Small Business Start Up Financing

[ad_1] The number one question I get asked as a small business start-up coach is: Where do I get start-up cash? I'm always glad when my clients ask me this question. If they are asking this question, it is a sure sign that they are serious about taking financial responsibility for start it. Not All Money Is the Same There are two types of start-up financing: debt and equity. Consider what type is right for you. Debt Financing is the use of borrowed money to finance a business. Any money you borrow is considered debt financing. Sources of debt financing loans are many and varied: banks, savings and loans, credit unions, commercial finance companies, and the U.S. Small Business Administration (SBA) are the most common. Loans from family and friends are also considered debt financing, even when there is no interest attached. Debt financing loans are relatively small and short in term and are awarded based on your guarantee of repayment from your personal assets and equity. Debt financing is often the financial strategy of choice for the start-up stage of businesses. Equity financing is any form of financing that is based on the equity of your business. In this type of financing, the financial institution provides money in return for a share of your business's profits. This essentially means that you will be selling a portion of your company in order to receive funds. Venture capitalist firms, business angels, and other professional equity funding firms are the standard sources for equity financing. Handled correctly, loans from friends and family could be considered a source of non-professional equity funding. Equity financing involves stock options, and is usually a larger, longer-term investment than debt financing. Because of this, equity financing is more often considered in the growth stage of businesses. 7 Main Sources of Funding for Small Business Start-ups 1. You Investors are more willing to invest in your start-up when they see that you have put your own money on the line. So the first place to look for money when starting up a business is your own pocket. Personal Assets According to the SBA, 57% of entrepreneurs dip into personal or family savings to pay for their company's launch. If you decide to use your own money, don't use it all. This will protect you from eating Ramen noodles for the rest of your life, give you great experience in borrowing money, and build your business credit. A Job There's no reason why you can't get an outside job to fund your start-up. In fact, most people do. This will ensure that there will never be a time when you are without money coming in and will help take most of the stress and risk out of starting up. Credit Cards If you are going to use plastic, shop around for the lowest interest rate available. 2. Friends and Family Money from friends and family is the most common source of non-professional funding for small business start-ups. Here, the biggest advantage is the same as the biggest disadvantage: You know these people. Unspoken needs and attachments to outcome may cause stress that would warrant steering away from this type of funding. 3. Angel Investors An angel investor is someone who invests in a business venture, providing capital for start-up or expansion. Angels are affluent individuals, often entrepreneurs themselves, who make high-risk investments with new companies for the hope of high rates of return on their money. They are often the first investors in a company, adding value through their contacts and expertise. Unlike venture capitalists, angels typically do not pool money in a professionally-managed fund. Rather, angel investors often organize themselves in angel networks or angel groups to share research and pool investment capital. 4. Business Partners There are two kinds of partners to consider for your business: silent and working. A silent partner is someone who contributes capital for a portion of the business, yet is generally not involved in the operation of the business. A working partner is someone who contributes not only capital for a portion of the business but also skills and labor in day-to-day operations. 5. Commercial Loans If you are launching a new business, chances are good that there will be a commercial bank loan somewhere in your future. However, most commercial loans go to small businesses that are already showing a profitable track record. Banks finance 12% of all small business start-ups, according to a recent SBA study. Banks consider financing individuals with a solid credit history, related entrepreneurial experience, and collateral (real estate and equipment). Banks require a formal business plan. They also take into consideration whether you are investing your own money in your start-up before giving you a loan. 6. Seed Funding Firms Seed funding firms, also called incubators, are designed to encourage entrepreneurship and nurture business ideas or new technologies to help them become attractive to venture capitalists. An incubator typically provides physical space and some or all of these services: meeting areas, office space, equipment, secretarial services, accounting services, research libraries, legal services, and technical services. Incubators involve a mix of advice, service and support to help new businesses develop and grow. 7. Venture Capital Funds Venture capital is a type of private equity funding typically provided to new growth businesses by professional, institutionally backed outside investors. Venture capitalist firms are actual companies. However, they invest other people's money and much larger amounts of it (several million dollars) than seed funding firms. This type of equity investment usually is best suited for rapidly growing companies that require a lot of capital or start-up companies with a strong business plan. [ad_2] Source by Susan L Reid https://4awesome.streamstorecloud.com/small-business-start-up-financing/?feed_id=38196&_unique_id=64d125c59b867

Small Business Venture Capital Strategies

[ad_1] When launching a new small business, often the entrepreneur will consider venture capital as a source of funding. Here are 3 tips to ensure that venture capital funding can be secured when sending out your business plan:

1. Send your business plan to the right people
Venture capitalists tend to specialize in certain kinds of businesses. Some will specialize by industry, only investing in new energy companies, for instance, while others look for a certain size of company to invest in. It is worth doing the research to determine who the venture capital backers are for your industry, before you start sending out your business plan. Venture capitalists who are not specific to your industry can provide recommendations to make your plan more appealing to other venture capitalists. However, it would naturally be a mistake to send your plan to potential investors who will not even consider it.
2. Make sure your business has the potential to be profitable enough
Most venture capitalists look for a return of about 5-10 times their initial investment. For example, an investment in a company of $2 million should yield a return of $14-20 million after about five years. To satisfy these requirements, it is generally necessary to have a business which has the potential for a high rate of return on the amount invested. If the rate of return can reasonably be expected to be lower, such as for a clothing retailer, then it is probably better to look for an alternate source of funding, such as an investment or commercial bank.
3. Remember to include an exit strategy for your investor
Venture capitalists generally do not want to be involved with a new venture for an indefinite period of time. Most will plan to leave the new venture after about five years, so you should offer a clear explanation of how this may be achieved. There can be a variety of reasons for this; some venture capital managers require that the holdings periodically be sold off to acquire other offerings. Nonetheless, by demonstrating that you understand the limited time frame for many venture capitalists, you automatically make your plan more appealing than those which do not.

In summary, by sending your business plan to the right people, by recognizing what rate of return is necessary for venture capitalist involvement, and by including an exit strategy, you can improve your odds of securing venture capital funding for a new and growing business. [ad_2] Source by Marc Mays https://4awesome.streamstorecloud.com/small-business-venture-capital-strategies/?feed_id=37982&_unique_id=64bd8265a3a31

Smart Entrepreneurs Wear Six Hats

[ad_1]

Entrepreneurs are necessarily optimistic. You need to be, it allows you to see the possibilities around you and act on them.

However, the downside is that your emotional attachment can blind you to problems that are otherwise obvious to someone who is not as personally invested in the project.

This is why smart entrepreneurs learn to wear six hats: six "Thinking Hats". Originally defined by psychologist Edward DeBono, the Six Thinking Hats are a structured creativity tool to help you look at a situation from different perspectives, to solve a problem or to foresee and minimize risks before they turn into problems.

When you "wear" a specific color hat, it gives you permission to look at your problem is a specific way:

• White Hat: Analytical - What does the data say? Look at the available data, both quantitative and qualitative. What are past trends? What can you extrapolate? Where is the evidence to support your assumptions? Where do you need more data?
• Red Hat: Emotional - How do you feel about this? Access your intuition, gut reaction, emotion. Talk about your feelings about the situation, where you feel good and not as good. How would others feel about this?
• Black Hat: Pessimist - What could go wrong? Think cautiously, defensively, why it might not work. Poke holes in the idea, look for the weak spots, all with the intention to identify what needs to be addressed in order to overcome any problems.
• Yellow Hat: Optimist - What if all goes right? Think optimistically, positively. Imagine all the opportunities, the benefits, the advantages. Reach for the stars!
• Green Hat: Creative - How can we make this better? Use your creative juices to think "out of the box". Explore weird tangents, unexpected synergies, make it into a "purple cow" (something remarkable that stands out from the crowd).
• Blue Hat: Process - What do we need to do now? Direct the process of creativity so avoid getting stuck. When in "Blue Hat" mode, step back from the problem and consider if you are giving all of the other hats equal time.

Entrepreneurs seem to do quite well with the Yellow, Red and Green Hat approaches to thinking about an idea. There is more resistance to the White Hat (analytical) and definitely a big block around Black Hat thinking. Could this be because the Analytical and Pessimist are associated with external control?

There is nothing to fear from the Black Hat - it can be your best friend. Wearing the Black Hat gets you out of cheerleader mode and forces you to examine your assumptions up close. From personal experience, I know that when a project backfires, the failure can be traced back to an assumption that was not properly tested. Black Hat thinking gives your project real traction by foreseeing the difficulties and encouraging defensive planning. This makes the plan more resilient and improves the probability of success.

As you explore wearing the various Hats, put on the Blue Hat (Process) from time to time to see if you are considering all the perspectives of your project. Note that the purpose of this thinking exercise is not to assign fault or blame. The mindset of every Hat is to make sure the project succeeds.

It is great fun to dream big and to reach for the stars. But if you want to make any progress, you need to keep your feet on the ground. Practice wearing the Six Thinking Hats as you plan and execute your business project. This mindset will give you the traction to power your project towards real and enduring results.

[ad_2] Source by Davender Gupta

Business Packaging

Printers

Networking Equipment

Dell

Office Chairs

Keurig Coffee Makers for Office and Home

Security Lighting

https://4awesome.streamstorecloud.com/smart-entrepreneurs-wear-six-hats/?feed_id=37804&_unique_id=64ad90d21a953

Micro Entrepreneurs

[ad_1] Micro entrepreneurs are the owners of small businesses that have fewer than five employees and have startup costs of less than $35,000 and annual revenue of less than $100,000. There are nearly 21.5 million micro entrepreneurs in the U.S. Examples of micro entrepreneurs are owners of bakeries, beauty parlors, child care facilities, repair shops, arts and crafts shops, painting businesses, contracting businesses, family-owned shops, auto body shops, small-scale restaurants, and small-inventory trading businesses. Micro entrepreneurs face many hurdles in getting startup financing, and they sometimes lack the skills necessary to manage the financial aspect of their business. As a result, many micro entrepreneurs cannot grow and develop their business beyond a micro enterprise. Various micro enterprise development programs have helped micro entrepreneurs achieve great success and growth. These micro enterprise development programs have immensely helped micro entrepreneurs who lack collateral needed to secure a loan or those who have low or no credit by providing them with training, support, help in developing a solid business plan, and assistance in building their businesses. Successful micro entrepreneurs have contributed much to society by creating wealth, economic assets, and jobs. How To Become A Micro Entrepreneur It is essential to study the market thoroughly and understand that market's customers before deciding on the type and kind of product or service to be offered. Here are some suggestions: Work out a sound business plan by doing extensive research and seeking help from the various micro enterprise development programs. Make arrangements for the startup capital by using savings, opting for a micro loan program, or applying for a grant. Do extensive market research, get the necessary training and skills required, and learn how to use technology to help run your business easily. Study the competition and analyze how you can better them. Get a good retail space to run your business as well as decide on the price, making sure it is right and has a profit margin; decide how to utilize the profit, whether you want to save it or reinvest and expand your micro business. Make sure that the quality of the product is never compromised and that your customers are happy, ensuring customer retention. Assistance for Micro Entrepreneurs Micro entrepreneurs in the U.S. are in need of training and skill development workshops as well as help in utilizing technology to help run their business. Some micro entrepreneurs need access to easily available funds for startup and growth. In order to encourage more people to become micro entrepreneurs, state, federal, and private sectors should make available ample funding for such enterprises. With a little effort, you can find firms that sell their services as well as products to help run successful businesses. You can even seek professional help to arrange business credit for micro enterprises. [ad_2] Source by Alexander Gordon https://4awesome.streamstorecloud.com/micro-entrepreneurs/?feed_id=37247&_unique_id=6480d6a7eace0

Top 10 Small Business Bookkeeping Tips

[ad_1] These small business bookkeeping tips will help you get your books up to date and keep them that way in less time. They'll help you maintain financial control, and help you manage your working capital more effectively and securely.

1. Before you contemplate recording any transactions in your ledgers, organize your paperwork in your files according to these bookkeeping basics. It will save you time, and time is money.
2. Work out how much you earn in your business per hour. If the answer is more than what it will cost to hire a professional bookkeeper, then hire one. If not, then do the transaction processing yourself. Get a tax accountant to do your year end filing so you don't have to keep up with arbitrary government rule making, and miss out on tax allowances.
3. When you've got your paperwork in order then consider how you're going to record your transactions. This could be in a traditional hand written ledger, or more likely using software. Understand your bookkeeping software requirements before you buy anything to prevent dissatisfaction.
4. If you don't have much money for investing in financial software, then consider using open source accounting software.This can be obtained for little or no cost. Click the link above to learn the advantages and disadvantages of using open source.
5. After you've decided what you're going to record your transactions in then follow these basic bookkeeping tips to make sure you record your transactions in the most efficient manner possible.
6. Make sure all cash is accounted for by performing a bank reconciliation. Ensure the transactions that are recorded on your bank statements are recorded in your books, and the balance on your statement is in agreement with that in your books. Make sure that you know the amount of any uncleared and unpresented checks (cheques) which will explain any actual difference between the statement and the account on your ledger.
7. Likewise, make sure all petty cash is accounted for by counting the cash in your cash box and agreeing it to your cash book.
8. Perform routine counts on items you carry in stock, and ensure that what is recorded in your books agrees with the quantity you have on the shelf. This is an area where strict control pays dividends as unexplainable differences often occur usually due to sales 'samples', spoilage, quality defects, returns etc. This is an important area to get right as any differences will have to be reflected in the financial statements and usually affect the profit line directly.
9. Keep a Fixed Assets register. While not a ledger in your books as such, a fixed assets register is essential to keep track of essential business equipment. This means the cost, the location the depreciation, the purchase date and the remaining life. The value of these assets are carried in your balance sheet. It can be surprising how, as you grow, things you thought you had have gone! Especially small high value technology.
10. Follow these small business bookkeeping tips, but don't forget to use the information kept within your books intelligently. Working capital management is how you manage your daily, weekly, and monthly cash, debtors, supplier payments and inventory/stock control to keep you in business, and really make a difference to the bottom line (the profit line) of your business.

[ad_2] Source by PJ Germain https://4awesome.streamstorecloud.com/top-10-small-business-bookkeeping-tips/?feed_id=36992&_unique_id=646a29a9c0bb7

'I have $30000 in my savings account': I'm 56, unemployed and ... - Morningstar

By Quentin Fottrell 'The past 20-something years were nothing short of rough' Dear Quentin, I am a 56-year-old divorced woman who has raised four children as a single parent. I made the decision at a young age to give birth to all of my children, and I was the sole provider for the family for over 20 years. Now, after my children are all grown, living their own lives, I'm left with no golden life to look forward to. As you may imagine, the past 20-something years were nothing short of rough. I have $30,000 in my savings account, I am unemployed (and unemployable), and living incrementally off those savings. I have survived my years, not particularly because I am smart, but because I am very creative (I like to think). I have been creating two products that require an investment of about $20,000 for patents and manufacturing costs. I truly believe that these items will sell well in their marketplaces, and set me up for success. However, I am so afraid to use that money because that is what I live on. What would your advice be on this? Please help me. All of my life, I've missed out on every opportunity that came my way. I don't want to be the person who never tried. At my age, I believe it would be devastating to just grow old and die, not having succeeded at something at least once, but if you think it is an unintelligent choice to use my life's piggy bank, per se, I want to know it. Divorcée & Inventor Dear Divorcée & Inventor, You have raised four children as a single parent. You are a winner. Measuring your success in life should not be dependent on whether you get these patents off the ground. Nor should it be calculated by the money in your bank account. Being rich and famous is not a marker of success. The relationships you have in your life and your ability to be kind to other people are a good starting and finishing point. All the rest is garnish. Your letter shows two sides of your self-esteem. You describe yourself as "unemployable" -- something I doubt -- and yet you also show great confidence and belief in your ability to turn these patents into a marketable product. I hope they work, and I commend you on your entrepreneurial spirit. But there's a happier, steadier medium between these two beliefs. There are other ways to raise money and trademark your intellectual property, if that is indeed required in this case. Finding a job would help you avoid dipping into your savings. It's great that you have $30,000 saved, but this should also be treated as an emergency fund rather than a "last-chance saloon" for your patent ideas. Plus, $20,000 sounds like a very modest sum for what you have in mind. Contact a patent attorney to find out how much it would cost. SCORE (Service Corp of Retired Executive) or the Small Business Administration's Office of Small Business Development Centers can provide assistance with your business plan. There are over 1,000 federal grant programs you can explore. There is, of course, competition for these grants. You could also find an angel investor for your business idea, but that will come with a cost (a percentage of your business for an agreed sum). That's why people go on Shark Tank. Again, you can contact the SBA. After talking to a patent attorney, you could also reach out to friends and family, and/or crowdfunding sites like GoFundMe to tell your story, and raise funds. I caution against putting money on a credit card, especially given that interest rates are so high and -- crucially -- you have no other source of income. For others who have a retirement account like a 401(k), think twice before raiding that, as there will be penalties -- and if the product/business does not work out, there will be a big hole in your retirement savings too. In the meantime, you can file for a provisional patent to protect your idea before you talk about it publicly. This book, "Patent It Yourself: Your Step-by-Step Guide to Filing at the U.S. Patent Office," may also be helpful for you. But as James Yang, an attorney at OC Patent Lawyer in California points out, "For a higher-quality application, you should hire an experienced patent attorney. " As one member of the Moneyist's Facebook Group wrote about creating products: "You have to HUSTLE, sell them into stores, brand and market them, baby them through the whole process. If you can do this (project management, sales, supply-chain management, delivery, design) you can certainly work somewhere and are employable. "Why not get a job that helps you develop these skills (working in a trade show/brand ambassador, delivery for a similar product, project manager) and save up the $20,000 to launch your products?" she added. "Even great ideas fail with the very best behind them, if you are serious about starting a company you need to get back into the working world first." Don't hang all your dreams on one business idea. Life is so much bigger than that. Ultimately, you need a team. Talk to your children. Tell them about your financial situation. Ask them for their advice. Can they help you find a job? Can they provide you with financial assistance? Do they have insights into your business plan? You're 56. You've achieved a lot in your life already. Follow Quentin Fottrell on Twitter. You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com. Check out the Moneyist private Facebook group, where we look for answers to life's thorniest money issues. Readers write to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns. The Moneyist regrets he cannot reply to questions individually. More from Quentin Fottrell: She never has enough money': I was adopted by a wealthy family, but my biological grandma says I need to financially support her -- and buy her a condo My husband and I earn $160K, have $1 million in retirement savings, cook at home and drive an old Honda. Are we missing out? 'I grew up poor': My wife and I have a $1.2 million real-estate portfolio, and $225,000 in income. Are we financially secure enough to start a family? -Quentin Fottrell (END) Dow Jones Newswires 01-24-23 2217ET Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. We’d like to share more about how we work and what drives our day-to-day business. We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to: To learn more about how we handle and protect your data, visit our privacy center. Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive. To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research. Read our editorial policy to learn more about our process. © Copyright 2023 Morningstar, Inc. All rights reserved. Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. source https://4awesome.streamstorecloud.com/i-have-30000-in-my-savings-account-im-56-unemployed-and-morningstar/?feed_id=36611&_unique_id=6445ad7498450