fbbsend.info

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?

Donald Trump and Roberty Kiyosaki Recommend Network Marketing – DO YOU?Network Marketing just seems to be one of those businesses. We’ve all either heard or said the famous question, “IS THIS ONE OF THOSE PYRAMID THINGS?” Network Marketing is one if not THE most miss-understood business models ever. In fact, Network Marketing is NOT EVEN understood by a large percentage of people involved in the business. Why is that, well in my opinion there are 2 primary reasons the masses don’t understand Network Marketing.The first reason people don’t understand network marketing is because; they have a preconceived notion of THE BUSINESS without having any information of substance. People THINK, they know – when really they have NO IDEA. We all look at business through a set of RETAIL eyes, unless we’ve received or sought out specialized training. In other words we all NATURALLY think of a store. We think of products being sold to an end consumer. Network Marketing sells to consumers too, but NOT in a traditional method – there is no store, wealth is not created in Network Marketing through traditional RETAILING or SELLING.The second reason people don’t understand Network Marketing is because people make decisions BASED ON EMOTION, then AFTER – the decision is made they back the decision with THEIR LOGIC. Were all human and that’s how we operate. So, when someone is exposed to the opportunity they will FEEL a certain way about what they’ve seen. They may feel that THIS WILL BE EASY, IT’S TO GOOD TO BE TRUE, TOO HARD, THEY CAN’T DO IT, I DON’T LIKE SELLING, or LET’S DO THIS, people will FEEL a given way FIRST. Each individuals FEELINGS will be based on the individuals own experiences and self-image they will then back this FEELING with logic.Humans are emotional beings; MLM is an emotional business and has to be because people are emotional. So what emotion is a new person who sees the light going to experience??? You guessed it EXCITEMENT! Excitement and enthusiasm is important in any endeavor, unfortunately when it comes to Network Marketing it’s usually misplaced. This miss-directed excitement can become a problem when the new Networker receives or ACCEPTS no training. EVERY company offers training, but not every person ACCEPTS IT. Too often the attitude about how to build a business is “IT’S OBVIOUS” but the reality is Network Marketing is a simple business that requires a decision for success first, then the action necessary to achieve that success.So to quickly review, MORE OFTEN than not in MLM, someone who “SEE THE LIGHT,” gets started, doesn’t understand the business but THINKS THEY DO, receives or accepts no TRAINING, and then QUICKLY has success but doesn’t know why or how, so they can’t EFFECTIVELY train others, or they KILL their own dreams of a better life at the first sign of adversity and quit. The system of MLM is designed to avoid these traps, but unfortunately most don’t follow the system.SAD RIGHT! Of course it is. So why would 2 WELL RESPECTED, entrepreneurs like Donald Trump and Robert Kiyosaki stick their neck out and recommend Network Marketing? Don’t they know most people don’t understand it or “FEEL” like it’s a scam or ARE THEY NUTS???Well, Robert and The Donald understand that Network Marketing is first about PEOPLE and RELATIONSHIPS. The business is about people before products, commissions, or anything else. A Network Marketing business is a collection of PEOPLE, and PEOPLE are the asset to the MLM business, and to all businesses. They also understand that Network Marketing is LEVERAGED – DISTRIBUTION business. That sounds kinda fancy, but it’s really SIMPLE. Network Marketing is not about retail, it’s about DISTRIBUTION. The distribution is created through RELATIONSHIPS. The goal is to create a distribution channel of like-minded people for the purposes of retailing through recruiting. It’s a model where distributors are CONSUMERS and can distribute to consumers, while creating individual and collective success. The real magic, is in the bond of like-minded individuals working toward the same goal. The leveraging component is created because of the commission structure, and because everyone has the same rights and ability to grow their business without any bias. Entrepreneurs of Robert and Donald’s caliber understand that the right relationships are the key to success in business and LEVERAGE is the only way wealth is created. MLM combines relationships and leverage in a business with NO BARRIERS to entry or CAP on income.Most business especially in a sales environment have commissions as well as leverage, BUT the leverage is limited. In mortgages origination, car sales, insurance, real estate, and many other professions managers earn their income based on the performance of the group. No one else is able to LEVERAGE from the efforts of many – only the managers and owners are given this privilege. HMMMMmmm. Limited leverage – limited opportunity, unlimited leverage – unlimited opportunity. Robert, Donald and many other entrepreneurs understand any business with an unlimited leveraging component can create a fortune.Robert Kiyosaki admits, that he didn’t understand Network Marketing at first – his mind was closed to the opportunity, for him it took a wealthy friend whom HE ADMIRED and RESPECTED enough to listen with an open mind. Since then he’s been a strong advocate of the industry. His most recent book is titled, “The Business of The 21′st Century” and you can guess what it’s about – that’s right Network Marketing.Donald Trump recognizes that hard work is required for success in anything. So, if you’re going to work hard anyway – why not work hard at something that has the ability to pay you again and again. This idea is readily scene in Donald’s real estate holdings – real estate is a business that can have booms and busts, but canalso create a recurring income stream. MLM on the other hand is known for its ability to withstand and THRIVE during recessionary periods. Donald and Robert co-authored the book, “Why We Want You to Be Rich” that had an entire chapter devoted to Network Marketing. Donald demonstrates his belief in the industry by endorsing a Network Marketing company and even featured the company on his prime time TV show The Celebrity Apprentice, while at the same time owning a separate Network Marketing company – that’s putting your money, time, and energy where your mouth is.The Key Benefit’s Donald Trump and Robert Kiyosaki highlight are:Tax Deductions – When you start a Network Marketing business you gain the tax advantages of a business owner and can do so without giving up your full time income. More often than not the benefit of the tax deductions can more than offset the initial and monthly expenses of the business. Consult with your personal accountant or CPA and get the advice you need to take advantage this HUGE benefit.Low Start Up – Most Network Marketing companies have very reasonable startup costs typically $500 or less. While traditional business and franchises have huge start up fees and unlimited operating expenses, all to gain limited territories and limited income potential. MLM provides a low cost entry and a fixed monthly overhead, with an unlimited upside potential. Network Marketing is a SWEAT EQUITY business; you don’t need to bring a big investment, just your consistent effort.The Network – The most undervalued asset in Network Marketing is the Network of people. Where else can you get 100′s or 1000′s of people of ACTION together in one place with the goal of a better life? Network Marketing is a relationship business, and in this environment you can meet, learn, and partner with entrepreneurs from all walks of life. Many of whom are business leaders or owners of businesses outside of MLM. It’s the meetings and the meetings after the meeting where bonds are made.The Skills You Learn – Network Marketing will challenge any insecurity you have, and rebuild you as a leader. Communication is the most important skill in life, whether it is internal communication with yourself or external communication with an individual or a group. Communication equals wealth. MLM will accelerate your learning curve, in sales skills, leadership skills, organizational skills, networking skill, and of course marketing skill. This industry is an entrepreneurs BUSINESS SCHOOL, where the grades come in the form of checks.Leverage Existing Systems – Surveys show that most Americans dream of their own business, and we all know most business fail. Most businesses fail because they lack a system. The individual more often than not is THE SYSTEM, and that system breaks down because of the stress and strain. Like franchising, Network Marketing companies have an existing system in place. All we need to do is PLUG IN and operate that existing system.Proven Business Model – Network Marketing is a proven business system. Results don’t lie, MLM and direct sales has created more millionaires than any other business model. The industry has proven that it’s person to person marketing strategy can stand the test of time, as well as even the deepest recessionary periods.In Conclusion – Network Marketing is a business for people who are looking to make changes in their lives. If you are a person looking to make financial changes in your life, and want to do it within a community of achievers – you deserve to get involved with the right company, the right leaders, while developing into the person you need to be to create the lifestyle and success you deserve.