photo credit: tombothetominator

Do existing businesses need money? Probably.

Is this a time to start a business? Maybe.

In either case, the business plan you write today will be different than the one you wrote five years ago. Five years ago money was available. It is still there, but it is a lot harder to find, and to tie down. Here are the five keys to getting funding now:

1. Take it as far as you can yourself

Whether your business is is brick and mortar, or online, do as much as you can yourself. Bootstrapping is IN style, if indeed it ever went out of style. Getting funding to “expand” is always easier than getting funding to “start”.

Yes, this means more extensive planning and researching than you may have done previously.

Yes, this means developing prototypes and test marketing before spending millions on a project.

Yes, this means actually beginning the business if you can. Most businesses can start early. Most businesses can begin as an online business, a very inexpensive alternative to a brick and mortar business. A beauty salon would have a hard time, but a professional speaker, credit repair, and dozens of other businesses are naturals for online businesses. Even the beauty salon can begin online if it will have some unique products to sell. One lady I know began her business online, making custom mineral makeup. It was so successful that she never opened the boutique business she had planned. Now she fills orders from around the world every day. She discovered, too, that she didn’t even need a business plan – she had all the money she needed.

2. Be THE pro in the business

Nobody wants to finance your on the job training. Prove up front in your business plan that you’ve got industry experience and management success behind you. The “wanna be’s” are in for a rude awakening over the next few years.

Your business plan needs to tell the tales of your successes. Lists of “accomplishments” can get pretty boring. Translate those into real vignettes and it is a slam dunk. Don’t have the success stories to tell yet? Well, get them. Don’t expect funding until you’ve got the tales to tell.

3. Be The Dreamer

Capture your lender with your enthusiasm and sincerity. Swallow whatever fear and misgiving you may have, and march up to the lender, stick out your hand and say, “I’m Josephine Martinez, the entrepreneur down the street.” It doesn’t matter if that business isn’t open yet, you are still “the entrepreneur down the street”.

There is just something catchy about someone with such unbridled enthusiasm, especially in tough economic times. Your lender will want to capture your energy, and just may want to keep you around.

4. Be The Realist

Recognize that some businesses will be easier to fund than others. Repair businesses, credit businesses, low cost businesses will all be better off than a custom tailoring shop.

Highly capitalized businesses like restaurants, construction and resorts have a tough time presenting successful business plans in tough times. The tougher your business is to fund, the more important it is to do your homework. Don’t wait for your lender to tell you to do it, or even to vaguely ask for it. March in with your stats in your hand. It is the only way.

5. Go For It

This is the most important step. Lots of folks are sitting in the wings, waiting for the economy to change. Well, it is not going to change soon.

The US economy, and the world economy, are in the wringer like they haven’t been for half a century or more. Because of that, everyone assumes there is no money to be had. Well, it just ain’t so. There is money there, but few people know where to put their money so that it is both safe and making money. Your job is to prove that your business is the answer.

And there IS money out there. Lots of it. Honest. Go for it. Now.

MaryAnn Shank, the talented and rough weathered pro at Business Plan Master has helped thousands of businesses navigate tough economic times. Here is where her experience shines.

photo credit: zhushmanson

Starting a small business has proven to be on e of the best ways to build wealth in America. Over 90% of all millionaires are small business owners. Taking the first step towards financial freedom is the most important thing you can do.

Now, financing your business venture can prove to be more difficult than many imagine. The good news is that there are thousands of grant programs available to people looking to start or expand a small business.

Many grant websites out there would like us to believe that it’s as easy as locating an obscure federal grant program and then sending them a letter and wait for the check in the mail. Furthermore, they’ll charge $59 for this info and provide no guidance on how to apply for the grant. It is important to realize:

(i) It is NOT that easy to get free money from the government
(ii)…but it IS absolutely possible, with a little research & work, to get truly free money from the government (or any one of several private foundations).

Now, most US government grants for businesses are targeted at larger corporations or non-profits organizations, particularly those specializing in education or medicine. The best-bet for getting money for a small-business is from private organizations and state agencies.

The process of finding a small business grant program to apply for and reviewing the requirements to getting is very time consuming. After conducting a two-week search for a medical publisher, I found the requirements to be very specific and difficult to meet.

Eligibility can be based on your location, and your business’ sales revenue to the application date, years in business, sex, race, and even for the purpose of funding. If your business sets out on a small business grant seeking mission there are some questions that you will have to answer which are:

1. Do you have the time and the resources available so that you can search for a small business grant program and apply for it?

2. Can you afford to hire a consultant if you are unsure of how to do it, or can you learn the grant application process by yourself?

3. Does your business need the money right now for expansion or can you wait up to a year?

If you want to take a look at the small business grants available, the best place to start is the Catalog of Federal Domestic Assistance (CFDA). The CFDA lists thousands of grants from all government agencies for free. Many business grants will be geared towards minority business development or rural business opportunity grants. Do not overlook the other assistance programs available such as equipment and training.

When you do locate a small business program, you will need to be ready to go through the, approval process. Most beginners spend too much time searching for a grant program then not enough time preparing and writing the grant application. This is crucial to your success as getting grant money. Our goal is to help people spend less time finding grants and providing them with a detailed approach to preparing a successful grant application.

Here are some tips:

Small Business Grant Tips

- Provide the grant company with all of your complete and accurate information in the application. An incomplete application will likely not make the review process or it can add delay your grant form getting approved.

- Get to know your grant officer and their constraints, budget and concerns with approving your grant.

- Stand out among the crowd with a well-prepared business plan if required. You will have to demonstrate your understanding of the business. Show how the money will bring the benefit the government agency wants.

If you find that you are willing to go through the steps that will be needed in order for you to get your grant, then this will be your comprehensive guide to making it happen. Visit our website for some free resources such as state funding agencies and more grant writing resources.

Two years ago I went through the agonizing process of getting a grant to buy a local business. A lot of Grant sites out there will charge you $50+ for the info in this article… There are a couple of things to remember when shopping for a grant program. Let this article point you in the right direction and read more at http://www.OfficialGovernmentGrants.com

photo credit: Lori Greig

Green investing is growing up. Previously the province of a small number of investors who chased an even smaller number of companies, the market for environmental technology has expanded dramatically in recent years. And it has captured investors’ wallet share along the way. Inflows into green funds totaled $766 million for the year ending May 31, according to Morningstar, compared with $37 million in net outflows from religious funds over same time period. (Morningstar tracks these two subcategories under the umbrella of socially responsible investing, or SRI, funds). “The interest has turned from ‘maybe I’ll dabble in this’ to ‘this is an asset class I should include in my portfolio,’” says Jerry Moskowitz, president of FTSE Americas.

Surging fuel prices have helped make green technology one of the biggest equity growth areas in the U.S., says John Quealy, a green tech analyst at Canaccord Adams, an independent financial services firm in Boston. New products are keeping pace. Mutual funds represent the largest share of socially and environmentally screened funds, with $171.7 billion in total net assets invested across 173 different funds, according to the Social Investment Forum’s 2007 Report on Socially Responsible Investing Trends in the United States. Exchange-traded funds accounted for only 1% of the total assets of all socially and environmentally screened funds at the beginning of 2007, but their ranks are growing daily.

The source of investors’ fascination is, of course, the need to find alternatives to oil and other fossil fuels in today’s environment of scarcity and climate change. We’ve reached a point where environmental technologies have moved way beyond good wishes for Mother Earth, and are starting to make economic sense. Alternative energy has finally captured businesses’ and investors’ imaginations and the gold rush is on-and so are nascent fears of a bubble.

Oil prices of $140 or more per barrel highlight the scarcity-or at least, the fears of scarcity-of this hot commodity. Global demand for oil will only increase over the short term, even if record gas prices finally cause Americans to curb their consumption.

China and India are expected to more than double their energy use by 2030, according to the International Energy Agency. Increasing demand for fossil fuels pushes their prices up, which in turn spurs technological advances across all alternative energies. The world will continue developing better ways to power cars (the next iteration of the Toyota Prius, the ragingly popular gas sipper, will come with solar cells that help run its air conditioning), as well as alternatives to coal and other greenhouse gas emitters. Industry experts say that oil would have to drop back down to $50 per barrel for alternatives like solar, wind and geothermal energies to lose their economic viability.

Here’s a closer a look at the opportunities, and some potential risks, in green investing.

Clean and Green

Investors considering environmental tech should start by defining their terms. For example, some use “clean tech” and “green tech” interchangeably, while others make a clear distinction. Jack Robinson falls into the latter group. The manager of the $410 million Winslow Green Growth Fund-whose three-, five- and 10-year performance has bested the Russell 2000 Growth Index-defines green companies as those involved in a bona fide, sustainable solution to global warming or other environmental ills; clean companies, in his parlance, are environmentally neutral. One clean company that Winslow holds in Green Growth is Bankrate, a North Palm Beach, Fla.-based online consumer banking and personal finance network. A green company he owns is Green Mountain Coffee Roasters, a Waterbury, Vt.-based purveyor of fair trade organic coffee that is carbon-neutral and donates 5% of its earnings to earth-friendly causes.

Investors must also decide for themselves what constitutes a green company. Quealy identifies four subcategories within the green sector: energy and power technology, which includes fuel cells; water technology; recycling technology; and bioresource technology, which includes ethanol. However, many so-called green companies don’t draw 100% of their revenues from green activities. Purely returns-driven investors may not care to know the full scope of a company’s endeavors, but those who see themselves as socially responsible will. “If you’re large enough, you’re going to be doing things some people don’t like,” says Peter Kinder, president of KLD Research & Analytics, a Boston-based social research and index firm.

Robinson won’t hold companies that are at all “dirty.” For example, he won’t own BP, even though the British oil company is also developing alternative energies. Don Rogers, executive director of Virginia United Methodist Pensions, won’t invest in conglomerates with more than 10% of their income from any combination of alcohol, firearms and gambling. Green investors also line up on different sides of the nuclear power divide, with some embracing the technology as an attractive alternative to fossil fuels and others shunning it as expensive, a cause of toxic waste and prone to accidents or terrorist attacks.

The growth of green tech investment vehicles mirrors the increase in individual companies in the space. When Robinson first began investing in the category 15 years ago, he had only a handful of stocks to choose from. These days, he says, “the universe has expanded dramatically and a lot of the small caps have become mid-caps or even large caps.” One stock that graduated from small cap to mid-cap on Robinson’s watch is Itron, a Liberty Lake, Wash.-based company that produces electricity, gas, water and heat meters. When Robinson first invested in the company in early 2006, its market cap was under $1 billion, and today it’s about $3 billion.

The Al Gore Effect

photo credit: World Economic Forum

Many credit Al Gore and his 2006 Oscar-winning movie, An Inconvenient Truth, for the uptick in consumers’ desire to go green. “He’s had a major impact on educating the public,” Robinson says. And today, more consumers are gaining access to green mutual funds through their 401(k) plans, he notes.

Christopher Manning, a financial advisor in Houston who focuses on SRI, says alternative energy investments are the most popular SRI category among his new clients this year. He uses Green Century mutual funds with his clients, as well as two PowerShares ETFs, Global Water and WilderHill Clean Energy.

Before he launched his own SRI-focused firm in 2005, Manning worried about how it would play deep in oil country. While he hasn’t encountered any outright hostility toward his mission, he says, he has found plenty of educational opportunities among potential clients. He’s also found himself quite a niche. “In this area, I’m the only game in town” for clients interested in SRI, Manning says.

Justin Harris, a financial advisor in Seattle, says few of his clients come in with specific requests about green investing. Most request a general negative screen that weeds out tobacco, gambling and alcohol stocks. While many advisors adopt SRI vehicles at their clients’ request, Harris went the opposite route: About seven years ago he set a mandate that all assets his clients invested with him would be in socially responsible investments. “I saw I wasn’t gaining anything by divorcing my money from my values,” he says. Harris didn’t lose any clients as a result of the mandate, and clients embraced the cause. “I find that people really want to be fully engaged,” he says. “They want to walk their talk.”

Policy Watch

As with so many issues in this election year, market watchers wonder how the new occupant of the White House will affect green technology next year and beyond. Both the presumptive Republican and Democratic nominees, John McCain and Barack Obama, respectively, support a cap-and-trade system for carbon emissions, so it’s likely this initiative will move forward regardless of the election’s outcome. A system adopted by the European Union several years ago, a cap-and-trade system creates market incentives for reducing carbon emissions. Companies are allotted a certain number of permits to release carbon gases, and if they can figure out a way to reduce their emissions, they can sell their excess permits for cash.

When investing in individual securities, investors can analyze how well companies are preparing themselves for these coming regulations, says Todd Larsen, spokesman for the Social Investment Forum, a trade association of the U.S. social investment industry. Companies will incur greater costs as a result of cap-and-trade regulations, and they will pass these costs along to their customers. For example, a one-cent increase in the cap-and-trade cost per ton of carbon translates into a 33% increase in the end consumer’s electricity costs, Robinson says. Investors interested in carbon as a commodity also have expanding options: In June, Barclays launched the first exchange-traded note offering investors pure exposure to the global price of carbon.

Many assume that a Democratic administration will be friendlier toward SRI principles. For example, conventional wisdom holds that Obama would be more likely than McCain to increase incentives for environmentally friendly corporate behavior. But in some ways, among individual investors the opposite may hold true. “SRI is demand-driven, and there’s nothing like a Republican president to drive demand,” says one prominent industry participant who requested anonymity for fear of being perceived as cynical. Indeed, frustration at President George W. Bush’s dismal environmental record has contributed to the popularity of alternative energy investments in recent years.

Investors or Believers

While the next occupant of the White House may affect certain environmental policies, SRI and green investing has enough momentum that it should make progress no matter who wins this November. “There has been a sea change at work,” says Calvert CEO Barbara Krumsiek. Corporations have embraced positive change on environment, social and governance issues (also known as “ESG”), she notes. Large institutions like public pension funds have taken up SRI investing, including shareholder advocacy, and investors are expressing unprecedented interest in SRI, Krumsiek continues.

Calvert doesn’t track how many of its investors are purely returns driven, as opposed to those who invest according their beliefs, but Krumsiek believes that both groups are well represented among her shareholders. The venerable SRI fund family ventured into the green tech space last year with the launch of the Calvert Global Alternative Energy Fund. The fund was down 12.1 % as of June 30, negative 0.2 points below Standard & Poor’s 500 results for the same period, according to Morningstar. Calvert plans to launch a Global Water Fund in the third quarter.

Bill Crager, president of Envestnet, a Chicago-based provider of investment management products and services, envisions a day when information on companies’ environmental, social and governance track records will become more readily available. One day, he predicts, clients might receive, along with their quarterly returns statement, a statement of their holdings’ sustainability efforts. This could take the form of a report on individual companies and how they help or hurt the planet during that time frame, by opening up a water filtration plant, say, or by polluting a local river, Crager says. Envestnet’s products include Veris Sustainable Strategies, mutual fund portfolios for socially conscious investors.

Potential SRI investors will invariably ask whether investing with their hearts-and their attention on ESG reports rather than earnings reports-will damage their wallets in the form of lower returns. “My experience is all investors are returns driven,” says Dan Porter, founder and vice president of marketing for IW Financial, a Portland, Maine-based provider of environmental, social and governance research, consulting and portfolio management solutions. “When I want to incorporate my values, the question is, can I do that at an acceptable level of cost?” The answer will vary from client to client.

Ready to Boil?

Only a handful of green mutual funds and ETFs tracked by Morningstar have even a five-year track record. “The jury is still out about performance of SRI funds in general,” says Stephen Horan, head of private wealth and investor education at the CFA Institute. “Both sides can cite studies to support their case.” Not surprisingly, of those that do, some have underperformed and others have outperformed the broader market. Those in the latter category include Winslow Green Growth, with 11.2% five-year returns as of June 26, compared with 7.4% for the Standard & Poor’s 500; and the New Alternatives Fund, which invests in alternative energy and boasts an 18.1% five-year return as of June 26, according to Morningstar.

Outsize returns like those may prompt the question of whether alternative energy is entering bubble territory. It’s never an easy question to answer. “If it pops, we’ll know,” says Johann Klaassen, vice president of managed account programs for First Affirmative Financial Network, an independent investment advisory firm in Colorado Springs, Colo., that designs green investment portfolios. That said, Klaassen believes alternative energy is still in “the opportunity phase.”

Robinson says solar companies got “priced to perfection” recently but have since receded from their highs. It would be wrong to avoid the category altogether, he says: “Long-term, solar is a part of the solution.” Oil prices will not likely make a big retreat, he believes, and demand for alternative energy sources will only grow.

After all, it’s not as if the world will stop using energy. FTSE’s Moskowitz says green tech companies are reporting solid earnings that are reflected in FTSE’s environmental indexes, the FTSE ET50 and the FTSE Environmental Opportunities All-Share Index. “They don’t look wild,” Moskowitz says of his indexes’ components.

Even so, green tech investors must have a strong stomach to weather the sector’s volatility. Some of that volatility comes from the fact that most green tech stocks are small-cap growth companies, which are among the most mercurial. In addition, Quealy says, “We live in an unbelievable bull market for commodities, where geopolitical discussions swing the price of oil two to three bucks daily.” This adds another layer of volatility to green tech stocks that other sectors don’t share, he notes.

Quealy still thinks green tech companies rank among the best secular growth opportunities for the next five to 10 years. Stock pickers would do well to study the management, market and marketable technology of the companies they’re considering, instead of blindly investing in the sector as a hot growth prospect, he advises. “The passive investment approach is likely to be a risky one as Wall Street decides who the winners and the losers are,” Quealy says.

Jan Bryan, a planner specializing in SRI out of Prescott, Ariz., reports that while her clients expect competitive returns from their investments, these long-term investors also understand and accept cycles of underperformance. For example, when defense and big oil are doing particularly well, portfolios that eschew them will miss out on those gains. Her clients have found other kinds of rewards in SRI and green investing. “Clients absolutely love it when you ask them their views on social issues,” she says. “They feel respected and heard, and these are the most loyal clients.” Klaassen also notes the phenomenon of “sticky clients” in the space: “They get invested in us, as well as with us.” First Affirmative does get some returns-driven investors, but they generally don’t stick around for long. “Hot money flows in and flows out,” Klaassen notes.

Elizabeth O’Brien is an author with Financial Planning magazine. For more information, please visit http://www.financial-planning.com

photo credit: Theodore Scott

Many say that now may not be the best time to deal with the Spanish market. Property, once one of the most intriguing aspects of Spain, has now become overcrowded and overpriced. But on the other hand, investing in businesses there has started to let its potential shine.

There are thousands of new businesses, entrepreneurs, and small businesses looking to expand in Spain. They can now use networks such as the Angel Investment Network to connect to investors in Spain, around Europe and in some cases globally. Over the past few years, several local networks of business angels have also cropped up, such as CIDEM/XIP.

Having become one of the top ten economies in the world, Spain has begun to attract significant amounts of investment from foreigners. The growth has remained steady over the past ten to fifteen years, convincing investors that new businesses here have the potential for a very profitable turnover. However, when angel investors invest in new businesses, they want to make sure they cover a variety of market and industry sectors, as opposed to the real estate market where certain aspects have become oversaturated, causing the property bubble to burst.

Many Spanish companies have expanded internationally over the past ten to twenty years, and new businesses are looking across borders for potential capital investment. This also works the other way around, with many foreigners moving to Spain to start a new business.

Contrary to some other parts of Europe, most business angels in Spain do not get too involved with the overall running of the business, making it less of an overall partnership, but there are still many intangibles such people can provide. However, most investors will have the benefit of experience of the market sector, solid knowledge of how start-ups are structured, and possibly access to contacts around the world.

To help connect both parties, the Angel Investment Network has set up a branch in Spain. With this, both entrepreneurs and investors can find the right kind of partnership online. The Spanish website already has thousands of registered entrepreneurs listing their products and business ideas, along with business angels from all over the world who are interested in making an investment in the Spanish market, with experience in all sorts of industries.

Mike Lebus works with entrepreneurs seeking investments, via the Investment Network in Spain, which is part of a worldwide network of websites that help angel investors connect to entrepreneurs around the worl

photo credit: cwbuecheler

Many start-up companies and even savvy business people are not aware of what it takes to find capital to launch their new idea or propel their business forward. There should be no shame in this because if you were an expert on it you would be in business finance and not the industry you are in. You are good at what you do so taking the time away from that can be detrimental to your business. One mistake 95% of business owners make is trying to learn and perform too much themselves, and not rely on outside help.

To structure a financial deal it takes good business planning and good business planning should involve financial planning and structuring. Unless you have a rich aunt or can self fund your project, you are going to have to sell yourself, your team, your idea, your business, etc to someone. Whether it is the manager at the bank, venture capital fund managers or private angel investors you usually only have one chance to make an impression.

In business financing, only 30-40% of deals are looked at seriously if they have collateral behind them and only 5-10% are taken seriously in the angel and venture capital world. The percentage of actual funding is even lower. These statistics are not to discourage you but to help you understand the importance of getting the right assistance. Raising money can become a full time job and if you are running a business you already have enough work to equal a full and part time job, so why add more to your plate than necessary. If you do there is a good chance that you are actually setting yourself and your business up to fail unnecessarily.

So understanding that raising capital is a full time job if done by you, what is the best way to ensure that you get the job done? The answer is hire it out and just oversee it as you would any other segment of your business that you are not an expert at. Take marketing for an example. Companies such as Coca Cola and Nike do not typically create their own commercials, brochures, logos, etc… , they have agencies that do it. You should take the same approach with financing your business.

When hiring a consultant, hire one that you can present your concept, brainstorm with, and have them do the job for you. Business finance consultants are invaluable to help start-up companies as most start-ups have a concept or idea and are overwhelmed with all the things involved to get the idea to market. To create a successful start- up you have to have a plan and a solid one. It does not mean that the plan is set in stone and you have to follow all the things you say to the letter. Good businesses are flexible and use the plan as a road map, in which they may have to take a different route to make it work better. Consultants help you down the road faster and should be honest of how and when you might need to take a detour to be successful.

An example of this would be raising capital. Different investors want to see the same overall structure in a plan but each one could have a different emphasis. One might think the strength of the team is most important, another might fund on the return on investment time frame, and another could have an entirely different focus. Investors will look at things different than lenders and venture capital will look at things different than angel investors. A good business finance consultant will understand this and will also know what road is the best to take. They will also have different sources they can present your completed plan or prospectus to but allow you to seek out your own as well.

An established business will also benefit from a consultant as although you could be in business for years the market is ever changing especially in todays world and what was true yesterday or a few years ago is sure different today and probably will be tomorrow. A good consultant keeps up on what the reality of today is and plans for tomorrow.

No matter what industry you are in these are just a few reasons not to go it alone. Before you head down the wrong path or need some help making a detour, contact a business finance consultant today. Your business will be better off for it.

Want more information about business finance consulting? Venture Works Capital helps many businesses properly prepare for financing fro start to finish. Visit our website for more information. http://www.VentureWorksCapital.com

photo credit: JUCCCE

When we purchased Rockford Ball Bearing Corporation out of bankruptcy in 2006, the venture capital market was flush with cash. This spring we sought an additional round of funding for our expansion. Venture Capital is never easy to find, but especially during these difficult economic times it is getting harder. New strategies need to be implemented to find capital.

There are several ways to prepare for VC interviews for funding. Three steps should be implemented out of the gate. These are verifiable and true options:

First, explore your accounting records, tighten up the ship. Cut as many overhead items that are reasonable without gutting your research and development budget.

Next talk with your employees, make sure that their advice is being heard by management. VC firms will start by talking with your employees at all levels. They will rely more on this feedback than your managers may be.

Last, review your business plans, take an objective look. See it through your worst critic’s eyes. What would they change?

The founder of our company Joseph Malik sold Malik Bearing Company to The Harvey Family in 1975. Malik Bearing was renamed Rockford Ball Bearing in 1982 when The Harvey Family had to reorganize the company during the protracted recession of the 1980′s. The due diligence was dinner and a hand shake. Today’s VC firms spend much more investigative time talking with suppliers and customers, reading industry reports and analyzing your firm against industry benchmarks.

The ball bearing industry is a tough business, as tough as the balls we mill. The margins are tight. Venture Capitalists seek the highest and best return for their investment dollars, and it matters not which industry they deploy their currency into. Leverage is a friend to returns of rising businesses but the enemy of gamblers who treat a manufacturing company as a casino. The Harvey Family over leveraged Malik Bearing Company and had to lower debts to get back on a positive stable business path again.

The Venture Capitalists knew this history and we worked hard to offer a better road forward for our business, they agreed and funded us $42 million for our expansion plans.

Michael Malik has run Rockford Ball Bearing Corporation since 2004, he has a MBA from Harvard University and has been a venture capitalist and business development executive in numerous industries.

photo credit: Hot Meteor

Alright, so you woke up one day, checked your Swiss Bank Account, called your family office planner, had breakfast with your private client service wealth manager, got your tax accountant on the phone, and between three of you, you decided to invest your proceeds from your latest company’s Merger or Acquisition not into some dubious hedge fund or start-up biotech venture, but into financing Hollywood films because you figure you need the State tax Credits, the Federal tax write-offs, as well as a nice hedge of revenues from a few movies.

Now, this may not ring too well initially with your hedge fund manager neighbors in Connecticut or your oil and gas investor friends in Bahrain or Dubai, but aren’t these the same guys who are financing Hollywood blockbusters? And the only question for you, how do you get in the game without feeling like the Uncle of the film school student who wrote his nephew a $1,000,000 check for a film that starred his theater department classmates and ended up as a free download on youtube.com?

So after doing your share of homework, here’s what you discover may be the opportunity to spice up your wealthy but boring life:

*Sergey Brin And Larry Page Of Google, Fred Smith, the CEO of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll Of Ebay, Todd Wagner and Marc Cuban (formerly of broadcast.com), Max Levchin and David Grodnick Of PAYPAL, Marc Turtletaub of The Money Store, Roger Marino Of EMC Corp, former Chicago bulls co-owner Jim Stern, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg, Bob Yari; and, financiers Robert Sturm, Sheikh Waleed Al Ibrahim, Zeid Masri of SilverHaze Partners, Michael Singer, Mark Esses, David Larcher, Michael Goguen, Richard Landry, Michael Reilly, Rafael Fogel, and Philip Anschutz are just a handful of high net worth entrepreneurs who entered the motion picture finance and production business with successful results.

*There are various tradable state, federal, and international tax credit incentives that would offer a premium based on an equity position. Assuming there is a 10 million dollar budget film, where 50% of it is in equity, and 50% is through international distribution guarantees prior to release. Now assume there is a 20-25% tax credit on the entire amount of $10 million dollars, which will immediately translate into $2-2.5 million tax credit to an investor.

*Numerous hedge funds such as Reed, Conner & Birdwell (DISNEY), Legendary Fund (Warner Brothers), Melrose Fund (Paramount Pictures), Ingenious Media’s 700 Million dollar Float on London’s AIM, Benjamin Waisbren Investments, and a host of other funds and fund managers are entering the film finance arena.

*The explosion of international DVD, pay-per-view, home video, cable, megaplex theaters, the future of multi-lingual Internet video on demand downloads, and cross-market digital distribution including low-cost theatrical digital projection, the movie industry is accelerating at an unprecedented growth rate.

*The American Jobs Creation Act of 2004, which amends the Internal Revenue Code of 1986, was signed into law . The Act creates three tax incentives expressly applicable to motion pictures, one of which – § 181 of the Internal Revenue Code – is especially significant to independent film producers and their passive investors on qualifying films with budgets under $20 million dollars.

*The filmed and other entertainment sectors are constantly outperforming and beating analyst expectations with regards to growth, and are the only industries resistant to untimely global events and adverse economic conditions.

*Movie Investor returns may be more favorable and more liquid than holding direct equity positions in most public entertainment and other public companies, real estate investments, and other alternative investments.

*There is a huge demand, audience, and growing distribution structure for specialty independent, ,crime, horror, and other low budget films as exemplified by the success of such films as “Brokeback Mountain”, “Sideways”, “Capote”, “Garden State”, “Napolean Dynamite”, “Y Tu Mama Tambien”, “My Big Fat Greek Wedding”, “Memento”, “Crash” , “Saw 1 &2”, Friday The 13th”, “Halloween”, “Texas Chain Saw Massacre”, “Hostel” and “WOLF CREEK”, which was made for $800,000, bought for nearly 4 million dollars prior to its release by Dimension, as well as “Hustle and Flow” which was made for $2 million dollars and bought for $16 million by Paramount Pictures.

*Apart from large blockbusters such as “King Kong”, “Harry Potter”, and other large scale studio films, the majority of studio-produced films have been under performing at the box office. The films that have been successful for studios were all externally financed and or co-financed with studios, sold for 2-3 x their costs, and a majority of them retained foreign sales rights to maximize revenues.

So after looking at all the great benefits, how do you actually go about finding a deal or movie project where you are certain that half your money isn’t going to be used by a Hollywood producer as a down payment on a new mansion in Pacific Palisades?

The key that separates the successful film financiers vs. the newbie Oil magnates who come to Los Angeles with a pocketful of money and end up leaving with half a pocketful of money is called several things: structured finance, leverage, risk minimization, multiple exit strategies, tax credits, and the ethical consciousness of the filmmaker/producer.

What does that translate to you in a real world scenario. Lets say you want to finance 100% of a $1.5 million dollar low budget genre film whose worst case scenario is a DVD release and profits from international sales and perhaps some other equity sweeteners in the conversion of the securities that you subscribe for as part of the deal. Well, if you write a check for $1.5 million, and the film is shot in a state that has 30% in tax credits, you get back $450,000 in tax credits + under Section 181, you are able to write off that amount under Federal. So you are already making a nice return before the profits kick in. Then you figure you sell the film to 50 countries, and if you are really lucky, you sell the film for 3-4 times it cost to a studio at a swanky festival like Sundance, Toronto, Cannes, etc. Do this over 5-10 films and you can make a very profitable name for yourself among the Hollywood elite.

But lets really take this a step further and see how the bigger boys leverage film investing because they can get a bigger star which can translate in larger overseas sales. Lets say a filmmaker/producer has a $10 million film and you want in on the action. You would park $5 million in equity, receive an 20-30% tax credit on $10 million which will be $2-$3 million, the producer will get the biggest star he can, get a studio to kick in the other $5 million dollars, you wont worry about ever seeing a penny from the theatrical release because you know your DVD profits and international sales will cover your equity position. Make sense?

Now leverage this with different budgets, genres, stars, distribution, places where you can get high tax credits (Ie Puerto Rico is 40%), other exit strategies where you can find your shares on the London AIM, and you are on your new career path as a sophisticated and educated film financier. Off course, if you want to go even further and guarantee 100% of your capital, there are tricks to that as well.

If you have any further questions on your quest to a movie premiere on the French Riviera at the Cannes Film Festival, and its a burning a hole inside your heart and soul, contact yours truly at filmhedge@aol.com or yuri@noci.com

Yuri Rutman is a visionary entrepreneur who has seen his lifelong passion to make movies and break into Hollywood slowly manifest itself into a reality. From his childhood days as an immigrant, he believed in the American dream through perseverance, certainty, focus, and overcoming any obstacles. After spending more than ten years cultivating industry relationships, Yuri Rutman raised money online from an Angel Investor in San Francisco whom he never physically met until after “Mr. Id was produced. On the strength of the initial business plan, the Investor wired money to finance the project a few weeks later. He currently has an innovative principal protected film fund and tax credit investment fund for accredited investors, institutions, etc. He is skilled in investor risk minimization, private equity, exit strategies, global film finance, and creative endeavors. Please visit http://www.noci.com

photo credit: Marcin Wichary

Where, oh where, has that business grant gone? Everyone talks about them. Few seem able to actually find them.

Some, in fact, claim that business grants are everywhere; some claim they are as rare as a trout tooth. The truth, dear Watson, lies somewhere in between.

“Business grants are there for the asking!”

If you have done so much as a single search for “business grants”, you have most certainly discovered those web sites that proclaim, “They’re here — in my directory. Satisfaction guaranteed, m’am.”

Yeesh. I can hear the carnival hawker in the echo.

And it’s not just one site that makes such claims. No, hundreds of sites that make this claim. One gives your money back if you send in a reject letter from an agency you applied to; another says you are buying “soft goods” that can’t be returned. No matter. It’s all the same pitch.

“Good luck, Buddy. Business grants just aren’t there!”

When I found one site that claimed that business grants are a fantasy, it was actually a relief. Wow, an honest person.

Well, this person may have been honest, but she hasn’t done her homework.

“There are business grants to be had.” (This is my voice)

They are not growing on trees, but they are there. Consider, for instance, these scenarios:

Scenario No. 1 — Local Interest Grants

An experienced pre-school teacher sees a tremendous need to provide pre-school care for children in a low income area so their parents can go to work in a new plant being built nearby. Where can she go to get a grant to start her business?

Answer: The U.S. Dept. of Education is a good bet. The local county or state government might have money available, too. Even the new company being built might chip in with space and supplies. (If the pre-school expands, and becomes very successful, and even lucrative, it can still open more branches, franchise, or expand. In short, it, too, can still be profitable.)

Scenario No. 2 — Scientific Grants

A brilliant scientist wants to team up with a university, use their Ph.D. fellows to do research, and pin down the gene for one particular type of cancer. She has good credentials and high hopes. Where can she get a grant to start her company?

Answer: The U.S. National Science Foundation may indeed have something. (If the company proceeds to make this discovery, it is still able to sell stock, take in investors, or sell the patents. In short, it can still be profitable.)

Scenario No. 3 — Emergency Grants

A second generation Indonesian entrepreneur sees the devastation in her homeland caused by a tsunami. With her business contacts and experience, she knows she can help re-build her country. Where does she go for a grant?

Answer: USAID probably has $20 million or so on hand for just such a project. In fact, as I write this, that is exactly the situation. (This is not a “profit making” venture. However, somewhere in the $20 million grant, she will of course pay herself, and will be able to lay a strong foundation for a future business.)

So, Can I Reach Out And Pick One Off A Tree?

Are these three examples just aberrations? Emphatically, NO — there are thousands and thousands more where these came from. It’s all a matter of knowing where to look.

And it is a matter of being creative. Rarely can a person simply raise her hand, say, “Here I am, ready to take your money!” The bigger the grant, the more creative the approach needs to be, and the more experience the businessperson needs to have. But the money is there, waiting for creative, experienced entrepreneurs to claim it.

MaryAnn Shank, the founder of Business Plan Master has helped thousands of entrepreneurs find just the right financing for their businesses, whether from grants, from the SBA, from angel investors or alternative financing. For decades she has been a recognized expert in business plan development. Her knowledge is there for the taking.

photo credit: David Boyle in DC

We’ve all seen the hype: “We’ll put your plan in front of thousands of investors!” “We’ll write you an award-winning online business plan!” “Only $3,000 for thousands of investors to learn about your company!”

I cringe every time I see one of these ads. Vultures are preying on honest business people who want to fund their businesses. Here are some ways to spot them:

1. “Only qualified investors see your business plan.” Yeah, sure. And who “qualifies” them? Have a friend try to sign up as an investor (that part is usually free). How is she “qualified”? Is there a background check? Does she submit a financial statement? Odds are that she will be asked to do nothing more than sign a statement that she has a certain net worth. That’s no “qualification” in my book. So who are these “investors”? Who knows. One could be your strongest competitor.

2. “You approve anyone who sees your business plan.” Okay. So what are you going to do to qualify the potential investor? Are you going to run a background check? ask for ID? ask for tax returns? or just be so happy that anyone wants to see your business plan that you jump on the idea? (That’s how these scams get away with charging thousands of dollars — too many entrepreneurs are desperate for funding.)

3. “It’s only $500 (or $300 or $100) to register.” What does it matter if it’s free? If it is diverting your time and energy and resources away from finding a viable investor, it’s not worth it.

4. “Your idea is great, but we need to put it into our format. This will only cost $800.” Don’t walk — run from these guys.

5. “Your idea is so great that we want to invest $2,000 in it.” (That’s after you spend $5,000 to put it into “their” system.) Do I really need to comment on this?

6. “Talk with a satisfied customer, or 2 or 3.” Here’s this entrepreneur who just got $2 million in funding, and he has nothing better to do than sell the web scam to you? Trust me, entrepreneurs who just get funded barely have time to eat, let alone talk.

7. “Look at all these written testimonials.” This is harder to disprove because the testimonials look so real — even the companies might be real. But unless the testimonials, and the companies, can be verified independently, I wouldn’t trust them. And I’ll lay odds that they cannot be verified independently.

There is one huge exception to this: ACE-Net (http://activecapital.org). This is more properly the Access to Capital Electronic Network run by venture capitalists, institutional investors and individual accredited investors. It was developed by the U.S. Small Business Administration’s Office of Advocacy to encourage the creation of a national marketplace for investors to find and invest in equity offers by small companies.

ACE-Net isn’t for all companies. Those seeking under $1 million will probably find the paperwork daunting. Those seeking over $5 million won’t qualify. There are special qualifications, and of course lots of forms to fill out — but nothing like the forms required for a formal initial public offering.

But for those who do qualify, it’s an amazing tool in raising financing. Spend some time with the website and the forms, and see if your local SBA office can put you in touch with another company that went through the process.

As with any investor tool, don’t rely exclusively on ACE-Net. Use it in conjunction with your personally developed targeted funding search. This, combined with an exceptional business plan, doesn’t guarantee success but it places your company head and shoulders above all the rest.

MaryAnn Shank

http://www.businessplanmaster.com/investors.html; http://businessplanmaster.blogspot.com

Ms. Shank is a seasoned business financing specialist.

photo credit: rachie lea

All businesses start with “the big idea”. The person with the idea often times does not have all of the start up capital that they need to turn this multi-million dollar idea into a reality. The first place that many business owners start to seek funding is from friends and family. This first level of funding is sometimes known as “FFF,” or Friends, Family, and Fools. Jokes aside, there is absolutely nothing wrong with this as a place to start.

Funding that you receive from friends and family does have its drawbacks. If the business should fold and you cannot payback these people back you risk losing those relationships. Also, this type of funding is usually limited. Where do you go next?

Many people might say that the next step is to go to the bank. This is a wise choice, but banks are typically going to want to see two years worth of financial statements at a minimum. This is often difficult for a start-up company to provide; hence the phrase “start-up”. Also, if the owner or owners have less than perfect personal credit, it will make this even more difficult.

So what does that business owner now do? There is no substitute for building the separate credit of the business. You can see results within three to four months. You can build upon those results to seek larger sources of funding. The business owners that I assist have seen great results using this process. They have gone on to acquire large credit lines, equipment leases, and vehicle financing. While a business owner is building the credit of that business, they often require an infusion of capital between the initial family and friends investment and the bank investment. That is where an angel investor would come in.

An angel investor is a person who invests in start up businesses. They are taking on a very high risk investment; most new businesses fail within two years. As a result, the investor is looking for an ownership percentage in exchange for the money invested. This is not to say that this investor will always have some ownership interest in the business. Approximately 90% of time, once the loan is paid back, the ownership interest is returned to the owner. While temporarily sacrificing a percentage of ownership may not appeal to some, it may be the road to success.

When a business owner decides to seek an investment from angel investor they must prepare a business plan. The plan presents the potential angel investor with something that outlines several different facets of the business with everything from financial projections to management profiles. A business plan is something that any business will need in order to seek substantial funding. An angel investor will invest anywhere from $25,000 to $3,000,000. As you can see, there is a very wide spectrum. There many factor which will influence the investment amount.

I titled this article by asking whether an angel investor is a savior or a sinner. Ultimately they can be both: They are asking for a stake in your business; however they are offering a way for your business to succeed. The most important thing to remember is that an angel investor can be the solution to the problem of intermediate funding allowing for the dream to become a reality.

Hazen Martin
hazen@fasttrackcredit.com

http://www.fasttrackcredit.com