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A Home-Based Business Online
_______________________________________________________________
Practical home business ideas, opportunities
and solutions for the work-from-home
entrepreneur
Issue 136 : June 10, 2002
Sent to 13,426 Opt-In Subscribers
Editor: Elena Fawkner
Publisher: Fawkner Publishing
http://www.ahbbo.com
Contact By Email
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IN THIS ISSUE
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1. Welcome and Update from Elena
2. Home Business Idea of the Week
3. Feature Article - Financing Your Home Business
4. Surveys and Trends
5. Success Quote of the Week
6. Advertise with AHBBO
7. Subscription Management
8. Caveat Emptor
9. Contact Information
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1. Welcome and Update from Elena
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Hello again and a warm welcome to all the new subscribers
who have joined us since the last issue.
Much of what you read in AHBBO is concerned with is actually
*finding* the right idea for a business to run out of your home.
This week, we assume that you already have your bright
idea but not the money to put it into action. "Financing
Your Home Business" looks at the various ways of obtaining
financing for home businesses when you don't have a
wealthy relative to bankroll you. It's at segment 3.
As always, thanks for reading and I hope you enjoy this
week's issue.
Remember, AHBBO is for YOU! If you have comments or
suggestions for topics you would like to see addressed, or
would just like to share your experiences with other
subscribers, I want to hear from you. Please send
comments, questions and stories to Contact By Email .
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2. Home Business Idea of the Week - Local Tour Guide
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Do you live in a city or town that attracts large numbers of
tourists? If so, and you enjoy meeting new people, have you
considered setting up shop as a personal tour guide?
To start, you obviously need to have an intimate knowledge
of the places of interest in your area as well as some knowledge
of its history. Some cities or towns will lend themselves well to
a walking tour of the city center while others will require some
form of motorized transportation to ferry your guests to the
various points of interest. Be prepared to recommend particular
restaurants, hotels, theatres and the like. Your guests will see
you as an authority on the area and will be likely to ask for your
recommendations.
To generate custom for your tour guide service, target travel
agents in your area as well as relocation consultants. If you are
aware of any major businesses in your area who frequently
entertain overseas business colleagues, approach them with an
outline of your services. Often, overseas businesspeople travel
with their spouses and your service would be a welcome
complement to their itineraries. Also target convention
organizers. Quite often, partners of convention delegates would
prefer to spend their time sightseeing rather than hanging around
the convention or the hotel pool.
Design and have a brochure printed and leave copies in places
you think people looking for tour guides will frequent including
tourist information centers and hotels. Leave your brochures
with the concierge.
-----
This is just one of over 130 ideas from the new "Practical
Home Business Ideas From AHBBO" e-book. Find out more at
http://www.ahbbo.com/ideasbook.html .
_______________________________________________________________
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3. Feature Article: Financing Your Home Business
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© 2002 Elena Fawkner
So, you have a great idea for a business and, more
importantly, the know-how to bring it into creation. The
only thing you’re missing is the cold hard cash to get
started. What are your options?
Assuming you don’t have a ready line of credit, an
expansive bank manager, wealthy relatives or a substantial
stash of retirement savings you’re willing to risk, you’re going
to have to do some serious homework and legwork.
Fortunately, there are a number of sources of finance for the
fledgling small business entrepreneur, at least one of which
may be right for you.
SBA LOANS
Available only to U.S.-based businesses (but look for similar
programs in your own country if you’re outside the U.S.), the
SBA (the U.S. Small Business Administration) has assisted
thousands of entrepreneurs start their own small businesses.
The SBA doesn’t issue grants (money you don’t have to pay
back) or make loans directly, rather, it guarantees loans made
by private lenders thereby reducing or eliminating the risk
inherent in new business ventures and making lenders more
willing to lend.
The primary consideration for the SBA is repayment ability
from the cashflow of the business as well as “good character,
management capability, collateral and owner’s equity”. You
will be expected to personally guarantee your loan. This means
your personal assets are at risk.
As for the types of businesses eligible for SBA loans, the SBA
imposes the following criteria: the business must be “for-profit”
(all that means is that your business has a profit motive, not
that it has actually generated a profit yet), be engaged in
business in the United States, there must be “reasonable”
owner equity (what’s reasonable will depend on the
circumstances) and you are expected to use alternative financial
resources first, including your own assets where practicable.
The SBA also imposes limitations on the use of loan proceeds.
For example, although the proceeds can be used for most
business purposes (the examples given by the SBA include “the
purchase of real estate to house the business operations;
construction, renovation or leasehold improvements; acquisition
of furniture, fixtures, machinery and equipment; purchase of
inventory; and working capital”), you can’t use the loan
proceeds for financing floor plan needs, to pay existing debt,
to make payments to the business owners or to pay delinquent
taxes etc.
As a general rule, loans for working capital must be repaid
within seven years and loans for fixed assets must be paid for
by the end of the economic life of the assets (but not to
exceed 25 years).
Interest rates are negotiated between the borrower and the
lender but the SBA imposes maxima which are pegged to the
Prime Rate.
Finally, the SBA charges lenders a guaranty and servicing fee
for each loan approved, and there is nothing preventing the
lender oncharging these fees to the borrower. The guaranty
fee for a loan of $150,000 or less is 2% of the guaranteed
amount; over $150,000 but below $700,000, it’s 3% and above
$700,000 it’s 3.5%. The annual servicing fee is 0.5% which is
calculated on the then-current loan balance.
Where the borrower meets the SBA’s credit and eligibility
requirements, it will guarantee up to $85% of loans $150,000
and less and up to 75% of loans above that amount (up to a
maximum of $1,000,000).
For more information about the various SBA loan programs,
visit the SBA website at http://www.sba.gov.
PRIVATE GRANTS
At present, there are no U.S. government grants offered for
small business. If you're outside the U.S. check with your own
government about the availability of small business grants. You
never know!
Various corporate grantmakers make grants available for small
business though. For more information, visit
http://www.fdncenter.org/funders/grantmaker/index.html .
ANGEL INVESTORS
Angel investors are good souls with a healthy sense of self-
interest. Figuring they can get a higher return if they’re prepared
to take a bit of a risk, they’re also often successful
entrepreneurs themselves and want to give their fellow travellers
a hand up.
Think of funding from an angel investor as a bridge or gap-filler
between being a start-up and qualifying for venture capital. The
kinds of dollars we’re talking about here are between about
$150,000 and $1.5 million. Beyond that point you’re in low
venture-capital territory.
The SBA estimates that there are around 250,000 angels in the
U.S., funding about 30,000 companies a year. So, how do you
hook up with one? Not an easy task, unfortunately. It comes
down to networking. Start by talking to professional and
business associates - they will often know someone who knows
someone etc.. Also, check out ACE-net if you’re prepared to sell
a security interest in your company. It’s an internet-based listing
service for securities offerings of small, growing companies. The
website is at https://ace-net.sr.unh.edu/pub/.
VENTURE CAPITAL
You’re in the big leagues now. Generally you’re in the ballpark
of millions (of dollars that is) rather than thousands. Venture
capital firms look for their return on investment from capital
appreciation rather than interest (unlike banks, for example).
They’re generally looking for a return of 500-1,000% on exit.
It won’t surprise you to learn that venture capitalists are
particularly leery of internet-based businesses right about now
and not without good cause. It also serves them right. But if
you have a solid business plan and strong growth potential, this
could be an option for you longer term.
One of the common concerns about this form of financing,
however, is that you may have to part with an unacceptable
amount of control over your own business. In return for their risk,
venture capital firms will usually want some control over how the
business is run and a say in business decisions. A venture
capitalist will expect a seat on the board, for example.
It’s important to remember, though, that it’s in the venture
capitalist’s best interests for your business to succeed, so
giving up some control in exchange for outside expertise may
well be something worth thinking about.
To find venture capitalists, get a hold of “Pratt’s Guide to
Venture Capital Sources” for a listing of 1,500 or so including
names, contact details and areas of interest. Of course, you'll
find no shortage of information online as well.
For most readers of this article, your best bet would be to start
out by investigating the various loan programs offered via the
SBA (or your country’s local equivalent). But don’t overlook more
obvious, close to home sources first. For example, if you have
family funds at your disposal and you’re confident that your
business will succeed, better to start out slow and ease into
outside sources of financing as your business cashflow can support
it. After all, Uncle Jack is much more likely to be understanding
about the occasional cashflow crunch than your bank manager.
Of course, if you're NOT confident that your business will
succeed, don't get into debt with *anyone*, let alone family
members.
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** Reprinting of this article is welcome! **
This article may be freely reproduced provided that: (1) you
include the following resource box; and (2) you only mail to
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Here's the resource box to use if reprinting this article:
------
Elena Fawkner is editor of A Home-Based Business Online ...
practical business ideas, opportunities and solutions for the
work-from-home entrepreneur.
http://www.ahbbo.com
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4. Surveys and Trends
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© 2002 Ryanna's Hope
=> ADVERTISING REALITIES
Our first "taste" of mass advertising was the infamous "patent
medicine" campaigns of the late 1880's. A campaign of selling
"elixirs" to the American public that contained cocaine, heroin
and many times 44% alcohol rates, the ads claimed they cured
everything.
America's first attempt at advertising in this industry virtually
killed it in 10 years. With few exceptions, it proved to be
a "Decade Of Lies."
=========================
Advertising Time Line...
1869 - George P. Rowell issues the first Rowell's American
Newspaper Directory, providing advertisers with information on
the estimated circulation of papers and thus helping to
standardize value for space in advertising.
=========================
=> "DOING TIME" AFTER THE AGE OF 50
While most adults age 50 or above are more likely to be
intermediate Internet users testing the waters of the Internet,
their heavy online habits have set them on a fast track to
become fully accustomed to the medium. Compared to 18- to
24-year olds, they spend on average 6.3 more days per month
on the Internet, stay logged on 235.7 minutes longer and view
178.7 more unique pages per month.
Source: Scarborough Research
=> THE HIGH INCOME MALE SHOPPER
Nearly 60 percent of e-shoppers are male, 70 percent attended
college, and 65 percent have white-collar jobs. More than a
third (36 percent) have a household income of $75,000 or more.
Three-quarters of Internet users are not yet shopping online.
This group has similar habits and lifestyles to e-shoppers, but
their Internet usage patterns aren't as diverse, according to
Scarborough Research.
=> WOMEN STILL CONTROL THAT DECISION PROCESS
Why is the female audience so desirable? According to a survey
conducted by Women.com, Harris Interactive, and Proctor &
Gamble, women control 80 percent of all purchasing decisions,
and 73 percent of women regularly access product and service
information online. Nearly 90 percent of the women surveyed
said they were the primary healthcare decision-makers.
=> SPENDING POWER OF THE TEENS
Though the exact age range defining Generation Y varies, all
sources agree that it includes teens and young adults in their
early twenties, with an average designation of youths between
the ages of 13 and 22. For these young people, using a PC is
about as intimidating as operating the family microwave. They
are a generation nourished by digital technology and, according
to Forrester Research, more than 60% of them are online. They
make up about 27 million of the total 40-million online consumer
population, and their average yearly income is $3,000, which
translates into $81 billion in spending power.
=> WE STILL WANT "LIVE BODIES" TO TALK TO!
Modalis surveyed 1,000 US consumers between April and May
2001 and found that 98% of respondents have used the internet
for some form of customer service help. The most popular
customer service element consumers desired on a company's
website was the general telephone number -- 86% sought the
number online.
=> AND... WHY THEY'RE NOT BUYING?
eMarketer reported that in the beginning of 2001, the number
one reason US internet users did not buy online was because
customer service options were slow, poor or non-existent.
------
SUBSCRIPTION INFORMATION
Subscribe to "Surveys and Trends" with an email to:
mailto:rypublish@sprintmail.com and say 'survey' in the
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_______________________________________________________________
****Success Story Of The Month****
My Secret Success Story On How I Made Money At Home
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They are PERSONALIZED Candy bars.
You wouldn't believe how much money you can make doing
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room.
In fact last week I made $795.00 part time.
To find out exactly what I did and how you can to visit me
at http://www.sellcandybars.com.
_______________________________________________________________
5. Success Quote of the Week
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Success is having a flair for the thing that you are doing;
knowing that is it not enough, that you have got to have
hard work and a certain sense of purpose.
-- Margaret Thatcher
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6. Advertise With AHBBO
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the most cost-effective and targeted form of advertising
online today. This is because the ezine's editor has already
done the hard work of bringing together a large group of
readers highly motivated by the subject-matter of the
ezine itself.
Therefore, assuming you place your ad in an ezine with
a subject matter that fits with what it is you are
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group of highly targeted prospects for your product or
service.
AHBBO offers four different advertising packages:
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(2) single ad placements,
(3) ad paks (4 ads for the price of 3), and
(4) exclusive mailings.
To learn more about advertising in the AHBBO ezine,
visit http://www.ahbbo.com/advertising.html .
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7. Subscription Management
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8. Caveat Emptor
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Although all of the information presented in AHBBO is
published in good faith, I accept no responsibility as to the
accuracy or otherwise of the information presented. By making
use of the information contained in AHBBO the reader assumes
all risk that certain information may prove to be incorrect.
**I do not endorse any advertisements unless stated to the
contrary. Your money, your decision, your responsibility.**
All advertisements are accepted in good faith. However,
advertisers are solely responsible for the content and
accuracy of their classified advertisements and I give no
warranties, nor accept any responsibility, in relation to any
classified advertisement appearing in this publication. ALWAYS
carry out your own due diligence! Remember, if it sounds too
good to be true, it probably is.
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9. Contact Information
_______________________________________________________________
Elena Fawkner, Editor
A Home-Based Business Online
Contact By Email
http://www.ahbbo.com
_______________________________________________________________
All Rights Reserved