The Keys to Standing Out in a Difficult Economy

There's no denying it: business is slow these days. Two months ago my phone was ringing off the hook and I was turning away clients due to too much work. These days I am only talking to a few potential clients each day.

We are in the midst of a very difficult economy. Small business owners and entrepreneurs are taking a wait-and-see approach to the credit market and putting projects on hold. And yet I am seeing many more email inquiries and getting alot more requests from established companies.

Despite the credit crunch, it is an ideal time to get started with planning your business so that you can stand out from the crowd when it does come time to get funding.

Loans and credit lines are tight, but that doesn't mean that financing has dried up completely. Equity financing is still available for great business opportunities. Many investors are looking for places other than the stock market to put their funds to use. They are willing to take the risk on a well thought out business idea.

The keys to finding financing in today's economy are the same as they have always been - you just need to execute even better than ever before and put in a little extra work:

Have a compelling business opportunity. A great idea, a vision on how to achieve success, and a plan on how to maximize performance. You will need to demonstrate all of the traits that investors have always wanted to see in a great business plan: an innovative solution to a problem, with demonstrated demand, sustainable competitive advantages, positive financial potential, and a committed management team who's been there and done that.

Tell your story in a clear, compelling way that that stands out from the stack. A downturn is generally a good time to start a business, but with a flood of displaced workers hoping to launch their own business will create a lot of entrepreneurs competing for a shrinking pool of capital. In order to succeed, you need to put a lot of time and effort into developing a killer business plan, practicing your elevator pitch, creating amazing presentations, establishing an executive summary, financial forecast, website, and more.

Perseverance. Even in the best of times, raising money is a hard job. The same process that may have taken three to six months might now take as long as a year. For some entrepreneurs, it will take extra patience and communications to sell your idea to the right investors.

This is not the first down-turn we've seen and it won't be the last, but if you keep your eye on the long-term view you can use these times as a opportunity to grow a successful business.

The Mind of the Entrepreneur

A new study out by Cambridge University has shown that entrepreneurs’ brains are different to those of managers. The study found that entrepreneurs’ brains were more active in the region of the brain which is responsible for taking “risky or hot” decisions.

The study is the first to look at entrepreneurs through neuroscience. To gather the results, researchers gathered 16 successful entrepreneurs and 17 managers. A series of tests showed entrepreneurs were more apt to be impulsive and mentally more flexible than the traditional managers.

Choosing the Right Business Partner

One of my favorite sites for women entrepreneurs, Ladies Who Launch, has a fantastic new article posted about how to go about deciding whether or not to go into business with someone. It is absolutely critical to take an objective look at a potential business partner before you take the leap to start a business together.

It often sounds ideal to follow your dream into owning your own business with a family member or close friend. But you have to be realistic when choosing a business partner to help create a positive business model and maintain those close relationships. Nothing ruins a friendship faster than a failed business.

Some of the things you need to look at include

• Work Ethics
• Values
• Individual Strengths and Talents
• Trust
• Respect
• Compassion

Read all of their tips and recommendations on choosing the right business partner at Ladies Who Launch.

New Businesses Rely on Credit Over Friends and Family

It used to be that new business owners would turn to their network of friends and family for startup funds. A new report out from the Kauffman Foundation shows that more and more entrepreneurs are turning to personal bank loans and credit cards to get their businesses off the ground.

According to the study, nearly 75 percent of most firms’ startup capital is made up in equal parts of owner investment and bank loans and/or credit card debt.

"Indeed, our calculations indicate that external debt financing—primarily through owner-backed bank loans and business credit cards—is the primary source of financing at a firm's inception. The average amount of bank financing is seven times greater than the average amount of insider-financed debt; three times as many firms rely on outside debt as do inside debt."