Financial Business Solutions

Adequate financing for any business is critical but even more so for a small business. Large companies appear to have a multitude of options to address financing and cash flow issues, while small businesses often have limited resources to address financing and cash flow troubles. From bailout funds to economic development grants, larger companies have options smaller companies often don’t have. Therefore, it’s important for small business owners to be aware of any nontraditional financing options that avail. Listed below are a few methods I think are noteworthy.

Financing with Alternative Business Loans

Peer-to-peer lending, a simple process done online, allows small investors to come together and lend money to individuals and small businesses for a variety of reasons. The lending rates, depending on your credit score, are usually competitive with bank loans. An added plus for peer-to-peer lending is the no requirement for collateral. The downside is the loans cannot be over $25,000. There are two I’m aware of that you may want to review. The first is Lending Club, the other is Prosper; both can be found online.

Another option you may want to consider is ACCION USA. ACCION USA is a private, nonprofit organization that provides microloans up to $50,000 to small business owners who cannot access traditional bank loans. ACCION USA targets low-to moderate-income entrepreneurs for its services.

One more option is family and friends. A formalized loan through a family member or friend gives the friend or family member a sense of security and helps protect the relationship between the lender and the borrower. It can be extremely helpful to have documentation to show repayment start dates, interest rates and a repayment schedule to cut down on confusion and misinterpretations. If this is something you think you can use then check out Virgin Money. It can be found online also.

The above loans are great when you just need a small amount to get you over the hump.

Alternative Financing Options

Sale/Leaseback funding is a transaction where the small business owner sells their existing equipment to another company and then leases it back. The leasing company in turn gives the small business owner a lump sum based on the fair market value of the equipment with the option of purchasing the equipment back at the end of the agreement. This is a win-win for both companies. This collaborative agreement allows one business to receive a return on its money through low monthly payments over a fixed or flexible period of time and the other, the ability to unlock cash tied up in fixed assets.

Another financing option is establishing a strategic alliance to secure needed assets. Let’s say you’ve created a product that requires an injection molded plastic part but you don’t have the money to buy the expensive custom equipment needed to produce it. You approach the owner of the plastic company and offer to pay him a percentage of every sale made for the product. The owner commits to the agreement. Again, this is a win-win for both companies. You eliminate the upfront cost of purchasing the equipment and the plastic company wins because they’re generating an additional revenue stream.

Business Alliances are great for creating synergies. Alliances can generate efficiencies, eliminate or reduce cost, reserve cash and much more. As a small business owner, it’s important you’re aware of options to help finance and grow your business.

Dee Dee Harbut is the founder of Partners In Demand, (P.InD). Partners In Demand is a online business matchmaking service. The service helps small businesses unleash the power of joint ventures; strategic and marketing alliances; partnerships and collaborations. Dee Dee developed this service as a way to help small businesses grow without taking on the added risk inherent with the purchase of additional assets and resources. Forming an alliance can help a company grow its market share; increase its profits; cut cost and much more.


How a Financial Business Plan Will Assist With the Management of Cash Flow

The management of cash flow is perhaps the most important issue that a business executive must grapple with in order for the business to remain competitive. Cash flow represents a business’ operating activities and how this influences the movement of cash inside and outside the business at certain periods. This article will address the importance of cash flow, explaining its uses and highlighting how this component of the financial Business Plan is designed to accurately forecast and present the pattern of income and spending in a business to ensure that it is capable of settling its bills on time.

Firstly it is important to distinguish between cash and profit. A profitable business year is still susceptible to upsetting stakeholders at certain points when and if the business is unable to pay its bills resulting in a negative cash flow. Profit is usually assessed over a longer trading period (1-year) and fails to take in to account the cash flow slumps. A business to customer relationship built on the exchange of cash for a product or service – often final payment is made once the product/service is completed to the customer’s satisfaction, known as a consignment agreement. However this bears no impact on cash outflow – the production and investments that go into the goods still require funding and the business is still liable to settle payments on fixed dates – overheads, employee wages and loan repayments. What is the business dependency on the collection of payments? If a customer is behind schedule with payment how will this affect your cash flow and the ability to meet these deadlines? Have you thought about implementing a contingency structure to extend the duration your business can afford to go without payment?

Available cash included in the cash flow will not include long-term deposits that cannot be immediately withdrawn (i.e. bonds), money owed by customers and stock. A cash flow forecast is mapped on a single spread sheet and will help you to forecast and identify potential system or operational improvements. Would it be more economical to hire another member of staff and purchase another fork lift to increase production or to operate additionally on a Saturday?

The cash flow forecast is incorporated in the Financial Business Plan and will also identify if a business could adopt staged forecast payments to better manage cash balances. Further methods of tighter control of payments may be achieved through issuing invoices more promptly, extending credit with suppliers, extending overdraft facilities and leasing equipment rather than buying it. General business practice is to stop work if the customer breeches payment agreements. Allocate your resources elsewhere and let the administration or third-party companies in place willing to buy your debt in return for a percentage of the debt chase those late payments.

The financial plan will also highlight the benefits of changing your supplier management and the most suitable payment schedule based on your outgoings. If an infrequent high supplier cost is an issue, consider adopting a just-in-time strategy which reduces risk through smaller orders and fewer inventories.

It is therefore important every business considers its business planning requirements and assesses the benefits of drawing up a financial plan, especially those businesses who may have problems with current or future cash flow.

Wisteria Chartered Accountants are professional business plan writers who can build a business plan [] around your business.


Getting Help From a Financial Business

It seems like everywhere you look today there is a financial business that has opened their doors for business. Under this category, there are many different business entities that exist. From financial planners, investment companies, market analyzers, and more, financial businesses can help you plan out your retirement fund, teach you how to invest, how to trade in the stock markets, and more.

Finding the right financial business to assist you with your needs is pretty easy. You can either check your local yellow pages, newspapers, or even the Internet to find a wide variety of financial businesses. Then you need to call and schedule a consultation appointment to find out whether or not this particular business will suit your needs.

When it comes to a person’s finances people are a little reserved. They have to trust the business to handle their money the way that they would if they had the expertise. They don’t want a business that will take too many risks with their future. They are taking advantage of a financial business in order to secure more money for their retirement, to leave to their families once they have passed, and more; therefore, they want a business that has their best interests in mind.

Also, consumers love to be kept in the loop. If there isn’t sufficient and efficient communication between both the business and the consumer, consumers will typically decide to pull their business from one to take it to another that offers better communication; therefore, resulting in a higher level of trust.

The next time that you are looking for a way to rollover your 401K or when you are considering investing in the stock markets, remember that a financial business can help; however, make sure that you feel comfortable with the particular business that you choose. After all, it is your money and your future.

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