Category Archives: Business

Perfect credit to get a small business loan

Although low credit scores might have precluded you from getting a loan in years past, today’s lending environment is more open to subpar credit ratings.

“While traditional banks may be restrictive when it comes to obtaining credit, there are alternative options,” said Michael Kevitch, president and founder of Small Business Funding.

Alternative lending sites such as Small Business Funding tend to base lending decisions on the financial realities of a business rather than the financial history of business owners. Specifically, Kevitch said, alternative lenders take a close look at business performance, industry type, time in business and cash flow before handing out a loan.

Traditional lending institutions have been a mainstay of small business funding for many decades, and still are in some industries. But they are not the only sources of financing.

For business owners looking to borrow a relatively small sum (between $5,000 and $250,000), getting a bank loan is likely to be more trouble than it’s worth, Kevitch said. However, he noted that bank loans may still be appropriate for business owners who need to borrow a large amount of cash, over a long period, and still get a low interest rate. Kevitch advised business owners to make sure they fall under those categories before applying through a bank.

Kevitch noted that alternative lending sources often provide faster approvals; sometimes, businesses can obtain access to the funds in as little as seven days, he said.

Bank loans may not be the best option for every small business, but they’re far from the worst funding option out there. In fact, for established businesses looking to grow at a moderate rate, traditional bank funding is generally a great option, Adam said. It’s when a business doesn’t fit those criteria that business owners should consider shopping around.

“If you are a younger company, pre-revenue or low revenue — but plan to grow very quickly due to the industry that you’re in (e.g., health care, IT or software consulting) — then a traditional bank loan may actually limit your growth,” Adam said.

To decide whether a bank loan is right for your business, research both traditional loans and alternative funding sources. It’s also important to know your business inside and out.

“If you anticipate steady growth over the next few years, then a traditional bank may be best,” Adam said. “If you are growing like crazy and you know you will need to keep increasing your loan size by large increments each quarter, then entertain a nonbank lending partner, as banks may not be able to keep up with your needs.”

You may find this myth floating around online forums and perhaps even hear it from well-meaning friends and family members. It’s all right to ask for money, nonexperts will tell you; just don’t ask for too much. While this might be reasonable advice in personal circumstances, there’s not much truth to it in the business world.

According to Jess Harris, content and social manager of business lender Kabbage, a working paper from Harvard Business School revealed that banks actually prefer lending larger amounts because they make more profit from large loans in the long run. In turn, banks are cutting back on smaller loans.

 

Conventional Industry Sectors

These days, few people expect to work for a single company throughout their career. But what about the expectation that companies will remain in one industry forever? Is that, too, becoming an artifact of the past?

In a new PwC report called “The Future of Industries: Bringing Down the Walls,” we look at how the boundaries among sectors are shifting. The pace of technological change is creating at least the prospect of a new industrial order, in which most companies no longer operate within the comfort zones of their established sectors. Already, a few companies (Apple, Amazon, and GE, among them) have boldly and successfully moved into new industries. Now just about every other company will have to do business that way.

Consider the telecommunications and automobile industries. Until the past few years, a telecom company based its business primarily on routing calls and data. But now, almost 25 years after the launch of the World Wide Web, telecom companies have become entertainment content companies. Technological change has taken them across industry borders.

Many expect a similar transformation to unfold for automakers. After more than a hundred years of selling cars, automotive companies are eyeing a future where they’re facilitating mobility on demand. Consumers will order cars from mobility services to suit their immediate needs: a spacious wagon for a weekend away with the family or a microcar for a solo trip into the city. Add in the driverless dimension and the potential for car-sharing, and it’s not difficult to see a future where owning a car becomes the exception rather than the rule.

Meanwhile, the century-old electric utility industry is at the nexus of an emerging business category that could be called “smart infrastructure.” It starts with wiring homes for security and temperature control, and expands to embrace a diverse range of integrated and automated services, including lighting, music, and locating misplaced items. The power utilities that provide this type of product and service — alone or in collaboration with one another — will also operate at a broader scope, that might cover larger-scale energy management, monitoring of building maintenance, city resource management, transportation efficiency, and eldercare. These will all take advantage of the same software solutions and analytics. The utilities have the potential to capture several new sources of value in this future, but they should expect to face strong competition from other players, including new entrants.

Stretch Your Startup Dollars

Initial startup costs are some of the biggest expenses a new business owner will have to encounter. Before you turn a profit, there are many parts of the business that need to be covered up front, and entrepreneurs don’t always anticipate some of these expenses. To reduce your startup costs and stretch your dollars a little farther, follow these tips.

“There is so much power in knowing what is going on in your business, for better or for worse,” Reiniger told Business News Daily. “Managing the finances of my business is not something I naturally enjoy, so I’ve put rules in place to help me stay on track. I advise setting up a standard time every week or month for reviewing and managing your budget.” Angie Segal, an ActionCOACH business coach, advised entrepreneurs to factor their own salary into the budget as soon as possible.

When you created your business plan, you might have envisioned all of the latest office equipment, lavish holiday parties and enough staff to take on big projects. However, not all of those business luxuries are guaranteed. Office Evolution founder and CEO Mark Hemmeter said small business owners can suffer from a lack of flexibility in their grand plans. “Your ego and vanity can get in the way,” he said. “You want that car or that perfect sign, but it just isn’t a good fit for the core of the business. Hemmeter recommended looking into short-term solutions, like using shared office spaces and hiring freelance workers, until you can afford to make long-term commitments such as acquiring private office suites and hiring full-time employees.

The Model for Communicators of New President

Like politicians, business leaders and their ideas are elected. Not by a formal vote, of course, but by winning the confidence and support of others in their organization — people who enthusiastically endorse their abilities and points of view. Gaining support is not an easy task, and many leaders fail because they’re not good at it. Their pitches fall flat, and they are left struggling to motivate and engage because they can’t articulate a clear message.

That is not a problem Donald Trump appears to suffer from. In spite of his having polarized the U.S. electorate, his ability to make an impression with enough voters in the right states has taken him to the White House. One reason Trump’s opponents felt sure he wouldn’t win is that he routinely violates so many of the classic principles of effective speaking. He talks quickly, bounces from topic to topic, emphasizes the negative, and often fails to finish his sentences or provide details to substantiate his assertions. And yet his political successes have been clearly linked to his oratorical style.

Whatever you think of his themes or his style, there is something to learn from Trump’s way of speaking. It’s not his bombast or his impulsiveness that persuades others; it’s his ability to stick to a story line. Below the riffling surface of his stream of consciousness, there is always a carefully crafted narrative that frames reality in extremely simple terms. It’s this story that makes an emotional connection with people, even if they are predisposed to resist him.

A few writers, who noticed Trump’s ability to connect this way, predicted he would win during the campaign. One was Dilbert cartoonist Scott Adams, who called him a “master persuader.” Another was Donald Miller, author of Blue Like Jazz: Non-Religious Thoughts on Christian Spirituality (Thomas Nelson, 2003). Miller wrote that as people seek to make sense of the complex world around them, they are drawn to narratives with “a clear and condensed version of life.” Trump won because he delivered that type of story.

How Much Cash Will You Need

If you’re thinking about launching a new business, you may not know where to start with your finances. Of course, you’ll need a decent amount of cash flow to maintain your company. However, if you are organized and thorough, you can plan out your financing and keep your startup budget on track.

Here’s how to figure out approximately how much you’ll need to launch your business.

 

Start small

You most likely have high expectations for your company. However, blind optimism may cause you to invest too much money too quickly. At the very beginning, it’s smart to keep an open mind and prepare for issues that may arise, experts say.

“A prospective business owner should start planning a small business by simply understanding the potential of the business idea,” McCahon told Business News Daily. “What this means is not assuming your idea will be successful.”

The best approach is to test your idea in a small, inexpensive way that gives you a good indication of whether customers actually need your product and how much they’re willing to pay for it, McCahon said. If the test seems successful, then you can start planning your business based on what you learned.

While every type of business has its own financing needs, there are some tips that can help you figure out how much cash you’ll require. Entrepreneur Drew Gerber, who started a technology company, a publicity firm and a financial planning company, estimates that an entrepreneur will need six months’ worth of fixed costs on hand at startup.

“Have a plan to cover your expenses in the first month,” Gerber said. “Identify your customers before you open the door so you can have a way to start covering those expenses.”

When planning your costs, don’t underestimate the expenses, and remember that they can rise as the business grows, Gerber said. It’s easy to overlook costs when you’re thinking about the big picture, but you should be more precise when planning for your fixed expenses, he added.