Realize Your Business

Author: Geri Schneider Winters

Sometimes when running a business you may come up with a need for a relatively small amount of money for a relatively short time period. You may not qualify for a regular bank loan, so what do you do?

Traditionally, many of us small business owners have turned to family and friends for these kinds of loans.

This can lead to problems. For example, there may be bad feelings if the terms of the loan and repayment are not clearly spelled out. Or you may not have family or friends who can afford to (or want to) loan you money.

There are some good solutions available, that are growing in popularity. This article reviews the solutions available from three very different companies: Virgin Money, Prosper, and Zopa.

I have not used any of these services yet myself, but they all look interesting to me for different reasons. And I see that they have all been favorably written up in the media, and have been in existence for quite a number of years. If any of these interest you, definitely do your research on the companies and what they offer before making a commitment.

First is Virgin Money (formerly CircleLending) owned by Sir Richard Branson (Virgin Records, Virgin Atlantic airlines, etc.). The purpose of this company is to document and manage loans for you. The basic service they offer is to do all the paperwork to formalize a loan between two parties who have agreed to the transaction. So for example, let us imagine that your father agrees to loan you $10,000 for your business. Then you and he would contact Virgin Money to write up all the loan documents, showing the loan amount, interest rate, and payment schedule. For an additional fee, they will also manage the loan, by transferring the payments from you to your father, and sending year end reports showing how much interest and principle you paid.

This is a good service if you already know someone who is willing to loan you money (or someone you want to loan money to) and you just need help formalizing the agreement. You might want to make the agreement more formal to avoid any misunderstandings about payment terms, or because you want the formal document to put with your business papers in case of an audit.

The home page for Virgin Money is http://www.virginmoneyus.com/
Virgin Money is available in several countries around the world, including the US and UK.

Another company that helps people borrow money from other people is Zopa. This works very differently than Virgin Money. Zopa is a membership community. Through this community, you become a member of a credit union. If you want to borrow money, you get a loan from the credit union. You can also post your loan on the Zopa site. Then other Zopa members can help you get a lower interest rate for your loan (which may mean you will qualify for more money). Back to how this works in a minute.

If you are a person who has money to lend, you also join Zopa as a member and become a member of an associated credit union. You invest the money you want to loan into a Certificate of Deposit (CD). You look through the posted loans on the Zopa site and indicate which loan you want your money to fund. Then you say what interest rate you want on your CD. If you choose a below market interest rate, then the person whose loan you are funding gets a lower interest rate on their loan.

In this Zopa model, the person investing in the CD will make the rate of return they choose, around 5% or less at the time this article is written. In return, the CD is insured up to $100,000 by the federal government of the US, and the rate of return is guaranteed.

You can get more information at the Zopa home site https://us.zopa.com/index.aspx
Zopa is only available to US residents. To apply for a loan, you have to be 18 or older with a FICO credit score of at least 640.

The last company I looked at is Prosper. Again, it’s model is very different than the other two. This is a real person-to-person model. Borrowers and Lenders both sign up to be members of Prosper. A member who wants a loan makes a post on the Prosper site saying how much they want to borrow, the maximum interest rate they will pay, and what the money will be used for. Prosper runs a credit check and based on the results, assigns a credit rating to the borrower – AA, A, B, C, D, or HR (High Risk). AA is the best rating, which means the person is almost certain to pay back the loan, based on their credit history.

Let’s say you want to loan money to one or more of the people listed. You select the loans you are willing to fund based on how much risk you want to take, or how much their story touches your heart. For each loan, you say how much money you will loan (it does not have to be the full amount), and the minimum interest rate you want to receive. Many people can “bid” on the same loan. Prosper picks the bids with the lowest interest rates that make up enough money for the loan.

Prosper handles all the payment processing, collection of bad debt, and the website, by charging a small percentage of the amount of the loan as a fee. If you are a lender, you will typically earn a better return on your investment by loaning money through Prosper than through Zopa, but you also take a higher risk of potentially losing the money. If you are a borrower with a low credit score, you may find people willing to invest in you here, if you cannot find a loan other places.

You can get more information about Prosper at their home site http://www.prosper.com/
Prosper is available to US residents only.

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Now it is your turn.

If any of these companies interest you as either a borrower or a lender, I encourage you to go to the sites and investigate further.

It is also wise to check with the Better Business Bureau to find out more about the companies.

If you are not in the US, then see what opportunities exist in your country. You may be able to find something similar, depending on the banking laws in that country.

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* Article used with permission from Wyyzzk, Inc.’s Realize Your Business website at http://www.realizeyourbusiness.com This website of reports and tips contains information to help you succeed as the Owner/Manager of a small business.

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Author: Geri Schneider Winters

Everyone says you need to document your business processes some how. There are many ways you can do this, including use cases, process maps, and mind maps. The big difficulty many people have is not the tools, but getting started. How do you know what to document? How do you get the information? I work with a lot of people to document their business processes, and here are some things I do:

Determine what your business activities are

Get in the habit of writing notes about what you do all day long. This does not have to be time consuming. I do it once an hour, or whenever I finish a task and start a new one. Just make a note in a calendar or time management program or on a piece of paper. I like to put it in my PDA calendar, because that is very convenient for me. Write something like – “3 -4 pm Wrote Newsletter Article and posted it to autoresponder.” This does not tell you in detail what you are doing, but it will provide you a list of the activities you do all day long in your business. Try this for a week, then at the end of the week, make a list of the things you have done for your business. Each thing on that list can be documented as a business process.

You will probably need to do this for longer than a week, because there are cycles in a business – some things you do daily, some weekly, some monthly, and some yearly. If you ever think you will want to do consulting or mentoring, then get in the habit now of writing a note about everything you did and how long it took. You will need that when billing customers for your time.

Write how you do each activity

Once you have a list of the things you do, then you can write notes about how you do those things. Look at one thing on the list and write some notes about how you do it. I like to do this while I am doing the activity (if that is possible) because then I will write all the steps of what I do.

If you are not sure how you do the activity, or you are having trouble writing the information, then enlist the help of a friend, family member, or business partner to find this information. The easiest approach is for you to demonstrate what you do while the other person takes notes on how you do it. Alternatively, another person can interview you, and you can describe what you do to them while they take notes.

When I work with people to determine what they do, my preference is to sit with the person and have him or her show me what he or she does. My second choice is an interview. My third choice is to make a guess about how the process works, send that guess to the person, and ask them to make corrections.

You will get the most accurate information if you (or someone else) write notes while the activity is being done.

Make a manual

Now that you have the activity written, you can review your notes to see if that is the best way to do the job. You might want to make changes because there is a better way. Once you are happy with the process, then you can make a page for a manual. This might be just text, or you can take the written notes and put them into another form you like, such as use cases, process maps, flow charts, or mind maps. You might add screen shots to help explain the process.

This manual is something you can use for yourself for tasks that are not common. I frequently forget exactly how to do some things because I only do them once or twice a year. My notes from the previous year save me a lot of time. You can also use the manual to train someone to do those activities the way you want them done.

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Now it is your turn.

If you are not recording how you spend your time, find a way to make this easy for you to do, and start doing it immediately.

Once you have at least a week’s worth of business activities, make a list of all the things you do for the business.

Once you have a list of the business activities you do, start making notes about how you do them.

Over time, you will create a manual of operations that you can use for yourself or any employees you hire.

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You are invited to re-publish articles from this blog, in your publication or website, as long as the article is intact and you include the following Byline paragraph (with live links) after each article you use…

START BYLINE

* Article used with permission from Wyyzzk, Inc.’s Realize Your Business website at http://www.realizeyourbusiness.com This website of reports and tips contains information to help you succeed as the Owner/Manager of a small business.

END BYLINE