Category Archives: Money

Suze Orman Shares Investing Common Sense With Women & Money

Photo from Fickr

By Lisa Manyon

Women & Money ~ Owning the Power to Control Your Destiny

Money is a topic you either embrace or avoid. Orman’s book delivers straight talk on investing for women and building individual wealth.

Personally I’ve always known just enough about investing to put some money away each month and I rely on financial advisers to steer me in the right direction.

Suze shares a candid look at her life and how she got to where she is now. Plus she offers a no nonsense approach to making sure women begin to really think about taking care of their own business.

With an uplifting vein of optimism about what is possible throughout the book, Orman successfully illustrates traits and tactics to help women thoughtfully approach investing.

Orman’s 8 qualities of wealthy women have been shared on national talk shows and cannot be stressed enough.

Qualities 1 and 2 are harmony and balance. These are said to be the most important qualities because they are the foundation for all other qualities.

Quality 3 is courage. Orman writes that “Courage gives harmony expression. When your thoughts and feelings are one, courage helps you manifest them in the form of words and actions.”

Quality 4 is generosity. Orman points out that women tap into this almost too quickly. We tend to be overly generous with our time, support, love and money. The true measure of generosity, according to Orman, is being able to allow money to come into your hands and out through your heart.

This was a concept I can relate to. Orman challenges women to look at why and what they give and how it makes them feel. She also offers six rules for giving (but, you’ll have to grab a copy of the book to find out what these are).

Quality number 5 is happiness. According to Orman when you find the courage to live your life in harmony and balance, you understand and practice generosity, happiness will spontaneously appear.

And perhaps the most important point she shares about happiness is this; “Happiness is not a luxury. It is a necessity for true wealth.”

Quality number 6 comes in the form of wisdom. Who doesn’t want to be wiser?

According to Orman, wisdom is more than intellectual and not directly related to education. Wisdom is an express result of tapping into your core beliefs to make the right decisions for yourself.

The 7th quality is cleanliness and is all about the importance of order and organization. A laundry list of situations that subtract from your wealth status include;

– Not knowing where your money is
– Not having a systematized filing system for important documents
– Pulling crumpled bills and receipts out of your purse
– Maintaining a vehicle that looks like a garbage can
– Having closets that are filled with junk and clutter.

I am sure most of us can relate to at least one area we need to work on. I have to admit, as organized as I am, I could relate to a couple of those scenarios. Orman’s philosophy really makes sense and I’ve corrected my personal problem areas. My first order of business was donating clothing I had not used or worn in the past year to charity.

The final quality is beauty. Orman ties all the qualities together by noting beauty is what you achieve when all the qualities are combined.

To some it may seem strange that the qualities of wealthy women are included in a book on investing. However, if you personally don’t possess the qualities it will not be as easy for you to achieve your wealth potential.

In addition to the foundational building blocks Orman shares solid advice on choosing the right investor, the importance of having one personal savings account in your name only and discusses investment options in layman’s terms so anyone can get started right way.

This article may be reproduced in its entirety with the following inclusion: Lisa Manyon specializes in POWERFULLY communicating your marketing messages to increase results. She’s a Professional copywriter and Marketing strategist. Her work has been featured by the National Association of Women Writers, Absolute Write, Copywriting TNT, Lewiston Tribune and more. Manyon works directly with Lorrie Morgan-Ferrero as the Red Hot Communications GOLD Copywriting Mentorship Managing Director, is the first professional copywriter in Idaho to earn Glazer -Kennedy’s Creating Copy That Sells certification and the Copywriting Expert for the Association of Web Entrepreneurs. Manyon specializes in making life easier for business owners and entrepreneurs by knocking one more thing off their “to do “list. She accomplishes this with her copywriting expertise and commitment to long-term business relationships. Get a Free Copywriting Action Plan & discover 7 Power-packed Insider Tricks of the Copywriting Trade to Dramatically Increase Sales of your Products & Services http://www.lisamanyon.com

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Crystal O’Connor discusses Money and Kids with Sarah Cook of Raising CEO Kids

Teaching kids business skills early will increase their financial awareness.  As we begin to teach our kids these important lessons about business and money it’s important to take advice from others that have been there and done that with their own kids.  Sarah Cook with Raising Ceo Kids shares tips on raising your own kids to be more self sufficient and money savvy.  Listen to the audio below to our 20  minute conversation and leave a comment sharing your own ideas.  We’d love to hear them!

Retiring? What to do with your 401(k)

Retiring? What to do with your 401(k)

By Walter Updegrave

From CNN Money

(Money Magazine) — Question: When I retire, should leave my money in my company’s 401(k) or roll it into an IRA? –Mark, Plymouth, Minnesota

Answer: I hate to start with that overused phrase “it depends.” But the fact is that the right answer really does hinge on your particular circumstances, not to mention the characteristics of your 401(k) plan.

For example, two factors that can definitely influence your decision to stay or go are your age and how soon you’ll dip into your 401(k) stash for living expenses or other needs.

If you’re at least 55 when you leave your company, you qualify for an exception from penalties that apply to withdrawals prior to age 59 ½. That means you can pull money from your 401(k) account and pay only income tax on the taxable portion of the withdrawal. By contrast, if you roll your money into an IRA and begin pulling it out, you’ll not only owe income tax on withdrawals prior to age 59 ½, but a 10% penalty as well.

So if you’re at least 55 but under 59 ½ and you think you’ll need access to your 401(k) money over the next few years, you’ll probably want to keep at least a portion of your dough in your company plan, at least until you hit 59 ½.

(Yes, you can avoid the penalty on early IRA withdrawals by taking “72(t)” withdrawals withdrawals — that is, substantially equal periodic payments based on your life expectancy — but that can get kind of messy.)

Generally, though, I think most people who are retiring or already retired are probably better off rolling their 401(k) balance into an IRA.

For one thing, if you stay in your 401(k), you’re limited to the investment choices within your plan. That may not be so bad if your 401(k) has a broad menu of decent investments that are reasonably priced. (To get an idea of how your plan’s investment options stack up on price, check out the 401(k) fee reports available free from 401(k) ratings firm BrightScope.) But by rolling your savings into an IRA at a mutual fund or brokerage firm, you give yourself access to thousands of different mutual funds, ETFs and other investments.

Not that you need thousands of choices. I think most people are better off keeping things simple and making a diversified portfolio with just a handful of funds. But the point is that by expanding the roster of funds available to you, you may have a better shot at finding low-cost funds. With an IRA rollover you’ll likely be able to pick and choose from more index funds and more target-date retirement funds than your 401(k) presently offers.

Another thing you want to consider is how much flexibility you would have for drawing money if you remain in your 401(k). Can you set up a systematic withdraw plan or do you have to put in a separate request each time you need cash? Can you designate which funds draws will come from, or does the plan administrator pro rate the withdrawal amount across your holdings? Does your 401(k) allow for lifetime annuity payments? If so, are the payments competitive with what you can get outside the plan?.

With an IRA rollover, you’ll probably find you’ll have more maneuvering room. You can pull money out as needed. You can ask the investment firm handing the IRA to pay you a specific amount or a specific percentage of your account value each month. You can use some of your assets to purchase an immediate annuity that will turn that portion of your savings into guaranteed lifetime income. Or you can do all three.

Until recently, there may have been another reason to go with the IRA rollover even if you were partial to sticking with your 401(k) plan: only a spouse beneficiary had the option of rolling an inherited 401(k) into an inherited IRA and then stretching out payments over his or her life expectancy. A nonspouse beneficiary was required to take the 401(k) money (and pay tax on it) within five years of the 401(k) owner’s death.

So if you were thinking of leaving your 401(k) to someone other than your spouse, you would give that beneficiary a lot more flexibility on withdrawals and taxes by rolling your money to an IRA.

But the Pension Protection Act of 2006 eliminated that discrepancy. Actually, that’s not quite right. After the act became law, initial interpretations of the legislation said that it gave 401(k) plans the option of allowing nonspouse beneficiaries to roll over the inherited 401(k)’s assets into an inherited IRA. In short, 401(k) plans didn’t have to offer that choice.

But a subsequent notice from the IRS makes it clear (well, clear to people who read IRS notices) that starting this year 401(k) plans must make the 401(k)-to-inherited IRA option available to nonspouse beneficiaries. Be aware, though, that the beneficiary has to follow some very specific rules to do this correctly, including setting up a special inherited IRA to accept the rollover and doing the transfer via a trustee-to-trustee transfer.

Bottom line: before you make a decision, take some time to think about such issues as when you’ll need access to your money, how much flexibility you’ll have getting to it in your 401(k) vs. an IRA rollover and, of course, how much you’ll pay in expenses staying in your plan vs. doing a rollover. I suspect that most people will opt for the IRA, especially if they’re 59 ½ or older. But the only way to know which is the better choice is to think it through.

How to Improve Your Financial IQ

How to Improve Your Financial IQ

Stop avoiding your numbers–there’s nothing to be afraid of and everything to gain.

By Peri Pakroo

From Entrepreneur.com

Like many things we know are good for us–exercise, getting a good night’s sleep, laying off the French fries–keeping careful track of yourbusiness‘s finances is one of those must-do tasks to keep your business healthy. Nevertheless, a huge number of business owners neglect their numbers, and their businesses pay the price.

I tend to see two main types of financial blow-off:

  1. Fully neglecting to track income and expenses by letting receipts pile up (or get lost) and failing to enter data into a bookkeeping system.
  2. Doing a decent job of keeping income and expense records up to date, but failing to use the numbers to answer questions about the business’s financial situation.

While I’ve definitely known more than a few business owners guilty of the abject neglect described in item 1 (you know who you are), the second type of financial ignorance is practically an epidemic among owners of small to medium-size businesses. Over and over I hear owners admit sheepishly, “I don’t do enough with the numbers.” If you merely keep up with the basics, you might avoid true financial disaster. But you’ll definitely miss opportunities to thrive if you don’t use your data to make strategic decisions.

Getting Over the Hump
If you’ve had your head in the sand about your business’s finances, take heart: You are not alone (by a long shot). Tons–tons–of successful business owners loathe dealing with numbers. They regard financial management with fear, anxiety, insecurity or some combination of the above. Typically, they say they are simply too busy running the business to deal with tracking income and expenses or analyzing the numbers.

The good news is that affordable bookkeeping software automates most of the work, from tracking account balances to generating sophisticatedfinancial reports, putting essential financial information at your fingertips. If you really hate working with numbers or truly don’t have the time to do so, have a competent employee or outside bookkeeper do the job.

However, as the owner of the business and the person responsible for guiding it, you do need to be in the know about your business’s finances. So if you hire someone to do most of the financial management tasks, make sure you’re in the loop and that you understand what the numbers mean. Don’t be shy about asking for guidance or mentoring from an accountant or bookkeeper. If you feel insecure about your level of financial knowledge, you’re in good company. Just make a sustained effort to learn as you go.

Financial Management in a Nutshell
The trick with bookkeeping is to establish a system early to help you stay organized. By “system” I mean a simple process for organizing your receipts and files, as well as having bookkeeping software set up and configured. With a system in place, you’ll definitely be able to handle most or all of your bookkeeping tasks, even if you’ve never done them before. I typically break financial management down into three broad steps.

1. Keeping and organizing records of expenses and income: Financial management starts with keeping records of all the money the business spends (expenses) and all the money it earns (income). This means carefully keeping and organizing your receipts and expense records (such as bills from the office supply store, invoices from your web-hosting company, and receipts of payments to your employees and freelancers) and your income receipts (such as a cash register tape of your café’s income, check stubs from your client’s payment checks, or your invoices to clients marked “Paid”).

2. Entering this information into bookkeeping software: On some periodic basis–maybe monthly for a small consulting business and daily for a busy café or retail store–you’ll enter the information from your income and expense receipts into a bookkeeping system. More often than not, this will be some sort of financial management software such as QuickBooks or MYOB.

3. Generating financial reports: Finally, with up-to-date information entered into your bookkeeping system, you’ll generate reports such as a profit/loss report or cash-flow projection (described below) to reveal how your business is doing.

Doesn’t sound too bad, does it? Again, setting up a system will make a huge difference when it comes to entering and categorizing data in your bookkeeping software. With your data entered, you’ll be all set to do the important (and actually quite fun) part of financial management: generating reports showing you the financial health (or illness) of your business.

Often, business owners have such poor systems in place they barely manage to get their data entered accurately. It becomes a grueling task–hours spent searching for receipts and trying to decipher poorly documented expense reports–that they stop after the data entry stage and never get around to generating reports. Don’t let this happen to you. Generating reports is key to managing your business’s finances and making strategic decisions.

Financial reports summarize the data in your bookkeeping system to show you different aspects of your business’s financial situation. For example, a profit and loss report compares monthly income to monthly expenses to show whether your business is selling enough products or services to cover costs each month. A cash-flow projection shows similar information, but includes other sources of income such as capital contributions from owners or loans (that is, not just revenue from sales). It also organizes the information slightly differently to show you whether the timing of your income is adequate to pay your bills on time.

The Payoff
By generating reports, you’ll be able to see trends and patterns in your business’s finances and identify profitable opportunities to pursue. You’ll also avoid letting your business simply drift along–or worse, run it into the ground. Here are a just few ways that analyzing your financial reports will help your business:

  • You’ll be able to price goods and services more competitively, pace growth more effectively and trim costs strategically–for example, you might cut back on travel expenses or outsourced services that aren’t helping to generate sufficient income.
  • You may be able to reduce taxes by timing your purchases strategically and claiming all your deductible expenses–things that often escape businesses with disorganized records.
  • You’ll be able to manage your business’s cash flow, ensuring you can pay important bills on time. Cash-flow management is a critical element in every business. When it’s done poorly or not at all, you may find yourself short of cash when it’s time to pay taxes, payroll or other crucial expenses. This is exactly the type of scenario that forces businesses to close up shop for good.

Finally, if you’re itching to launch your venture and still worried that you have too much to learn in a short time, stop fretting. You don’t need to turn into a financial whiz overnight. In practice, I advise every small-business owner to consult at least once or twice during their startup days with an experienced bookkeeper or accountant (or possibly both) to help the business get started on the right foot. For those of you who feel like total novices when it comes to the money stuff, consulting a professional will help you get over the hump of your financial learning curve. There are also lots of useful organizations such as The Association of Women’s Business Centers and SCORE that can help get you up to speed.


Peri Pakroo is a business and communications consultant, specializing in legal and startup issues for businesses and nonprofits. She is the author of The Women’s Small Business Start-Up Kit.


Feature: Junior Achievement’s efforts to teach kids around the world about business

Feature: Junior Achievement’s efforts to teach kids around the world about business

By Kate Foley, Fearless Ambition


When people think of Junior Achievement, the first thing that comes to mind may be the JA they experienced when they were a kid.

“Their perception that all we do is teach kids how to make lamps and birdhouses,” says Marketing and Media Relations director Stephanie Bell.

However, Bell says, JA has grown substantially in the last 20 years, and is now a global organization that reaches 122 countries in all parts of the world.

Today’s JA offers 24 program in the U.S. alone, covering business concepts like work readiness, entrepreneurship and financial literacy.

“JA empowers young people to own their economic success,” Bell said. JA’s programs create an online space where teams of kids and teens can create and run a virtual marketing company together. The competitive environment in the online program mimics real business situations, which allows the students to learn what life is like ‘in the real world’.

“Students can understand the relevance to what they learn in the classroom and how it matters to their life. Our programs make that connection for them,” Bell said.

Bell, who has worked for Junior Achievement since 2001, says she feels inspired by teaching students business success at a young age.

“I really enjoy doing something with such a positive impact on young people,” Bell said. “At the risk of sounding cheesy, I hope that will help make the world a better place.”

With its global expansion over the last few decades, JA is definitely working to impact the world. Its current curricula cover six continents. Regional operating centers around the world take U.S. developed programs, and culturally adapt them to other countries to suit their own economic and cultural interests.

For more information on Junior Achievement, or to get involved, visit their website at www.ja.org.

Don’t buy fake health insurance

Don’t buy fake health insurance

By Jen Haley

From CNN Money

NEW YORK (CNNMoney.com) — Massive unemployment and a changing health care system is creating a breeding ground for con artists. One of the fastest growing scams is fake health care coverage.

You may see ads stapled to neighborhood telephone polls, flyers left on your car or maybe you’ll get a phone call from someone who’s selling health insurance at extremely low rates, as low as $29.99 a month in some cases, says Jim Quiggle of the Coalition Against Insurance Fraud. The sad truth is that often these bogus policies pay little or nothing on claims, leaving consumers with exorbitant medical bills.

“Fake health plans won’t be licensed. If they were, regulators would be breathing down their necks. And the last thing they want is regulators to know what they’re up to,” says Quiggle.

If you’re going to buy health insurance, make sure you speak with family and friends to get recommendations, says Barry Johnson of Healthcare Insight, a fraud-prevention company.

If you get scammed, it’s not only a high medical debt you have to worry about. Besides the obvious hit to your credit score if you can’t pay those bills, you could be opening yourself up to ID theft if you give out sensitive information like your Social Security number or your credit card number.

“This could reach into your financial existence,” says Quiggle.

Older people on Medicare are particularly susceptible to scams, says Johnson. Mobile medical clinics may visit communities and offer “free” services, like tests or medical supplies like orthotics after you’ve provided your Medicare number. These con artists then use your number to make bogus Medicare claims against your policy. Make sure you protect your policy number as you would any other piece of identification.

Sam’s Club tests small business loans

Sam’s Club tests small business loans

By Catherine Clifford

From CNN Money


NEW YORK (CNNMoney.com) — Sam’s Club, the members-only wholesaler owned by Wal-Mart, is testing out an online program to offer discounted loans to its small business customers.

The program is essentially a white-label arrangement with Superior Financial Group, the nation’s most active Small Business Administration lender. Superior Financial, based in Walnut Creek, Calif., specializes in loans of $5,000 and $25,000, often made through the SBA’s “express” program for smaller loans.

By applying for the loan through Sam’s Club as a member, small businesses will get $100 off Superior Financial’s loan packaging fee (typically $350 to $450, after the discount) and 0.25% off the market interest rate. Sam’s Club gets a $50 referral fee for each loan funded.

The new Sam Club’s venture launches amid a bleak credit landscape for small companies. Banks have slashed their lending portfolios and credit lines, leaving many companies scrambling to find the capital they need to operate. “Unable to find credit, many small businesses have had to shut their doors, and some of the survivors are still struggling to find adequate financing,” a recent government study concluded.

That’s one motive for Sam’s Club to wade into the lending market: If customers are strapped for cash, they don’t shop.

Small businesses “are a big portion of our business, so if we can help small business, that helps us,” said Hiren Patel, director of financial services at Sam’s Club.

Rival wholesaler Costco has tried three times to pair up with small business lenders. “The results have been underwhelming in each iteration,” said Joel Benoliel, senior vice president at Costco (COSTFortune 500). Costco linked up with Key Bank in 2000, American Express in 2003 and Capital One 2007.

“The assumption is that there is this big need, and we are all about small business as our members, so we have really, really tried over the past decade,” Benoliel said. “In each case, the main problem was the same: we had low member approval rates.”

Businesses that already have an established relationship with their bank tend to apply for loans with that bank. Those looking to apply for a loan through an alternate avenue aren’t typically the most attractive customers.

“Maybe they will have success where we didn’t,” Benoliel said of the new Sam’s Club venture. “The lending environment is entirely different since the last time we tried this in 2007.”

The Sam’s Club arrangement is an open-ended pilot program. “We will monitor on a monthly basis, report back to our executives on a quarterly basis, and see where we want to go with this,” Patel said.

Teach Your Teen Paycheck Savvy

Teach Your Teen Paycheck Savvy

By Linda Stern

From CNN Money Magazine

Congrats! Your kid landed a summer job in this tight, tight economy.

Now, of course, he’ll have that $7.25 an hour burning a hole in his pocket. That’s where you step in: “Parents have a real opportunity to help teens learn to manage that first paycheck,” says Mari Adam, a Boca Raton, Fla., financial adviser. “I can’t think of a better learning experience.” Share some solid financial strategies with your teen now, and your child may even have some cash left over come September.

Have the tax talk

Better explain the harsh realities of gross vs. net before your teen gets any big ideas about what she’ll spend her wages on. She may not yet understand that taxes will be withheld from every paycheck. So sit down with your child to go over that first pay stub, explaining how and why taxes are taken out, as well as the difference between income taxes (which most teens are likely to get back when they file tax returns) and FICA taxes (which they won’t). “This will be a real shock to them,” says Adam.

Take it to the bank

Help your kid open two bank accounts — one savings, one checking. Spend time together comparing fees and rates online, looking specifically for a no-fee checking account meant for teenagers. You’ll have to co-sign the accounts, but it’s worth it so your kid can start learning to use an ATM card and keep his balance in the black. (Just don’t forget to mention the exorbitant costs of using another bank’s ATM.)

Your child may balk at an analog check register but might enjoy tracking expenses online via Mint.com. To motivate him, explain about the $30 overdraft fees the bank will rapidly bestow if he messes up budget calculations. And remind him that at minimum wage, it would take most of a day’s work to recoup that expense.

Share the savings secret

Deferred gratification is an important lesson. Your teen may not be inspired to stash cash for retirement but may be swayed to the savings habit with a near-term goal, like an iPod Touch or a limo for homecoming. Help her do the math so that she’ll know how much to set aside per paycheck to afford her prize by summer’s end. Show her how to have that automatically transferred from checking to savings every pay period. As an incentive, offer to match your child’s contributions.

Avoid micromanaging

Blowing that first paycheck on shoes that will be out of style before the next check arrives is a rite of passage, isn’t it? It’s also a “very good lesson,” says Rob Gordon, a Coconut Grove, Fla., financial adviser. So let kids have space to make spending decisions, even if they’ll end up with buyer’s remorse.

There’s nothing like having wasted your own hard- earned cash to make you more careful with your money next time.

The 12 Best Sources of Business Financing

The 12 Best Sources of Business Financing

Precious capital remains hard to find for small businesses. Here are the most likely sources, from least attractive to most.

By Dileep Rao Ph.D.

From Forbes.com

Where and how you finance an operation can be the difference between dominance and failure. All money may sound like good money in this environment. It isn’t.

Often it makes the most sense to tap a few different sources of capital. One deal I arranged involved seven funding sources. That sounds like a hassle, but it ended up greatly reducing the company’s cost of capital and saving it from bankruptcy.

There are myriad financing sources available for American entrepreneurs (seeHandbook of Business Finance atwww.uentrepreneurs.com). Here are the 12 best, from least attractive to most. Two glaring omissions: venture capital–VCs fund just 3,500 of the 22 million small outfits in the U.S., and they only tend to hunt for companies with the potential for torrential growth–and a founder’s own savings. If you don’t know by now that financiers want to see some of your own skin in the game, you may already be in over your head.

12. Angelequity. If you must sell an ownership stake to get your company off the ground, start by finding a respected industry executive who is willing to invest a reasonable amount and give your venture credibility with other investors. The advice and networking–without all the heavy-handed demands of a VC–come in handy, too.

11. Smart leases. Leasing fixed assets conserves cash for working capital (to cover inventory), which is generally tougher to finance, especially for an unproven business. Warning: Don’t put so much money down that you end up spending the same amount of cash as you would have had you bought the asset with a down payment. The cost of a lease may be slightly higher than bank financing (see source No. 10), but the cost of the down payment you did not have to make is likely to be less painful than the dilution you suffer from giving away equity.

10. Bank loans. Banks are like the supermarket of debt financing. They provide short-, mid- or long-term financing, and they finance all asset needs, including working capital, equipment and real estate. This assumes, of course, that you can generate enough cash flow to cover the interest payments (which are tax deductible) and return the principal.

Banks want assurance of repayment by requiring personal guarantees and even a secured interest (such as a mortgage) on personal assets. Unlike other financing relationships, banks offer some flexibility: You can pay off your loan early and terminate the agreement. VCs and other institutional investors may not be so amenable.

9. SBA 7(a) loans. Of all the federally sponsored debt-financing programs, this is the most popular, and perhaps the best. It loosens the flow of credit by guaranteeing the lender against a portion of any loss incurred on the loan. Not to say that banks aren’t careful when making 7(a) loans: They are required to keep the non-guaranteed portion on their books.

The interest rate can vary based on the size of the loan, with smaller amounts costing a little more. Shop around. Some banks reap servicing fees and nice profits by selling the guaranteed portion of the loan to insurance companies and pension funds; in those cases, a lender may be willing to offer you a better rate.

8. Local and state economic development organizations.Economic-development organizations can charge tantalizingly low interest rates when lending alongside a bank.

Say you need to raise $200,000 for a building. A bank may offer $150,000 on a first mortgage at a variable interest rate of prime, now 3.25%, plus 200 basis points, for a total of 5.25%. The local development entity might lend you another $30,000 on a second mortgage at a fixed-interest rate of 4%, without seeking equity shares or warrants. (Without the development corporation’s contributions, you would have to scare up $50,000 in equity–expensive.) If you don’t have the cash flow to cover the interest, the development organization may offer extended terms. Some loans are interest-only for the first year or two, and even the interest payments can be accrued for a certain time period.

Development groups may not agree to finance an entire operation, but they make snagging the remainder from other private sources a lot easier. Talk to your local chamber of commerce to find these programs. (Also checkwww.infinancing.com for a list of the types of development finance organizations).

7. Customers. Advance payments from customers–assuming the terms aren’t too onerous–can give you the cash you need, at a relatively low cost, to keep your business growing. Advances also demonstrate a level of commitment by that customer to your operation. About half of the world-beating entrepreneurs in my book, Bootstrap to Billions (seewww.dileeprao.com), were funded by their customers. This strategy allowed them to grow faster and with limited resources, and to operate with relative impunity with respect to their investors.

6. Vendors: Dick Schulze built Best BuyBBYnews – people ) with financing from large consumer electronics firms–in other words, his suppliers. This way, your financiers do not control your growth; you do. Just be sure not to enslave yourself to a handful of powerful suppliers in the process.

5. Friends and family members. If you’re lucky, friends and family members might be the most lenient investors of the bunch. They don’t tend to make you pledge your house, and they might even agree to sell their interest in your company back to you for a nominal return.

4. Small Business Innovation Research (SBIR) grants. Getting past the paper-intensive application process and SBIR grants can be a great way to turn your intellectual property into mailbox money. For more on these grants, check out How To Get Uncle Sam To Fund Your Start-Up.

3. Tax Increment Financing. TIF subsidies are geared toward real estate development in targeted areas. Depending on the state, the subsidies can be as large as 20% to 30% of the cost of the project. Better yet, you may even be able to borrow against this subsidized value. If your own community does not offer a TIF program, look at communities that do. You may end up a little farther from your home or office, but it could be worth your while.

2. Internal Revenue Service. No, the IRS does not lend money. But it does allow you to deduct expenses. If you are paying a heap in taxes, evaluate whether you can use your profits to expand your business–and reduce your tax bill.

1. Bootstrapping: Many billion-dollar entrepreneurs find a way to grow without external financing so that financiers don’t control their destinies or grab a disproportionate slice of the wealth pie. For more on the sound strategic thinking you’ll need in order to live on your own cash flow, check out The 20 Most Important Questions In Business.

Dileep Rao has financed over 450 businesses. He is the author of Bootstrap to Billions: Proven Rules from Entrepreneurs who Built Great Companies from Scratch andFinance Any Business Intelligently. For more information, please go to www.uEntrepreneurs.com.

Risk Assessment: The World’s Riskiest Companies

Risk Assessment: The World’s Riskiest Companies

By Matt Buttell

From MeetTheBoss.tv

Amidst the global recession of the last two years, the news of profit losses, job cutbacks and business closures soon became a daily occurrence. While the meltdown of the global banking sector spearheaded the headlines, the ensuing impact on our daily lives really took effect as the recession hit our retailers hard.

With everyone across the world tightening their belts, it became something of a no-brainer that retailers would suffer. Independent retailers all but ceased to exist, as even some of the world’s most recognized and respected brands fell apart under the pressure of the economy. Among some of the many, many casualties were outdoor outfitter Eddie Bauer and skincare specialists Crabtree & Evelyn, with both of these among those that have either been reorganized or liquidated since 2008.

But, according to Forbes, despite two years having passed and the economy (by and large) showing serious signs of recovery, the retail sector continues to face a rather murky outlook. While the early, hectic post-crash devolution of the sector may have all but dissipated, hundreds of business remain on “high risk alert” and continue to “flash financial danger signs” – and its not just the retail sector who are feeling the brunt.

While retailers such as Zale – the Irving, Texas based jewelry retailer – and drugstore chain Rite Aid ride high on Forbes’ “Risk List”, the top end is populated by companies from all industries – including telecommunications, the energy sector, the financial services industry and shipping and freight services.

The Forbes Risk List, as rated by the Accounting and Governance Ranking system, collates those businesses that are struggling to perform in the current economy. The ranking system is defined as a measure undertaken by Audit Integrity of the transparency and statistical reliability of a corporation’s financial reporting and governance practices. According to its output companies ranked as either Very Aggressive or Aggressive are much more likely to face class action of litigation and financial restatements, and – most crucially – more likely to suffer sever equity loss.

Of course, if the recession of the last two years has taught us anything, it’s that leading in tough times takes its toll of even the toughest CEO; and in the world of business leaders, there have been many a casualty along the way. (Think Fred Goodwin’s epic downfall as CEO of RBS).

But, for all those leaders who fall at the recession-hurdle, there are leaders who are capable of pushing forward and of leading their company to the foreground of business success. In a recent broadcast on executive business channelMeetTheBoss.tv, for instance, Steve Odland, CEO of Office Depot, explained just why the retailer had remained on top – despite an all-together rocky road during the economic crisis.

In fact, at one point during the crisis, Office Depot stock was pushed as low as 60¢ – though it has now returned to the normal levels, and the company is again riding high. “Anybody who operates in a competitive environment has to believe in themselves and has to believe in the team around them else you simply couldn’t be successful,” explains Odland.

Perhaps some of those organizations of Forbes’ list have passed the ‘Last Exit’ sign on the Highway to Meltdown, and while we are not one to suggest that the blame for such dire straits lies with these companies’ respective CEOs, great leadership – at any level – remains critical to business success. Just ask Steve Odland.