SE Minnesota
Small Business Development Center
"Shaping the Future of
Small Business"
Our Mission is to Deliver Lasting Positive Economic Impact.
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April 2016 SBDC Newsletter - In This Issue:
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The Small Business Development Center (SBDC) offers
Confidential Consulting at No Cost
to help businesses in Southeastern Minnesota
Identify, Understand and Overcome Challenges
of starting a business, running a successful business, and developing exit strategies.
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Fostering the Next Generation of Rochester's Entrepreneurs
RCTC and SBDC host Rochester's first Youth Start-up Weekend
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Julie Kiehne
SE Mn SBDC
Regional Director
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Considered to be the world's starting point for entrepreneurship, Startup Weekends are weekend-long, hands-on experiences where aspiring
 entrepreneurs can find out if startup ideas are viable. The first youth-focused Startup Weekend was held at RCTC on March 18-20 and welcomed high school students from the Rochester area. Mentors and coaches assisted the youth in market research, evaluation of their ideas and developing the pitch. The event culminated with group presentations to pitch their ideas before a panel of judges. Thank you to the SBDC Advisory Committee Members serving as presenters and mentors, John Devlin and Diane Quinn; as well as volunteer SBDC Consultant, Cathy Enerson. Youth Start Up Weekend website
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Customer Spotlight
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| Tyler Mundy, Owner of Heavy Metal LLC |
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Congratulations to
Tyler Mundy of Heavy Metal,
recognized as the
Southeast Minnesota
Small Business Person
nominated for the
Tyler Mundy of Heavy Metal, LLC in Blooming Prairie is the SBDC's customer spotlight. Tyler started his precision CNC machine shop in 2012. Read more on why he started a machine shop and the niche market for his Olympic weight lifting bars.
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Feedback builds better business!
Come and hear area entrepreneurs
pitch their business ideas....
Rochester's
BizPitch Event
April 7, 2016 3:00-5:00 pm
Rochester Community and Technical College
Heintz Center
1926 College View Rd SE, Rochester
Room HA 132
A partnership event with the SE Mn SBDC and the
Regional Center for Entrepreneurial Facilitation (RCEF) Contact: Laura Babcock
, [email protected] 507-344-7895.
More on BizPitch
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Opinion
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Buyer Beware!
Over the last few years I have seen a few new financing tools for the small business. One tool that has been increasingly popular is what I call the "Non-Traditional Bank Loan". They will give you a credit decision in less than 48 hours. In addition, you will not be required to make a monthly payment if they decide to approve your company for a loan. Instead, they will just take the funds directly out of your account daily. And yes, the interest rate is a little higher than the normal rate. However, they say it will be less expensive because you will pay off the loan quicker.
Example: Your business needs a loan for $12,000.
| Type Of Loan |
Interest Rate
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Loan Amount
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Daily
Loan Payment
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Monthly Loan Payment
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Total Annual Payments
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Total Payments
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Non-Traditional Bank Loan
(Based on 1-year
term loan)
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8% |
12,000.00 |
48.18 |
0.00 |
12,528.84 |
12,528.84 |
Traditional Bank Loan
(
Based on 3-year
term loan)
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6% |
12,000.00 |
0.00 |
365.08 |
4,380.96 |
13,142.88 |
Now, let's take a closer look at these numbers:
Advantage:
The advantage of the Non-Traditional Bank Loan is the total cost to pay off the loan. The savings is $614.04
Disadvantage:
This loan is a huge drain on your company's cash flow. This loan will place a negative cash flow drain on your company of over $8,000. The way to figure the impact on your cash position is to compare the difference in the Total Annual Payments column. The Total Annual Loan Payments of $12,528.84 for the Non-Traditional Bank Loan is over $8,000 more than Total Annual Payments of $4,380.96 for the Traditional Bank Loan.
The bottom line is that the business owner needs to evaluate the overall cash position of their business and see what type of business loan will help improve their cash flow instead of place a strain on their cash flow. Please give me a call if you need help on figuring out your business's cash flow needs.
Shaping the Future of Small Business,
Rick Indrelie
507-280-5503
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Accounting for Land and Buildings on your Balance Sheet
Most small business owners do not pay close enough attention to their balance sheet. One common mistake that I see often is when the business owns a building. Most of the time they will also own the land that the building is on. However, when I look at their balance sheet they do not have a line item for the land. Proper accounting is to separate the land and the building on your balance sheet. So you are thinking that is no big deal. It is a big deal. You need to ask yourself when someone looks at your balance sheet and they see an obvious error, they will look for other errors and lose confidence in your financial data. The people that would be looking at your balance sheet would include this short list: your banker, a future banker, the IRS, Department of Revenue, an investor, and an existing or new business partner. When the reader loses confidence in your financial data, they will lose confidence in the business and the owner. If you need help, please give me a call or talk to your accountant to get this fixed correctly and put your company's financial data in a positive light.
-Rick Indrelie
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LegalCORPS provides free assistance in non-litigation business law matters to small businesses through the services of volunteer attorneys.
Common questions include what type of business entity to form, how to patent an idea, employment law, and much more.
LegalCORPS volunteer attorneys can provide the sound legal advice that is essential for success in business.
To schedule a consultation with LegalCORPS, Email Sarah or call her at 507-285-7536.
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