5 Sources of Financing For Small Business Growth

In the experience of many small businesses over the years, one thing is certain – no matter what type of business you start, it is going to require money from somewhere. Although many entrepreneurs are one-person companies, raising sufficient money is often overlooked seriously by many new startups. The word sufficient here is defined as the amount of money that will really make this business succeed through practical and aggressive means.

Most of the time, the passion of starting a new business overtakes common sense and a real clear idea of the startup and operating capital needed is lacking. So it is advised that when you consider shopping for money to start your business, that you do so after completing some form of a business plan. Even if you take money out of your own pocket or borrow on the equity on your home or from your credit card, it is essential that you know ahead of time that it will be well spent.

Let’s take a look at the most popular options for financing small companies.

Credit Cards

This is the easiest type of money to obtain. According to the Small and Medium Size Business Survey of 2007 by the National Small Business Association (NASB) credit cards are the number 1 financing choice of 61% of businesses of 0 to 4 employees. Frequently, the instant that a small business is formed, the owner takes the EIN number to the bank and starts a checking account. Oftentimes, these small business owners are encouraged to sign up for a credit card and offered favorable terms (sometimes 0% financing) for the first few months.

The problem with credit cards is that the interest rate is often very high at 15 to 20% + and according to the NASB, 71% of small and medium-sized businesses are carrying balances from month to month. This has grown from 64% in 2000. The amount of interest expense carried thus obviously affects profitability and cash flow. If credit cards are used as the principal source of financing, the situation is even worse because the amount borrowed is often higher in this case.

The advantage of credit cards is that there are no barriers to this form of borrowing. This is easy money to obtain. There is no system of checks and balances to ensure that the purpose for which the financing is being carried out is qualified by formal business planning and review.

Earnings of the Business

This may seem a bit obvious, but plowing cash back into the firm from earnings is a form of financing. It is important to keep that in mind, because the cash that becomes available from operations could alternatively be used as a distribution to owners or shareholders. Some of these owners may require that they receive distributions. Depending on the stage of the business, this could have deleterious effects on the business, with respect to growth.

Putting money back into the business should be done consciously, with a clear idea for what specifically the money will be used. If the money is getting put back strictly to grow inventory, it may take a much longer time to grow the business. However, if the money is getting put back to invest in systems and people that represent critical choke points in the current business operations, that is a much better plan for higher growth.

Line of Credit

This could come in the form of a business asset or home secured loan. This means that the bank will utilize the company’s property (equipment, building, accounts receivables) or personal property (usually your home) to ensure that they will obtain significant value in the event that you default on your loan. This is also a much easier form of loan to obtain however is best used for incremental financing not a major infusion of cash.

Bank Loan

One of the best strategies early in the business is to establish good relationships with a community bank in your area with assets around $100 to $200 million. Ideally, their investments in the sub-prime mortgage business are limited so that their interest in lending in general is not tainted. Discuss your business and forthcoming lending interests with the individual that has the final say so on the loan approval. Unsecured loans will be the only option for new businesses and usually have serious limitations on the amount that can be financed and usually comes with higher interest rates.

Private Equity Firms

These are venture capital or private investors that will invest in your business in return for some direct control (or say so) into company matters so that they can extract the return that they expect from your company. This requires that you carefully choose from people/firms with whom you develop a good rapport and that are familiar with your type of business.

Private equity is a good choice for small businesses that need to move to the next level due to limitations on the current business that presents obstacles to growth. This is because, the firms that will invest their money will want to see a good operating and financial track record before they inject their money.

Good advice for small companies at this level is to hire an investment banker. Although this carries a cost to achieve this financing, it allows the banker to attend to this specialized form of financing and allow you to keep focused on running your business. One thing is certain, you will be required to complete a formal business plan for this option.

Is Online Shopping Better Than Actually Going to the Malls?

In the last few years, there has been a dramatic increase in online shopping. Despite difficult economic times, online shopping is thriving. There are a number of reasons why online shopping has become more popular than going to traditional ‘brick and mortar’ shopping malls.

Below are a number of reasons why online shopping is better than actually going to the malls:

1. Going to a traditional shopping mall requires getting ready, getting the proper clothing, doing your hair and make up, making sure you have your money, and getting in your vehicle and driving there. When you shop online, you just switch on the computer, connect to the internet, and start shopping. It is easy, convenient, and it does not matter what are wearing and what you look like.

2. Transportation can be a hassle when you shop at a traditional mall. You have to spend money on fuel, fight the traffic, locate a parking spot, and carry all your purchased items to the car. With online shopping, you don’t have to worry about transportation hassles and often your packages are delivered right to the door. If you don’t have a car, taking a bus can be a real hassle when going to a mall.

3. Shopping malls are well-known for the crowds. It can be frustrating trying to get the items you want to purchase. With online shopping, there are no pushy crowds and you can relax and enjoy your online shopping experience.

4. Shopping online is better for the environment. Most online retailers keep their items at a central distribution centre so there is less energy being used which is better for the planet. Retail stores have such energy consuming things as lights and heating and cooling units. As well, shipping from online stores is better on the environment. According to the Center for Energy and Climate Solutions, “shipping two 20 pound packages by overnight air – the most energy-intensive delivery mode – still uses 40 percent less fuel than driving 20 miles round-trip to the mall or store.”

5. Online shopping is a definite time saver. Most people shop on the weekends. Many shopping experiences at a traditional mall can take an entire day. Online shopping saves time so you can enjoy the rest of your weekend. Or, you may have the weekend free if you online shop during the weekday. You can shop any time of the day or night.

6. You can save a lot of money when you online shop. There are many deals on the internet just waiting to be scooped up. As well, most online shops offer free shipping on a certain amount purchased. You are also paying a cheaper price because online stores have less overhead.

7. Shopping online gives access to millions of different products. When you go to a shopping at a shopping mall, you only have access to what the stores have in stock so you end up going from store to store trying to find what you are looking for. Sometimes, it is not always available. When shopping online, you almost always find what you are looking for. You can also comparison shop to find the deals.

Online shopping is continuing to grow at astounding rates. With improvements in secure payment processing, the online shopping industry shows no signs of slowing down. More consumers are discovering that it is a great way to find exactly what you are looking for at a low price.

Statistics Programming – Easing the Pain

Different sets of software are being developed everyday just to ease man with some of his technical works such as in the field of business. These programs are specially designed to make high speed calculations and analysis of the data and come up with a soft copy of information output that can be used instantaneously after the software processes it. Statistics is one of the most complicated clerical works of anyone who is studying or working in the field of economics, politics and even social matters. Statistics is deemed to be of importance because it gives a type of descriptive conclusion or interpretation that can be very precise depending upon the quality of data that has been gathered and the competence that is given to organize, interpret and represent that data. But even with the level of competence that a person has with regards to his statistical skills, there is still a probability that a miscalculation might be made and alter the holistic outcome of the statistics.

However, because of the rapid advancements of technology and the evolution of the functions that can be performed by the humble computer software developers has come up with a certain software program that can make ease any statistician of all their statistical tasks. The development of a program that is able to perform the task of organizing and interpreting statistical data was q revolutionary breakthrough when it comes to statistical analysis help. Statistics programming is defined as the systematic calculation of all the numerical data that has been downloaded into the system wherein it is organized basing upon the categories. These categories are classified upon the nature of the data that has been downloaded. After the process of organizing the data, it will be then interpreted numerically. This function of statistical programming helps to lessen the burden of work and also to maximize the output of a statistician.

Statistical program is composed of sets of languages. There are a total of 17 categories in a statistical program and these are the following;
• Analytica, ADMB
• Gretl, GAUSS
• Mathematica
• OxMetrics
• Quantum (Programming Language)
• Programming Language, SPSS, Symbolic Data Analysis, Sysquake, SAS (software and language), Speakeasy(Computation), SHAZAM (Software)
• World Programming System
• XLispStat

Each of these categories of Statistics Programs has their own unique sets of functions. Each one of it is capable of performing specific functions about statistics. The MATRIX LAB is one of the statistics programs that are widely used today. It is a program that is provided by a certain company that is said to be fully capable of solving ad coming up with solutions with regards to any mathematical or numerical problems that are fed into it. The MATLAB assignment helps not only statistics but also other aspects that majorly require the use of mathematical equations and solving. Because of these software programs, statisticians are given more time to pay attention to other details of the data and leave the organization and the interpretation of it to the statistics software.