Like The Smell of Money? Get A Loan


Halle Berry is a genuine tinsel town success story: She's gone from humble origins to earning 8-figure salaries and winning an Oscar. Now she wants to capture the sweet smell of her success, so she can sell it to you.

The Monster’s Ball actress announced last week that she is developing her own scent with perfume giant, Coty. Steve Mormoris, senior vice president of global marketing at Coty commented, "Halle is an iconic actress and symbolizes beauty to many generations. [She] has always been a little more mysterious, not quite as open with her personal life as some other stars. Her fragrances will allow her to present another facet of her personality to her fans." Those fans will be able to get a whiff of that personality when her perfume reaches stores in spring 2009.

Whether it is a perfume line, a restaurant, or even a lemonade stand, starting a new business can be an exciting time and an expensive process. However, there are some ways for entrepreneurs to get their ideas off the ground without draining their wallets.

Before doing anything a budding entrepreneur should sit down with someone who does not have a vested interest in their company.  Many turn to groups like SCORE for help.  SCORE is a group of more than 10,500 retired business volunteers who provide business advice and can help organize a plan so that it is investor and lender friendly.  Ridgely Evers, the CEO and founder of NetBooks, says it is important to have a strong plan because, “Whatever you think it is going to take [financially], you are wrong.  Everything always takes longer and costs more than planned.”

There are two choices for people when getting financing for a new business: borrow money through loans or get investors to take part in the company.  Drew Tignanelli, the president of The Financial Consulate in Baltimore, Md., says that the financing decision should be based on what kind of company is being started. If it is a small company that will not require a lot of capitol, loans are the way to go. If it is a larger company, getting investors may be the better choice.

When it comes to loans, experts say it all comes down to collateral.  Collateral can be an established business, or investments and real estate that an entrepreneur already owns, says Tignanelli.  Most banks will provide a small business loan, as will the government through the Small Business Administration (SBA).  To get a loan from the SBA a business plan must encourage future employment.  But, Evers says, there is one place not to go for a loan:  “Credit card loans are suicide. They are an ugly path of non-resort, not even last-resort.” 

The other option for funding a business idea is to get investors involved in the plan.  This can be a tricky, but also a profitable choice. It is important to keep in mind that investors are only buying into a piece of the company while entrepreneurs are “all in.”  Because of this distinction, these investors may have different objectives and entrepreneurs should choose carefully when accepting investor offers. The choice is about the individual, and not their business, because that person will be a partner on a long voyage.  There should be good deal of trust involved.  “It should be viewed more like a marriage than a one night stand,” says Evers.

When it really comes down to it, starting a business is long hard work and no one wants to see it fail.  So, Tignanelli says, “The big key really is to think hard about the plan before you start and ask yourself, ‘Is this business going to make money?’  If the answer is yes then don’t waste any time getting started.” And. if all your sweat equity is getting to you, Halle's working on something to make it smell sweet.


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