Small Business Blog

Posts Tagged ‘Capital’

Company revenue refers to the money a business makes from the sell of its products or services. The amount of revenue earned by a business in a specified time period tells illustrates the success or failure of a company. In order to earn a profit, company revenue must be greater than the company’s expenses. Revenue is calculated by multiplying cost per unit by the quantity sold.

Company revenue growth is essential to analyzing the financial stability of a company. In the case of small businesses, lenders look at revenue growth to decide if it worth the risk to loan money to a business. The same is true for corporations. However, revenue growth is necessary to attract stockholders to invest in corporations.

Company revenue is not the same as income, or profit. Revenue only refers to the amount of money incurred due to a business’s activities, such as sales. Profit is the amount of money a business actually has after expenses are deducted from revenue. While revenue is a valid determinant of a company’s financial health, profit is the main indicator of a company’s success or failure.

Businesses usually build their potential for revenue by advertising through various types of media, holding sales, and offering more products or services. However, the price to potentially build revenue may end up costing more than the actual incurred revenue. It is vital to research the costs of advertising, discounts, and more products or services before investing in them.

A company with good working capital management generally refers to a business that successfully handles its working capital to improve and maintain profitability. Working capital management focuses on the short-term assets and liabilities of a company. Effective management of working capital involves creating sources of cash flow and managing how that money is spent. A business owner must make sure there are enough funds for the operating expenses such as salaries, inventory, debt payments, and emergencies.

There are many ways to fund the short-term monetary needs of a company with good working capital management. Business owners can obtain funds through a short-term loan, factoring its accounts receivables, trade creditors, equity funds, and lines of credit with other companies.

Businesses can also encounter working capital problems when customers fail to pay their invoices. Not all businesses have excess capital to deal with these types of situations, but the ones that do should effectively manage ways to invest surplus funds to pay unexpected expenses and improve profitability. If a company has good working capital management, the less that company will have to borrow.

Because good working capital management focuses on monthly handling of funds, it helps to balance the finances of a company. Business owners do not have to wait until once a year to see how their funds are being used on a day-to-day basis, thereby allowing them to detect inconsistencies before they negatively impact the business’s productivity.

Start up businesss financing and leasing,  business loans, capital, with credit problems are still available in these economic times.

 This article is going to discuss what is start up business financing and leasing, business loans, and capital, what are its benefits,  leasing plans and how it relates to the start up business.

 

 Additionally, we will show you lending requirements below for start up loans

Leasing is a form of renting but with a buyout clause at the end of the lease to take title to whatever we are leasing. The requirements to get into the lease may be as low as first and last payment and as much as 25%. Each situation is different and this offers the start up and seasoned business a way to invest very little monies into the business. Additionally, all other monies can be used for operating expenses such as marketing and other key areas. Leasing is not a new form of financing but could be a lending solution to the start up business.

The benefits of leasing may result in off-balance sheet financing reporting, tax incentives and conserving cash flow and preserving lines of credit for working capital purposes. Many leasing requirements may only require the initial outlay of first and last rental payment. Most leases finance 100% of the cost of the equipment such as soft costs which include shipping, software, training and installation. Additionally, leasing lets you regularly upgrade your equipment, eliminating your utilization of old, outdated equipment and reducing repair options.

Some of the leasing and financing plans available to the lessee are .00, 10% or 20% purchase options as well as Trac Leases and FMV lease buyouts. Additionally, some lenders offer seasonal payments, deferred payments for ninety days, declining payments and half payments for a specified time period. It is important that the lessee understands all these different lease plans available as well as the buyout clauses. The lessee has many options to consider in negotiating his lease. He must understand each lender’s requirements and see if it fits within the realm of the lessee’s requirements.

 Some lenders will accept the start up business whereas others will not want to lend to this group. They consider that their risk capital can be invested in other types of portfolios that can be better served. Many lenders require full documentation which includes a couple of years of personal income tax returns, a personal financial statement, and other underwriters requirements. However, in the past couple of years, there is a select group of lenders out there require an application only program. These lenders have their own computer scoring model and eliminate the necessary additional paperwork of other lenders.

 These application only programs are usually restricted to the seasoned business, however there are a few out in the industry which will work with the start up business as well. The amounts of the application only program run as high as 0,000 for the seasoned business and ,000 for the start up. Additionally, the lender will lease the qualified asset probably from 36-60 months and many won’t finance any equipment and commercial vehicles over ten years old.

It is important to understand the lease terms, the rate factor the lender is charging and the buyout clauses in the lease to take title. If you anticipate paying off the lease early, you should consult your lender to ascertain there is no prepayments for a early payoff. The last thing to understand that the lessee is going to guarantee the lease.

 

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1) Recap of Start Up Business Loan, Financing Programs Up to ,000**********Conventional Financing, Bad Credit

0-2 Years Time In Business, Story Book Lender, Credit is Run but isn’t Credit Driven, High Cash balances help a lot for approval

For New Business Start-Ups: (terms 12-30 months) Up To ,000

1. Completed Credit Application

2. Personal Credit Report from all Principals

3. Last Years Personal Tax Return

4. Evidence of an Alternative Source of Income*********

 

5. Personal Financial Statement on All Owners

6. Evidence of a Business Bank Account (this may not be open yet)

If a Business has been open for a few months, please retrieve bank statements

Lease Terms are Up To 36 Months…………10% Buyout Clause

 

2 )     Second Start up Lending Program. Business loans,  financing and leasing

 If you have good credit for other start up financing, minimum credit score 650 or higher, the down payment for conventional financing and busines loans may be any from 10 to 30% down.

Industries include owner operators for semi, day cabs and dump trucks. Other industries such manufacturing, construction, medical, transportation, retail and service industries may also be eligible. Paperwork requirements are basically the same as above….

 

3) If you don’t qualify for the start up programs above, we have many off lease and repo financing programs that start as low as 550 for minimum credit scores, financing up to 0,000, Down payments as low as ,000

 

Happy hunting for your  acquisition and its start up business loan, capital,  financing and leasing programs

 

 

One of the primary duties of an entrepreneur is to continuously raise capital for his or her business. But what happens when that business is still in its startup stage? How will an entrepreneur raise capital for a new small business startup? I intend to use this article to reveal the fundamentals of raising capital for your business.

“Thought, not money is the real business capital” – Harvey Firestone.

If you are a first time entrepreneur seeking to raise capital for your small business startup, then read on as i share with you 12 avenues you can ply to raise capital for your small business startup. If one fails to yield result, you can try another.

Before proceeding to raise capital for your business, i want to clearly state that there are certain necessities you need to have at hand and one of such necessities is a business plan.

12 Ways to Raise Capital for Your Small Business Startup:

1.    Family Members

One of the first places entrepreneurs go when trying to raise capital for their small business startup is their family members. Family members will give you money blindly simply because of the love and bond you share with them. Though capital from family members may not be enough to see your business stand firmly, it’s going to give you a push and boost your morale to forge ahead.

2.    Friends

The next avenue you can ply to raise capital for your small business startup is to approach your friends. One thing with seeking capital from friends is that they (your friends) might want to come on board as partners. One more thing, your credibility will be a determining factor to your success with raising capital from friends.

3.    Angels

Angels are rich individuals that have resolved to use a portion of their wealth to support young entrepreneurs and small business startups. All you have to do is fit into the criterion set by the angel investor and you will see your startup funded, provided you have a bankable business idea backed by a strong plan.

4.    Entrepreneurship Supporting Banks and Institutions

Your business startup can also be provided with capital by entrepreneurship supporting banks or institution. Some banks and institutions usually set apart funds to support entrepreneurship. Their terms are usually flexible; these institutions or banks usually request a stake in the new venture and whereby a stake is not requested, they may grant the small business startup a longer repay period.

5.    Private Investors

The next avenue you can ply to raise capital for your small business startup is to approach private investors. These private investors are individuals that invest in business ventures with the hope of receiving a massive return on investment. They are usually rich and experienced individuals when it comes to business and investing.

Before approaching private investors; you must make sure your business idea is bankable and backed by a strong business plan. You must also make sure you are capable of defending the proposed budgets stated in your business plan before these investors.

6.    NGOs and Not For Profit Organizations

NGOs and Not for Profit Organizations that support entrepreneurship may not directly provide capital for your small business startup but they can help link you up with private investors and institutions. Some of these NGOs have strong working relationships with the elites of the society and big institutions. You can leverage on this relation to raise the capital you require.

7.    Venture Capitalists

Approaching a Venture Capitalist is one option you might not want to consider because VCs are tough and strict on their funding terms. Only few businesses ever pass the test of VCs because of their tight rules.

If you pass their requirements, VCs will provide the capital you need in return for equity in the startup. They will also bring their experience on board to make sure your business survives and grow; so they can get back their investment.

8.    Banks

You can obtain loans from commercial banks to kick start your business but you must deposit tangible collateral of value. Obtaining loans from banks is one of the less applied tactics to raising capital employed by entrepreneurs because of the requirements and high interest rates.

9.    Entrepreneurial Networks and Associations

Just like NGOs, entrepreneurial networks and associations don’t provide direct capital but may link you up with investors and entrepreneurs that might provide capital and bring their expertise on board. Examples of such network and association are VentureHacks.com and SBA.

10.    Customers

You can raise capital from customers by showing them a prototype of the product and collecting payment upfront before supplying. This tactics may not see your business explode but it might help it get off the ground. Steve Jobs of Apple Computers kick started his business this way by securing a large order from a customer with payment upfront.

11.    Suppliers

Just as the case of raising capital from customers, you can also apply the same tactics on suppliers by seeking supply in advance.

12.    Investment Bankers

When all avenues have been exhausted, you can approach investment bankers to provide you with the capital you need. They have the capacity to raise capital for you from the general public. But for this approach to be successful, you must be willing to give up ownership and sell some stakes to the public through an IPO.

As a side note, you can also raise capital for your small business by undergoing Reverse Merger. Reverse Merger is simply the process of merging your business with a publicly quoted company.

In conclusion, i want to send a message across that raising capital should not be a night mere as touted by some. Raising capital is all about creativity. Once you have the right plan, you will surely find the money no matter how long it takes. Disappointments are bound to surface but you must refuse to be discouraged by these setbacks. At this point i leave you with these quotes:

“The size of your success is measured by the strength of your desire, the size of your dream and how you handle disappointment along the way.” – Rich Dad

Raising capital is one of the most critical activities in getting a business started, for obvious reasons.  It is one of the largest hurdles development stage and microcap companies have to overcome.  Raising capital through private investors is one of the best ways to get a young company off the ground.  Raising money this way provides your company with more exposure to your best customers.  Getting equity from family and friends has many advantages over other types of financing.  The course offered at  www.RaisingCapitalSecrets.com is one of the most comprehensive guides available for raising the capital you need to start a business or to grow an existing business the world of raising capital.

Small businesses are a major part of our economy, in fact one of the most important resources we have is the small entrepreneur. We need to keep this resource active as part of our economic growth.  To fund the business and keep a roof over one’s head, the entrepreneur must maximize assets, minimize expenses, and use credit judiciously.  By having a strong business plan, you will be able to effectively present your concept to potential angel investors, venture capital firms, banks for SBA Loans, or Business Loans.  They can provide your business extra working capital that can be used for marketing, purchasing of property, purchasing of another business, or for just about anything else for the growth of your business.  The investors want to see in depth information on how much money you need to run your business, and they also want to see how that money will be spent.

Luckily, there are still options for funding new companies, but finding and securing the cash will take careful research, good negotiating skills, and, above all, an unflagging commitment to launching your new business.  When raising capital privately, your offering memorandum is the disclosure document you must present to communicate the benefits for your business model – and warn potential investors of the risks inherent in your business.  Small business lenders want to hear the good and the bad, the need to understand all the risks involved. Whether your business is struggling, or making money hand over fist, it’s important that both situations be communicated to a lender.  Find an Angel.  Angel investors will not only share their money; they’re also great sources of knowledge for fledgling businesses.  Keep it clean. Make sure your agreements are in writing and legally binding.  Cleaning up mistakes made in a securities offering is expensive, time consuming and can shut your business down.

One of the most important things to keep in mind: Raising capital takes more time than you think. Expect the capital raising process to take anywhere from a month to six months once your business plan is complete.  Even then, capital raising activities are likely to continue long after operations have started as you seek additional funding to expand your business.  It’s important not to waste your time (or theirs) pitching you business where there isn’t a good match to begin with.  You will likely pitch your business to many potential investors before all is said and done.  Private placement successes often involve businesses offering products that improve the environment, niche online communities, or a unique service concept.

We encourage you to read articles regarding raising capital and how best to do it.  To prepare yourself for raising capital, you should create documents that support each stage of the process.  Raising capital from family and friends has many advantages over other types of financing.  Raising Capital Secrets is the definitive guide for entrepreneurs and growing companies that need to raise capital, whether from friends and family, angel investors, or venture capitalists.  The course provides a huge selection of checklists, charts, sample forms to expedite the capital formation process, and the author relates eye-opening “”war stories”" and perspectives from the investor’s side of the table that will help you avoid pitfalls and guide your business confidently through every growth stage.  One word of advice, the duration of raising capital could last a few weeks, or it could last several months.  Finally, the last and most important rule of all is be tenacious, there is no substitute for absolute commitment to growing your company by raising capital.

To Get more information on how to raise capital visit www.raisingcapitalsecrets.com now and get your free report on the 1 sentence business plan.

You’ll almost certainly need to raise money to start up your company,

unless you already have sufficient capital yourself. The typical costs

of starting up are in obtaining premises, manufacturing your product if

you have one, buying materials, stock or equipment, marketing and fees

for external consultancy such as legal help, accountancy etc. Then when

you’re off the ground, you’ll need working capital to keep you afloat

in the gaps between paying your own invoices and receiving payment from

customer invoices.

Again, your business plan is essential at this stage of setting up your business. In it you will

already have scoped out what your money needs are and how you plan to

raise the capital, and you’ll be using it to persuade potential

investors and lenders of the benefits of funding your company. Your

financial calculations in your business plan therefore need to be

thorough and accurate and presented with confidence.

Everyone expects that they’ll be able to stick to their plans and only

need to borrow the absolute minimum, but more often than not something

unexpected crops up to throw a spanner in the works. It therefore makes

good business sense to include a contingency element in the amount you

request. It’s better to do that now and have the extra cash as a

safeguard than it is to have to return to your lender or investor not

far down the line to ask for more money. If it wasn’t in the original

plan they are likely to be concerned about your financial ability and

your request may be rejected.

How much money should you request? This question worries all start-up

business owners. You want to make sure you have enough to keep you

going without struggling, but how much will your investors or lenders

be prepared to give? Most experts would advise that you should pitch

somewhere in the middle – don’t leave yourself short by requesting the

minimum, but at the same time don’t be greedy (and lazy) in asking for

too much. You want to keep costs to a minimum and invest your money

wisely in your company, while still having the security of a little

extra for backup if required. What you borrow should give you a

realistic challenge for your business but should not be too risky. And

back up your calculation with evidence in your business plan – it has

to be credible.

People raise money for their company in many different ways, not always

from professional business investors or high street banks. How you

raise your capital will depend on your business needs and your own

circumstances. Here’s some information on various different sources of

funding.

Your own money – if you have enough cash to spare, putting up your own

money for the business means you don’t have to be in debt to anyone. It

will also give you full freedom over the running of your company as you

won’t be responsible to any other interested parties. On the other

hand, you’re risking a lot personally by investing your own cash and

you could lose it all – and not just your business, but perhaps also

your home if you obtained the money by taking out a secured loan or

increased your mortgage, for example. You should also be aware that

personal borrowing rates

often have much higher interest repayment rates than business deals.

People you know – if they have anything to spare, family and friends

are often more willing to give you cash than external lenders or

investors. Again, though, there is a high level of personal risk, both

for your family or friends who could lose money, and for you – it can

cause relationship tensions. If you do take money from family or

friends, treat it as a formal business arrangement as you would with

external funding and agree clear terms and conditions. You want to

protect both your interests and ensure that there are no

misunderstandings.

The bank – high street lenders usually have a variety of different

packages and there’s usually something to meet everyone’s requirements.

You’ll have to do a sales pitch to get your money though, and depending

on financial circumstances you might also be required to find a

guarantor or provide some sort of security. Don’t just go to your own

bank – look around for a good deal and do your pitch to various

lenders. If nothing else, it will give you good practice! If you think

you might have more of a chance of obtaining money from your own bank

where you already have a strong relationship and good financial

history, then don’t put it first on your list of visits – present your

case to a few different lenders first to hone your presentation and

persuasion skills to a tee! Even if you can’t find a lender to give you

money, there is a government programme that may be able to help. The

Department of Trade and Industry offers a Small Firms Loan Guarantee,

in which it offers three quarters of the borrowing amount to the lender

as a security guarantee. In return, you must pay an annual fee (which

will be a small percentage of the remaining loan amount) to the

Department of Trade and Industry. Up to quarter of a million pounds can

be borrowed over a maximum 10-year period.

Outside investors – often referred to as ‘business angels’, private

investors are rich professionals, often successful entrepreneurs

themselves, who are able to offer a great deal of capital in return for

an expected large profit and dividends when the company starts to make

money. The advantage of obtaining finance from an investor rather than

a lender is that they will not expect any financial returns until your

business is turning a profit. Also, as successful business owners

themselves, they can be a valuable source of advice to guide you in the

right direction with your company. A combination of investment and

lending might be a good option. Your business will seem a much more

attractive and secure prospect to lenders if you already have a sum of

capital to back it up. Investors will no doubt have a level of

influence and decision-making power in your company, though. Most will

want to be kept informed of what is going on – they will want to

protect and develop their investment, of course, so you will have a

responsibility to them. Also, when you start to turn a profit, it will

be divided among everyone who has invested so you won’t get the full

whack. Finally, you’ll need to put forward a very good business case to

attract an investor – these are very wise, shrewd and experienced

entrepreneurs.

Government schemes – there’s a whole raft of options available to small

business owners from the government and local authorities in the form

of low-cost loans and grants – in fact far too many to mention here.

Your local business enterprise centre, chamber of commerce or local

council will be able to advise on what options are available for your

type of business. The loans are usually offered at very reasonable

rates and grants are of course non-repayable (although competition can

be tough). Such incentives are often given to certain types of

businesses in certain industries located in certain areas, particularly

in areas that are being regenerated and in fields such as science,

research or engineering.

In conclusion, the key message is that however you get the money you

need for your business, you’ll need a very strong business plan – and

you’ll need to practise your skills of presenting to ensure you make a

good impression and a convincing case.

The presentation of the document itself is also important. Keep it

clean, crisp and sharp. Use a business-like typeface, use colours

sparingly and use spreadsheets to create neat graphics. Have someone

else look over it for you when it’s done to check for mistakes. Print

it on good paper and hold it together in a presentation folder or comb

binding.

Don’t just plan to read out your business plan – people can do that for

themselves. Turn it into a slick presentation with a strong argument

for your case. Write down what you want to say and rehearse it several

times – in front of a mirror at first and then to family or friends.

Confidence is key and this will come with practice. Ensure that you

know the details of your plan inside out, including the figures. You

don’t want the facts to trip you up. It’s also a good idea to consider

what questions investors or lenders might ask and how you can answer

them confidently and convincingly.