Category: Finance & Capital

Article Contributed by Conrad Ford

Business overdrafts will always have a role to play in the financial workings of small and start-up companies in every conceivable sector. These days though, banks are far less willing than they once were to open up these facilities to even the most viable and reliable of fledgling companies.

Thankfully, alternative funding options are increasingly being made available in response to the need among small businesses for a greater measure of financial flexibility. Here are 4 such options well worth considering if your company needs to boost its cash flow but cannot access an overdraft facility:

1 – Asset refinancing

If you’ve invested in or managed to acquire equipment of any sort that carries considerable value then cash flow problems can be particularly frustrating and tough to bear. By refinancing these assets, your company can free up cash in the short term by effectively selling their ownership and agreeing to hire them back at a pre-determined price. Quite what assets you might refinance will depend on your line of operations but could include, for example, a fleet of vehicles, an item of heavy machinery or an area of office space.

2 – Factoring and invoice discounting

One asset that is often overlooked by small businesses but which can now be leveraged in a variety of ways to raise cash quickly is a company’s sales book. The processes of invoice factoring and discounting are both growing in prevalence and popularity as a means through which small companies can effectively sell their invoices to third parties and access cash upfront without having to wait for clients to pay in full. The terms involved in these kind of scenarios vary a great deal but the process of selling invoices is already helping hundreds of businesses raise funds quickly when they have an urgent need to do so.

3 – Revenue loans

Banks have become more reluctant to extent lines of credit or loans to small businesses in many different parts of the world in recent years. One solution to emerge in response to that situation in the context of retailing in particular is revenue loans, which are created in a way that means they’re paid back in line with income on a monthly basis. For many small companies, these terms help create a crucial degree of financial flexibility and keep repayments from becoming routinely burdensome.

4 – Crowdfunding

Crowdfunding has been one of the more remarkable small business financing developments to have emerged in recent years and its potential is still far from being fully realised. Already the phenomena, along with peer-to-peer lending, is helping hundreds of small businesses around the world raise funds online in ways that simply weren’t possible only a few years ago. Crowdfunding won’t work for every type of business but there is certainly scope for many thousands more small companies to generate cash through online platforms and based on the strength of their appeal to low-equity investor communities.

Every developed economy needs its small business sector to thrive and access to finance will always play a big hand in making that happen. So even where banks have retreated from the small business and start-up sector, there is plenty of optimism and certainly a growing sense that alternative options are available and on the rise.

About the Author

Conrad Ford is the founder of Funding Options, which provides a range of online tools to help firms and their trusted advisers to manage funding and cash flow.

Article Contributed by Ronny Cheng

Fundraising for your startup can be one of the most important and stressful times. When done right, it can lead to partnerships with angel investors and venture capitalists  that lead to millions of dollars to grow your business. If done wrong, it can lead you down a long road where you begin to second-guess your business and model.

Raising funds for your business takes a lot of planning, a lot of patience, and a significant amount of time preparing pitch decks and financial models.

So how exactly do you start to fundraise for your startup?

The Pitch

Well, regardless of whether you’re getting seed funding or going for series A, you always need to have the perfect pitch. The trick to having the right pitch is to keep it short and sweet, and most of all, be passionate. Don’t worry about providing too many statistics, just remember to tell your story and include the details listed below:

• What your company does
• What problems or pain points your product solves
• Have you created technology for this?
• What’s the size and level of competition in the market?
• And most importantly, why will people love your product?

Mastering your pitch is the first step to raising capital for your startup. Funny story, I once spoke to a CEO who said that vacations were his best testing grounds for his pitch. He would sit at the hotel bar and just pitch to random strangers. By gauging the interest and excitement he got from these strangers, he would know that his pitch was heading in the right direction.

The Pitch Deck

Did you think all you would need to get together is your pitch and you’d get thousands or millions of dollars thrown your way? Wrong. After you get your pitch together, you need to carefully assemble your pitch deck. A Pitch deck is a very important fundraising tool. Examples of a good format for a pitch deck can be found all over the web. However, Forbes has a great breakdown here. They break it down into 11 basic slides for your pitch deck.

1. Vision/ Elevator Pitch
2. Traction / Validation
3. Market Opportunity
4. The Problem
5. Product / Service
6. Revenue Model
7. Marketing and Growth Strategy
8. Team
9. Financials
10. Competition
11. Investment ‘Ask’

Pitch decks are great tools for raising capital for your startup, and are a great way to segue to and from introductions.  You’ll need to leverage your connections and have them provide brief information about your company, as well as your pitch deck. This allows investors to quickly scan what it is you do, and decide whether it’s worth actually meeting you.

As you present to more and more investors, your pitch deck will become your best friend. You’ll carry your pitch deck with you wherever you go, and constantly nitpick at little details.

Article Contributed by Ronny Cheng, Carkibo, http://www.carkibo.com. The Best and Easiest Way to Sell Your Car.

Article Contributed by Paul Jackson, CEO, Worthworm

As someone who spent many years as an investor, I can tell you it’s actually a great time to think about turning your innovative idea into a reality. There have never been so many methods of raising the capital needed to be successful be it an accelerator program, crowd sourcing, boot strapping, or something else. However, many of you will at some point need to seek funding from an angel investor or group of investors which can be extremely tricky to navigate. The truth is, the funding process can be one of the most complex challenges small business owners and startup founders face when growing their company. Consider the three lessons I’ve learned from my time one the investor side of the table as you meet with investors and build a successful and thriving company.

1. Make accurate and honest financial predictions
   Honestly, ongoing financial success doesn’t typically come easy to most companies. If you don’t have a background in finance, its easy to get swept up by the promise million dollar headlines tend to make. My advice is to stay as accurate and honest as possible about the worth of your company when meeting with investors. Remember, this is what they do for a living and they’re going to be incredibly sensitive to anything that feels overblown. It’s much more important to present accurate financial predictions and then be able to demonstrate how you plan to grow and scale in the marketplace gradually. After all, the investors’ ultimate goal is to have a return on their investment and they understand that might not come for some time. Your goal should be to show them how you will achieve that with the money you’re asking for.
2. Don’t get greedy, seek what you need
   In addition, to being honest and accurate we might as well talk about not getting greedy. It might seem tempting to ask for more than you actually need during an investor meeting, after all the startup game is volatile and more money might mean more stability. If a smart cooler can raise $10.5 million on Kickstarter, why can’t you ask for a cool million from an investor? However, in my experience securing more money than you need often causes more trouble down the line. This means things like money that gets misused and resourced in the wrong places, you acquire incompatible investors who want a controlling stake in the direction of the company or even pricing your business out of future funding rounds.
3. Prep the management team
   Financial savvy is something that should resonate throughout your entire management team. Competition for funding dollars is fierce and bringing an empowered team will set you apart from the numerous other pitches the investors have heard that day. Let your team in on your financial plans for the future, discuss previous successes and failures, and understand how your collective financial knowledge can be leveraged for the meeting. By showing you are the ones who are prepared to successfully navigate the financial hurdles that are bound to pop up, an investor is much more likely to feel confident about taking the risk.
4. Look to the past to solve problems
   One thing I don’t see often enough, is today’s startups doing their homework and looking into the history of successful companies in a similar marketplace. You might be surprised to see that some of the biggest companies around began with very modest funding. Mega popular home-sharing service AirBnB is valued at more than $2.5 billion, but it began with $20 thousand in angel investment. Recently, ZipRecruiter began sharing its growth story, from boot strapped lifestyle company to a first round of funding at $63 million. If you’re having challenges, are not sure how to tackle a particular hurdle or the right answer a question you’ve been receiving form investors, there is much to be learned from the history of your predecessors.

Funding can be achieved successfully if you’ve properly prepared. Too often to entrepreneurs get caught up in the excitement of their ideas that they forget to actually explain how they plan to achieve everything they’ve presented. Keep in mind these lessons learned and make sure you have the financial plan to back your idea during the funding process and you will be successful.

As a small business owner, you know it takes money to make money. To meet growing demands, you may need to increase your payroll. If you don’t have the liquidity to support hiring, consider borrowing options that can help you bring on new employees. A small business loan or business line of credit can give you the working capital you need to expand your team without restricting your cash flow for day-to-day operations.

Small business term loan

A business term loan can give you access to the short-term funding you need to cover hiring costs. Typically, it has a lengthier financing period than other borrowing options, which can mean lower monthly payments and more time to repay your debt. Term loans also differ from other types of small business loans, including equipment and real estate loans, because they can be used for any business expense. Lenders offer them with both fixed and variable rates, as well as a range of terms. If you opt for a term loan to increase your working capital, use a business loan calculator to get a rough estimate of how much you’ll be able to borrow.

Business line of credit

A business line of credit can be a convenient way to get the working capital you need grow your team. It offers you revolving credit, which you can use to pay your new employees. As they generate income for your business, you can pay down your balance, and reuse your available credit. A business line of credit can also help you maintain your buying power during slow periods. Like a small business loan, it offers you the flexibility to cover any expense.

Choosing the right working capital loan for your business

Before you start the application process, create a budget.  Review your expenses, seasonal sales, online business checking account balance and project commitments to figure out how much working capital you need to hire new employees. Then, speak with a lender to determine whether a loan or line of credit is better suited to your business’s needs and financial standing. You should see what borrowing options are available from the financial institution you bank with. Having an established relationship with a lender could improve your chances of securing a small business loan or line of credit.

Sponsored content was created and provided by RBS Citizens Financial Group.

Every business starts with a dream — something you’ve always wanted to do or create. As you invest time and money into your project, you may find you need financing to grow beyond marginal profits at six months to the booming profit-machine you dreamed up. Applying for a business loan may be the answer. With a small business loan, you can get the money you need to purchase your own space, hire new employees, manage inventory costs, get new equipment and cover marketing costs.

If this is your first time applying for a business loan, it may be difficult for you to obtain financing right away.  As a new borrower you’re more of a risk to lenders, but there are several tips that can help you prepare and present yourself as a prime candidate. Keep in mind, each lender is different and different rules and requirements may apply.

1. Outline the core elements of your business: Most lenders will want to know a little bit about you before loaning you money. A short summary should include your products or services, employees, competitors, current financials and plans for your future growth. You may need to provide records of your personal finances as well. 
2. Know what type of loan you need: Knowing the type of business loan and loan amount you need shows lenders you have done your research. Think about why you need the loan. Are you trying to grow working capital, purchase a new space or hire new employees? Using a business loan calculator can help you decide how large a loan you need and what type of loan suits your needs. 
3. Develop a relationship with your banker: Look for a lender who has worked with companies your size in your industry as they will have a better understanding of what you need. Communicate your goals and financial plans clearly and patiently. You may be emotionally connected to this project, but a lender is looking at it strictly from a risk-reward relationship. Helping them see your vision may help them be more invested in your project. 
4. Come prepared with answers: Your lender won’t be afraid to ask the tough questions, and you should be prepared to answer them. Know what you’re willing to offer as collateral for the business loan, what your risks are and how you plan to counteract them. Other questions to be prepared for are:               

• How do you plan to repay the loan?
• How do you plan to meet your projections?
• Do you have previous business experience and can you provide references?
• Can you support your projections with facts?

5. Maintain your credit and borrowing credibility: Before you apply for a small business loan, obtain a copy of your credit report and do whatever you can to improve your score. Show the lender you have a strong borrowing history with evidence of paying down student loans or car loans and making regular mortgage payments. It’s also important to show you have the resources to support the loan aside from the earnings of this business. Whether it’s in the form of savings, a spouse’s income or a co-signer, this will make you less of a risk.

Be confident and prepared when applying for a small business loan

Lenders want to see that you have a plan and a back-up plan. Go into your meeting with confidence in your strategies, and be open with the lender about any flaws or potential areas of risk. It’s also important not to go on the defensive. Accept any criticism they have and ask them how they suggest you improve in order to obtain the loan.