Finance for Startups – Let’s Keep It Simple!

Percent of Failed Businesses Year 1 at 25%, Year 2 at 36%, and Year 3 at 44% –

You get up, put on your best business suit and polish your shoes. You even attempt tidying up your hair and you carefully place all your documents in a briefcase. You take one last look in the mirror and mouth “hot stuff!” as you wink at your reflection and head out the door. No, you’re not heading out to a hot date or meeting the future Mrs. So-and-So.

You’re heading to the bank because you had a brilliant business idea in the shower last week and any bank who doesn’t want a piece of it, will miss out big time. You practice your carefully rehearsed script as you drive to the bank. You know what you’re going to say and how you’re going to say it. You get there and expect to be shown into a luxurious business office that houses a carefully manicured business manager to discuss this project. Instead, you sit and wait in the queue with the rest of the clients who also didn’t make an appointment.

What to Expect When You Go to the Bank for a Startup Loan

After sitting in the queue for the good part of an hour, you’re finally shown to the business banker’s office. The business banker looks like a smoker’s cough and although the office is neat, everything is chipboard and plastic to save costs and cut corners. Just another business, you realize. The banker turns his tired gaze to you and asks what he can help you with. That carefully rehearsed speech is out the door and you sit there fumbling for words like a fish out of water.

He slowly takes a sheet of paper from a nearby file, and you notice that it’s a checklist. He starts asking you a few questions about the industry and then runs through the requirements. A business plan, it turns out, forms the backbone of this application. You didn’t know that. Your company profile and projection just won’t cut it. He doesn’t want to hang on to your documents or look through what you have in the meantime. He will have forgotten what it was about by the time the rest of the documents get to him, he mumbles as he escorts you out the door.

Before the Anger Wells Up

Yes, okay, you worked on your documents a whole darn week before you went to the bank. You even missed the latest eposide of Hawaii 5-0 to get all your documents in place, only to find out that they’re pretty basic. He refers you to an accountant and a business plan writer, he also gives you a checklist to work through. He emphasizes that you only come back when you have all those things. No, they won’t consider it without those documents. No, the manager doesn’t have any say. Oh, and did he mention that he needs collateral and a deposit? No, they’re not the same.

Before dropping your paperwork in the trash and giving up on your idea, you need to decide how much you want this business to succeed. Suck it up, Buttercup and get to work. Even if you manage to self-finance your business, work through the checklist anyway. As much as this is a passionate decision, you will need to use your brain as well.

So What’s in the Checklist?

For a new business to start off with the least amount of risk, it’s important to make sure all the basics are in place, whether you apply for finance or not:

  • Lease agreement to ensure your business will have a premises. If you’re applying for finance, this only needs to be signed after the finance has been approved.
  • Staff appointments should your business require it, such as factory workers, seamstresses, or whatever is required.
  • A comprehensive business plan.
  • A feasibility study of it’s a high-risk industry or a niche business.
  • A list of asset requirements and invoices.
  • A list of stock requirements and invoices.
  • Furniture and fitting requirements and quotations.
  • Licenses or certifications required for business.
  • Franchise specific documents where applicable.
  • A cash flow forecast for 12 to 24 months, with assumptions.
  • Resumes of all principle members.
  • Information about key individuals.
  • Information on the collateral offered.
  • Details of the own contribution by the owner/s.
  • Any other document pertinent to the business or industry.

Why So Many Documents?

It is the duty of the bank to ensure that they mitigate risk. This means that the lending will need to take place with as much information as possible, to ensure the wellbeing of their investment. It is also crucial for them to protect the assets of the owner as far as possible. With the regulations pulling in tighter, a lot of the risk is carried by the bank even when there is security in place. This is because they suffer reputational damage when they need to call up the security.

The high failure rate of businesses is also something of concern to banks. Proper research needs to be done by the client to ensure they’re not buying a hole in their pocket. Although the bank does its own research, it is the client’s duty to follow due diligence. Each piece of paper that aids in research provides the bank and the owner with the assurance that they’ve covered all angles. When you start crunching the numbers and have a look at the number of business failures, the need for proper research is evident.

The guys over at have done a lot of research to pinpoint the exact number of years businesses should operate for before being in the clear, and the sad truth is that longevity is not a guarantee of success. Businesses fail well into the tenth year of operation.

The different types of industries play a big role in the success of a business, and those deemed as high-risk will need a little more paperwork, collateral and own contribution before the bank will put their money down.

failure, business, industry

Failure By Industry ©

Can I Draw Up My Own Business Plan?

The answer is both yes and no. It depends whether you have a fair amount of business acumen and understand the terminology they wish you to discuss the business plan. Bear in mind that the bigger the ask for finance, the more involved the business plan should be. The business plan allows the bank or any other investor to have proper insight into the business. It also provides them with a clear picture of whether the business owners are aware of what they’re getting themselves into. There are many templates on the web that guide business owners, allowing them to draw up their own business plans.

Many business owners find this process daunting and difficult, as many of the terms or phrases may seem repetitive or ambiguous. This is why it’s a good idea to have the business plan drawn up by someone who has experience. Keep an eye out for businesses who offer a personal or Skype interview or who display a genuine interest in your business. Asking a lot of questions is a good thing. You want the business plan writer to have as much information as possible.

Those who pull a business plan out of thin air rob you of your finance opportunity. Rather spend the money wisely and get it done properly. If you think the bank won’t notice that the actual information is based on a different demographic, think again. The banks go through the business plans with a magnifying glass. Their reputation is on the line, after all.

Dust off those research skills and put on that thinking cap. Knuckle down and do the work. Your future self will thank you for it.

cash flow, staff, stock, underquoting, overquoting, business failure, time, planning,

Business Failure – 8 Things That Could Derail Your Business

You spend hours and hours agonizing about the figures, trying to figure out why your business is just falling short of a breakthrough. Month after month, your cash flow seems to be stretched to capacity and your sales seem to have reached a plateau. What can you do differently to get your business where it needs to be? More importantly, what can you do to prevent business failure?

Are You Spending Time on the Right Things?

It’s easy to look busy for the sake of it, but going in aimlessly and without focus can cost you valuable time. Time is the only resource in a business you will never get back. It also happens to determine many of the successes and failures in a business. A great way to keep on top of projects and ensure that time is spent on the right things, is by keeping yourself accountable. Ways to do this, include:

  • Diarise important items and ensure you stick to them.
  • Identify distractions and minimize them.
  • Delegate tasks that can be delegated.
  • Invest in a business planner.

Invest in the Best Staff

“Take care of your employees and they’ll take care of your business” – sir Richard Branson

Cheap labor does not only ruin the industry, it could also ruin your reputation. Workers without the right experience could cause serious damage and eat into your profit.

It’s not enough to just have the best staff, they also need to be rewarded appropriately. Staff members need to be paid on time, every time. Reward efficiency and hard work, and invest in their training. Happy employees are far more likely to take good care of customers than a disgruntled one. Staff members are, after all, a human resource.

Manage Your Cash Flow

It’s quite tempting to go out on a splurge and redecorate your house the moment the money starts coming in. The thing with the business cycle is that the income isn’t guaranteed and that not every month will be a good month. It’s important to invest money in stock and growth and to ensure that the cash flow is taken care of. Businesses who don’t manage their cash flow will constantly be on the backfoot and find it hard to experience growth. Mismanagement of cash flow is one of the biggest causes of business failure. This is true for those who need to purchase stock, as well as fund projects before payment. A good way to ensure that cash flow is not an issue, is to request deposits where possible.

One-Man Band

You can’t work all the time and if you have a business that cannot continue without you, you could face some serious repercussions when you are unable to work. If you can’t delegate tasks to others, putting away funds for those rainy days is imperative. It’s also important to create passive streams of income, for instance, products that can be sold online. There are also special insurances for business owners that cover loss of income. If at all possible, hiring an assistant to take care of some of the minor things will help a great deal. Being spread too thinly will cause stress on one or more departments, which can lead to business failure.

cash flow, business failure

Workspace via Unsplash by Maliha Mannan

Yucky Paperwork

It can be quite frustrating to deal with reams and reams of paper on a regular basis, but it’s a necessary task in every business. Taxes, HR, and other important document flow need to be adhered to and businesses are known to have been closed down for less. Appoint a general assistant to keep these things in order, even if they only come in a few times a month. This will ensure that everything checks out when it needs to, and you as business owner can do what you do best.

No Marketing Budget, Yep, It Can Cause Business Failure

Technology is moving at a much faster pace than ever before. Businesses who are popular very rarely have to close their doors, but not everyone can rely on word-of-mouth. This is especially true for new businesses. Part of the expenditure planned for the business should be marketing. If this is not part of the business cash flow forecast, rather close the business and move on to something else. That may sound harsh but it’s important to remain relevant.

Underquoting and Overquoting

Nothing is more damaging to an industry than a business underquoting. This is not only bad for the business providing the quote, but also the rest of the industry. Customers are reluctant to pay higher prices and will not accept steep increases in the future. This means that the business will always only scrape the bottom of the barrel.

Overquoting is another issue. Do research on the industry norms and price according to your skills and experience. Every industry has a quoting soft spot. Find out where this is and quote accordingly.

Selling What You Want to Sell, Not What the Customer Wants

There are some pretty small niches where the likes of Chanel and Andy Warhol pioneered different movements in their respective fields, but this is not the norm. Bear this in mind when selling a service or product that is very niche-based. Market research and proper placement of the business can make a difference.

Making a few minor adjustments and getting back on track could save a business and steer it in the right direction. Take a breather, work out a plan, and steer the course. Business failure doesn’t have to be on the cards, as long as you play those cards right.

freelance, work, copyright, DMCA, infringement

What to Do When Your Content Gets Stolen

You take another sip of coffee as you furiously type away at the latest batch of articles you received from your client. They’ve paid you for the first batch and you’re already on the third. The fact that they still haven’t paid for the second batch is niggling at the back of your mind, and as you submit the last article to them, along with your invoice (plus the overdue amount) that sickening feeling starts to develop in the pit of your stomach. You decide not to get too paranoid, however, this is something that is causing you quite a bit of frustration.

Disappeared With Too Many Traces

You put all your sleuthing skills to the test and manage to uncover a bogus profile on every site that you thought you could trace these people with, and it’s no surprise that they “live” in all four corners of the earth. With a hefty fee still outstanding, you wonder whether it’s worth booking a ticket to one of the locations, and throttling your money out of them even if it is at a loss. You also start thinking about hiring private detectives, write bogus summonses, or anything just to show these thieves how connected you are.

You Start Googling EVERYTHING

There is no limit to the anger and frustration you feel, and that silly little contract that’s sitting in your inbox does nothing. They’re bogus, fake, non-existent, and there is nothing you can do about it. You run Copyscape and you realize they’ve ended up using your articles, and you’re mad as heck!

Do You Have Your Document Flow Recorded?

It’s easy to prove ownership of an item that is published first but to sell it to a third party as a Word document is another story. Ensure that you save PDF copy of a document the moment you send your final draft to the client, as it can serve as a proof of ownership. Keep copies of all your correspondence with the client, as it will help in any action you deem necessary to take.

Remain Professional for as Long as Possible

  1. Try to make contact with the website owners to get them to remove the item in question. There is the slight chance that the website owner is innocent and may have dealt with a third party.
  2. If contact with the website owner doesn’t work, try to make contact with the host service.
  3. At all times try to mediate the situation as amicably as possible.
  4. If this does not work, consider following the DMCA process. Although website might not be a U.S. based website, their servers or hosts might be and this could provide that much-needed hook.

What About the DMCA?

Website Protection Pro

There is nothing more disheartening than putting all your time and energy into a product, only to have it stolen by someone who doesn’t give a hoot. An extract of The Digital Millenium Copyright Act of 1998 issued by the U.S. Copyright Office, describes the act as:

The Digital Millenium Copyright Act (DMCA) was signed into law by President Clinton on October 28, 1998. The legislation implements two 1996 World Intellectual Property Organization (WIPO) treaties. These are the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. The DMCA also addresses a number of other significant copyright-related issues.

It can take quite some time to read through all the technical terms and legal jargon. A quick way to get around this is to rely on professional services to get the job done. One such service is the Digital Millenium Copyright Act Services Ltd.

Dealing with content thieves can be disheartening and it takes courage to pursue this avenue. The more this is done, however, the more difficult it becomes for thieves to make money off unsuspecting creatives. Protecting content is vital and the follow through critical to ensure content remains safe.


Great Resources for Freelance Writers

Those fingers flit over the keyboard as you move between a number of open tabs on the desktop. Hours of intense writing and research culminate in what you hope is your best project yet. You read through it twice to see whether there are any grammar mistakes and take a breather. You get back to your desk, do a final read-through and press that submit key. Instead of the nice pat on the back from the client, you receive a scathing e-mail from the editor pointing out some glaring mistakes in the article. The feedback is half a page of errors and issues and you’re not sure why you got into this in the first place. Take heart! There are a whole lot of resources that make this easier.


Life before Grammarly was filled with errors, and although word processor documents have their own built-in spelling and grammar checkers, you’d be surprised how many things they overlook, especially if the word actually exists. It also points out mistakes that are unforgivable by the Grammar Police such as their, there, and they’re. Users have the option of making use of the free version or upgrading to the Premium version. The Premium version offers users the 250 additional checks, allowing them to provide clear and concise copy. Both the free and the paid versions are available in online applications such as Facebook and Gmail, as well as word processing documents such as Microsoft Word.

  • Free Version: Yes
  • Upgrade Period Options: Monthly, Quarterly, or Annual
  • Optional Corrections: Yes
  • In-document Editing: Yes


If you’re known to take a long way round in telling a story, an editor has most likely already cited you for wordiness. WordRake alleviates this issue by removing all the words that make sentences heavy and filled with fluff and filler content. Users have the option of going with the recommendations or not. This is a must-have for those who do their own edits. Users have the option of purchasing the program for Microsoft Word, Microsoft Outlook, or both. Users decide between the one, two, or three-year option.

  • Free Version: No, only a 7-day trial
  • Upgrade Period Options: 1, 2, or 3-yearly
  • Optional Corrections: Yes
  • In-document Editing: Yes

Pro Writing Aid

This is a tool that simply has it all. It takes care of additional grammar issues, long sentences, sticky sentences, phrases, cliches, pretty much the whole caboodle. This is the perfect tool to use for copy that needs to be flawless and you have a bit of time to spend on editing. The free version picks up all the errors, however, the user will need to fix it in their document, whereas the paid version allows users to edit in document. Users have the option of signing up for the program for 1,2, or 3 years or opt for the lifetime use.

  • Free Version: Yes
  • Upgrade Period Options: 1, 2, or 3 years, or lifetime
  • Optional Corrections: Yes
  • In-document Editing: Only with paid option

Having the correct tools will help with all the minor details, allowing the user to work on the flow of the piece. There is no substitute for self-editing, however, and users are recommended to do a thorough read-through to ensure nothing was missed. Of all the editing software I’ve used throughout my career, these have provided me with the most satisfying results.