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Build Your Business: 2
New businesses have a hard time getting loans because
they have no track record. And potential lenders want to see some
"skin in the game." They want you to invest some of your own
savings — 25 to 50 percent of the loan you are looking for —
and to tap the resources of friends and relatives with low-cost loans
before you come to their doorstep, hat in hand.
So prepare well. Know how much money do you need, why do you need
it, and how will you be able to pay it back.
James Scott, founder of The CFO.com and a virtual CFO tech start-ups,
suggests ways entrepreneurs can pull in the cash to get their
to the next level.
someone who hasn’t put in his own time and his own money," says
Scott. Investors have the same criteria, so the owner of a new
has to be prepared to dig into his own savings, and perhaps even
his house or sell some assets to get the business going before he
asks outsiders to provide funding.
capital, and they also might be useful collateral. That is the case
with ExpertPlan, one of Scott’s clients, located at Windsor Corporate
Park. "They have about 100 plans," he says of the 401(k) plans
the company administers. "They’re adding about 10 or 20 a
These plans have value to anyone who might consider purchasing
Scott explains, in the same way that each cable subscriber adds value
to a cable company, and each water customer adds value to a water
company. In the case of ExpertPlan, Scott figures each 401(k) plan
adds $10,000 to the company’s value.
"There are landlords in New Jersey no one should work with,"
says Scott. These are the landlords that require personal guarantees
on office leases, and show no inclination to bend with the winds of
economic change. Others will work with tenants, perhaps helping them
through a cash crunch. "You want to do business with good
says Scott. Establish a network of vendors, customers, business
and landlords, and do your part by helping them out — perhaps
by sending business their way.
working at funding your company. "Tell vendors, customers, your
accountant, everyone in the family. No source should be
days going to meetings and funding fairs to meet angel investors.
A better tactic, says Scott, is to research your company’s industry
so well that you are aware of all of the players. Among them are
retired executives, some of whom may want to stay in the game. With
luck, one might decide to fund your company.
SBA loan programs enhance your chances of getting money, because they
relieve some of the lender’s risk.
the government makes good the major portion of the loan. The SBA can
guarantee as much as 85 percent on loans of up to $150,000 and 75
percent on loans of more than $100,000. The loans can be five to 10
years for working capital, and up to 25 years for fixed assets such
as real estate or equipment purchase.
and rapid turnaround on approvals for loans up to $150,000. The SBA
will guarantee up to 85 percent of the loan and usually turns the
applications around within 36 hours. Eligible: Start-ups and
with average annual sales for the past three years not exceeding $5
million and with 100 or fewer employees, including affiliates.
The SBA will guarantee up 50 percent of the loan, which can be up
guarantee for short-term and seasonal working capital needs: material
and labor needs for a contract, seasonal inventory increases,
for a small general contractor. It can be an advance against accounts
that will grow to create jobs. This national program offers a low
down payment (just 10 percent of the total project cost) and a fixed
interest rate, usually below market. It can cover all costs, including
"soft costs" like appraisals and fees.
for capital expenditures and working capital. This is a "last
resort" loan available to nearly any company. They are available
from the Trenton Business Assistance Corporation.
Front Street, Trenton 08608-2102. Deborah Osgood, executive director.
609-396-8271; fax, 609-396-0559. Home page:
A community development small business loan fund providing financing
and technical assistance to business in Mercer County.
Other Private and Public Funding
Street, Trenton 08608-2088. David M. Scheck, executive director.
fax, 609-393-9401. Home page: .firstname.lastname@example.org">email@example.com A statewide,
nonprofit community development financial institution providing loans
and technical assistance for low income housing and economic
State Street, Box 990, Trenton 08625-0990. Caren S. Franzini,
director. 609-292-1800; fax, 609-292-5722. Home page:
A self-supporting, independent state financing and development agency.
Though the NJEDA operates under the supervision of the New Jersey
Economic Development Authority, the NJEDA has its own funds derived
from casino revenues. It offers loans for start-up and micro
to spend on real estate, fixed assets, and working capital. For fixed
assets and working capital, the same pool can provide loan guarantees.
Venture Capital Resources
Venture capitalists will want an equity share of your
business, and they will look over your shoulder to supervise
Some of the VCs that make small to medium-sized investments:
08542. Jim Breyer, managing general partner. 609-683-4500; fax,
Home page: www.accel.com Focus on communications and
firms, headquarters in Palo Alto with $3 billion under management.
Road, Suite 104, Princeton 08540. Anthony C. Warren. 609-688-9990;
fax, 609-688-9988. E-mail: firstname.lastname@example.org.
Princeton 08542. John K. Clarke, managing general partner.
fax, 609-683-0174. Home page: www.cardinalpartners.com. Venture
capital, with $185 million under management, investing $6 to $8
per company in healthcare, life sciences, medical products, and
515, Princeton 08542. James C. Blair, general partner. 609-683-5656;
fax, 609-683-9789. E-mail: email@example.com. Home page:
Venture capital investments in life science companies. Provides $30
to $40 million annually to U.S.-based ventures concentrated in the
08558. Ron Hahn/Jim Millar, general managers. 609-921-8896; fax,
Venture capital investor in seed and early stage companies, with $44
million in assets, an SBIC company.
4, Suite 200, Lawrenceville 08648. John H. Martinson, managing
609-896-1900; fax, 609-896-0066. E-mail: firstname.lastname@example.org.
page: www.edisonventure.com Equity financing and guidance to
companies with proprietary technologies or unique services in emerging
markets, with $300 million under management.
08542. James H. Cavanaugh, president, general partner.
fax, 609-430-9525. Healthcare investments, with $838 million under
Suite 310, Princeton 08540. Ted Stack, co-managing director.
fax, 609-452-7134. Home page: www.inhealthventuremgmt.com
acceleration services for start-up companies in the healthcare,
risk services, and technology sectors.
Princeton 08540-7645. Robert F. Johnston, president. 609-924-3131;
fax, 609-683-7524. E-mail: email@example.com. Venture capital and
investment banking with focus on seed capital for healthcare and
Forrestal Village, Princeton 08540. Richard Secchia, partner.
fax, 609-936-3051. Home page: www.kemperventures.com Invests
$1 to $5 million in early stage technology-oriented companies.
309, Princeton 08542. Stephen Shaffer, partner. 609-497-4646; fax,
609-497-0611. E-mail: firstname.lastname@example.org. Expansion financing
for early to mid-stage companies, a participating security SBIC, with
$30 million under management.
David C.A. Plimpton, managing partner and president. 609-924-8244;
fax, 609-924-8236. E-mail: email@example.com. Home page:
Venture capital, with $200 million under management
204, Princeton 08540. Pasquale DeAngelis, chief financial officer.
609-919-3560; fax, 609-919-3570. E-mail: firstname.lastname@example.org. Home
page: www.proquestvc.com Venture capital firm with a focus on
research with $200 million under management.
Brook Drive, Silicon Garden, Somerset 08873. Daniel J. Conley, venture
catalyst. 732-873-1955; fax, 732-873-3237. E-mail: OnCallCFO@aol.com.
Home page: www.OnCallCFO.com Expansion capital, venture
creative leasing to business owners, coaching entrepreneurs and
owners in business plans.
08540 (until mid January, 2002, at 989 Lenox Drive, Building One,
Room 208). John Whitman, Kilin To, and Peter Gerry, managing partners.
609-759-8888; fax, 609-759-8900. Home page: www.sycamorevc.com
Venture capital with $500 million under management, for second stage
companies through IPO.
08542. Dominick B. Turiano, general partner. 609-430-8422; fax,
Venture management services with three venture capital funds has
$350 million since 1992 and invested in more than 60 companies in
the Internet and communications industries. Limited partners include
Lucent and AT&T.
505-C, Princeton 08542. James R. Utaski, partner. 609-806-0002; fax,
609-806-0004. Home page: www.whitestonecapital.com. Seed
and expansion stage private equity.
If you have a technology business, you will be looking
for government grants to develop your technology so that you can limit
your risk. Your best chance at getting "almost free" money
is through the Small Business Innovation Research (SBIR) program.
It is the federal government’s largest R&D grants program targeted
to the small business community, says Randy Harmon, director
of the Technology Commercialization Center, part of the New Jersey
Small Business Development Center (NJSBDC) of Rutgers Graduate School
"The odds for the SBIR grants are very good, one in eight for
Phase I and two in five for Phase II," says Harmon. Under Phase
1 you can get up to $100,000 for `proof of concept’ work. For Phase
II, some agencies go up as high as $750,000 for proof of concept and
developing a prototype. A daylong workshop for writing Phase II grants
is Tuesday, February 5, at Rutgers’ Cook College, for $60.
In contrast, Small Business Technology Transfer (STTR) grants cap
at $500,000, but they often work better for academic researchers who
can’t meet the SBIR requirement that the principal investigator spend
at least 50 percent of his or her time on the grant project. STTR
grants require, nevertheless, that 30 percent of the funds must go
for a collaboration with a nonprofit institution.
Randy Harmon at the TCC has monies under a federal and state program
so that the young high-tech business can:
write consultants to help write strong SBIR proposals. "This will
result in stronger business models and business plans for the
that submit proposals and improve the likelihood that the technology
developed under SBIR will be commercialized," Harmon says.
grant. Working from the company level up, the consultant will assess
a company’s technologies and core technical competencies and then
identify federal research programs and laboratories that participate
in SBIR and are interested in these areas. Then the consultant will
help the entrepreneur contact the research program.
Working from the government agency "down," the consultant
will try to match any future SBIR grant solicitations with the
and capabilities of firms registered in this state.
Early on, Margery S. Davidson, a CPA and owner of
Business Development Team, a consulting business, began to detect
a common thread among those who own businesses. "There so much
they don’t know," she says. "Simple things, like how to keep
books, and what things are tax deductible." She found herself
spending a great deal of time providing tutorials, and then decided
to build a business around teaching accounting basics to new business
owners. Among the most important issues:
of the time it doesn’t even have to do with financials," she says.
"Most times it doesn’t work out because people go into
Whether it’s a spouse, a friend, or a stranger, inviting someone to
share your business dream can be a disaster. The problem, she says,
is simple, and oh-so-human: "I want to take it one way, and you
want to take it another."
Asked how her business has avoided the pitfalls of partnership, she
reveals the second key: "There’s one boss, and that’s me."
Just one person can be in charge, she says. The job can rotate, with
each partner taking the helm for six months or a year, but for each
time period only one person should be making decisions for the
opens, its owner is working 12-hour days. That, Davidson says, is
no time to learn accounting. By contrast, "new business owners
have more time than money," she says, and need to be spending
some of that time on learning bookkeeping basics. Having seen her
fair share of shoe boxes crammed with a melange of receipts, bills,
and canceled checks, Davidson observes that total ignorance of the
financial side of running a business is rampant. The shoe box
system costs all business owners big, she says, particularly at tax
Bookkeeping is especially important for businesses with seasonal dips.
By writing down all expenses in categories and keeping track of what
checks come in when "they can know a bad season is coming,"
Davidson says. Keeping track of financials will also allow busy
to see if their businesses are growing from year to year, and by how
owners do their own bookkeeping in the beginning, and outsource it
as they reach that busy three to five year mark.
flow grows to a point where there is enough for support staff, it
is time to bring accounting back in-house. Even then, however, she
urges business owners to retain control over bookkeeping functions.
The bookkeeper should not have access to all the company’s funds,
she says, but only to the amount that is required for the month’s
into the business, thinking `I’ll take what’s left over.’ Bad idea
on a couple of counts, Davidson says. "What’s left over is
she says. "That is what you use when you want to buy a new
Business owners who do not write themselves a paycheck often end up
resenting their company, she says. "Pay yourself, even if it’s
only $25," she says. "It feels so good to get a paycheck."
What you pay in legal fees depends on whether you
your company as a sole proprietorship, partnership, or corporation.
There are tax advantages to each. Consider the type of business you
have, how you will distribute profits, what capital you need, what
liabilities you will have, how many workers you will have, and how
long you expect to operate the business.
In the l980s, many small firms were swept into the prestige of
their companies, which added substantial set-up and bookkeeping fees,
and in the end afforded little in the way of practical tax or
will be minimal.
and loss, how they will pay salaries, how they will resolve disputes,
who has the authority to spend funds, and who would get what when
the business is sold.
A General Partnership is useful in solving disputes but you are
for your partner’s business actions. You must file an Assumed Name
Certificate with clerk of the counties in which your partnership
A Limited Partnership requires filing certificates and affidavits
with the Department of State and publishing a Notice of Formation
attorney fees. Whoever owns the most stock controls the corporation.
Decisions made by a board of directors must be recorded, and officers
are liable to stockholders. For a regular corporation, file a
of corporation with the Department of State. For a Limited Liability
Corporation (LLC), file Articles of Organization.
You will need somebody you can talk to. Find a business
mentor, preferably not a direct competitor. "Those words of wisdom
will carry you through many hard times," say Spiewak.
S.C.O.R.E., the Service Corps of Retired Executives, offers free
to small business owners, and to those considering starting a small
business. In the greater Princeton area, S.C.O.R.E. works from the
offices of the Chamber of Commerce of the Princeton area
A national organization, S.C.O.R.E. is a resource partner with the
Small Business Administration.
Extended mentoring is available, but those who prefer a quicker answer
to a problem can now visit S.C.O.R.E.’s website (www.score.org)
and pose questions by E-mail. Counselors in most states, including
New Jersey, provide personal answers.
West Lafayette Street, Trenton 08608. Greg Williams, president.
Networking and support group for small business owners and operators,
formerly Mercer County Black Business Association.
Avenue, Suite 312, Verona 07044-1399. John Sarno, executive director.
609-393-7100; fax, 973-239-0904. Home page: www.eanj.org
A nonprofit that provides employee relations services including salary
and wage benchmark data.
07090. Jeff Milanette, president. 908-789-3424; fax, 908-789-9761.
Home page: www.njef.org
Assistance in formation and growth of young technology-based
in the state, meeting second Thursdays, 6 p.m., at McAteers, September
Road East, Suite 4200, Princeton 08540. Robert Frawley, president.
609-279-0010 and 609-987-6656; fax, 609-987-6651. Home page:
For entrepreneurs, angels, and venture capitalists, monthly meetings
on first Wednesdays, September through June at the Doral.
Helene Mazur, facilitator. 609-924-9399; fax, 609-924-9533.
Structured networking for leads, and referrals, usually every other
Thursday at 8 a.m. at the Hyatt.
111 Washington Street, Newark 07102. Sharon Gifford. 973-353-1646;
Suite A c/o Center for Applied Psychology, Piscataway 08854-8067.
David Niemeyer, director. 732-445-7504; fax, 732-445-7970. Home
Avenue, Princeton 08540. 609-921-7458; fax, 609-258-2158. E-mail:
Meets second Tuesdays at Stark & Stark, Lenox Drive.
c/o Sandra Carson, Box 400, Princeton 08543. Mary Jo Donovan,
732-519-3071; fax, 732-519-2063. Home page:
Forum for women in, or considering careers in, science and technology.
Federation, 3131 Princeton Pike, Lawrenceville 08648. Linda
Cohen, director. 609-219-0555; fax, 609-219-9040. E-mail:
Hightstown 08520. Ruth Rainford Timins, president 2001. 609-799-7143;
fax. E-mail: email@example.com.
Meets at Hickory Corner Road Library on second Tuesdays, 7:30 p.m.,
September to June.
08536-0222. Marj Stivers, director. 908-281-9234; fax, 609-799-1874.
Member of the National Association for Female Executives, meetings
at Holiday Inn in Princeton and Cherry Hill.
07424. Marguerite Schaffer, president 2001. 973-812-7272; fax,
Monthly forum for senior level executive members for sharing
and business experiences, biennial dinner for graduate scholarship
Women, Box 224, Hightstown 08520. 609-426-4490; fax, 609-426-4772.
Dinner meetings on second Tuesdays, 6:15 p.m., September to June
— call for location.
Street, Red Bank 07701. Gerri Hopkins, Executive Director.
fax, 732-219-1938. E-mail: firstname.lastname@example.org. Home page:
For full-time professionals in commercial real estate and related
fields. Monthly meetings usually on Thursday. Call for time.
City Road, Trenton 08638. 609-771-0525; fax, 609-406-9255. Home
Women’s organization committed to voluntarism and leadership of
Islands, 26 Nichol Avenue, 213 Davison Hall, New Brunswick
Margaret Varma, director. 732-932-6521; fax, 732-932-6522.
225 Hamilton Street, Bound Brook 08805. 732-560-9607; fax,
chapter, Box 5443, Trenton 08638. Arlene Schragger, president
609-924-7975; fax, 609-771-4390.
chapter, 8 Outlook Lane, Freehold 07728. 732-308-3442; fax. Home
page: www.njawbo.org/middlesex. Meetings second Monday at
6 p.m. at the Clarion Hotel and Towers.
8267, Princeton 08543-8267. Maria (Charo) Juega, co-president.
fax, 732-519-4225. E-mail: email@example.com.
Princeton 08540. 609-497-2100; fax. Home page:
Meetings on second Fridays at 11:45 a.m. at the Princeton YWCA.
5218, Princeton 08543-5218. 609-683-1023; E-mail: firstname.lastname@example.org.
Blvd., Apt. 123, Mercerville 08619. Lorraine Rose, president.
fax, 908-281-7745. E-mail: MotherCute4@home.com.
Professional and business women working worldwide to promote causes
that benefit women and children.
Trenton 08638. 609-895-5775; fax, 609-896-5366. E-mail:
email@example.com. Education and support for women fundraising
22, Third Floor, Union 07083. Judi Dill, director. 888-675-2678; fax,
908-686-9120. E-mail: Jdill@waort.org. Home page:
Support for worldwide vocational education and technical training
centers — advocacy for Jewish community values.
Rockingham Row, Princeton Forrestal Village, Box 431, Princeton 08542.
609-520-1776; fax, 609-520-9107. Home page:
West State Street, Trenton 08608. Cathy Frank White, president/CEO.
609-393-4143; fax, 609-393-1032. Home page:
87, Hightstown 08520. Patricia Lee, chamber administrator.
200 East State Street, Second Floor, Trenton 08608. John E. Harmon,
president. 609-393-5933; fax, 609-393-9166. E-mail: firstname.lastname@example.org.
Home page: www.mtaacc.org.
Division of Mercer County Chamber.
1 Distribution Way, Monmouth Junction 08852. Nancy M. Ostin, executive
director. 732-821-1700; fax, 732-821-5852. E-mail: email@example.com.
Home page: www.mcrcc.org.
West State Street, Box 230, Trenton 08602. Joseph Gonzalez, president.
609-393-7707; fax, 609-989-7371. Home page: www.njbia.org.
Business advocate representing over 16,000 New Jersey companies.
Street, Trenton 08608. Joan Verplanck, president. 609-989-7888; fax,
609-989-9696. Home page: www.njchamber.com.
Steve Sroczynski, president. 610-718-9810; fax, 610-718-9811. E-mail:
of sales, marketing, and contact building for technology-oriented
Suite 280, Mt. Laurel 08054. Maxine Ballen, president. 856-787-9700;
fax, 856-787-9800. E-mail: firstname.lastname@example.org. Home page:
Statewide group that provides recognition, networking, information,
and services for the state’s technology businesses.
Princeton 08540. Cathryn A. Mitchell, president. 609-921-3322; fax,
609-921-0459. E-mail: email@example.com. Nonprofit
in the greater Princeton area.
400 Morris Avenue, Suite 222, Denville 07834. John Daghlian, executive
director. 973-627-5330; fax, 973-627-8410. E-mail: firstname.lastname@example.org.
Home page: www.rdnj.org. Support for continued growth of
organizations in the state.
Corrections or additions?
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