“It takes money to make money.” That saying is somewhat true. To create or expand your business empire you will need some funding to cover your expenses until your income comes in. That may take 2 months or 2 years, and it may require $200 or $200,000. The money can always be found, one way or another, but you need the right method for you.Money comes from three sources, each with its own benefits, dangers, and costs. You will likely use two, if not all three of these types over the course of your enterprise — and you must understand each to evaluate which will work for you today, tomorrow, and 5 years from now.#1 Method: Self FinancingWhen business owners have cash on hand, they typically look to their own bank account first as a simple form of financing. Self financing can be broken down two different ways, each with their own considerations. First, there are two types of self financing: lump-sum and bootstrapping. Second, self-financing can come from you, personally, or can come from your current business that finances another business, venture, service, or product line.Lump-sum financing is when you have a fixed amount of money from the sale of a business or investment, an inheritance, personal savings, 401(k) cash-out (rarely a good idea) or other amount of cash that can be used to finance a business venture. The amount you have available is relatively fixed and can be viewed and tracked as a one-time investment.Bootstrapping is constantly used by most small businesses, usually without conscious knowledge. Bootstrapping is where you pay for the new or expanding business through cash flow coming in from another source. The other source may be your day job, your spouse or partner’s job or business, a profitable business or product line, or passive investments (real estate, mutual funds, and bond).Self-financing works when you need a small amount of money, when you have a large amount of money available, when you are comfortable with risk, or when you need money quickly. It also works when a profitable business can absorb investing in a new venture until the new venture takes off; assuming adequate cash flow projections and tracking has been done to ensure the new venture is not a never-ending profit leach.#2 Method: Debt FinancingDebt financing is obtaining money that must be paid back to the lender, usually with interest. Similar to self-financing, debt financing may include both using your personal credit as well as the credit and security of the business to obtain a loan or line of credit.Personal debt financing is readily available to most business owners. If you have a decent credit rating, you can obtain credit cards, a home equity line of credit, or a loan, without informing the bank about your business. You may obtain a loan from a family member or friend who knows about your business venture but who may not demand as rigorous standards as a formal bank.Businesses may also obtain credit cards, lines of credit, and loans from banks and credit unions. Loans that are secured by the Small Business Administration (SBA) are available through banks providing lines of credit to small businesses that may not be able to obtain credit without the SBA guarantee. Alternative debt financing options such as Prosper.com enable individuals and businesses with lower credit ratings to obtain financing from diverse sources. But these private loans will typically be at interest rates higher than SBA loans.#3 Method: Equity FinancingEquity financing is giving away ownership (equity) in your business, and potential future profits, in exchange for money (capital) today.Investors can come in the form of silent partners, family, friends, or private investors who speculate in new companies. Angel Funding, wealthy individuals and groups who invest in small, high growth companies, typically buy stakes in companies for a few hundred thousand dollars. Venture Capital firms and Investment Banks typically are looking for companies where they will invest millions of dollars.If you are planning to seek private investors, Angel Funding, Investment Banks, or Venture Capital, you will likely need more sophisticated financial reporting than is covered in this book. You will also need more lawyers and accountants.How do you decide which type of financing to pursue?Most likely, one type of financing is obviously not right for you now. You will probably use two or even all three types of financing for any one business, and your choice may change over the life of the business as you expand and add new ventures. You may be able to weed out certain choices because they are not available — you don’t have cash or another income source (self), you don’t have a good personal credit rating (debt), or your business has no exit plan (equity).For each decision, you must track the benefits (Return on Investment), and the costs (interest, fees, and lost profits) of each type of financing. As your business grows, you may need to add or switch financing as prior financing methods become too expensive, are exhausted, or do not produce a sufficient return.
4 Things to Think About Before Starting Your Home Base Business!
With almost one half of small businesses are being operated from home, the number of home based business opportunities are exploding. There are a thousands of options, and it is easy to be misled. If you are thinking about how to start your legitimate home based business, be sure you do your research and ground work well.Legitimate home based business opportunityMany legitimate home based business opportunities will let you make a lot of money, be your own boss, even choose to work from home. But make your decision wisely and well about which home based business you will build.Last year, the home business industry expanded by over 15% and this growth looks to be sustained and even speed up. This increase is because of many legitimate home based business opportunities becoming available.Home based businesses do not have to mean ‘get rich quick’ schemes. The best opportunities provide information, support and assistance to prospects, giving them business lead generation systems, proven marketing tools and even interactive guidance through online discussion forums and even personal contact in group mentoring sessions.All of this guidance and help can boost the chances of making your home based business successful and people wanting to work with you.Researching the OpportunityIts always smart to do your research. The range of legitimate home based business opportunities includes Internet home based businesses, direct selling, telemarketing, lead generation, and drop shipping business systems. But there are also many scams.Your responsibility is to find out everything about the company and people behind it, fellow franchisees and even customers to understand the business model, the risks involved and income potential.Far too often, people fail at even legitimate home based business because of unreal hopes and dreams. If you expect to bank a fortune very soon after you start in business, the chances are high that you will not reach your expected goals.Its important to be patient.Legitimate home based business brochures do not promise instant or easy wealth, though they do paint a rosy picture of how business success will be, with steady income that grows over time.Market ResearchBefore launching a home based business, you must ensure a big enough market.You want to be everywhere. The Web is can help in this research, as can extensive offline facilities like small business organizations, trade associations, or even public libraries.Personal AnalysisNot everyone is cut out to be a business owner. And it is important for you to go through a careful self-evaluation to make sure you are in the right business, for the right reasons.You may want to start a home based business because you are unhappy with your job. Maybe you prefer working from home or have unique circumstances that necessitate it. Or maybe you just like being your own boss. A legitimate home based business is definetely your solution.Consulting ExpertsBefore beginning work on your home based business, there are two more things to do: assemble a team and prepare your business plan or goal. A business plan is your road map to achieving your targets or goals and doing it in a timely manner. Your team will avoid mistakes and pitfalls as you build and grow your home based business.Legitimate home based business opportunities exist and are available in plenty. Many of them have potential to completely turn your life around. Do your research, and then leap in to reap rich rewards.
The Key To Working Capital Financing – Asset Based Lenders
Wondering how your competition seems to have all the working capital financing they need and you don’t – the key to that answer might just be asset based lenders and the asset based lines of credit they offer to Canadian businesses such as yours.Let’s examine how this relatively new and unique method of business financing can totally alter your business financing success.The acronym for this type of financing is A B L; simply speaking its daily cash flow provide against your current, and sometimes now so current assets. What do we mean by that? Simply that this facility allows you to margin your receivables, inventory, and in most cases, should you choose, fixed assets and real estate. You are probably saying to yourself that you could arrange financing on your own re those fixed assets and real estate – but we are talking about using those assets as collateral for your daily revolving line of credit. So you aren’t borrowing, you are not bringing debt on to your balance sheet, you are just leveraging your ‘ assets ‘ (that’s the ‘A’ in ABL!) for daily cash flow and working capital.And why are we claiming that this type of working capital financing just might be your key to business success. Simply because you have probably found it has been challenging to get the full amount of business credit you need. In some cases you might have discovered its been a challenge to get business lines of credit of any manner.So if your competitors are using this type of financing today, who exactly is eligible for it, and is your firm a candidate. The answer is simply that if your firm has a combination of 250k in working capital assets you are immediately eligible for asset based lines of credit. We would add that firms with smaller asset sizes can still monetize those receivables via invoice financing or discounting, but that’s not our key focus for today’s information exchange.So now you now the offering are out there. But why should you consider it. Simply because your firm might be in one of a number of special situations – that includes issues such as your need for increased daily operating cash, you wish to merge with or finance an acquisition, you have been unable to obtain inventory financing elsewhere, you are growing to quickly for traditional Canadian chartered banking financing, etc! We are pretty sure you get the picture now!The benefits to this type of business financing must by now be pretty obvious. It’s all about access to working capital financing and cash flow that you couldn’t access before. Assets that couldn’t be financed are now financeable, and inventory financing, previously limited or unavailable now looms on your growth horizon.Who are these asset based lenders, and what is the cost of this financing? We’ll leave that one for another day, but if you want to investigate asset based lines of credit for your firm ( remember, your competitor probably already has ) then speak to a trusted, credible, and experienced Canadian business financing advisor who will assist you with identifying benefits and the best solution for your current strained needs in business finance.
Are You Choosing the Right Stock Market Advisory Company
What do you do if you want to learn driving a car? You will try to find an expert teacher, isn’t it? You do not want to avail the services of a novice individual to help you out, but a professional person can provide you the vital tips and most importantly guide you efficiently. Similarly, when it comes to investing in the stock market for the first time, you require a knowledgeable advice to attain your financial goals and get profitable returns.
If you are a beginner, then it is quite obvious that you may be having no information about the process of buying the right shares in the market. In such a situation, getting the right tips from an experienced financial advisor or a registered advisory company will truly prove to be a great blessing in disguise. However, there are some of the important things that have to be kept in mind while choosing the top stock market advisory company, which are as follows:
How much assistance do you actually require?
Before you make up your mind to hire an advisor, it is imperative that you must first decide about the kind of service you require from them. You may need their help at the beginning or during the time of any issues. This is because an advisor has to formulate a map according to your requirements. Hence, it is suggested to ascertain your needs first and then take further action.
Choose a top ranked advisory company
It is a very important point that has to be taken into the consideration. Availing services of the well known advisory company or a financial advisor is an absolute necessity. Make it a point to carry out a proper background or research work about the company. Check out their credentials, reputation, experience, etc before hiring them.
Asking for a sample financial plan initially makes sense
When hiring a financial advisor, then do not forget to ask for sample plan first. It is imperative to note that there is no such thing called the perfect plan. A sample plan will help you to determine whether an advisory company is actually making sense according your requirements or not.
The financial planners or advisory companies can really turn out to be the greatest asset for you if you choose the best one. They are just like the professional sailors who can help you out to sail through stock investment related problems quite efficiently.
Deepak is a financial advisor who likes to provide quality tips to the people facing any issues with regard to investing in the stock market. He likes to keep himself updated about the stock market by reading articles, news and blogs, etc.