Scheduling for Your VA Business

Once you get established with a few clients, it’s easy to find your schedule either keeping you insanely busy or insanely bored. There doesn’t seem to be much in the middle, which is your ideal. So this month I’m offering tips on how to schedule your workload out.

First of all, never go over 30 hours a week with scheduling your clients. So make sure you account for that in creating your hourly rate. Why? Well, two reasons. One, this allows you the opportunity to be flexible with your ongoing current clients if they need more from you one week than they do normally. They will appreciate that and their loyalty to you will increase.

Also, it allows you time for one time projects that might drop in sporadically (and with minimum charges on those they usually turn out to be very profitable). This also gives you time to handle some of your own business administrative functions (billing, record keeping, etc.) during normal business hours so you are not up late at night or weekends when you should be spending time with family.

Next, make sure your contracts all state that normal business requests must be scheduled 48 hours in advance. This way, when someone calls and says, “Heather, are you available to work with me on a project on Friday?” on a Wednesday, you can open your calendar and schedule appropriately.

Many clients will try to treat you like an employee–requesting same day if not immediate turn arounds. This is your time to remind them that while you do try to process same day requests, you do require a 48 hour notice for all normal business requests and that rush fees can apply if they need things done sooner.

Now, I’m pretty flexible with most of my clients, because I understand that things DO come up as a surprise now and again. So most of the time I don’t charge a rush fee for doing work the same day or in less than 48 hours from request unless they either are abusing this by constantly wanting things done same day or I’m really that busy that I can’t process their requests same day unless I work until midnight. Those two times, I will actually tell them that if I do their work I will require a rush fee in addition to normal hourly rates.

Always keep an electronic and a paper copy of your calendar. Technology is great, but you never know when it will decide not to function anymore! Even if I know a phone call or project will only take 30 minutes or so, I go ahead and block an hour in my schedule just in case something goes wrong or the client requests changes afterward.

This is a good rule of thumb to keep yourself out of a quandary and it gives you the opportunity to get up and stretch your legs or get some fresh air or a cup of coffee between projects. Believe it or not, these little “breaks” even if just for a minute or two will help keep your mind fresh all day.

Keep moving toward success

A Small Business Loan

A small business loan is one of the most treasured commodities in the business world. It is still very hard to get despite the claims and promises of banks, credit unions, and other lending institutions that they want to help American small business to survive and grow. In fact it sometimes seems that banks and other lenders want to see small businesses fail and only support those that survive the battle for customers, revenues, and finances during their first two years.

Getting a small business loan is most difficult during these first two years, when most businesses face a myriad of challenges involved with not only opening their doors, but hiring and training staff and meeting the demands of customers, clients, suppliers and vendors. The main reason that the banks use for not granting many loans during this period is like the same reason that a student can’t get a job coming out of school. They don’t have the experience.

The other major reason behind that first reason is that the banks think that many small businesses are simply too great a risk to offer them a small business loan. On that front they do have a point. The majority of small businesses open and close their doors for good during that first year and from the banks’ perspective they don’t want to risk losing their investment during this period.

But after a small business survives those first two years of struggle the banks are much more accommodating. By then the business not only has experience and has proven its capacity to overcome adversity, it also has a track record of being in business. This will include having a financial statement or income tax return prepared twice as well as a record of how well they have been paying their bills to other businesses, suppliers and vendors.

The banks are able to access this information by doing a business credit check from any one of a number of business credit reporting agencies. They can also access a company’s payment record by reviewing their Paydex Score which is available from business reporting company, Dun and Bradstreet. Whenever there is an application for a small business loan, all lenders will review this information before even looking at the rest of the loan application.

If all the business credit checks and reports come back okay the banks and other lending institutions may look further into the business requesting a small business loan and this often includes a personal financial check on the owners or operators of the company. They may ask for business references to follow up with and they may even ask for a personal guarantee or collateral before granting a small business loan.

Agencies like the Small Business Administration can assist small businesses to obtain a small business loan since almost all of the monies provided to small businesses are guaranteed by them even before the bank loosens up its money strings.

Tips For Establishing Business Credit Fast

Borrowing from the SBA

Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan isn’t always easy. Before you approach your banker for a loan, it is a good idea to understand as much as you can about the factors the bank will evaluate when they consider your loan. This discussion outlines some of the key factors a bank uses to analyze a potential borrower. Also included is a self-assessment checklist at the end of this section for you to complete.

Key Points to Consider

Some of the key points your banker will review:

1. Ability/Capacity to Repay

The ability to repay must be justified in your loan package. Banks want to see two sources of repayment – cash flow from the business, plus a secondary source such as collateral. In order to analyze the cash flow of the business, the lender will review the business past financial statements. Generally, banks feel most comfortable dealing with a business that has been in existence for a number of years, as they have a financial track record. If the business has consistently made a profit and that profit can cover the payment of additional debt, then it is likely the loan will be approved. If, however, the business has been operating marginally and now has a new opportunity to grow, or if that business is a startup, then it is necessary to prepare a thorough loan package with a detailed explanation addressing how the business will be able to repay the loan.

2. Credit History

One of the first things a bank will determine when a person/business requests a loan is whether their personal and business credit is good. Therefore, before you go to the bank or even start the process of preparing a loan request, make sure your credit is good

3. Equity

Financial institutions want to see a certain amount of equity in a business. Equity can be built up through retained earnings or the injection of cash from either the owner or investors. Most banks want to see that the total liabilities or debt of a business is not more than 4 times the amount of equity. (Or, stated differently, when you divide total liabilities by equity, your answer should not be more than 4.) Therefore, if you want a loan, you must ensure that there is enough equity in the company to leverage that loan.

Don’t be misled into thinking that startup businesses can obtain 100% financing through conventional or special loan programs. A business owner usually must put some of his/her own money into it. The amount an individual must put into the business in order to obtain a loan is dependent on the type of loan, purpose, and terms. For example, most banks want the owner to put in at least 20 – 40% of the total request.

Example: A new business needs a $100,000 to start. The business owner must put $20,000 of his/her own money into the new business as equity. His/Her loan will be $80,000. The debt to equity ratio is 4:1. Note that this is only one of many factors used to evaluate the business – simply having the right debt to equity ratio does not guarantee you’ll get the loan.

The balance sheet indicates the amount of equity or net worth of a business. The net worth of the business is often a combination of retained earnings and the owner’s equity. In many cases, an owner’s equity will be shown as a loan from shareholders, and is therefore a liability. If a business owner wishes to obtain a loan, he/she will be obligated to pay the bank back first, not his/herself. Consequently, it may be necessary to restructure the liability so that it becomes the owner’s equity, or subordinate the loan. If the current debt to net worth is 4 or over, it is unlikely that the business will be able to obtain additional debt/loan. Understand your financial statements.

Understanding Financial Statements:

The primary financial statements are represented in the balance sheet and income statement. Learn more about these statements

BALANCE SHEET

The balance sheet is a snapshot of the company’s financial standing at an instant in time. The balance sheet shows the company’s financial position, what it owns (assets) and what it owes (liabilities and net worth). The “bottom line” of a balance sheet must always balance (i.e. assets = liabilities + net worth). The individual elements of a balance sheet change from day to day and reflect the activities of the company. Analyzing how the balance sheet changes over time will reveal important information about the company’s business trends.

INCOME STATEMENT

Known also as the profit and loss statement, the income statement shows all income and expense accounts over a period of time. That is, it shows how profitable the business is. This financial statement shows what how much money the company will make after all expenses are accounted for. Remember that an income statement does not reveal hidden problems like insufficient cash flow problems. Income statements are read from top to bottom and represent earnings and expenses over a period of time.

4. Collateral

Financial institutions are looking for a second source of repayment, which is often collateral. Collateral are those personal and business assets that can be sold to pay back the loan. Every loan program, even many microloan programs, requires at least some collateral to secure a loan. If a potential borrower has no collateral, he/she will need a co-signer that has collateral to pledge. Otherwise, it may be difficult to obtain a loan.

The value of collateral is not based on market value; that is discounted to take into account the value that would be lost if the assets had to be liquidated.

5. Experience

A client who wants to open a business and has no experience in that business should not seek financing, let alone start the business unless they intend to hire people who know the business or take on a partner that has the appropriate experience. Regardless, the client should be advised to take some time to work in the business first and take some entrepreneurial training classes.
Sample Collateral Chart [http://www.corporatefasttrack.com/SBA_Collateral_Ratio.htm]

Questions Your Banker Will Ask

The key questions the banker will be seeking to answer are as follows:

  1. Can the business repay the loan? (Is cash flow greater than debt service?)
  2. Can you repay the loan if the business fails? (Is collateral sufficient to repay the loan?)
  3. Does the business collect its bills?
  4. Does the business control its inventory?
  5. Does the business pay its bills?
  6. Are the officers committed to the business?
  7. Does the business have a profitable operating history?
  8. Does the business match its sources and uses of funds?
  9. Are sales growing?
  10. Does the business control expenses?
  11. Are profits increasing as a percentage of sales?
  12. Is there any discretionary cash flow?
  13. What is the future of the industry?
  14. Who is your competition and what are their strengths and weaknesses ?