s also important to remember that other expenses come with hiring staff, including workman’s compensation insurance, training costs, and benefits.

To find employees for your business, ask friends, family members, and colleagues for referrals. You may also post a job advertisement on online job boards. You can even contact local temporary agencies to find the help you need.

Bolster Your Web Presence

Your plans for a catering business are coming together, so now it’s time to start thinking about how you’re going to bring in clients. There’s no better place to start than the internet.

Just think about it. If you’re looking for a local company to work with, where is one of the first places you look? The internet, of course.

You can quickly build your web presence with these easy steps.

Launch Your Social Media Profiles

Social media is a great way to reach new customers, and best of all, setting up your profiles is free! Create business pages on Facebook, Twitter, Instagram, and/or Pinterest. Make sure to include critical details such as your contact information, service areas, and types of events catered. You can build up your profiles to include information such as menus, pricing lists, and photos of your food and past events.

An added bonus on social media is that you can communicate with potential customers through comments or direct messaging.

As you begin to grow your business, you can later invest in social media ads, but in the beginning, focus on getting your profiles up and running.

Want to get the most out of your social media profiles? Check out our Guide to Social Media Marketing.

Build Your Website

In addition to your social media profiles, you also need to build a website. This doesn’t have to be overly complicated. In fact, there are lots of website builders that make it easy to choose a template, customize your font and colors, and drag and drop images, text boxes, and tools — no design experience required.

Make sure that the design of your website reflects your branding. You also want to include important details, including the name of your business and contact details. You can also add additional features and information, including a live chat option, photo galleries, and reviews and testimonials.

Advertise Your Business

Boosting your web presence is a great start to advertising your business, but make sure that you don’t stop there. There are several ways that you can advertise your business — both online and off.

Fliers

Pass out or hang flyers advertising your catering services throughout your area. Make sure that you understand the regulations in your area surrounding posting and/or distributing flyers.

Online Ads

Purchase ad space on Facebook, pay-per-click ads on search engines, or even post advertisements on local online forums and social media groups.

Newspaper Ads

This is an oldie but goodie: pay for ad space in your local newspaper.

Attend Wedding Shows

Many cities and towns have bridal shows where vendors can advertise their services. Research events in your area, rent booth space, and advertise your business in-person to newly engaged couples.

Wedding & Event Websites

Submit your business information to wedding and event websites to draw in new customers.

Word-Of-Mouth

Word-of-mouth advertising is the best form of advertising. Ask your past customers for testimonials and reviews, and always make sure to go above and beyond to provide exceptional service.

Final Thoughts

Starting your own catering business is exciting but venturing out on your own can also be a little scary, especially if you lack business experience. However, you can be on track to owning and operating a successful catering business with careful planning, preparation, and strategic borrowing. Good luck!

The post How To Start And Fund A Catering Business: The Step-By-Step Guide appeared first on Merchant Maverick.

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