Category Archives: General Business Advice

State of NM Construction Industries Bond Requirements

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In 2008, the New Mexico Legislature passed a new law requiring contractors to carry a $10,000 Consumer Protection Code Bond to satisfy the financial responsibility requirement for licensure.  This new bond replaces the three options that were previously authorized by statute to satisfy this requirement.  These options included the Penalty Bond, the Cash Collateral Assignment, or the Audited Financial Statement.  As of July 1, 2009, this different bond type is required for all new licenses and all renewals of a current Construction Industries Division- (CID) issued license.

The change in the bond requirement is not merely a change in form and cost.  The state legislature amended the Construction Industries Licensing Act in the 2007 legislative session to change the type of bond required for licensure. Formerly, the bond could be attached only by the state to satisfy penalties assessed against a licensee by the state. Under the new law, a consumer is now able to attach the bond for assistance in correcting building code violations caused by a licensee.

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ARC Loans Help Small Businesses Bridge Debt Gap

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David Valdez, Vice President Small Business Lending, Century Bank

David Valdez, Vice President Small Business Lending, Century Bank

Despite signs that the recession is easing in some quarters, many small businesses continue to struggle to pay off business-related debt. America’s Recovery Capital Loan Program — better known as the ARC loan program — can provide up to $35,000 in short-term relief to help qualified small businesses return to profitability.

The program was authorized by the American Recovery and Reinvestment Act, which became law in February. ARC loans are being offered by various Small Business Administration lenders until September 30, 2010, or as long as the money lasts.

How to qualify

To qualify for an ARC loan, the business must have been in operation for at least two years and have financial statements or tax returns showing profitability or a positive cash flow in at least one of the past two years. The business must be able to project sufficient cash flow to meet its business-related debts in the future.

ARC loans aim to help small-business people pay down or refinance existing business loans so they can redirect cash flow from making loan payments to investing in their businesses. The borrower must not be more than 60 days past due on any loan being paid with ARC funds. The business owner also must prove immediate financial hardship in the form of declining sales, frozen credit or difficulty meeting payroll or payments on rent or loans.

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Credit Score: Important in Good Times and Bad

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Leslie Hoffman, Vice President of Lending and Client Service, ACCION New Mexico

Leslie Hoffman, Vice President of Lending and Client Service, ACCION New Mexico

Those who spend their careers watching the economy contract and expand agree on at least one thing: a person’s credit score is important in any economic cycle.  Before extending credit to an individual or business, bankers want to review the borrower’s credit report and know their credit score.

Financial institutions verify credit through reports that reflects how an individual has handled his debts.  Three national companies – Equifax, Experian and Transunion – track credit and produce reports.  All include similar information.

Report elements include personal information such as Social Security number and employment record, borrowing history, a record of creditors who have reviewed the credit history, and other public information such as foreclosures or bankruptcies.

Credit scores generally range from 350 to 850 points, with most people scoring in the 600 to 700 range. A high score indicates good credit. Lenders review credit scores to determine loan amounts and interest rates that will be charged, and a higher score usually yields more favorable loan terms.

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Farmington’s Enterprising Spirit

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Jasper Welch, Director of the San Juan College Quality Center for Business

Jasper Welch, Director of the San Juan College Quality Center for Business

It might be the size of a “big-box” store, but the Quality Center for Business in Farmington deals in something more valuable than merchandise. Inside this 43,000 square-foot space reside the San Juan College Enterprise Center, San Juan Economic Development Service, Small Business Development Center and the Workforce Training Center — all sponsored or supported by San Juan College. The College facility is also home to the Enterprise Loan Fund, the SBDC grant-funded Procurement Assistance Office and more than a dozen small businesses now being incubated in these nurturing surroundings.

The multi-program facility is the only one of New Mexico’s seven business incubators to be organized as a one-stop resource center for entrepreneurs. (The state’s other incubators are the Santa Fe Business Incubator, NMSU Arrowhead Business Incubator, Los Alamos Small Business Center, Clovis Business Incubator and South Valley and WESST Corp business incubators in the Albuquerque area.)

Rather than creating a stand-alone business incubator, San Juan College 10 years ago partnered with public and private organizations to create a place where entrepreneurs could find all the resources an enterprising person might need under one roof. The college and the city had a common goal: to encourage business startups and expansions and diversify the region’s economy beyond the economic cycles of the oil and gas industry.

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Avoiding the Most Common Business-Plan Mistakes

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Betsy Gillette

Betsy Gillette, Director of Market Research & Planning, TVC

Entrepreneurs looking for funding and those just getting started should pay special attention to the marketing sections of the business plans they submit. This is where the most common mistakes — and the most outrageous assertions — are made. Typical errors include flawed appraisals of market need, market sizing, customer identification and branding.

Market need: This most basic element of a business plan is often woefully undeveloped. Unless a product or service provides tangible benefits to potential customers — at a cost that the customer considers a value — an entrepreneur has little chance of success. Continue reading →

Keeping an Eye on Cash Flow

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Steven Becerra, director, Albuquerque South Valley Small Business Development Center

Steven Becerra, Director, Albuquerque South Valley Small Business Development Center

Cash is the most liquid of a business’s assets. Although cash isn’t obvious in a high-tech world where money mostly moves by debit and credit cards, wire transfers and other electronic transactions, the monetary standard of all these types of transactions is cash. Quiet as it’s kept, cash still rules the economy. It’s the easiest form of money that can be used to buy things, pay off debts or distribute capital.

Given that, business owners should have a basic understanding of cash flow and know how to ensure their businesses have sufficient cash to sustain current operations and ultimately create wealth for the owners and investors. And yet this most basic of business cycles is probably the most misunderstood — and sometimes woefully ignored — by business owners, who are vigilant about checking their account balances at the bank but fail to predict how much cash they have available at any given time to meet the needs of the business.

ABCs of cash flow:

The injection of cash — or sources of cash — come from four areas: investment, debt, sale of assets, and operating profits.

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A Resource Center for New Mexico Businesses

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Paul F. Goblet, financial advisor to the New Mexico Small Business Investment Corporation

Paul F. Goblet, financial advisor to the New Mexico Small Business Investment Corporation

The New Mexico Small Business Investment Corporation and its partners launched Finance New Mexico two years ago as a one-stop resource center for New Mexico entrepreneurs. An outgrowth of Lt. Gov. Diane Denish’s statewide small business tours, Finance New Mexico was intended to be a source of information and support to small business owners in need of information about how to start or build a business and where to find money to finance such a venture. Its overarching goal was to nurture the economy of New Mexico by promoting job creation and economic development, especially in the state’s rural areas.

The power of information:

Finance New Mexico was based on the belief that knowledge could empower the state’s would-be entrepreneurs. To that end, a Web site was created from which information could be disseminated through timely articles about the resources available to small-business owners.

The articles, written by experts from the financial services industry, are also distributed to the media for publication in community newspapers around the state, where most business people get their news. Past articles have covered such topics as how to start a business, surviving in a slow economy, obtaining a loan and how to attract equity investors.

As the initiative enters its third year, Finance New Mexico is coming up with ways that business people can interact online with authors of these articles through social networking and a comments board at the end of each article. Finance New Mexico is now on FaceBook and LinkedIn. Twitter tweets are sent when new articles are posted to the Web site and authors participate in discussions on LinkedIn.

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Artist Hits Homer With Help of Economic Development Network

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Monica Abeita, Regional Development Corporation for Northern New Mexico Connect

Monica Abeita, Regional Development Corporation for Northern New Mexico Connect

Jolene Jessie’s life philosophy, and the mantra that has made her successful in business, is “find a need and meet it.” In 1987, Jessie worked as a free-lance portrait artist in San Francisco and was asked to paint images of San Francisco Giants players on baseballs. “The Giants were my first clients,” she said. “They bought dozens of those baseballs.”

That’s where Jessie’s work in custom sports memorabilia began. Today, Jessie operates sportartist.com from her home in Chama, New Mexico. Her custom portraits are painted on jerseys, baseballs, bats, footballs and other collectibles. Jessie also has a successful business relationship with Upper Deck, the world’s largest baseball card company, for whom she produces high-end signed memorabilia.

As a member of the Chama Valley Chamber of Commerce, Jessie in 2008 met Christopher Madrid of LINK, which offers coaching and networking to small businesses and entrepreneurs in Rio Arriba County. It is one of five services offered to Northern New Mexico businesses provided by Northern New Mexico Connect, the principal economic-development and investment arm of Los Alamos National Security LLC and Los Alamos National Laboratory (LANL).

“Christopher and I began by brainstorming about my business, including potential growth, employees, legal structure, future partners, and other ideas,” Jessie said. “He then began networking me with resources based on my business needs.”

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The Pros and Cons of a Ready-Made Business

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Buying a franchise or becoming a multilevel marketing salesperson allows an entrepreneur to start a business without starting from scratch. Both provide opportunities to run a business using methods developed and used by a parent organization.

More than 35 percent of all businesses in the United States are franchises, including McDonald’s, Subway, Ace Hardware, various motel chains and auto dealerships.

Multilevel marketing companies such as Amway, Avon, Mary Kay and Shaklee Corp. use independent salespeople working on commission to get their products to consumers.

Not for everyone

The most obvious advantage of owning a franchise or being an independent product or service representative is that both setups offer instant name recognition and credibility and products that are familiar to consumers.

A person who opens a franchise — a franchisee — benefits from national or regional advertising and marketing done by the parent company. He or she is trained by the franchisor and given a manual that outlines company standards and operations. Multilevel marketing salespeople get similar resources and support materials.

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Getting Top Grades in Financial Literacy

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Gena Wilimitis of the Securities Division of the NM Regulation & Licensing Dept.

Gena Wilimitis of the Securities Division of the NM Regulation & Licensing Dept.

The steep rise in credit card debt, short-term lending and personal bankruptcies underscore the need for more effective economic education if individuals are to be empowered to achieve financial security.  Without basic knowledge of how financial markets, credit, and investing work, individuals risk becoming victims of fraud and of making unsound investments.

A variety of financial education materials are available to educators, but it’s not always easy to get them in the right hands. The New Mexico Coalition for Financial Education is trying to change that.

Coordinating financial education efforts

The New Mexico Coalition for Financial Education is a voluntary association of educator businesses, government agencies and individuals who believe that the prosperity of our state requires economic and financial education. The coalition’s goal is to help all New Mexicans acquire the knowledge, skills, confidence and resources that can help them manage and improve their personal financial lives. The coalition formed more than four years ago to act as an umbrella group for all the financial literacy efforts under way statewide. What began as a loose network of individuals and organizations has developed into a formal organization with a board of directors and monthly board meetings. The coalition recently applied for nonprofit status.

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