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.

Boomers In The Work Force

If you follow the baby boomer demographics and you are a baby boomer (born between 1946-1964) you begin to wonder about a lot of things because the numbers are staggering when it comes to our generation. We are 76 million strong. (39)They numbers say that 64 million baby boomers (over 40 percent of the US labor force) will be eligible to retire in large numbers by the end of the decade. Statistics also show that the average retirement age today is 63 because baby boomers are staying on the job longer, either by choice or because they need to stay employed. (57)The increase in retirement age from 55 to 63 represents a trend for baby boomers and requires a change in our culture to recognize that retirement age is an arbitrary number and must be adjusted to respect the choice many make to stay in the work force. (45)As a society we must change our vocabulary and shift the paradigm that life begins to decline once a person enters the fifth decade of life, to life for many is just getting started in the fifth decade. If we replace the word retirement with “transitional phase”, for example it creates a different image in our minds and leaves more room for individual design of that phrase rather than a “one size fits all mentality”.(75)The word retirement leaves no room for variation on that theme in terms of employment and it is very cut and dry… either you are working or you are retired. Why can’t employers work with employees of retirement age to develop a transitional plan that allows the worker to remain productive and the employer to continue to benefit from the knowledge and skills provided by the experienced employee? (68)

Special Training For Brain Development Of Kids

Many researchers have proven the fact that functioning of brain cells of infants is twice active as adult’s brain. Neurons are the brain cells that connect together and power of neuron have the potential of a PC. Connectivity of neurons decides the smartness or intelligence of individuals. In human, brain development and the learning ability of an individual is 50% in the first four years of age. The nerves of individuals are reduced as they grow up and this is why the 1000 trillion nerves present in an 8 months baby are reduced to 500 trillion as it grows up. A child that has given more opportunities to explore will be much smart.

A majority of children, more than 90% of them use their left brain, but the imperative fact to remember is the right brain must also be utilized. Education system present in almost all the schools is designed to develop or use the left brain. Right brain is never the less significant because it is responsible for creativity, arts, feeling, imagination, visualizing, daydreaming, rhythm, holistic thinking and many others. Hence it is equally important to develop both side of brain. It is also most important to take steps to keep both the brain much active, by keeping them to perform analytically on an equal basis. It is the responsibility of parents to give activities to their children that ensures the involvement of both brain. If both brain used by children it is probable to enhance their learning power and they can also increase their brain power. If brain development programs are offered to children they can make most of the program and develop their skills to give work to both side of brain and remains high in intelligence level. Development of brain in human beings is based on the degree of how much it is used. If it is left unused there are more probabilities for individuals to lose as brain works on the basis of use it or lose it.

To ensure the progressive brain development in children, it is the role of parents to introduce their children with a reputable brain development program. Most of the experts suggest step by step educational program to the children which is systemic and efficient. Nowadays it is very simple to find out a lot of schools which not only gives importance to academic program, but they also boost the creativity of children through their extracurricular activities. It is probable to search internet and get hold of relevant schools that present with a variety of activities to stimulate the brain and encourage the development of children. A total development program to stimulate mental activity of children is also found out in the online sites and parents can try out these activities with their children while they are at home. Getting education from a school that implements total development program is much beneficial. Search for such schools and secure admission to enhance the future of the children and boosts in brain development.