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Checking eligibility for SBA's 504 loan program

October 20, 2008|Karen E. Klein | Special to The Times

Dear Karen: After reading your recent column I looked up the Small Business Administration's 504 loan program. How do we proceed?

Answer: Consult with SCORE ( www.score.org) or your local Small Business Development Center. Both entities provide counselors free or at low cost. Talk to one about whether your business would qualify for a 504 loan and whether you should apply. Use this url to find a local business development center: www.sba.gov/aboutsba/sba programs/sbdc/sbdclocator /SBDC_LOCATOR.html.

This is probably not the best time to seek a loan. Apply when credit frees up, said Peter Justen, president of MyBizHomepage.com.

"While a tighter economy means tighter lending, less competition should eventually make it easier to get money from lending institutions, assuming you have stellar credit. Shop your local banks for the best rates and services," he said.

Ensure firm fits before buying it

Dear Karen: In the middle of this economic turmoil, is it a good idea to buy a dental office? The owner is retiring and selling for $200,000. The price seems high, especially with the current economic downturn, and we are biting our nails trying to determine whether it would be a good move.

Answer: Buying a business, or starting one, is always a risky proposition. That said, it's generally easier to keep an existing business operating profitably than to start one from scratch, except in the case of purchasing a well-known and well-regarded franchise that will have traffic and positive cash flow immediately, said Ken Keller, president of Renaissance Executive Forums of North L.A. County in Valencia.

"If you're already biting your nails before you even own the business, you need to take a step back," Keller said. "If you think that once the business is purchased all your troubles will be over with, you won't make good owners."

Even in the professional services industry, the marketplace is brutal, Keller said.

"Customers can leave at any time; vendors can raise prices or stop servicing at any time; insurance companies can drag out payment -- and yet the business owners must still pay the rent, utilities, payroll, insurance, taxes and still have enough left over to pay themselves," he said.

Think about why you want to own your own business and make sure this particular industry is the right one. If you decide to go forward, hire a broker to work on your behalf, Keller recommended.

Use media pitch to increase sales

Dear Karen: What is the fastest way to boost sales in this tough economy?

Answer: If you are working with a tight budget, one of the fastest ways to boost sales, awareness and credibility is to do guerrilla-style public relations and get some local media attention for your company.

"Develop a unique story angle relevant to your products or services that is specific to a targeted media venue. Then, contact a reporter directly and give your pitch. Also offer yourself as an expert for future stories," said Melanie Rembrandt, a small-business publicist at Rembrandt Communications in Redondo Beach.

To be successful, you'll need to read local publications and regional business media, keeping track of what kinds of stories they feature and which reporters cover which topics. You can also work with bigger organizations and businesses on joint events and promotions. "This way, you share resources, expenses and efforts." --

Got a question about running or starting a small enterprise? E-mail it to ke.klein@ latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.

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