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Means To Finance Your Business

September 2, 2011 — 10:04 am

Financing a business is always the critical component to success.  There are a number of ways to avail funding for a business. If it is an already running business, financing it would depend upon the credit history of the business as well as on how well established it is in the market. In case it is at the inception stage or is yet to be started, it would depend upon on what the business plan and concept is.

Whatever stage the business might be at, whether still an idea or an already established business, one should never let the lack of funds be a hindrance. There are a variety of methods available for financing a business. Elitegrup suggests the following financing opportunities that business entrepreneurs can take advantage of.

There are various sources from where finance can be procured for a business. These include banks, government institutions, venture capitalists, angel investors and finance companies. But a useful thing to look for over here is that what all the lenders want when they invest money in a business enterprise or a business proposal.

In case one is seeking money for an already existing business, lenders would be interested in knowing about the history of the business as well as about the past performance and track record of the business. They would also be interested in knowing whether you can repay the loan that you are taking.  They would take a look at the present cash flows of the business and try to gauge whether it is sufficient to meet the current obligations and take on the extra debt or not.

The credit history of the business will also be brought under scrutiny. A good credit history will always help a business to get a loan. In case there has been any kind of problem in the past, it is always better for the borrower to himself bring it to the notice of the lender and then explain the reasons for it and how he was able to turn the situation around.

Another way to improve the chances of being sanctioned a loan is by putting up collateral. This reduces the risk for the bank or the lending institution in case of a default. And finally, if the borrower can show that his personal money has also been invested in the business, the lender will have more confidence in the proposition.

There are many business loans which are turned down by the lenders due to bad credit history, poorly presented proposals, inadequate collateral, insufficient cash flow and a lack of management experience and exposure.

These are the general points in which the investors and lenders are interested. Having discussed that, let’s have a look at the various sources which are available for financing a business.

Traditional Money Lenders – The major source of loans to businesses are banks, finance companies and credit unions. Most of these institutions have a dedicated business department and pretty experienced in handling business loans. The best place to start is with the institution which handles your business and personal banking.

Government Sources and the Small Business Administration (SBA) – There are various government agencies and sources like the co-operative banks and small business administration groups which are into funding for businesses. But these primarily cater to the small business proposals and projects. The programs of the SBA work in conjunction with the traditional lenders, as they are mostly loan guarantee programs that reduce the risk to lenders in case of default. Some of the popular SBA programs include the 7(a) loan guarantee program, SBA Express Loan program, microloans etc.

Venture Capitalists – These are the firms which are seeking investment opportunities in companies with a high growth and profit potential. Usually when you take money from a Venture Capitalist, you might have to give up some control and ownership to the investors. So if you are planning to go in this direction, it is imperative to investigate the Venture Capitalist firm and make sure that it has good references.

Angel Investors – These are individual investors who are looking for good opportunities in a wide variety of businesses. You don’t have to be a high-tech company to attract these funds. Angels have smaller sums to invest than venture capitalists. You can find the angels by making a search on the Internet, looking for angel associations in your particular area of business. You can also inquire with your local business librarian, the chamber of commerce and with other non-competitive businesses for angel investors.

So the money for investing into a business is certainly out there. There are just few things which need to be taken care of while availing business finance. One needs to prepare the business proposal very carefully and then approach the institution which best matches the need and capacity of the business.

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Why Everyone Should Seek Independent Financial Advice In Recessionary Times

June 5, 2011 — 3:57 am

You might wonder if you’re a candidate for advice from a financial consultant. Often people save a considerable amount in their company pension plans and then don’t have any idea what to do with the money at retirement. Others are more familiar with investing funds but worry whether they’ll have enough money to live comfortably the rest of their life. Still others are uncertain about the ancillary financial products they might need to protect their investments. If you fit into one of these groups you need  financial advice from a competent  financial advisor.

No matter what the economic climate, it’s important to invest your money wisely.If everything is booming, you often feel like the smartest person in the world because you’re making a good return on your investment. However, during recessionary times, it can be extremely difficult to uncover the right investments that allow your money to grow faster than inflation. In order to do this, most people seek financial advice from someone, whether it’s a registered financial advisor or just their smart neighbour down the street.  

While the smart neighbour might offer some good advice. They don’t spend their entire day in the field of finances as a registered financial advisor does. Often non-professionals focus on one area and while they may be good at predicting some financial events, they don’t look at the whole picture. Of course, you often don’t want to share all your financial information with them so they can’t make specific recommendations.

Financial Advice entails more than just how to make your money grow.It also involves planning for the pitfalls that can suck away your life savings.  Illness, taxes and some unexpected unpleasant surprises can take you off guard if you haven’t planned wisely.  A good financial advisor outshines the neighbour next door planning for these events.

You also can confidently share any information with a financial advisor, knowing that he is obligated to keep all your personal information private.  You can share any specific worries or dreams you have and he’ll gear his advice to avoid the problem that concerns you or help you make those dreams come true.

Important financial advice from a registered financial advisor can often require more than a one-time consultation. It’s an ongoing process. The world changes dramatically over the course of a few years and those that can change with it survive and thrive.  People that retired during robust economic times often find themselves falling short when the tables turn and the economy goes into a slump. They planned to receive high returns on their funds and lived as though these were possible no matter what the economic conditions. Suddenly they find themselves with declining balances.

Using a professional that understands the market and the world of finance can help you prevent running out of money before you run out of time. Financial advisors don’t base all their advice for the future on today’s market but balance the accounts to maximize the returns while minimizing the risks. If they see an opportunity because of a changing market, they help you take advantage of that opportunity. If, they see risks that come from the changing financial environment, they also help you sidestep those risks to preserve your assets.

Who can use financial advice from a professional? The answer often shocks many people. While the rich often understand they require the services of a financial advisor, those with midrange assets worry they don’t have enough money to work with a financial advisor. In reality, these people need advice the most. If the very wealthy make a few mistakes in their financial planning, it won’t be a crisis. Those of modest wealth need to be the most vigilant about the assets they own.

 

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Why It’s Important To Seek Financial Advice

February 9, 2011 — 6:11 am

During good times, it’s effortless to make your investments double in value. However, a recession or depression creates a slippery financial slope. During those perilous times, the importance of seeking financial advice is imperative.People seek financial adviceduring high growth times to make more money on their money or even on their comapny pension.  However, a recession calls for maintaining your equity and looking for safe methods of achieving growth.

Seeking financial advicefrom a qualified financial advisor can help you dodge the bullets of economic disaster. You spend your day making money or learning more about your specialty. A financial advisordoes the same.He occupies his days by studying the market place and looking for the next big investment. He also looks for safe investments with strong companies and knows exactly what to look for in the company’s background that might be an alert to disaster.

You may have spent most of your life accumulating assets for retirement, only to find that you now have to use some of the equity you built over those years, long before you expected to do that.  However, there are ways to protect many of your assets and prevent dramatic erosion of your savings. Sound financial advice can help you do just that.

During rough economic times, most people pull in the reins of spendingand worry that the services of a financial consultant will be too expensive for their more limited budget. Nothing could be further from the truth. A preliminary meeting with a financial advisor can actually save you thousands. He/She often can spot financial leaks in your investment pool.

You might think you have to delay your retirement because of the recessionary times. With proper direction and good sound financial advice, you might be wrong. Even if your savings has worn drastically, there are ways to prevent further erosion and turn your situation around in many cases. That is why seasoned investors seek financial advicemore in rough economic times.

Some people turn to friends and family during these times for their advice. You might know a very smart neighbor that you believe has all the answers. He/She may have some advice and might be able to help you, but does he/she know every option? Are you willing to put your entire future in to the hands of that person? put your years of hard work and graft in the hands of that individual? Would you rather seek council from someone that has formal training in this area and spends everyday, all day, studying the various aspects of personal finance and investments?

A more recent method of increasing supplementary income for retirement is through a lifetime mortgage or home reversion plans.You can harvest the paybabck of your equity in the home without losing that asset. If you only need a small increase there are programs that allow you to use just some of the equity.  However, the use of a home reversion plan or lifetime mortgage also requires that you find the best one and understand all the potential problems. Sound financial advice from someone that studied each type of home reversion is often necessary at this time.

It is best to find a financial advisor to help you look for the best method of supplementing your income or releasing the equity in your home. Sound financial advice will include an explanation of the differences between home reversion plans and lifetime mortgages. A financial advisor can evaluate your situation and help you decide on the most beneficial solution for your financial future.

 

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You Need Business Insurance

November 5, 2009 — 2:23 am

It is often overlooked item when starting a new business. Many people don’t take into account the reason behind needing business insurance or the cost of this type of insurance when they figure out their business planning or financing.

Why Insurance Is Needed: Business insurance, while not required for every business by law, should be required out of common sense. What this insurance does is cover the business, the business owner and any monetary losses in case of liability or loss of business which would otherwise put the owner out of business. When a business suffers substantial loss due to a major event the insurance acts as a safety net to ensure that the business is not crippled or completely fails if possible. Business insurance can also act as a safeguard in case of complete loss for the owners against any outstanding costs. Some of the things covered by most business insurance are included in this list:

Natural disaster Fire Machine or equipment failure that shuts down the business Loss of income due to employee negligence Lawsuits brought against the business Ensure ongoing operations due to adverse affects from man-made circumstances outside the business Consumer issues or problems.

Business insurance defrays, or in some cases, the costs associated with covered events. This can be of enormous assistance with most of a company?s cash is tied up in repairs or would not be sufficient to cover massive expenses.

Small Business Insurance: The smaller the business is the more likely the need for business insurance in today’s world. Many, if not most, small business owners will have placed their entire lives and earnings into the business. Several reasons exist for the smaller business to own business insurance: When a large problem requiring a financial outlay large enough to destroy a small business.

Banks often require business insurance specifically for small business to cover loans and payments If the owner of a small business dies, the insurance guarantees payment of all business debt If an accident occurs at the site of the business, insurance is needed to cover the costs of the accident.

No matter if it’s small business or a large factory, covering costs due to unforeseen problems can cripple any operation. This is the reason business insurance exists today. With so much financial investment in any business, insurance is the only way to guarantee ongoing operations.

Susan Reynolds is the content coordinator for a leading South African Insurance Provider who specialises in Business Insurance.

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