There were both positive and negative developments for business loans during 2007. These will have an immediate impact on business financing strategies for borrowers.

When reviewing commercial loan developments that occurred during the past 12-18 months, there are mixed results when looking at the best and worst trends. Many of the working capital changes that emerged last year have important ramifications for borrowers refinancing or seeking new financing.

A major commercial property investment trend has been some increasing activity due to the current decline in viable residential investing options. This seems to be particularly true for business opportunity situations which do not have a real estate component, an aspect of increasing importance to investors who want to avoid property ownership at this time.

For business cash advance and credit card processing services, the past 12 months have been characterized by significant changes. There were many providers both entering and exiting these business activities. It is of course good news that some ineffective providers were forced to leave this specialized working capital management service area. But the bad news is that there are still many new and inexperienced companies attempting to operate in this complex field.

A similar trend involving inexperience can be seen in viewing the large number of residential financing brokers now attempting to transition into business financing. Since by some estimates well over 100,000 residential financing employees lost their jobs during 2007, there is a real possibility that thousands of unqualified brokers will be entering the business finance field during 2008 or have already started the process.

A general business loan trend impacting refinancing is the reduction in loan-to-value ratios, especially when borrowers are attempting to get some of their equity out of the business in cash. For purchase situations including special purpose properties such as church financing, slightly larger down payment requirements are increasingly more common.

During 2007 there was also noticeable attrition in SBA loan providers. This is primarily a positive development, since the field has long been overpopulated with inadequate business lenders.

Likewise many local and regional banks visibly reduced or eliminated their business financing activities during the past 12 months. The bad news about this trend is that very few former commercial lenders provided their borrowers with adequate notification of their intent to exit the business. If there is a positive aspect to this development it is probably that many borrowers confronted with the need to suddenly find alternative commercial financing sources have often ended up with much better terms by dealing with a new lender that specializes in commercial real estate financing and working capital management.

Although the general decrease in interest rates during the past year is a positive development, there will probably be some confusion among commercial borrowers who have adjustable rate terms when they do not see their rates reduced. In all likelihood, this will be due to a common clause applied to most commercial loan contracts that stipulate that the minimum rate for such agreements will never be less than the initial rate. With such a floor rate provision, this means that if a borrower starts with an adjustable rate set at 10% and then rates fall, the effective loan rate will remain at the initial rate.

Understanding how to lead is an important ability for a small business owner, particularly when it can be difficult to receive good small business advice. The simple fact is that of the 26 million small businesses (less than 500 employees) in the US, only six million have employees. Of that six million, approximately 60 percent have less than five employees. Knowing how to effectively lead, motivate and manage is critical, especially when every hand counts. In developing your own leadership strategy, keep these aspects in mind:

Setting Goals

In becoming a business leader, it is important to have set goals that can be measured.
Even something as common as training should have this same type of specified and measurable outcome, such as defining what success means, both for the team and the individual employee. By setting several smaller, attainable goals, every achievement will muster the confidence and morale of your staff, while every milestone provides a common focal point.

Ethics and Attitude

Developing a strategy toward business leadership also involves a high degree of courtesy? owning mistakes, apologizing for errors, keeping one’s word and giving as much as is asked. When business leaders incorporate these attributes, they set the pace for their respective teams. When employees see the business leader behaving the same every day, being just as courteous, just as level ?headed, just as hard working, they too will begin to adopt those traits. Setting this type of status quo should be a goal of any business leader.

Personal Involvement

Becoming a business leader also means retaining one’s stature. It is important not to be personally emotive; staff looks to the business leader to see how situations are to be managed effectively. It is important that the business leader’s personal life not interfere/intermingle with his professional life. When the business leader’s name is heard, it should invoke thoughts of what excellent work he does or what a good manager he is, not that he does the funniest impressions or that he offered the best marriage advice. In the same right, the business leader should never play party to personal attitudes that may arise.

Personal Agendas

When developing leadership strategies for a small business it is important to humbly represent the goals of the business, rather than personal agendas. Small business managers commonly have a tendency to manage more by personal inclination than business inclination, be it the selection of products to sell in a store or who gets compensated for drinks at a restaurant. Neither example represents the business as an entity. The good business manager examines sales, profit reports and market analysis to make those determinations.

Using small business coaching can help you navigate the turbulent waters of the marketplace through marketing advice, financial advice and business coaching in general to help make sure that you do not make the types of mistakes frequently made by new small businesses. Visit the training site of successful entrepreneurs at  www.helpingyouhelpyourself.com for advice on being active in determining your financial success.

When you have started your own business, you will always encounter information from one source or another telling you how to run it. This can be very confusing because you have just started out and may be willing to do what it takes to make your business work. One place that you can get good business advice is from other experienced business owners. These people have been there and can help nurture your business by giving you invaluable advice.

You can also learn a lot from them by just watching how they work and conduct their business.
Another great source of small business advice that can never fail you is the Internet. However, you have to learn to distinguish between good and bad advice. You will get advice from all corners of the world about how to run and manage your business. You should learn how to sift through the various opinions and find the advice that best suits your business.

There will always be an unending supply of books about small businesses. Go ahead, read these books and find new ways to make your business a success. You can also find ways to improve on various aspects of your day-to-day running of the business.

If all these options prove difficult for you, you can always seek the advice of a financial expert to guide you through establishing your business. You may have to cough up come money but it will be well worth it. A financial expert will look at your working capital and expenses. They will help you in making cutbacks in the various sections of your business. They can also teach you where to invest more money and how to manage your profits. Whichever business advice you choose, ensure that it is valuable because your business depends on it.

Sometimes through Online Counseling people don’t always “like” the advice they’re given.

This was the case with M., a 31 year old professional saleswoman who had a small high end sheep leather coats import company. M. had recently lost here dream contract in early 2008 doing ‘big business’ with a nationally known prestigious clothing store. Since that time she had moved around a bit job-wise and slowly gotten herself into debt.

At the time when I starting communicating with her she had reached the point where she was willing to work part time for others, in a commission only based job. She was currently four months behind on her rent and was exhibiting the beginning stages of clinical depression.

M. lived in New York City by herself, most of her friends and family lived overseas. She did have a few friends in the area but she hadn’t seen very much of them recently because in her own words: “What friends I do have here, I rarely see anymore as I have withdrawn into my apartment. A typical weekend for me will be to stay up all night Friday night only to sleep for the next two days consecutively until I have to return to work on Monday.”

Through our introductory Online Counseling session M. revealed that she was falling into a type of depression and having all sorts of strange dreams whilst sleeping (12-14 hours). She could not afford health care at this time and did not know what she was going to do financially. The weekend she had contacted me she had simply decided to discontinue eating and stated that she, “did not even feel that hungry anymore.” It was later revealed that she had also been engaging in other activities that pointed to sings of her Depression. She showed signs of drinking binges beyond socially acceptable standards; there were also some concerns about promiscuity (with one of her potential client).

I assessed that M.’s life was spiraling out of control and the things that provided her with a feeling of self worth i.e. her job, her apartment, her standard of living in general – were all dropping significantly. She was trying to get past these difficult times and just reached the point where she did not know what to do.

Three Online Counseling sessions were needed in order to formulate my assessment and professional advice; generally speaking, I appreciate someone who is having a true awareness about him / herself and wants to take the right steps – and she falls into this group.

I had the feeling that M. is having ‘an o.k. personality’ and therefore is capable of getting through the current situation, if major changes would occur in four domains:
A. Drinking should be a definite target for a change in her life.
B. Job and Business re-structuring: This economy has no room for many high end products; leather sheep coats are definitely within the heavily affected range. Use your sales ability, and move into another area. You are good in that line, so do high commission jobs.
C. Love / Sex / Relationships – no more and never again with clients or potential clients. Adopt therefore another mission: to look inward for your ‘self assets’ and thereafter outward, to find the right one.
D. New business location – no chance in NYC. Costs are too high and market trends are alarming. You are single, I told her, with no real supportive social circle around your location. Transform this “negative asset” into a big “plus” and move int to a growing areas, economy wise. Neither you nor I are going to produce miracles that would beat the economy trend. Since I’m not a magician, only a professional, I could see no reason to support an effort to swim against the stream when she could float on it instead.

So the strategy is:
- Look for another business and or job, elsewhere in the US.
- Establish a new ‘you’ – no drinking, financial responsibility and healthy relationships.

M. questioned me on the necessity to move out of New York; she was slightly agitated by my recommendation. Our Online Counseling work has ended; the Small Business Advice I could give her was left untouched.

Depending on whose stats you pay attention to, approximately 80% of small businesses fail within their first 5 years of  operation.

In many cases, its not that a particular business could not succeed; there just wasn’t sufficient time to figure out how to succeed.

Which brings us to the worst small business financing strategy ever.

Here’s how it work.

The would be entrepreneur develops what they believe to be a sure fire business plan that can’t fail.

Unable to locate any form of start up capital, they start their business with credit cards as the only source of financing, and an expectation of sustainable business results within 3 to 6 months.

If everything goes well, the debt will be retired within a year and funds will start building in the bank account.

Sounds Good, right?

I mean the thinking lines up perfectly with all the get rich quick business opportunities that exist on and off the internet today where some of them even try to convince you to use your credit cards because the opportunity is soooooooo good and can’t miss.

The problem is that every business can miss.

Every single one.

And the vast majority do fail.

Have you ever spoken to someone who runs a successful small business; perhaps one that’s been around for 10 to 20 years?

If you take the time to ask one of these entrepreneurs about their start up period, what you learn may shock you.

Even some of the most successful small and medium sized businesses out there today had some hairy moments making a go of it in the early years.

And some times the difficult early years lasted for several years.

The point here is simply this.

The process of getting a business operating and successful can take many unexpected twists and turns, no matter how diligent you are in creating a thorough business plan and business financing strategy.

Therefore, to increase your probability for success you need to allow for the unknown, the unplanned, and the unfair.

A business financing strategy that cannot accommodate unforeseen events is not much of a strategy.

A business financing strategy that is based on high interest credit cards that can destroy both your cash flow and your personal credit is also not much of a strategy.

To improve your odds of small business success, here are some tips for developing a solid business financing strategy.

>>> Invest Your Own Cash

If you have some of your own cash penciled into your business financing strategy, it will immediately increase your likelihood of getting some sort of start up loan.

The more “skin” you have in the game, the more interested a lender will be in approving your loan request.

There is also something to be said about the psychological incentive of losing your own money and the motivation it creates for you to work harder to keep it.

>>> Create Contingencies in Your Cash Flow

Whatever you estimate your working capital requirement to be, double it. At least increase it by a factor larger than 1.

Things can and will go wrong, so give yourself a fighting chance and develop a business financing strategy that allows for less than perfect results.

>>> Use Credit Cards Wisely

Used properly, credit cards can be the cheapest form of working capital that you have at your disposal.

Some business credit cards provide 40 days of interest free financing. If you pay off the entire balance every month, you have an extremely low cost of working capital financing.

But if you start carrying large balances without paying them down monthly, you will go from the cheapest source of working capital to one of the most expensive, and you will likely also destroy your credit rating in the process.

>>> Make Timely Government Remittances

Small businesses are by default tax collectors. And the taxes collected can sometimes wind up funding the business for longer periods of time than they were ever intended.

Using government remittances as a business financing strategy is basically a bad idea.

Government agencies that are assigned to collect from you have large budgets and enough broad sweeping authority to create plenty of grief for you if you are too slow in paying.

If you apply for a business loan while you have an overdue balance with a government tax agency, your loan request will likely be declined.

Even after the balance is paid up, you may have burned your bridge with the lender as a history of overdue government remittances can brand you as a bad credit risk.

>>> Watch Spending Closely At Startup

One of the things you can control early on is how much you spend and what you spend it on.

This is going to change in time, but if you can spend wisely in the beginning you may be able to avoid a cost cutting exercise further down the line.

While its normally true that you have to spend money to make money, you can still be smart about the spending process.