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Financing a Small Business – What Alternatives Are There to Finance Your Business?

A lot of reasons exist why you should not only get into business, but also endure in business. You may want to take any of these decisions because of the love of a particular business, because of a need to do so, because you are bound to continue from where someone stopped or because you simply have a feeling to do so. In almost every country of the world, people are looking at the business sector as one of the bests. There are always statistics of these found in all countries. For example, the United States Department of Labor produces statistics which indicate that for almost the first three quarters of last year, unemployment was very high and a lot of people resorted to doing business.

There is no need to trouble yourself on the way your business is going to look like. All that is necessary for you to do is to develop a plan and seek for any of the so many options of securing finance for the business. The following lines are meant to encourage those coming into business and even those already in business to seek for means of financing their businesses:

Loans

This type of finance for a business is common all over the world and it can easily be gotten. In some cases, there is often a belief the loans can easily be gotten by everyone who applies for it. This may be true or false. It all depends on your business plan, the lending policy of the bank and the type and value of security you have. What makes this source of finance much considered is that interest rates on the loans are also reasonable. It should be warned that you should not get into taken of loans without seeking for proper recommendations from experts. Remember that it is always good to know the ins and outs of every type of loan ahead of getting into it.

Angel Financing

This is also another common source of finance that is common among new businesses and even those that are already in existence. What obtains here is that there are so many people who have the willingness and ability to pump finance into any business which have potentials to grow. Angel financing can be a family type. This will involve members of the same family pulling their resources together and investing it to develop a business plan. This is good but not preferable because of the close ties that the members may attach to each other, which may not be best for the health of a business. Angel financing can also be an affiliation angel. This will involve an association of friends willing to see a business plan from conception to completion. Another strand of angel financing is idea angel. These are financiers who are involved at the conception and actual progress of the business. Whatever the form of angel financing that you may opt for, you must get into the set of connections that these angels operate before you can benefit from financing.

Equity Financing

This involves raising money for the business by using what the business owns and can give out to the public. There are individuals willing to pay for equity in the business and even take part in the running of the business. Although this type of financing is common, it may not be available to every type of business. This is the more reason why every business owner must always carry out enough research in order to get the appropriate financing for his or her business.

Six Keys to Developing a Successful Business Plan

“To build a successful business, you have to begin at the end.”

Creating a clear business plan is an essential task for every leader who wants to operate a successful, smooth running, self-sustaining company. While it takes time and effort, having such a strategic roadmap will enable you to view your business from a higher plane and to quickly evaluate its strengths and inefficiencies. It will also empower your employees by freeing them to accomplish your company’s goals and to fulfill its mission and vision without your constant, hands-on involvement-which also frees you up from the day-to-day work, or, as we call it, “Doing the do.”

I have identified six key elements every successful business plan should include. The first three encompass what we call the organizational “Culture,” while the second three comprise its business “Systems.” Lacking these business elements almost inevitably leads to employee confusion, conflicts and other workplace problems that undermine product quality and business performance-and makes it almost impossible to remedy them. Since most businesses do not have a clearly defined culture or defined systems, by taking these steps you will gain an immediate advantage over your competition. Below is a brief description of our Six Keys:

CULTURE

1. Vision
A one-sentence statement that defines the ultimate impact your business is going to make on the community. It should state what you want to accomplish in terms of an almost unattainable goal or dream. A good vision statement makes the connection between your business’s passion and its purpose. My rule for Vision is: “People will work harder for a vision then they will for a paycheck.” Your vision statement should inspire, motivate and excite your employees, clients and the community where you do business. It should be short, concise and easy to remember.

Remember, a vision is not merely a large goal. It differs from a goal, in that you almost never quite achieve your vision-it is a virtually unattainable ideal that motivates your employees to meet and exceed your company’s practical objectives. In other words, goals are used to measure systems and processes, while vision is the fuel that ignites people to go beyond goals to excellence. A company’s top leadership has the responsibility to drive its vision. Without the support and encouragement of upper management, your vision will fail to have the impact the company needs to outperform your competition.

Example-”Estrada Strategies: “Creating an Opportunity for All Businesses to Succeed”

2. Values
Core Values are the rules of conduct in your business: a clearly defined set of standards that describes your organization’s approach to relationships. It is a written code of conduct defining how all stakeholders will treat people internally and externally, including other workers, clients, vendors and the community.

Without defined rules of conduct, people have little or no direction as to what constitutes acceptable behavior in your business. In the absence of such values, individuals will create their own rules. Experienced employees will default to values acquired outside the company in prior work environments. Some may have a positive impact, others may not. With no defined values, managers have a difficult time leading people, whether it means handing out accolades or taking disciplinary action.

Your business’s core values are non-negotiable within the company environment. When they are broken, swift disciplinary action or termination is usually in order. When management fails to uphold written values, employees soon figure out that they mean little or nothing-they become token values that everyone winks at and no one takes seriously. However, if core values are upheld, the company can use them to guide every aspect of the business.

Example-”We believe in frequent, open and honest communication.”

3. Mission
A short, concise declaration of the four essentials of every business:
1) What you do, 2) How you do it, 3) Whom you do it for, 4) Where you do it.

Your company’s mission statement is truly the roadmap for your employees; it is also a management tool to communicate how your company will operate in the community.

A mission statement is not a long dissertation, like those from corporations in the 1970′s and 80′s. Those lengthy proclamations were often viewed as unrealistic, empty rhetoric aimed at impressing bankers and the like. Today, they are used to guide the company’s overall direction, as well as its daily business activities. Beyond providing essential guidance to your employees, it empowers them to make swift, effective decisions by establishing critical boundaries. Without a clear mission, a company will often become paralyzed whenever it encounters a new situation as it attempts to figure out what to do.

Example-”Our Mission is to lead our small to medium-sized clients to greater success. Our
Method is to bring about behavior modification through business training, one-on-one
coaching and business monitoring. We Advance our Vision by being the business example
for our clients.”

SYSTEMS

4. Growth

A well-thought-out plan for growing your business that clearly defines these four elements:

1) Your target market;
2) How to market your product to the target;
3) An advertising strategy;
4) Brand creation that establishes a unique visual and emotional identity.

The rule for growth is, “You are either green and growing or you are ripe and rotting.” Without growth, a company will likely fail. A growth plan is the lifeblood of your organization. It includes your company’s sales process, marketing, advertising and branding systems.

1) Sales-the entire process that defines the demographics of your future clients (your target
market or “suspects”), as well as the foundational activities that drive new relationships and will
lead to future opportunities, sales, customers and referrals.

2) Marketing-the activities in your company that create visibility, credibility and demonstrated
ability in the marketplace. Low cost/high impact is a critical element of this process, which
communicates to your market who your company is, what it does, where it does it and how it
does it. Marketing supports sales, but must not be confused with sales. Remember, marketing
is about visibility, credibility and demonstrated ability. These elements build trust and branding
in the marketplace.

3) Advertising-Systems in place that bring potential clients through your doors, make the phone ring and create leads. Advertising is all about making sales. It is the promotional aspect of growth, and concerns how your company attracts its customers. It also tracks where and how
your customers discovered your company. Ultimately, advertising is all about return on
investment (ROI).

4) Branding involves the processes that create product or name recognition in the marketplace. It
comprises the visual and emotional impact people connect with your name, logo and tag
lines. Think of Nike’s “check mark,” or McDonald’s golden arches. Does the market know your
logo, name and tag? That’s the test.

5. Operations

Operations encompass the “nuts and bolts” of how a company satisfies customer needs, wants
and expectations-the blueprint that defines how a company produces its products or delivers its services. The focus here is on the five components of your company’s processes or way of doing things: systems, quality control, labor standards, material management and Internet technology.

1) What your systems/processes are. These define how your company executes, produces and
provides its products and services, including procedures, materials and process manuals.

2) How your company will control the quality of its products and services.

3) Productive labor standards that define the labor-cost relationships of providing your products and services. Think in terms of a piece worker who may be expected to produce X amount of product per X hours, a day, a week or a month. Also, think in terms of labor costs vs. overall revenue or net income. Such labor standards provide the needed benchmarks for your employees and for your managers to track and measure performance.

4) Material management or the cost of goods sold. How your company physically manages and
stores its raw material before and after products are produced. It also focuses on keeping material, shipping and storage costs to a minimum. The goal here is to minimize inventory without running short on needed materials.

5) Internet technology-how your company will use the Internet to advertise and sell your
products. The focus here is how your company effectively uses its website to promote and sell its products and services. Some companies have glorified brochures on the web, and that might be all they need. Most companies today are moving into the e-commerce where prospects can purchase items over the internet.

6. Finances

The financial aspect of your business involves how you manage budget planning, cash flows, capital and debt servicing, KPI’s or Key Performance Indicators-like pipeline and sales values, total revenue, gross margins, operating expenses and net profit to name a few. In the end, KPI’s serve as the monetary numbers that define the health of your company. The process, in short, means developing a budget that covers three years of monthly projections for your business in these three areas:

1) Income statements;
2) Cash flow statements; and
3) Balance sheets.

An experienced leader tracks his KPI’s weekly, monthly, quarterly, and annually. He knows exactly where the company stands financially at any given time. KPI’s make up the financial information a leader needs to make strategic decisions: to buy a building, increase inventories, or purchase new equipment. Running a business without KPI’s is like driving a semi-truck on a mountain road with blinders on. You are likely to drive the truck right off the cliff.

While having a successful business plan defined in terms of these six key components won’t absolutely guarantee that your company will be successful, not having one will almost inevitably lead to failure. Estrada Strategies exists to help businesses like yours succeed, in part by providing business training, executive coaching, and business monitoring you need to create a dynamic business plan.

Small Business Startup Loans – What Are the Fundamentals of Business Finance?

If you want to set up or considering setting up a business of your own, you must bring one thing in mind. You must know that you will need money to make sure that the business functions as it ought to. For the purposes of this study, we shall think of business finance as all the money that will be required for the smooth functioning of the business. This will include money from a variety of sources such as loans from lending institutions, cooperatives and these loans may be acquired either on short term or on long term bases.

One thing that should be borne in mind is that it is necessary for every person to understand the fundamentals of business finance. This study is not only meant for those coming into business for the first time. Keep in mind that at every stage in the business, there will be a need to finance to expand, transform or even give a new facelift to your business. The good side about this study us that it will enable you to know where you can seek for finance for your business, it will help you to better manage these finances so that you should avoid falling into debts by paying your loans and it will equally let you know what type of loan is appropriate or not for your business.

Knowing the Essentials of Business Financing

Ahead of opting for any source of finance that might be open to you as an investor, there is always an obligation for you to not only become aware, but to understand and appreciate the importance that financing has to do to your business. As of now, one of the sources of finance to your business is venture capital. Venture capital will refer to a venture group that is willing and able to pump in finance to your business. But it should be kept in mind that this is done with the intension that the venture group will become part of the business.

It will have to take part in the running of the business and equally in the profits of the business. In some cases, the option of an angel financing may also be available. This is a situation in which high risk ventures will be financed for the reception of high profits. Another source of financing is corporate venture capital financing. This is almost the same thing with venture capital but the difference is that groups and not individuals will be involved into the financing. You can also think of taking a loan from a bank or any financing establishment.

If you are an experienced financier, you will realize that identifying and making use of these sources of finance is easily done if you are aware of all the essentials of business financing. This will be difficult for the novice. What has been realized is that most lending institutions have already created and developed some form of confidence with those already in business, plus the fact that they think their money will be better protected with those who already have some worth to prove.

It May Be Necessary To Integrate Your Business When Seeking For Financing

The rationale for confidence building will vary from one lender to another and will also depend on the lender’s personal conviction about the business. It is normal that every lender will want to scrutinize and make use of any former financial record of a business before it can give loans to that business. In other cases, it is known that sources of finance may be easily opened to groups of business than to individuals.

This is the more reason why you must understand all the essentials of business financing before making an application for it. Sometimes, it is necessary that as a sole proprietor, you may decide letting a takeover of your business. This is to give your business a positive credit worth so that it can stand a good chance of being financed. But you must make sure that you seek expert advice in doing this. Remember that there are so many essentials in all of the above and you must be skilled enough in these before you can achieve any success.