Finance – Page 6 – Business Plus Baby

Launching and growing a business will always require money in some form. There are some business models that you can start with minimal or even no capital. But it’s not always possible. Securing funding for your business idea can be difficult. However, there are a number of options to consider and avenues to explore. If one method of funding doesn’t work for you, you can try others. Many people go straight for a bank loan, but that’s not your only option for funding your business. Whether you’re starting up or trying to grow, think about using one or more of these options. Remember, you don’t have to stick to only one.

Dig into Your Savings

If you have some private savings, you could use them to fund your business. Of course, it means you will no longer have the money for its original purpose. Perhaps you weren’t saving for anything in particular. And you’re confident that you’re going to be able to replace the money. It’s cash that’s already there for you to use, and you won’t have to spend time trying to get money from other people. However, there are downsides to using your own savings. You might not have much to start with, and once it’s gone, it’s gone. Plus, you’re taking away your safety net, which can be vital when you’re trying to start a business. If you’re going to use your savings, it can be best to do it when you have another job to fall back on.

Hit Up Friends and Family

If you’re lucky, you’ll have friends and family who believe in you. And, crucially, they have a bit of money to spare that they can toss your way. You might have one family member who has a sizeable amount of cash they’re willing to loan or even give you. Or you might ask all your friends and family to give you a small amount. But you need to convince them that it’s worth it to invest in your idea. What are they going to get in return, apart from to see you succeed? You might offer them shares in the company or a gift to say thank you. A loan from a family member can better than a bank loan, with lower interest rates and payments. However, be careful that you do everything officially and draw up a contract. If you’re not careful, borrowing from family can get messy.

Traditional Bank Loan

One of the most common routes for people to try and secure funding is the bank loan. If this is an option you want to explore, you first need to have a solid business plan. You’ll need to present it to the bank and convince them that you’re going to be able to pay back the loan. Securing a bank loan for your business can be tough, so don’t expect to be handed one right away. You need to put a lot of work into your proposal and show that you’re financially responsible. Many potential business owners find themselves unable to get a bank loan. So don’t despair if you don’t succeed. There are other options.

Photo credit: Tax Credits

Some methods of raising capital are becoming more popular, thanks to the internet. Crowdfunding is one of the things that people are using more to fund all sorts of things. Some people use it to pay for a creative project while others crowdfund the launch of a new project. The great thing about crowdfunding is that it’s not a loan. Usually, people give you however much they want to, and you give them something in return. People put their money into various projects just because they want to see them succeed. You can offer a range of incentives to get people to give their money. They could include little goodies or expensive products.

Angel Investors

Angel investors are also a popular way to fund your new business or to start growing it. However, they can sometimes be difficult to find. It can be especially hard in some locations compared to others. You may find that it’s easier to get funding if your business is based somewhere with an active startup community. Your business angel could be a friend or acquaintance you met while networking. One of the bonuses with using an angel investor is that they don’t just give you money. They can also help you by providing you with guidance and advice to grow your business. You have their money, so it’s in their interest to help you succeed.

Securing a Business Credit Card

Another way your bank can help you with funding is by providing you with a credit card. It can help you to get started and to grow your business until you’re in a stronger position. If you’ve tried other financing options, a start up business credit card could be a good solution for you. It can help to bolster your finances and can earn you rewards too. However, there are risks to consider if you want to take out a credit card. Firstly, banks will look at your personal credit information to decide if you should have a card. If you don’t have a good record, you might not have much of a chance. Banks will usually ask you to provide a personal guarantee. That means that you will pay off any debts the business can’t repay. However, some banks will waive the agreement after you’ve been in business for a few years.

Photo credit: Omer Unlu

Bank Overdrafts

Your bank can also help you out by providing you with an overdraft. Of course, it’s unlikely to be enough to fund the launch of your startup. But if you have a sizeable overdraft it can be an excellent way to boost your funds when you need some quick cash. Perhaps your cash flow isn’t as synchronized if you need it to be. You can have funds to take out while you’re waiting for more money to come in. It may not provide you with vast amounts of cash, but it will keep you going in the leaner months. Remember that there will be interest to pay, however.

Business Grants

You might be able to find some business grants that are available to you. These can come from government agencies, charities, and other organizations. To access them, you would usually need to meet certain requirements. They might be looking at you as a person or at your business model. For example, you might belong to a minority that needs more representation in business. Perhaps you’re hoping to launch an eco-friendly business. You could be competing with lots of other companies and business people for these grants. If you want to have a chance of securing them, you will need to be confident about your business plan. You should be able to explain it well and talk about why you deserve the funding.

Private Equity and Venture Capital

Using a venture capital or private equity firm isn’t the easiest of options for a startup. They usually don’t deal with small amounts of money. So they’re more likely to work with a growing company. If you have big dreams, and your business is already on its way up, it could be a good option for you to continue expanding. It can be very hard to get them to invest in your company, but that doesn’t mean you can’t convince them. You’ll need an awesome business plan to show that you can grow quickly. You need to prove that you’re worthy of investment. You need to show that you’ll be making them money.

Corporate Venturing

You can also consider using corporate venturing. An established company can incubate you to provide you with the funding, advice, and support that you need to grow. Using this method does mean that you won’t have full control over your business. However, this is true to some extent for many funding models. You need to make sure you find the right firm to work with. If you can discover someone that suits you, they could provide you with everything from office space to mentoring.

Growing Organically

Some businesses can get started on very lean funds. If your company can begin with little or no capital in your home office, you can use your profits to support your growth. All it takes is funneling the money you earn back into the business to help you expand. It’s a good way of funding a company such as one offering professional services. Your primary product is your skills and experience. So you don’t need funding for manufacture or other expenses. It’s not the method that’s going to help you grow extremely quickly, but it can be a safe way to help you get off the ground.

You have lots of options to choose from if you want to fund your new or existing business. Don’t forget that you aren’t limited to only one method of funding. You can combine several of them to build capital.

December 2, 2015

Great finanical tips for new business owners

Keeping the finances in order is one of the hardest parts of running a successful business. It’s an even greater challenge when you’re new to the world of business. Here are some great tips to make it easier.

Allow for Extra Room in Your Budgets

When you’re setting your budgets for the business, you should always allow yourself a bit of extra room. It’s not uncommon for a business to have to spend more than they expected to, especially near the beginning. So, this means you need to make sure you’re able to deal with these unexpected costs. This is a small move, but it could make a big difference in the long-term for your business. By allowing yourself that space to make changes, your business should see some immediate benefits too.

Use the Best Software

The software you use to keep on top of your accounts can make a big difference to how effectively you do that job. Accountancy software can make the task of maintaining healthy books that little bit simpler. And every bit of help you can get is a good thing when it comes to your finances. Using online xero accountants can also be a good idea if you want to use the most up to date and helpful system for your accounts. Stay on top of the latest developments and changes in accounting software to remain ahead of the curve.

Grow the Business in Line with Your Bottom Line

Most business owners are eager for their business to grow and expand. But this process is not something that should ever be rushed. The business needs to grow at a natural rate. This will make sure that the business doesn’t grow too fast and then stall as many small businesses do. When it comes to the growth of your business, you need to think about the finances. When the bottom line of the business starts to grow, you can then use that money to grow the business in turn.

Stay on Top of Debts

Many small businesses pile up some debts. This is not such a bad thing in itself. Borrowing can help a business onto its feet. And then it can help the business find its market. All these things cost money, and it has to come from somewhere. The problem comes when those debts start to pile up, and you’re unable to make the repayments. Once the business starts to bring in some money, you should make repaying your debts one of your top priorities. This will allow you to maintain financial control of the business.

If You Lose Control, Get Help

There’s only one thing that’s worse than losing control of your business’s accounts. And that’s not regaining control quickly. Once you lose control of the accounts, your business is at risk. You will be unable to see the warning signs when things start to go wrong for the wider business. So, when this happens, you should get help from somebody who will be able to get things in order once again. Hiring an accountant can be expensive, but letting your accounts spin out of control can be even more costly in the long-term.

November 23, 2015

Revealed: The investment strategies your business should consider

Individuals are often used to having a variety of investment options open to them. But, did you know that more businesses are making the effort to invest money as well? It’s no secret that today’s business savings accounts yield little returns.

Companies are always looking for ways to increase their money. After all; when you’ve got plenty of cash in the bank, you should make it work for you! Do you run a business and have some spare money to invest? If so, check out these top investment strategies:

Trade on the Forex markets

In case you didn’t know, Forex trading is the art of buying and selling currency. You make a profit when you correctly predict certain movements in the market. Many individuals trade on the Forex markets each day.

But, it’s only until recently that more businesses became involved in doing the same too. Before you dive in at the deep end, it’s important to research Forex signals. You should learn more about the market and how it works before investing. That way, you’ll have a greater chance of making a good return.

Invest in other companies

You might not think it, but it’s often a good idea to buy shares in other businesses. Companies have followed that investment strategies for years! Most do so because they want to see healthy returns from growing businesses.

Others do it because they would like to end up with a controlling stake in the other companies. There are many strategic reasons why investing in other businesses can work well.

Lock some money away in a long-term savings bond

There are quite a few long-term savings bonds that offer attractive returns for businesses. Usually, these are bonds that have five or even seven-year terms. Some companies invest in government bonds while others save with financial institutions.

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It’s worth doing some online research to find out what the market has to offer right now. If you’ve got a lump sum of money doing nothing, you may as well lock it away for a return!

Invest in peer-to-peer lending firms

One of the best ways to make money is by lending yours to other people. Over the past few years, peer-to-peer lenders have gained momentum in the market. They help people turned away by their banks, even if they have good credit scores.

You can control the amount of risk you are happy with, and you can choose who has your money.

Invest in gold

Last, but not least, you ought to consider investing some spare money in gold. The thing about the gold market is that prices are increasing, and have done so for many years.

There isn’t much gold production these days, and so the value of gold keeps on rising. When you need money in the future, you can sell your gold for a healthy profit.

You can either buy physical gold or shares in someone else’s stock. The former is an attractive option, but you need to store it in a secure warehouse.

November 22, 2015November 21, 2015

5 Ways trading can benefit your business

Choosing to go public and float your company’s shares on the stock market is a decision that shouldn’t be taken lightly. After all, the organisation’s financial dealings will essentially go from under your control to being dependent on economic conditions and market fluctuations.

However, if you have a decent amount of knowledge about public markets and confidently know your way around a trading glossary, it can be a very worthwhile decision with the potential to bring about various benefits.

Access to more sources of capital

One of the main reasons for a business deciding to go public is because it opens up the possibility to raise additional finance and capital. Public companies can usually raise money for growth more easily and at better rates than private organisations of a similar size.

Its shown clearly in “Why Do Companies Go Public?” (Pagano et al. 1998), that companies that went public were able to borrow more cheaply after their Initial Public Offering (IPO). What’s more, a number a banks were also willing to lend a company increases after its flotation.

Liquidity and an increased share price

Seeing as the information contained within an IPO prospectus and subsequent annual reports can reduce uncertainty around performance, companies listed on the stock exchange are typically worth more than privately held organisations.

On top of that, investors are willing to pay a premium for liquidity, or the ability to easily buy and sell shares. It is thought that listed companies will typically be valued 30 per cent higher than private organisations in the marketplace by investors.

Management and employee motivation

Attracting and retaining the best talent is a challenge that businesses in every sector will experience. However, one way to ensure your staff don’t jump ship in a hurry is to offer them stock options and bonuses.

Employee ownership and equity-based awards are usually more broadly spread among the workforce in public companies than private organisations. Also, management and employees can actually witness the results of their efforts in the company’s share price, making success a joint goal.

Putting together a plan for the future

Even though the flotation process requires a lot of effort and upheaval, this can actually help your business put together a comprehensive and coherent plan for future prosperity.

Many companies will improve their management and financial structure in anticipation of public ownership too. On the other side of the coin, private organisations don’t always review their internal infrastructure regularly, which can be the difference between success and failure.

Enhanced brand image

Not only do public companies benefit from increased visibility through ongoing disclosures to the stock exchange or securities commission, they also attract more press coverage. This is turn can lead to an enhanced brand image among market analysts and job candidates.

In “The Ernst & Young Guide to Financing for Growth” (Garner et al. 1994), it states, “A public company that is well run and compiles a record of success can gain a first-class reputation that can prove an immeasurable benefit in many ways.”

November 16, 2015

Are your overheads too high? Try these ideas

If your business is spending too much, it can have a big impact on the long-term prospects of the business. Here are some ideas to help reduce your business’s overheads.

Use the Phone Less, and the Internet More

In this day and age, you don’t need to pay a fortune for an office phone service. In fact, landline phones in the office should become a thing of the past if you ask me. It’s much more cost-effective to use the internet to talk to people. You can use services like Skype to make video calls to people. And you can use a VoIP phone to make calls. These are so much cheaper than ordinary landline phones, so makes a lot of sense to switch to them. Embrace the internet, and stop throwing away money!

Decide What’s Needed and What’s Not

There are some things in the business that are simply essential. For example, every business needs to hire core staff, and every business needs to look after its accounts. But, on the other hand, there are things that are not so important. These are things that you could cut when your overheads are too high. Take a look at your business and ask yourself what’s vital and what can be gotten rid of. If something isn’t necessary for the functioning and success of your business, get rid of it!

Get External Support

You can’t do everything in the office by yourself, so it doesn’t make sense to. Hiring new employees is something that costs an awful lot of money, so instead of doing this, you could outsource. This is when you use the services of an external company and pay them to carry out certain services on behalf of the company. Things that can be outsourced include integrated supply solutions, computer support and printer services. It’s a great idea to do this if you’re looking for dramatic ways to cut costs. It will mean not having to hire so many people, and that will take a huge chunk out of your monthly outgoings.

Ditch the Paper

There’s no excuse for carrying using lots of paper in the office. Nowadays, it’s perfectly possible for companies to ditch the paper and use computers instead. I’m sure you already have lots of tech and gadgets in your office, so why not make better use of them? This will stop your business spending so much money on paper every month. Computers store information faster and more securely, so it no longer makes sense not to use them. It also makes it much easier to share documents with colleagues.

Know When to Stop Cutting Costs

You can’t keep cutting forever; that’s an important thing to remember. You need to know what your limits are when it comes to cutting costs. If you’ve cut a lot, and you still have problems, that might be a sign that the problem lies elsewhere. Instead, you could try increasing the number of sales the business is making. Sometimes, it’s better to focus on making more sales than paying out less. And, remember, investment is sometimes essential if you want the business to grow and expand.

Category: Finance

Everything you need to know about funding your business

Great finanical tips for new business owners

Revealed: The investment strategies your business should consider

5 Ways trading can benefit your business

Are your overheads too high? Try these ideas