Monday, March 8, 2010
One of my biggest mistakes was creating a business with a financial plan that consisted of using my own money as working capital. 90% of all businesses fail because of issues with cash flow (not enough revenue coming in or too many expenses). My goal in creating the business was to love my work and be able to do it for the rest of my life. This year I will learn from my mistake by implementing something different! The greatest advantage of being a business owner is the ability to save money utilizing the tax code for business. This country was built and designed for business and the current tax code heavily favors business ownership which used to have a high cost of entry (rent, staff, overhead expenses). Now because of the network marketing industry, anyone and everyone can have access to the tax advantages of business ownership.
Lately, I have been consulting with clients who are expecting a refund from their 2009 tax return. The best advice from Christopher Chaplin, a fellow ULEC Financial Consultant and Michael Bing, Director of The Enterprise Center Capital Corporation is to save the refund (in the form of a savings account or money market account) to use as collateral for the SBA guaranteed Micro loan Program . The loan program has a maximum loan size of 35,000 which President Obama has proposed to increase the limit to 50,000. A lot of business owners do not apply for the program because of the reporting requirements. As you may already know, I am a multi-tasker (mom of three , business owner, network marketer, mentor, mentee) and I view this is an opportunity to complete the W/MBE certification requirements at the same time. Since most of the paperwork for the loan and certification is the same, we can create a financial goody bag!
The financial goody bag should have an executive summary of your business, a company profile (with testimonials and past clients), 3 years of tax returns (call 1-800-TAX-FORM to get past reported information from the IRS), a business privilege license, a certificate of organization from the state, a signature card from the business bank account and the articles of incorporation. Once this information is in the bag (pun intended!) your business is set to complete both the loan application and the state certification for Minority or Women Owned Business. My intention for the micro loan program is to create a working capital account for my business. Expenses that are incurred (like rent, salaries, cell phone, electric, etc) without regard to actually selling a product will be paid from this account. Then the revenue generated from the sales of goods and services will be used to service the debt and create a buffer fund for research and collateral for the next loan. This will remove my company from the feast or famine trap of small business to create the financial stability needed for long term success!
Happy Financial Planning!