Bank Scoring System

Apparently for businesses (and I assume personal accounts) banks have a scoring system that assists them in determining if you are worth lending to that accompanies your credit score, regular income, etc. This is the bank that you have an existing relationship with. Basically they look at your average daily balance to determine your repayment ability.

So if you have under $999 you are a high 3 (or is it low 3?)

If you are between 1000 and 5000 you have a separate rating

And 5000-10000, another rating (low 5 I think)

Basically for any type of business loan you want to be above 10000 for at least a 3 month period. So even if it means borrowing the money from someone with interest, it would help significantly.

Invest in your mind at the expense of... everything

One of the greatest benefits of being young is that you have a lot of time to recover from any mistakes you make. It provides a great opportunity for you to attempt to learn all that you can, even at the expense of your lifestyle, money, credit, etc.

There is definitely something of value in learning from other people that have gone through similiar experiences, but too often people never make the jump to trying something that may seem "risky" because they want to make sure everything is "right". The truth is there will always be a reason not to do something, so what the heck are you waiting for?

Now I'm not saying jump into just anything, you should calculate your risks to some extent, but too often we never get out of the calculating stage! And there are definitely a lot of bad directions (see posts on multi-level marketing). But sometimes you have to go to a MLM rally in order to realize it is madness despite what everyone says.

:Example:

I want to: Open a coffee shop

Obstacles:
I've never worked in a coffee shop
I don't know how one operates
I don't have the money to start one
What if I lose my money
How will I pay my living expenses?

Solutions:
Get a job in a coffee shop, try to absorb as much info. about the business as possible
Read as many resources as you can about coffee shops!
Research success stories like Starbucks, Bigby
Budget how much you would need to barely survive and then set EVERYTHING else aside for the business

Results:

• Best/Least Likely: You open a coffee shop and it does well, you continue to make it operate more efficiently and look into opening others
• Average Result/Very Likely:You open a coffee shop and it fails, you reflect on your journey and what you did wrong/right. You don't have the money to try again, but you vow to do so. 9/10 Business start ups fail in the first 1-3 years, so you just need to try 10 times to make it happen (odds are if you are moderately intelligent that you will hit success earlier, but other factors may prevent this from happening). You learned a hell of a lot at the cost of your investment, but that knowledge will pay off eventually.
  
• Worst Result/Don't Do: You open a coffee shop and it fails, you say it was never a good idea and give up. You lose your money, learn nothing. What are you investing in here? NOTHING!

Okay so this doesn't cover every possibility but you get the idea. Of course you could discover that you hate running a coffee shop and instead want to run an ice cream parlor. Well you better believe the business knowledge is going to be relevant for that too.

Starting a Business

While I was in school I started a business to earn some extra cash, it also looks good on a resume to say you were responsible enough to do it.

Starting a business is not as difficult as one may think. While there is a lot of work involved with the various aspects of marketing, cashflow, etc; actually filing the forms to start a company is pretty easy. This varies, of course, depending on the structure of the business you select. That is why to keep things simple, I'm going to talk about an LLC with only one owner (you!). Before you file your documents you really need to ask yourself a couple things:

1) What you are going to do or sell?
This can be a product or service. I have heard services fixing computers, selling on ebay, cutting hair, help writing papers/studying, etc. You could also try to sell something; maybe a unique item that you can make or a web page you can design.

2) What your name is going to be?
A good rule of thumb is to pick a name that describes what you do and what you stand for like "Friendly Computer Repair" or "Fast Hair Cuts". Of course these are simple and you could probably come up with something better, but you get the idea.

Now that you have the preliminaries done, you actually need to do it! Here is how:

1) Find the form

Once you are done with these you can head to your state's website and search for the forms section. You are going to be looking for "Articles of Organization". Do a little research about your state and make sure it is a state that is good for LLCs. Most are, but sometimes states have a history of treating various types of companies poorly.

2) Print and fill out the form and mail!
Not very complicated here, just make sure you spell everything correctly and sign! Usually there is a filing fee, so make sure you write a check!

Tadah!!!!

In a few days or weeks you will be sent back the same form stamped, approved, or what have you. You have now done the basic steps required to create your company!

In the future you will have to worry about:
Tracking Financial Info for your business, Taxes, etc. Feel free to ask me about these now, but I will be posting about them more in the future.