This book is a gold mine of wisdom and a must read for the young graduates and entrepreneurs entering their practical life in the "real world" after their basic or advanced education. It provides guidelines in business matters, loans and banking, providing banker's perspective to the entrepreneurs on borrowing matters. The deep recession of 2007, has been stubbornly overshadowing the developed world. Many Western countries are struggling with much larger debts and very high unemployment rates. Much larger percentage of graduates and school leavers are without proper jobs in their formative years. Many of them would need to look at their own liking of becoming entrepreneurs and self employed. This book is an easy to understand guide, a ready reference about banking, financing and entrepreneurship. It will help remove myths and fears of entrepreneurs about banking relationships and borrowing. The book also explains the intricacies and precautions to be observed in any businesses in simple language. The book provides deep insight and sound advice on day-to-day topics like credit score, limited liability entities, insurances, buying real estate, income tax, raising capital and estate planning. This book is a product of the author's over ten decades of collective experience in international trade and finance. It provides almost all that young graduates and MBAs students need to know while undertaking any new venture.

Wisdom for Business Success

Practical Guide for Entrepreneurs and Fresh GraduatesBy Barkat Charania Nuruddin Abjani

AuthorHouse

Copyright © 2012 Dr Barkat Charania & Nuruddin Abjani
All right reserved.
ISBN: 978-1-4634-4744-1

Contents

Dedication...................................................................................iDisclaimers..................................................................................iiiAbout Authors................................................................................ivPreface......................................................................................viiAcknowledgements.............................................................................xChapter 1 Be a Successful Entrepreneur.......................................................1Chapter 2 Informal Sources of Capital for Entrepreneurs......................................6Chapter 3 Conventional Sources of Capital....................................................9Chapter 4 Banks Have Important Role In Society...............................................18Chapter 5 Banking Is Important Business Relationship.........................................22Chapter 6 Applying for Bank Facility.........................................................31Chapter 7 Types of Banking Facilities........................................................35Chapter 8 Finding the Right Lender for Your Needs............................................45Chapter 9 Know Your Bank.....................................................................49Chapter 10 Formal Meeting with Your Banker...................................................54Chapter 11 Small Business Administration (SBA)...............................................57Chapter 12 Various SBA Loan Programs.........................................................61Chapter 13 Writing a Loan Proposal...........................................................68Chapter 14 Successfully Qualifying for a Loan................................................74Chapter 15 Valuation of Your Collateral......................................................80Chapter 16 Evaluation of Your Loan by Underwriters...........................................83Chapter 17 How to Proceed After Getting Loan Commitment......................................92Chapter 18 Your Creditworthiness as Seen by Your Lender......................................103Chapter 19 Long Term Relationship with Lender................................................108Chapter 20 Lender is Your Friend; Just Fulfill Obligations...................................117Chapter 21 Banking and Lending in the USA....................................................124Chapter 22 Understanding Cash Flow and Managing it...........................................129Chapter 23 Break-even Analysis...............................................................135Chapter 24 Your Credit Score: Raise it using Prudence........................................141Chapter 25 Limited-Liability Entities: Advance Planning Pays in Long Run.....................152Chapter 26 Franchising Wisdom: Buying Experience at a Price..................................158Chapter 27 Wisdom: Advantages of Legal Entities..............................................163Chapter 28 Bankruptcy Protection: Wisdom of Last resort......................................165Chapter 29 Property Transaction Wisdom: The Ultimate Goal....................................169Chapter 30 Will and Estate Planning Wisdom: a Must for All...................................174Chapter 31 Adequate Insurance Wisdom: You Can't Over-insure..................................179Chapter 32 Savings And Retirement Wisdom.....................................................184Chapter 33 "Wisdoms" Learned From Global Recession...........................................191Glossary and Definitions of Financial Terms..................................................203Index........................................................................................207

Chapter One

Be a Successful Entrepreneur

There are many ingredients required to become a successful entrepreneur. In business and entrepreneurship, there are many qualities, traits, attributes and virtues needed from the person aspiring to become an entrepreneur. Almost all of us have most of such qualifications. Some may need to be developed by working with some experienced colleague or a mentor. With investment of time these can all be developed. We shall define and elaborate them here.

Ambition: This is by far the most important ingredient in becoming a successful entrepreneur. Without ambition to grow and be successful, many important and much-needed jobs will remain undone or less attended, leading to very slow progress or even failure. Hence, every beginner has to try and understand his own ambition and follow his or her sixth sense in starting or pursuing any career. Today's world is very competitive, and although ambition is an inborn thing, it would be safe to say that the competitive spirit, which is promoted in today's schools and colleges, sharpens the inborn ambition to a major extent.

Personal interest: You need to be interested from the bottom of your heart and spirit to be able to succeed in any line of work. One sure way to lose and fail is to start a job and lose interest in the middle. Hence, all entrepreneurs are well advised to have a long enough exposure in the line that they are wanting to pursue as career. Such exposure will make you understand how much interest you actually have in the career, which, on first look, seems to be enticing. You may have to work in that business or career for some time to understand its requirements. You then need to analyze from the experience obtained to understand the limitations and difficulties in that career and then conclude whether that business or career is suitable for you or not.

Commitment: To find success in any work, only getting involved is not enough. One has to be committed to the work. As an entrepreneur, you need to learn this early in life, so that you are trained to be absolutely devoted to the kind of work that you chose to pursue for your entire life. A new business venture is like raising a child. It is a challenge to learn many new things and be dedicated to do all that it takes. Again, if the commitment and interest is any less than the best, it may lead to mediocrity and/or failure. Many businesses do not do well only because the entrepreneur is not fully committed right from the beginning.

Experience: This is also one of the most important ingredients to bring success to any work. Experience is an invaluable asset that anyone can invest in one's work. We strongly advise every entrepreneur to work and gain experience in the line of work that you think will be interesting and gather a lot of experience before starting your own business. The time spent in obtaining such experience will reveal to you the limitations and rewards attached to it. It will expose you to many possible problematical situations and teach you how to resolve or rectify them. The firsthand experience will allow you to measure your own interest in that line of business and will also be a test if the interest is sustained after a while. Firsthand experience and an understanding of the business will also reveal whether or not this is the kind of work that you like. It will also be clear to you whether it will satisfy your future expectations and obligations to yourselves, your family, and community.

Planning: This...