No Free Lunch - Make Your Money Work for You

From the SBDC Vault

By Michele M. Miller
SBDC Director

Last month we discussed reasons for business failure and the importance of a well-written business plan. .

At the Small Business Development Center of Northwest Illinois (SBDC) we believe the top five reasons for business failure are:

1. Poor planning or poor preparation. Lack of a well-written business plan.
2. No working capital (money)
3. Poor choice of locations
4. Not understanding your market (customer needs)
5. No marketing (let people know you are here)

This month we are looking at ways to improve your working capital, meaning how to make your money work for you not against you.

At the Small Business Development Center of Northwest Illinois we receive many phone calls about grants. In general the conversation goes like this:

I was watching TV at 3:00 o’clock in the morning and saw this commercial.

This crazy guy with question marks all over his jackets says that for $49.95 he

will send me a book with all the free grant money places in it. Should I send

him the $49.95?

No, save your money for a better use. There is no free grant money available for commercial (regular businesses) ventures. Just like the old saying goes there is no free lunch.

The Small Business Development Center of Northwest Illinois receives its funding in part from a federal agency (Small Business Administration) and a state agency (Illinois Department of Commerce and Economic Opportunities). When any type of funding program is available we are among the first to receive the information. If it is a program that would apply to anyone of our clients, we will notify that client directly.

So lets talk about how to make what money you have work best for you. One of the best things you can do for your business is to get to know your banking professional and accounting professional. These expertises have many tools and ideas that will help your business. Their guidance, along with the Small Business Development Center of Northwest Illinois assist can make a big difference in your business.

So show me the money!! The Small Business Administration (SBA) has some ideas of where to look for capital:

• Savings
• Family
• Friends
• Home Equity financing
• Banks and Credit Unions
• Angel investors or Venture companies

So Great-Aunt Tilley won’t lend you any money? Your best friend from grade school is tapped out? Now what? Here are some additional ways you could seek capital:

• Credit Card
• Mergers/acquisitions
• New partnerships
• Customer financing
• Employee Stock Ownership (ESOP)
• Purchase Order Financing
• Factory Accounts receivables
• Local and state economic development plans

Remember all options have a price, so discuss them with your professionals for their advice. The bottom line: A well written business plan will help you create a method for returning capital into your company and making it work for you, not against you.

If you have additional questions or need assist, please contact our office at Highland Community College 815-599-3654 or at Sauk Valley Community College at 815-288-5511 x 320.

Exciting things are happening in Northwest Illinois, be a part of it! Get involved in your communities!