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Put Yourself In The 10% By Coming Back From The Brink

If you’re starting a business, you’re likely all too aware of the threat that 90% of startups fail. This is the figure we all fear when we decide to make a go of things. And, it’s what we keep in mind if our enterprise starts to struggle.

In truth, though, focusing on this figure isn’t helpful. In fact, you can rest easy that the businesses which do reach success ignore odds like these. The chances are that they had as many rough patches as everyone else. But, instead of lying down and accepting failure, they fought their way back from the brink. And, you can too, with the help of last-minute money making schemes like these.

Turn to investors

Investors have the ability to bring any startup back from the brink. All you need to do is convince them you have an idea worth investing in. Admittedly, this will be much tougher if you’re struggling. But, that doesn’t mean it’s impossible. Remember, investors know how tricky it can be to get started. They won’t hold initial struggles against you if they believe in what you do. All you need to do is find investors who seem like they would be interested, and perfect your pitch. Instead of dwelling on how your business is going at the moment, focus on where you imagine you could be. With a bit of luck, they’ll believe it enough to get behind you with financial backing.

Sell stocks and shares

You could also opt to sell stocks and shares to help boost your earnings. In some ways, this isn’t much different to selling to investors. It involves handing over a chunk of your company to others. For obvious reasons, many of us are hesitant to do this. But, there’s no denying that it’s a sure way to make money fast. By turning to companies like TD Ameritrade, you can soon see yourself back on secure financial footing. Bear in mind that, if you’re struggling, you may well have to sell stocks for low prices. But, this is a much better option than merely accepting defeat. While it may be the last choice, it still deserves a place on your list. Bear in mind that you should take the time to research the legalities before getting started.

Special offers for customers

If you want to keep things simple, you could always do some special offers on your services or products. Work out how low you could drop your prices, while still making a profit. Then, offer these discounted rates to first-time customers, or for a limited time. It may involve taking a small hit in earnings for a while, but this stands to boost your business. Plus, if those customers like your services, there’s more chance of them coming back for more later down the line. And, that’s not even considering the power of word of mouth and so on. You know how it goes; you hook them with low prices, then you reel them in.

Controlling Cash Flow In Your Start Up Business

Starting up a business isn’t easy, but with so much to think about cash flow is one thing that can easily put to one side, while you focus on marketing and sales. But with no cash coming in or going out at the right time, you could be left with a huge problem when it comes to continuing to run your business. Which is why I thought I would share with you some of the ways you can control your cash flow as a start up.

Have a decent cash flow reports and money projections

It is vital to ensure that you make cash flow projections for the next year, the next six months, month or even within the next week to ensure that you are fully aware of what your current financial situation is when it comes to your business. As a small business you need to understand the projection isn’t set in stone, but it enables you to make changes or save when possible if you consider that certain times of the year may mean you are shorter on funds than at others. It is important to know what cash you will have, and for it to not be measured on how many sales you might make. It’s more about ensuring that you know where you stand, rather than predicting where you could be.

Improving money coming in

Sometimes you don’t get paid for sales instantly. This tends to be sales made not to the general public purchasing on your website and making a payment straight away, this is normally as a trade sale where you need to offer a thirty-day payment window for invoices to be completed. One initial step is to ensure you invoice correctly and using the Quickbooks invoice template could be a great way to make sure you do everything right and include the right information. Many businesses will then wait until the opportune time for them to pay the invoice.

Be careful with your outgoings

It is just as important to ensure that you are also careful with your outgoings and the invoices that you may need to pay yourself as a business. This means that when you have your outgoings to consider then you need to make the most of the payment obligations you have to your advantage. It might also be a good idea to discuss your business financial situation with creditors so that they are fully aware of when they are likely to receive funds. This extends respect and also helps them to manage the cash flow within their business.

Making sure you survive the shortfall

Finally, you need to ensure that you manage any shortfall you have. A quick way to do this is to go back to the first step and be aware of your cash flow projections. Being aware of the shortfall ahead of time enables you to make sure that you cover expenses due and that you have the time to rectify the shortfall as quickly as possible.

I hope these tips help you to control your cash flow as a start up business.

6 Fundraising Tips for Your New Business

Every emergent business needs a source of capital. Regardless of the nature of your business idea, this capital has to come from somewhere. Fortunately, there are plenty of places to find funding for an early-stage company.

For guidance specific to your company’s needs and growth trajectory, you’ll of course want to speak with a seasoned business coach, accountant or financial advisor before proceeding. However, these six tips to generate or secure funding for your nascent company are broadly applicable and can definitely give you a leg up regardless of your near-term objectives and overarching vision.

1. Tap Liquid Savings

Although roughly half of Americans live paycheck to paycheck, the other half have at least some financial breathing room.

If you’re part of the second camp, look to your personal savings as a source of startup financing. This is a great way to show future investors that you believe in your business idea. The fact that you’ve personally invested in your company before seeking external funding sources is a vote of confidence for many angel investors and venture capitalists.

2. Stay Lean for Longer

As an entrepreneur, it’s always in your best interest to carefully watch the bottom line. Successful business owners use every available tactic to control costs and remain lean, stretching their startup resources farther.

“As a young entrepreneur, staying lean was very important to me,” says entrepreneur George Otte. “My approach to business allowed me to grow on my own terms and strengthened my enterprise during its critical early years.”

By following in Otte’s footsteps, you can wait longer to seek external funding. When the time finally does come to pitch investors on your idea, you’ll be in a stronger financial position.

3. Borrow Against Home or Retirement Equity

If you have substantial equity in your home or a sizable balance in a tax-advantaged retirement account, you can borrow startup capital at lower rates than those afforded by unsecured loans, credit cards, and traditional lenders such as banks.

Contrary to popular belief, borrowing from a retirement account is possible while preserving your scheme’s tax advantages.

“There are provisions in the Employee Retirement Income Security Act and IRS tax codes that enable people to invest retirement savings in a business if they are active employees in the company,” says business expert Erik Sherman.

In other words, as long as you play a day to day role in your startup’s operations, you can borrow from your retirement savings without incurring a tax penalty.

4. Seek Support from Your Friends and Family

Friends and family members are great sources of “patient capital.” In other words, they may be willing to wait years or even decades to realize returns on their investments. “Patient capital” is the first source of external funding sought by many entrepreneurs.

5. Run a Crowdfunding Campaign

If you have a novel idea that you think consumers will really love, build a crowdfunding campaign around it. Crowdfunding allows you to raise money at relatively low cost without giving away equity in your company or paying interest over time.

6. Apply for Grants and Prizes

No matter what your company does, it’s likely eligible for grants from industry associations, local government agencies, or entrepreneur-oriented nonprofits. It might also be a worthy contestant in startup competitions that promise cash prizes to winners and runners-up. Even if you don’t win, you’ll learn a lot from mentors and fellow contestants.

Making Your Money Go Further

Managing your finances isn’t always an easy task. The older you get, the costlier life seems to get. Still, it’s not your salary that matters; it’s what you do with that salary. Making your money go further is the theme of this article and anybody can do it with just a little planning and foresight. Here are some pieces of advice to help with your personal finances.

Manage your income and expenditures better.

The first step towards making your money go further is to manage it better in the first place. Whether you earn a lot or a little, making your money go further is about organizing your finances so that you’re not being wasteful. You need to make a budget so that you can monitor your expenditures in line with your income. You need to set aside enough of your earnings to cover the necessities such as rent, petrol, food, and all other bills; you shouldn’t be struggling to pay for those things because you’ve splashed out on luxuries.

And when it comes to your disposable income, you shouldn’t burn through it all. Making your money go further is about being strict with your spending habits and trying to save at least some of your earnings every month. If you’ve got debts or other bills looming over you but you can’t make the payments then you might want to look into bad credit loans. Whilst you may not have the best credit score if you’ve been a little careless with your finances in the past, there are options for you if you’re a homeowner. At the end of the day, it’s about owning an asset which proves to lenders that you’re financially trustworthy.

Supplement your income.

Another way to make your money go further is to look for additional streams of income outside of your job. Online surveys and reviews are a great way to earn a bit of money on the side. You could spend a few minutes every evening or every weekend answering a few questions about a certain brand you use, watching a short advert, or taking daily polls. Whilst not all sites offer hard cash, many offer gift cards, vouchers, and entry into contests for more prizes. For a few minutes work here and there, you could really earn some decent rewards for your effort; going to your favorite shops with gift cards and vouchers will save you having to spend any of your actual money, so there’s always a monetary reward for doing online surveys in some sense.

You could also do some research on the property market. Investing in real estate is a great way to bring in an additional source of income, whether you rent out a property to tenants to bring in a monthly stream of revenue or buy a property simply to sell it at a higher price. It’s an industry well worth checking out because you should be making smart investments in order to secure your finances for the future. It’s better to spread out your money rather than putting all your eggs in one basket.

What All Entrepreneurs Need to Know About Debt

Yes, there are angel investors and venture capitalists; yes, there’s always bootstrapping; but the truth is, you probably can’t start your startup without accruing debt. You need capital to get your business up and running, and loans of one type or another are the fastest, most reliable way of acquiring money to fund your dreams — especially at the beginning of your entrepreneurial career, when you don’t have any small business credit to attract deep-pocketed investors.

But here’s the thing: Debt isn’t always bad — but it isn’t always good, either. Before you begin your startup, you should learn a thing or two about what debt is, what it isn’t, and what you should do about it.

First, a Discussion of Different Debt Definitions

Some of the most famous personal finance gurus make millions on messages that debt is the ultimate evil. They say that borrowing money should be a last resort, even if it is for large, necessary purchases like homes and businesses. As a result, most people experience terror at the idea of taking any kind of loan and feel anxiety and guilt at the prospect of maintaining debt.

However, borrowing money isn’t a complete definition of debt. Rather, according to the true accounting definition, you only have debt if you owe more than you own — if your liabilities are greater than your assets. Making loan payments doesn’t make you in debt; however, incurring liabilities when you lack sufficient assets does make you in debt.

Still, you should know the difference between consumptive and productive liabilities. Consumptive liabilities are those that do nothing to increase your wealth. Often, personal credit card debt falls into this category because goods purchased on credit are rarely put to profitable use. Conversely, productive liabilities help you build wealth. Some examples of typically positive, productive liabilities are: mortgages, education loans, small business loans, and business lines of credit. When you are building a business, you would do well to avoid the former while accruing a practical amount of the latter. Then, you should be able to stay out of debt while generating sufficient capital for your startup.

Next, an Explanation of Debt Monitoring Tactics

The security of your business depends on you maintaining productive liabilities and reducing (or eliminating) consumptive liabilities — but when you apply for loans or look for investors, all liabilities

Cash Ratio. This tells you how much cash you have available — and how much of your income is tied to liabilities. First, calculate the amount of cash you have on hand, which might also include cash equivalents like highly liquid investment securities. Next, add together your current liabilities. Then, divide your cash by your liabilities. The higher the number, the healthier your finances.

Debt Service Coverage Ratio. A debt service calculator will determine whether you are capable of producing enough cash to cover your debts. Most often, debt service is used to determine your ability to obtain more liabilities for your business. First, calculate your net operating income, which is your net income plus amortization and depreciation of assets plus interest expenses plus non-cash items. Next, calculate your debt service, which is your principal plus your interest payments plus any lease payments. Then, divide the first number by the second. Again, you should be looking for a large number, closer to one.

Debt-to-Asset Ratio. This calculates the percentage of your assets that were paid for with borrowed money. It can indicate financial leverage, measure solvency, and determine financial distress. First, add together your current liabilities and long-term debt; next, add together current assets and net fixed assets. Then, divide your liability total by your asset total to obtain the percentage. A large number isn’t necessarily bad, but it isn’t good, either. You should determine the optimal ratio for your business.

Debt-to-Equity Ratio. This tells you how much of your business you own, and how much belongs to others. First, add together your liabilities; next, calculate your equity, or how much money you have invested in your company. Then, divide your liabilities by your equity. If the number you produce is large, that means a large proportion of your business is owned by outside sources, like banks.

How to Choose the Right Loan for Your Small Business

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As a small business owner, or an entrepreneur about to launch a startup, you will know what its like working with a small budget. However, did you know that money problems are the second most common reason behind business failure?

While SME’s and startups do not necessarily need huge funds to thrive and grow, if your business begins to experience negative cash flow, it could be the beginning of the end.

When your business needs a cash injection, you may be tempted to apply for a Market Invoice business loan. A loan can help your business thrive but with so many what might seem complication options to choose from, you may be unsure where to start.

To help you apply for the right loan, here are some things to consider about borrowing for your small business.

Secured and Unsecured

There are two types of loans: secured and unsecured. The former is secured using business assets, which ensures that should you fail to make repayments, the lender can recover losses by selling your assets. This could include business cars, property or equipment. The latter involves no collateral but does often require a longer trading history by way of guarantee.

It is important to note that the type of loan you will be able to secure will depend upon your company’s history, trading time and credit history.

Research the Criteria

When applying for a business loan, your company will usually have to meet a certain set of criteria. For an SME, many lenders will ask to see two years trading records, turnover and profits, as well as your credit history.

For startups, the required criteria are usually more basic and may include permanent UK residence and less than two years trading.

Tip: After ensuring that your business meets the conditions, make sure you have all documentation required to make the application process quicker and smoother.

Fixed and Flexible

In addition to secured and unsecured, you can choose between fixed and flexible loans. Fixed loans have fixed payments. As such, when you agree to the loan, you agree to pay the same fixed sum every month until the debt has been cleared. Flexible loan repayments, on the other hand, differ depending on interest rates.

Both types of loans have their benefits, as fixed allow you to predict and allow for expenditure, while flexible loans could save you money if interest rates drop.

Purpose of the Loan

Before applying, it is important to think about why the loan is needed. Think carefully about how long you need the loan, how much money you need to borrow, how quickly you need the money and what you can secure the loan against.

Considering these questions will help you to determine what type of loan is best for your business.

There are a range of business loans available on the market, with some aimed at SMEs and others tailored for startups with no-to-little trading history. Before applying, do some research, think carefully about what type of lending is suitable for your business and take your time, to make sure you select the right loan.

The Black Mark: Personal Finance Problems Which Could Stop Your Startup

For the most, it’s essential to keep your personal life and your startup separate. Business and pleasure don’t mix well. A scandal at this stage could spell curtains. So, the chances are that you keep your personal life out of the office. It’s usually the best route to take.

But, such separation life isn’t always possible. Entrepreneurs can’t escape the fact that who they are is linked to what they’re doing. Your personal background could have a massive impact on your success or lack thereof. For example, a bad personal meeting with a future business associate could scupper a deal. Equally, a bad credit rating could halt progress before you even get going. And, that’s what we’re going to look at here.

You may assume that personal finances wouldn’t have anything to do with your enterprise. But, think again. Here’s how your own money problems could cost your startup.

Failure to get a loan/backing

Let’s not beat around the bush; no startup can get off the ground without money. You’ll have a hard time convincing anyone your business is worth investing in if you’re drowning in debt yourself. Not to mention that yet another loan could lead to more trouble. Even if you manage to get a loan against the business instead of your name, it’s unlikely you’ll meet the repayments. As such, your company could end up filing for bankruptcy before you even start.

Lack of faith from the business world

Nothing stays secret for long in the business world. If you’re drowning in debt, the businesses in your circle will soon know about it. And, once they do, you’ll have a hard time getting a deal from any of them. Why would they trade with an entrepreneur who can’t handle money? That would be financial suicide. If your company goes bust, they lose money. It’s as simple as that. Instead, you’ll find that all those businesses turn their backs on you. And, when they do, you’ll soon find yourself in trouble.

Is there anything you can do?

Luckily, there’s plenty you can do to get the situation under control. You want to develop a way to clear your debts as soon as possible. The faster you’re clear, the sooner you can enter the business world on stable footing. Many would choose to turn to debt consolidation to tackle the issue swiftly. But, that might not be the best plan for you. After all, every penny counts when you’re starting out. You can’t afford insane interest rates right now. Instead, consider the debt relief programs offered by companies like the Bank of America. This way, you can develop a plan to clear debts in a realistic time frame.

It’s also worth being completely open about your situation. Speak about how you’re dealing with the issue. As mentioned above, these things have a way of coming out in the end. So, beat the gossip by sharing your story. You could even become an inspirational figure for other entrepreneurs out there.

How To Survive A Cash Flow Crisis

Cash flow is the total amount of money going in and out of your business and is a big problem for most small business owners. If your sales projections weren’t quite what you expected, or you have a customer or client that hasn’t paid you on time, it could mean that you don’t have enough money to cover the day to day expenses of running your business. This, of course, is a big issue and could result in your business going under. If you want to avoid this possibility, then ensure you read the tips below.

Cut Down On Non-Essentials

One of the first things that you should do when you have little money coming into your company is to cut down on expenses that aren’t bringing in profit. If you have a business landline but always have customers and suppliers calling your cell, why not consider having it cut off? It won’t save you massive amounts of money, but it’s money that could be better spent elsewhere. The same goes for any services that you may be subscribed to.

Push Back Bills

It’s unlikely that you’ll be able to put off paying for things like your rent or mortgage, but you may be able to negotiate an extension with your suppliers, especially if you have a good relationship and have always paid on time before. In fact, if you seem to be having a cash flow issue the same time every month, you may want to ask them to push back you due date permanently, and pay a couple of weeks later from now on instead.

Consider Increasing Prices

We live in a world where everything is slowly getting more expensive, and that should include your products and services too, especially if you’re having cash flow issues. However, you don’t want to just raise prices on a whim; You need to be strategic about it. Don’t increase your prices by massive amounts, and try to keep them below the prices of your competitors. If you increase your prices by too much, you’ll risk losing customers to cheaper competitors. Visit business.tutsplus.com for advice on how to raise your prices.

Give Them Incentive

If your cash flow issues are caused by customers making late-payments, you may want to consider offering a discount to customers who make their payments early. However, you may find that this costs you more money that you’d like, so you could also consider doing the opposite, and make your customers aware that they’ll be charged extra for making a late payment.

Get Some Credit

If you’re really strapped for cash, then you may want to consider applying for a business credit card or a working capital loan, to help you cover the day to day expenses of running your business, as well as payroll and marketing. Workingcapital.co compares some of the best working capital loans, to help you find the best one for your business.

Once you manage to get out of your cash flow crisis, you need to make sure to come up with a plan on how to avoid any future financial problems.