News From the Louisville SBDC
the secret of my success…
The word “made” can bring a variety of connotations to mind, some positive and others not so positive. Let’s focus on the very positive ones when we describe the newly opened MADE Blowdry Boutique on Lime Kiln Lane. Owner Carrie Ann Smith likes to compare her business model for MADE to a model more popular for salons in the 1950’s but that is now trending again, one that focuses entirely on washing and styling client’s hair. In the time of Bewitched, or maybe when Aunt Bea was getting ready for an evening out on the town in Mayberry, the service would have been referred to as a “set and style”, but it is now called a “blow-out” and it is perfected at dry bars or salons like MADE.
The first national franchise within this industry, Drybar, was started in 2010 and has grown to a $50 million business in the five years since then. This chain now has over 42 locations and employs 2,500 stylists. But Carrie Smith was not interested in purchasing a chain. As a first-time entrepreneur, Carrie understood that to grow her proposed business, she would need to “spot a gap within a given market, fill it and establish ownership of the space”. That is exactly what she has accomplished with Made which opened in late fall 2015 as only the second blow-out salon to be located in Louisville.
Carrie first came to the Louisville KSBDC to work on fulfilling her entrepreneurial spirit in March of 2014. She readily credits her father, who is also an entrepreneur, for the drive and initiative to start her own business. Carrie is a licensed cosmetologist and has over 10 years’ experience in the industry. This portion of her work history partnered with more recent experience working in marketing and business development within the plastic surgery industry provided a unique combination of skills that support success in her newest venture.
When approaching the KSBDC for assistance, Carrie requested help in developing financial projections to share with potential lenders or investors along with information about successful techniques and practices for hiring reliable staff. Louisville’s KSBDC business consultant, Vallorie Henderson, worked with Carrie to help map out a path to her success.
When asked about her experience of working with the KSBDC, Carrie stated that she “greatly appreciated Vallorie’s unbiased feedback and her willingness to stick with her through the entire process”. MADE was over a year in the making and Carrie is quick to credit the love and support of her close friends and family in the task of bringing her vision to reality. The salon has now been open approximately four weeks and is enjoying sales very close to the owner’s initial revenue projections. Both Carrie and Vallorie feel this is primarily due to the close connection of the business’s location with its target audience and the extensive social media marketing platform that was launched well in advance of the business’s opening. Over 80% of MADE’s clients live within a three mile radius of the business.
Look on MADE’s website or its Facebook business page for information on how you can schedule an appointment to get MADE
If you are an entrepreneur seeking to accelerate your business to the next level, I will be glad to help you. Contact Vallorie Henderson, Management Consultant at the Louisville SBDC, (502) 625-0124or email me at vallorie.henderson@uky.edu
It Takes Money to Make Money!
As a business leader, you may be faced with the challenge of acquiring a business loan as you consider launching a new business or expanding an existing one. Starting a business requires cash to obtain the assets needed to launch. If you plan to grow your business in 2016, you may need to acquire new assets to fuel that growth such as a larger building, equipment or vehicles. And, whether you are starting or growing your business, you’ll need working capital to fund operations.
Finding capital to start or grow your business is hard but not impossible. To be successful, you must be strategic, prepared and organized. Your greatest chance for success lies in being able to clearly understand and communicate how much money you will need, why you need it, what you’ll do with it and know when you need it. Whether you’re making a plea to friends and family or a formal pitch to banks you have to be prepared.
Here’s my 6-step process to getting that business loan you need:
1. Prepare personally – Get a free credit report from one of the credit sites. Make sure there are no mistakes and if there are listings of non-payment see what can be done to mitigate any issues. Download a personal financial statement (you can find one here https://www.score.org/resources/personal-financial-statement ) and fill it out. Any financing source will require this so it’s best to be prepared. You will also need to copy three years of your personal tax returns for your loan package if you plan to borrow money.
2. Prepare your Business Plan – A business plan will identify all uses for capital whether it is for a startup or an existing business. In fact, until you have finished your business plan you probably won’t even know how much money you really need. A good business plan will also have detailed financial information including several years of projected financials as well as several years of past activity for an existing business. You will also need to include details as to the uses of funds and an analysis of the market opportunities that make repayment of loans likely.
3. Identify potential lending sources – All lenders are not created equal. While some banks say they want to work with small businesses, often that is just PR. Local and regional banks are best. Make a list of at least 8.
4. Plan your presentation – Put together a professional looking presentation to give to the loan officer. Have ready everything the loan officer will need including tax returns, personal financial statements, and your business plan. Have everything professionally bound and include charts, spreadsheets, leases or anything that will help sell your opportunity.
5. Practice your pitch – A commercial loan officer is more likely to go to bat for you with the loan committee if he believes in you and your opportunity. Practice trying to sell your idea to some business professionals that you know that have gotten a business loan.
6. Make an appointment – Loan officers are busy so be mindful of their time. When you make the appointment briefly explain what you’ll be talking about and how much time you will need. Again, all lenders are not created equal so visit several.
The goal at the Louisville Small Business Development Center is to not only help you obtain a loan, but to simplify the process. While we do not make business loans, we know that proper preparation increases success. And to help you succeed, we have developed the expertise, tools and connections to financing sources that can save you time and offer you greater access to financing possibilities.
Our mission is to help startups and existing businesses get capital so they can grow and hire more people. Through our extensive experience, we’ve developed a process that can help you get the financing you need. While we can’t guarantee success, we’ve helped enough people that we know what lenders are looking for. Let us help you navigate the funding maze.
Helping to make your small business dreams a reality is our ultimate purpose. And, we are very good at what we do.
If you need a business loan to start or grow your business, contact me. I’d like to help.
If you are an entrepreneur seeking to bring your dream to reality, I will be glad to help you. Contact David Oetken, Center Director/Management Consultant at the Louisville SBDC.
502.625.0124 l david.oetken@uky.edu
If I had a Million Dollars...
At our annual fall conference David Oetken, the center director, and management consultant Toni Sears, were inducted into the exclusive Kentucky Small Business Development Center Million Dollar Loan Club.
This honor is reserved for management consultants who helped business clientele secure a million dollars or more in loans to start, expand or purchase their companies. Statewide KSBDC consultants aided entrepreneurs with more than $32 million in loans during the 2014-2015 fiscal year. Oetken and Sears were among 11 consultants statewide who achieved this honor.
“I am so proud of the impact and contribution the Louisville SBDC staff makes to our Commonwealth and it is an honor to recognize their accomplishments,” stated Dr. Becky Naugle, State Director of the KSBDC.
Dr. Becky Naugle inducts Louisville SBDC’s Toni Sears into the Million Dollar Club for 2014-2015.
A Look at Leasing
Looking at acquiring equipment for your business? Whether your company needs heavy equipment or a virtual computer, network leasing can be a good way to acquire it. Aside from reduced cash outlay there are many benefits to leasing equipment.
• 100 percent financing: Many business leases come with 100 percent financing terms, which means no money changes hands at the inception of the lease. Can you imagine what a boon to cash flow this can be?
Well, it’s not totally cash-free, because the lessee has to make the lease payments each month. But many times the assumption is that the company will be making the payments from future cash flows — in other words, from enhanced revenues that the company earns because of the lease.
• Obsolescence: Another advantage to leasing is working around obsolescence, which means the company anticipates frequently replacing the fixed asset. For example, many larger clients lease rather than purchase their computer equipment so they can stay current with new and faster computer processing technology.
• Flexibility: Asset flexibility is another leasing advantage. Based on the relationship between the lessor and the lessee, the lease may be for either just a few months or the entire expected life of the asset.
• Tax advantages: Separate from any tax benefit a company may gain, lease payments can reduce taxable income in a more appropriate manner than depreciation expense. Remember that you treat operating leases like rentals by exspensing the entire lease payment when the business makes it.
Before you get all excited about paying fewer taxes, there’s usually only a timing difference in taxes paid with leased versus purchased assets. Basically, taxes saved today will eventually have to be paid tomorrow.
• Off-balance-sheet financing: Finally, operating leases provide off-the-books (or balance sheet) financing. In other words, the company’s obligation to pay the lease, which is a liability, doesn’t reflect on the balance sheet. This can affect a financial statement user’s evaluation of how solvent the company is because he will be unaware of the debt—hence the importance of footnotes to financial statements.
Leasing can save you the time and hassle involved in finding someone who will extend you credit for purchasing equipment, and you can keep pace with emerging technology. If you use the leased equipment in your business, you may enjoy a tax advantage because your lease payments might also be fully deductible. Maintenance may be included in the lease saving you additional costs.
Finally, a Fair Market Value Lease is a lease with a buyout at the end of the lease .The advantage of this type of lease is that the lease payments are treated as a rental expense, and as such are tax deductible because they don’t show up as an asset of the company.
For more information about equipment and vehicle leasing please contact Tom Jenkins at The Leasing Group 502-224-2073