Category Archives: Starting or Growing a Business

Cash Flow: Timing Is Everything

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Leslie Hoffman

Leslie Hoffman, Director of Lending & Client Service, ACCION New Mexico

Ever had a friend who seemed to have it all – high-paying job, nice car, beautiful home and plenty of toys to fill the garage? But at the end of the month, your successful friend doesn’t seem to have $10 to his name. Turns out he has been pouring all those earnings into the house, the car and the toys. Perhaps he can afford them all, but he could certainly use a lesson in cash flow management.

This illustrates a critical lesson for business owners: profitable companies can go bankrupt. It may seem counterintuitive – a business that lands in the black can simultaneously be putting itself out of business.  But business owners who fail to manage cash flow can find themselves much like that friend – with positive earnings but no cash to pay bills. Continue reading →

Solutions: You’ve Come to the Right Place!

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Paul F. Goblet, Investment Advisor, NMSBIC

Paul F. Goblet, Investment Advisor, NMSBIC

During the past six months, the New Mexico Small Business Investment Corporation (NMSBIC) and its partners have created a series of business-related articles and a web site to provide information and resources to New Mexico business owners and entrepreneurs. If you are reading this article in a newspaper, you can thank the editors of the publication in which it appears for supporting economic development in your community. The Finance New Mexico initiative has been a collaborative effort that has relied on the simultaneous actions of entities in both the public and private sectors across the entire state.

Why? It was and still is our collective belief that if we provide timely, well-written articles containing useful information about the resources available to all small businesses, it will help strengthen local businesses and communities. Those resources include services, advice, technical assistance and training – all of which prepare current and future business owners.

The network of Small Business Development Centers (NMSBDC) is one such resource. Located in 20 communities around the state, these centers provide classes, consulting and business advice – much of it for free – to hundreds of businesses. WESST Corp. provides technical assistance and training workshops on topics such as creating a business plan – something that can be of critical value to comprehensive understanding of the challenges and opportunities confronting your business. These resource-services can help you prepare to access capital more successfully, and this is something in which the NMSBIC is particularly interested.
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Fund Fills the Gap in Seed-Stage Investments

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Trevor Loy, Managing Partner, Flywheel Ventures

Trevor Loy, Managing Partner, Flywheel Ventures

Yogi Berra once famously said about his favorite restaurant: “It’s so crowded, no one goes there anymore.” The same could be said about seed-stage investing and today’s venture capital investors.

For several decades, the VC industry has delivered above-average risk-adjusted financial returns, and capital invested in venture capital funds has grown exponentially. While capital has increased, the number of qualified professionals in the VC industry has only grown slightly. The result is that each individual VC professional now manages considerably more capital than before, but their available time has not changed. As a result, almost no professional VC firm can consider initial investments of as little as $50,000 – typical of seed-stage investments – especially when these investments may well require similar time commitments to those of $5 million.   The aggregate result is clearly seen in industry data, which shows a drop in professional VC seed-stage investing of at least 50% over the past ten years.
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The Business Plan: Your Guide to Success

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J. Roy Miller, State Director, NMSBDC

J. Roy Miller, State Director, NMSBDC

Imagine you are starting a trip. Where are you going? How will you get there? A plan helps you chart the best course, ensures that you follow your route, alerts you to important landmarks and reminds you of your schedule and budget.

You wouldn’t embark on a trip without a plan so why would you start a business without one? Studies have shown that the failure rate of start-ups without business plans is three times higher than that of businesses whose owners prepared a plan.

A business plan provides you with the analysis needed to decide whether it is in your financial interest to go into the business. If you decide to continue exploring the idea, this analysis is critical to obtaining the main thing that fuels the business world: capital. A plan helps the prospective investor – be it your banker or brother-in-law – determine the merits of the “deal.”

Plans can be as short as one page or as long as one hundred; most are between twenty-five and fifty pages in length. Whatever length and style is suitable for you, your plan should, at a minimum, contain the following information:
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Business Loans: When Traditional Banks Can’t Help

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F. Leroy Pacheco

F. Leroy Pacheco, CEO, The Loan Fund

Nine years ago, while working as a housekeeper for a large Albuquerque hotel, Delia Gallegos dreamed of her own restaurant. Today she is the owner of two restaurants that provide a living wage to nine employees, and she has plans to open a third.

Delia is just one of many successful clients of The Loan Fund, a non-profit alternative lending agency that steps in when banks are unable to make a loan. The mission of The Loan Fund is to build New Mexico communities, and we pursue this mission one loan at a time.

The Loan Fund was founded in 1989 by the Council of Churches to help alleviate poverty in New Mexico. It was, and still is, a laudable goal and Continue reading →

Preparation Is the Key to Getting a Business Loan

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Paul F. Goblet, Investment Advisor, NMSBIC

Paul F. Goblet, Investment Advisor, NMSBIC

Unlike securing a consumer loan for a home or car, getting a business loan can be difficult. Consumer loans have become readily available, and often a borrower can be pre-approved based on his or her credit score.

A business loan, on the other hand, demands far more documentation, takes longer to close, and is often based on both the historical success of the business and the personal financial strength of the owner.

There are many reasons for this. Valuing a business is not as simple as having an appraisal on a home because there are fewer comparisons – not many businesses are exactly like yours. Nor can the business be sold as quickly as a home or car.

The New Mexico Small Business Investment Corporation (NMSBIC) tries to make the process of obtaining a business loan easier. Through its financial partners, like ACCION New Mexico, WESST Corp. or The Loan Fund, we have provided funding for over 1,300 business loans throughout the state. While each financial partner has their own credit approval process and each requires different documentation, these partners are accustomed to working with small businesses that might otherwise have trouble securing a loan from a traditional bank.
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