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Using Social media for Business Google +

December 7, 2011 By Amanda Leave a Comment

Using Social Media for Business is a must do or must have for any business, large or small. The interview below between writer Chris Brogan and Laura Cohen of Experian might seem quite long, but if you are like me & are struggling with one of the latest developments by Google….. Google +….. this high level overview may be of some help. I’ve made a personal Google + account, but must admit I don’t really know what I’m doing. I’ve + things that I like & are important to me and I know there is more to it, but my head is spinning. It is going to take some time to digest all the information. My next business step for my bricks and mortar stock will be to use more types of Social Media. Business will never be the same again.

Update: An internet course for using social media for business

Since writing this post I have found a useful site that will help with social media for your business. It covers setting up Facebook Fan Pages and instruction on various types of social media for business including google +. Also check out the setting up of Facebook Fan Pages with a difference, not just like everyone elses (free). To find out more click here

Chris, you have been a Google+ evangelist since the beginning. You even abandoned Facebook to devote more of your time to Google+. When did you realize that Google+ was more important for your business than Facebook?

Chris: Facebook works well as a platform to connect me with people I already know, like friends and family and old work colleagues. Google+ connects me with people who are like-minded, and who share similar interests. Which set of people are more apt to help me land a client? Google+. My friends and family referrals can only stretch so far. Because most businesses rely on the kindness of strangers to survive, I recommend Google+.

Business owners might feel that maintaining a Facebook page and a Twitter account is enough. How is Google+ different and why should businesses create a page and begin writing/sharing engaging content?

Chris: Two or three years ago, it was difficult to convince a business owner that Facebook or Twitter was worth it. Now, they’re not willing to transition to the newest network, run by the biggest search engine in the world? I’m fascinated by this digging in. It shows that business owners aren’t seeing the platforms for what they are: a gathering place where potential prospects can be invited into a business relationship. Saying no to the biggest up-and-coming social network run by one of the richest companies on the planet seems a lot short-sighted.

You wrote Google+ for Business: How Google’s Social Network Changes Everything to provide advice on leveraging Google+ to improve business communication, content promotion, and much more. Aside from social networking, what are ways businesses will benefit by owning a page in Google’s ecosystem?

Chris: 69% of people start their online activity around a need with search. The number one search engine in the world, Google, has opened a social network to help people better interact with and find what they want. Posting information to the public on Google+ immediately impacts search results because Google (the search engine) indexes Google+ (the social network). If three out of four humans start their search to fulfill their needs with a search engine, why wouldn’t you want even more potential opportunity to interact with those searchers?

When business owners first create their pages, they might feel lonely since they are unable to circle people (until first circled back). What is your advice for them to help them get noticed and added into relevant circles?

Chris: I’m almost sad that business pages have already launched. So many people didn’t take the opportunity to make relationships happen before those pages landed, and now they’re wondering why no one is rushing in to circle their company page. Humans make relationships. Humans do the footwork before the business page comes into view. I knew Esteban Contreras from Samsung long before I saw the Samsung page. We’d interacted a lot. When the Samsung USA page opened, I circled it right away due to my affinity for Esteban. I’m friends with Jennifer Cisney from Kodak, and so I interacted with her page long before Kodak opened up a presence. The same is true for your business. Humans connect. Make a relationship and the business page will get some traction. But don’t wait for that. Think of the business page as a business card. Would you ever let a salesman wait around to sell until he or she had a business card?

During your Google+ Business Webinar in November 2011, you suggested that businesses should think about posting every six hours. This is a much more aggressive posting strategy than businesses might be used to (especially compared to Facebook). Why should businesses be active on Google Plus?

Chris: Google+ is tied to Google, the search engine. The more opportunities you have to influence potential direction of prospects to your business is a positive thing. I also think that because it’s a new and budding network, that more “seeding” has to happen to keep people interested. I note that larger companies are still only posting once a day at present. Then again, they don’t get the engagement I’m seeking.

What types of circles should businesses think about creating so that they can message the right people with the right kind of content?

Chris: It depends on the business. Intel has three circles: tech enthusiasts, press stuff, and life at Intel. They split it that way. If you’re a plumber, you probably don’t have plumbing enthusiasts (then again, what do I know?). Circles for my professional page include “prospects, collaborators, colleagues, allies, and unknown.” I use those to sort people so that I don’t upset any particular group by sharing too much (or the wrong) information.

What are some ways small businesses could utilize YouTube hangouts in Google+?

Chris: Hangouts are live video events. You can have up to 10 people in a hangout (the host +9). To me, they are a great way to handle customer service issues, a wonderful way to do training/education, a great method by which to share business advice, to have meetings, to consult, and more. Hangouts are one of the best features of Google+. YouTube videos shared on Google+ get a lot more engagement by a higher caliber of person. I find that comments on YouTube itself are useless. On Google+, I have the exact opposite experience.

When Google+ page analytics gets introduced, what type of data do you think will be helpful to business owners – and how can they use this data?

Chris: Analytics will help people see what type of content they share drives what level of engagement. They will also see more click-through activity, more sense of how long someone interacts with your profile and/or other parts of your account, and more. It will really help people decide what to spend their time on.

How do you envision successful Google+ business pages will operate in the future?

Chris: Google hinted at what business pages would do with Google Places. With Google+, once Places integrates with business pages, and given all the other tools you can use on Google+, I believe that this network will be a very robust and de facto part of business communication and collaboration.

What about you, are you also struggling? Are you using social media for business or just for personal use?

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Who can Screw Up My Small Business In 2012

December 7, 2011 By Amanda Leave a Comment

I like this article, even though I am not based in the US, there is allot that us Small Business owners around the world can relate too. Small businesses over the planet can unite ( maybe even ‘occupy’) with the knowledge that we are not alone, somewhere some government is stuffing things up for others as well.

I am excellent at screwing up my business. I sell to customers who can’t pay, hire people who don’t work and rely on vendors who don’t deliver. I purchase outdated technology, say the wrong things to the wrong people and I’m terrible at making plans. But somehow and despite my best efforts, my company continues to be profitable.

Of course, we could be more profitable if I didn’t keep making so many mistakes. And I certainly don’t need any more help in that department. But the problem is my business, like most small businesses, is vulnerable to potential mistakes that could be made this year in Washington. Mistakes that could really screw things up. A few come immediately to mind.

Mistake #1: Gingrich becomes the Republican nominee. Please don’t misunderstand. I really like Newt Gingrich. He’s the smartest, most politically experienced presidential candidate we’ve had since Joe Biden. Just kidding on that one. Newt’s a thinker, a debater and a political savant. Sure, he’s a little chubby. And a “newt” is a kind of salamander, isn’t it? I’m not worried. A couple of turns on the treadmill and a bomb or two dropped near Tehran and even Putin will show a little respect.

Newt is very pro-business. But that won’t do me any good. Because if he becomes the Republican candidate he’ll have a hell of a time getting elected. He’s too polarizing. He has less business know-how than Romney. He has too much personal and political baggage. He’s going to be spending a lot of time defending his past actions, positions he took or things he said more than twenty years ago. When Nancy Pelosi says she “investigated” him and has “dirt” I believe her. Trust me, Pelosi hates guys like these which means that…

…with Gingrich as his opponent, Obama will draw the left back to his camp. Alec Baldwin and Barbara Streisand will be re-energized. Bon Jovi and Bruce Springsteen will write him campaign songs. Look, I think Obama’s a good man too. I voted for him. But I would never vote for him again. He’s proven himself to be way too big-government and way too anti-business. He wants to raise taxes and continue to spend on stimulus programs. As far as running the government and managing the world’s largest economy he’s shown himself to be inexperienced. The economy, the markets, the business environment and my small business in particular would suffer if he’s re-elected.

Mistake #2: With the retirement of Barney Frank, Maxine Waters is appointed to chair the House Financial Services Committee………..

Mistake #3: The Supreme Court declares that healthcare reform is constitutional……..

Mistake #4: The Fed eases even more…….

Mistake #5: More stimulus is approved……`

…………This is not something a small business owner would do. This is not something that any experienced business manager would consider. For God’s sake, even Greek government bonds would start looking pretty good. More stimulus would further exasperate the potential for inflation as our currency loses its value. For the business community, the downsides of stimulus are higher than the upsides.

Look, I can do a great job screwing up my business on my own. I don’t need any help this year. Especially from Washington.

I hope you enjoyed this teaser. Do read more on this article, it is one mans opinion and you can accept or regret, but it makes for interesting reading. Thanks to Gene Marks of Small Business America, I’ll be watching for you again

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Filed Under: Small Business News Tagged With: small business, small business help

Small Business – help for the end of year

December 5, 2011 By Amanda Leave a Comment

Here’s a little reminder of what to do for small businesses at the end of the year. This specifically written by Rhonda Abrams for the USA, but has good general advice but do consult your CPA for ideas in your geographical location.

December is always a hectic month, but it’s an important one for your small business.

A few easy steps now will save you money and help you be more successful in 2012. I’ve whittled your December end-of-year to-do list down to three critical areas.

1. Reduce your taxes. You can pay Uncle Sam less in April by being smart in December.

First, call your tax adviser. I do. Every December, I call my CPA — Steve Thielmann in Campbell, Calif. — and we go over year-end tax planning. We go over my profits and losses and examine certain types of business expenses. He gives me guidance on how to legally lower my tax bill now if possible.

The basic rule is accelerate expenses, delay income. In other words, you want to do whatever you legally can to lower your total profits for the 2011 taxable year.

Let’s look at the first part of that equation: accelerate expenses.

One thing I do is to make sure my independent contractors — and I use a lot — get all of their invoices to me by Dec. 20 for work done this year. Prepay January rent and some January expenses if possible. Pay your registration or exhibit fees for upcoming conferences. Print your brochures now. Make charitable donations. And here’s a fun part: Go shopping. Now’s a good time to replenish your office supplies, furniture and equipment.

For the second part, delay income, don’t send your invoices til after Jan. 1 if you can. Of course, if you need that money to pay your bills or a customer might flake if you delay, get those invoices in the mail.

2. Set up a qualified retirement account. If you don’t already have a retirement plan for you and your employees, ask your tax adviser about one now.

Many plans need to be established by Dec. 31.

3. Update systems. The beginning of a year is a natural, and ideal, time to put new back-office operating systems in place.

It’s great to start fresh on Jan. 1, and it also makes record keeping far easier if you change when the calendar year changes.

Again, use this guide as a reason to contact your taxation financial advisor for what to look out for in your country.

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Filed Under: Small Business General Help

Small Business Brand Makeover?

December 5, 2011 By Amanda Leave a Comment

Does the brand of your business need a makeover? We see makeover shows all the time on reality TV. There are shows on making over houses, making over young people, old people, in between people, making over restaurants, making over hotels, making over hairdressers. The person or home or business looks tired & drab and, voila, when the makeover is complete what a difference. People have more of a spring in their step, business can have more money in the till, houses become more like homes.

The ‘brand’ of your business can also use a makeover. There is so much change going on, social media is on the rise, websites now need mobile versions as well there’s Google +, QR codes. If our brand is looking old the perception could be that it is past it’s use by date. It’s so hard to stop & look at our business brand with a critical eye. We must step back & view at our brand with a fresh look to see if our image is still relevant to our market.

How do we know? Ask. Ask friends, family, employees, customers, business advisers. What do they think when looking at our store, website, flyer’s, emails, business cards. Do these convey the message of what our business stands for. Look at your successful competitors, what message are they conveying about their image? How can we highlight what we do better than them, what better service we provide, are these messages getting through?

Again we must do this with our target market in mind. We must speak their language. If we are targeting the over 60’s then our brand should look & feel different to businesses that are targeting teenagers.

How can we makeover the brand of our small business?

Well there are basically 2 options, pay or not pay. If you have time on your hands then you can spend hours searching on the internet, magazine or books for ideas. This depends on where your precious time is best used. If you are the main sales person for your business then you may be better off selling. If you are the finance person, then your time could be best used there. This could be a time where you are better off to pay the professionals as often here the first cost is the last cost. Though if choosing this path then the more information you can provide them on what you want & were you want to head with your brand the better.

Food for thought 🙂

Filed Under: Small Business Marketing Ideas and Tips

Small Business Marketing – Tips on using Flickr

December 4, 2011 By Amanda Leave a Comment

Flickr is another tool in the small business marketing armoury. Adding photos and videos to your website is proven to increase rankings in Google.Here are some tips for using Flickr on your website, written by Kim Bhasin on the AMEX open forum.

Source Flicr.com

Tell your company’s story, through pictures

Every brand has a story. Flickr presents an opportunity to share it with your customers, and more importantly, you can give them a chance to be a part of it. Flickr is particularly strong at telling stories visually. Use compelling photos that represent the identity of your company, where its roots are and where it’s headed.

And be sure to get your customers directly involved with, and be able to affect, that storyline. Have them submit their pictures interacting with your brand, and encourage them to talk to each other—and you—about it. And remember, in order for people to talk to your brand, you have to make things personal. Your voice must be real, and human.

Always avoid the hard sell

Never, ever, post anything that looks or feels like an advertisement. That’s not the point of Flickr, or any other social network. You’re trying to find ways to get closer to your customers, not scare them away with annoying advertising. This holds true for both comment sections, and photo captions. It’s not an online store.

That doesn’t mean to separate your products completely from your Flickr account. When there’s a launch coming up, use the platform to get customers involved. But base it around their experience, not your own marketing.

Integrate Flickr into everything you’re doing on the Web

To get all the value you can out of Flickr, use it to connect with your other platforms. Make sure each part of your digital network is linked, from your Web page to your blog to Facebook to Flickr. Tell your customers that these places exist, and how to get there. Then they can decide which ones they want to interact with.

At the same time, make sure that you’re using each social network for its strength. For example, if you have both a YouTube channel and Flickr page, it’s okay to post videos on Flickr, but keep it primarily focused on photos because that’s the reason people will be going to your page. Beyond that, you can use Flickr as a resource for your other sites. There are tons of Creative Commons-licensed photos available for use.

Allow and encourage others to share your content

It’s a photo sharing platform, so treat it like one. You could be hosting your photos anywhere on the Web, but you’ve picked Flickr because of its users, and the site’s social features that better allow you to connect with those users.

Since you want exposure, don’t be hyper-protective with your content on Flickr. Allow sharing, and don’t limit what folks can do with your content. The whole point of a business being on the site is to let people interact with the content that you put up.

Also, upload your photos on a Creative Commons license so that people can use them. You’re probably not a professional photography company that has to protect its valuable pictures. Every time someone shares your content, that’s a plus for you. If you’re particularly concerned about people stealing your work, use small watermarks.

Join relevant groups and participate in the community

Groups are an integral part of the user experience on Flickr, and your business should be a part of that. There’s a group for pretty much any topic on Flickr, and finding some that are relevant to your business can pay off. Be active in comments, even if they may not be directly related to your business. Also, add people’s photos to your business’ ‘favorites’ stream.

Again, it comes down to being human. So get off the sidelines and participate in the community like any regular user. Fortunately, this is one major advantage small businesses have over the big boys. You don’t have that initial stigma of being a bloated corporation, so it’s usually easier for folks to relate with your brand.

When on Flickr.com the photos and videos get shared around the community. Remember again, this is not the place for the hard sell. It is to build awareness about your brand, creating discussion and driving more people to the business end, your website.

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Filed Under: Small Business Marketing Ideas and Tips, Small Business Social Media

Small Business Marketing – how to make an eBook

December 3, 2011 By Amanda Leave a Comment

In a previous article we looked at what an eBook was & how to use in our small business. Here Karen Leland continues with how to write an eBook in 4 simple steps.

Small Business marketing - how to write an eBook

Karen Leland

Step #1 Choose a topic: Brainstorm ideas that that use your expertise, knowledge base or specific information and/or research. Consider smaller slices of bigger topics for eBooks. Books that can fit into the “how to” topic area are some of the most popular.

Step #2 Create Your eBook Outline: Decide what five to ten basic topics you are going to address in your eBook, and then outline the three main points you are going to make under each of those topics.

Step #3 Begin Writing Your eBook: Oddly enough, the easiest part of eBook publishing is getting the finished product up and running for distribution. Many can be uploaded with just a click of a few buttons. But where most entrepreneurs face a challenge is in finding the time, or having the writing chops, to craft the eBook in the first place. I get weekly calls from small business owners asking me to ghostwrite their eBooks because, although they have great content and ideas, they don’t have the writing skills.

Even if that’s the case, it’s no excuse, since there are scads of eBook-savvy small businesses whose sole purpose is to ghostwrite, edit, design and publish your eBook.

Step #4 Edit and design your eBook: A few things to keep in mind:

Unless you were an English major, hire a proofreader to go through your manuscript to check spelling, grammar and punctuation.

Unless you were a graphic design major, hire a designer to create the layout, cover and formatting of your book.

Unless you are an illustrator, hire a graphic artist to add pictures or drawings to your eBook.

Consider embedding video in the eBook.

It sounds simple, but no doubt takes time and effort to produce. Possibly less expensive than printed options that often get thrown away, and you do have the option of having them printed as well. Remember to update to keep the information fresh and current. This is a great way to spread the word about your business,and how to get it out into the world?

adding to your blog
sending an email to existing customers
sending out to new ‘likes’ on your facebook fanpage
adding to newsletters
sending excerpts to other bloggers who could link back to your site
sending excerpts to twitter, linkedin etc

I would love to hear from you if you have any examples that have worked for you

Filed Under: Small Business Marketing Ideas and Tips

Small Business Marketing – whats an eBook? How can we use it?

December 3, 2011 By Amanda Leave a Comment

E-Book? Yes I know about Kindles et al, but how does an eBook fit in with my small business marketing plan. Are the pamphlets & flyers I produce still going to cut it in today’s world? Here’s an interesting article by Karen Leland who explains

What & How eBooks can be used.

Karen Leland

Common Questions on eBooks for Small Business

In the world of small business marketing, it sometimes seems like there is a never-ending tension between the “what’s hot now” social media to-do and the actual way to execute for maximum business benefit. Consider for example all the small businesses that have a Twitter account because they know they “should” but are really not using it effectively. The current darlings of small business branding — eBooks — are no exception.

Despite their meteoric rise in popularity — American publishers reported that in February of 2011, eBooks ranked as the #1 format among all categories of trade publishing — I still find that many small business owners are confused about the part eBooks play in their overall marketing plan. Here are the four most common questions I get asked about using eBooks to build small business brand.

What exactly is an eBook?

In short, an eBook (electronic book) is an electronic document that can contain text, images, audio and video. They can be viewed on a personal computer, smartphone and eBook reader, such as a Kindle, and are sold through Amazon, Barnes & Noble and dozens of other outlets.

One important distinction to note, however, is that only eBooks that are created as PDF documents and downloaded as such retain their formatting and graphics. eBooks that are not downloaded as PDFs fall into the category of e-publishing, and when viewed on a Kindle, iPad or other device, they are simply a straight translation of the text only. Currently the Kindle and other such devices can only support the text from these documents, not graphics.

Most of my small business clients find that because they are creating eBooks primarily for branding and marketing purposes, they use the PDF format — being able to include graphics, format, audio, video, etc is a distinct advantage.

How could an eBook help my small business become better known?

eBooks can be the perfect calling card for potential customers. Offering an eBook free on your website in exchange for a prospect’s email, providing a link to a free downloadable eBook via your newsletter, or even having a link to your eBook in your email signature line provides a much greater opportunity to show your client your knowledge, expertise and point of view.

A great read, I hope you enjoyed this introduction to eBooks for small business marketing and are thinking of ways you can use this technology . The next post will explain how to make an eBook.

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Filed Under: Small Business Marketing Ideas and Tips

Small Business Start Up Advice for Owners

December 2, 2011 By Amanda Leave a Comment

Randal Charlton has had long, colorful career with plenty of ups and downs; he’s done everything from tending dairy cows for a Saudi sheik to starting a jazz club in Florida. And as a lifelong entrepreneur, he has bought and sold 14 different companies. He shares some strategies for small business start ups from a personal development perspectivehere. Written by Mark Miller

Randal Charlton

Charlton built TechTown by raising $24 million from foundations and government, and gathering together an impressive array of resources for training and start-up funding. He recruited a small army of start-ups that have created a total of more than 1,800 local jobs — not only in high-tech industries. “There’s an absence of everything from grocery stories to dry cleaners and taxi services in the city,” Charlton says. “We need to provide services to a broad range of entrepreneurs.” TechTown has been home to 250 companies, and more than 2,200 entrepreneurs have graduated from its training programs.

Charlton recently transitioned to a new role heading up a program focused specifically on helping Detroit adults over age 50 transition to new careers, entrepreneurship and volunteer service. The idea for BOOM! The New Economy began to germinate after Charlton noticed the outsized number of older adults attending TechTown conferences and entrepreneur training.

When I asked Charlton for his top tips for would-be, he walked me through a seven-point plan of advice based on his own numerous and colorful life experiences:

1. Get fit and keep fit. Running a business requires physical and mental stamina.

2. Focus on skill sets. Think about finding work tied to your strengths, rather than your former title.

3. Plan an exit as you enter. If you are partnering with others, think about how you can set up your business so that you have a “pre-nup” that allows you after a few years to pass the business along, and therefore get some value out of it.

4. Mitigate risk. Stabilizing your personal expenses is one way to do this. Charlton says he was “ruthless when setting up my own business at age 60. I had no credit card debt, rented a small apartment and then built a small house later on, when I could afford it. I still drive a 10-year-old car. I made sure that if the business went south I wouldn’t be left with a lot of personal debt.”

5. Leverage everything and anyone who offers help. “Universities, economic development agencies, states and cities have an incredible number of services that they want to offer to small businesses to help create jobs,” he says. “The challenge is identifying them.”

6. Network, network, network. “Forget resumes. If you send out enough resumes you will need anti-depressants quickly. Most jobs are obtained by knowing people who know people.”

7. Get in the game. “Don’t stand on the outside waiting for a plum job to come along. Volunteer or work as an intern.”

Great advice here. Though Charlton is now working with the over 50’s, those younger entrepenuers should take heed of these tips as well. That brings to mind another point, don’t under estimate the ‘oldies’, there wisdom gained over the years could save alot of pain and suffering, so don’t forget to ask for help… even when you feel like you don’t need it 🙂

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Filed Under: Small Business Personal Development, Small Business Start Up Help

Small business personal development – Tune Out Distractions

December 2, 2011 By Amanda Leave a Comment

Wanting time out to work on your business? but there are too many distractions? This article from blog.crowdspring.com gives advice of what to do in order to tune them out. Great ideas for your personal development in your small business.

Distractions abound. Every day we start work and spend a great part of the day battling the noise that surrounds any small business owner or entrepreneur. The email, the Facebook, the Twitter, the cell phone, the landline, the snail mail, the deliveries, the lunch orders, the radio,the text messages, the television, the newspapers, the YouTube videos – all conspire to dilute our focus, stifle our creativity, and distract from what is really important: growing our business in a productive, efficient environment. Finding ways to tune it out is important; sometimes a lack of noise helps you to think creatively, focus on what you need to accomplish, and reflect on what is working with your business and what is not. Great ideas can come in ways that surprise you, but rarely come amid the hubbub of everyday distraction. So… here are 5 ideas of practical steps you can take to reduce the noise.

1. Turn off the apps. Try to limit your time with email, twitter, Facebook and the rest to specific times of the day. The constant ding-ding of alerts can greatly diminish your ability to get other work done. I find that if I can ignore the incoming messages (whatever source the come from) I can think more clearly about what I am working on, accomplish goals in a shorter time, and complete my other tasks more efficiently and effectively. Productivity is only measured by what you actually accomplish, not by how many emails you read, tweets you send, or blogs you read, so my recommendation is that you literally turn off those programs and feeds at certain times of the day and only turn them back on when you are ready to focus on them

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2. Work from home. The office can be a dark, bubbling tar-pit of conversations, jokes, music, and a multitude of other interruptions, all conspiring to keep you from your work and to hamper your ideas. Working from home allows you to pro-actively tune out the distractions and the commotion that come with working around a larger group of people.

For the other 3 ways to tune out distractions that could hinder your buisness read the full article.

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Filed Under: Small Business Personal Development

Small Business Financing – using your home as collateral

December 1, 2011 By Amanda Leave a Comment

Mostly there is no other option for small business financing than to put up the family home as collateral. There are of course risks to this and here are some examples on how it has worked and how it hasn’t. Reported in the New York Times, the article shows readers what can happen. It’s a difficult decision… even for established businesses that need a (hopefully) short term boost. Here’s what has happened to 2 business owners:

In March 2008, about nine months after he bought a steel-processing business, Precision Steel Services in Warren, Mich., for some $750,000, Shailesh Kumar went to two banks in search of a $350,000 loan.

He wanted to expand the business and pay off a $290,000 debt he had with the seller, replacing an 8 percent, seven-year debt with a 6.5 percent, 20-year loan. “It would have made a huge difference in terms of cash flow and growth capital,” Mr. Kumar said.

But both lenders he was negotiating with demanded that Mr. Kumar put up equity in his own home as collateral. Mr. Kumar hesitated, and then as 2008 wore on, he watched the value of his home fall to $330,000 from $425,000, wiping out all of his equity. Eventually, the banks broke off negotiations. With no cash on hand and revenue down by some 60 percent during the first half of 2009, Mr. Kumar closed Precision Steel in July 2009.

Zalmi Duchman, 31, took a $100,000 home equity loan on his Surfside, Fla., condo and in 2006 used $5,000 of it to start the Fresh Diet, a gourmet meal-delivery service. (He used the rest for living expenses while building the business.)

About 18 months later he took out an additional $200,000 to match with a $900,000 S.B.A. loan that he used to buy a competitor with operations in Miami and New York. “I don’t think I would have gotten the S.B.A. loan without my condo,” said Mr. Duchman, who expects the Fresh Diet to bring in $30 million in revenue this year. “I wouldn’t have grown the way I did.”

Under pinning the whole problem of using a home as collateral is the lack of alternatives. Lets face it, banks and other lending institutions cannot loan without security. Some businesses succeed and some fail. Without the courage of entrepreneurs taking risks with small business finance then what does the future hold? How else can the ‘small guy’ raise finance?

….Some worry about the impact this inability to raise capital and start businesses and hire employees might have on the economy; others wonder whether it ever makes sense to demand this level of commitment from entrepreneurs…..

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Filed Under: Small Business Financing