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.

Revive Your Businesses With Digital Marketing

What is digital marketing?
Promoting or marketing your product or services on the digital platforms, including the internet, mobile phones and display advertisements is collectively known as digital marketing. With the internet becoming an integral part of everyone’s life, the way of marketing products and services too has evolved and every brand and business is using technology to reach out to the maximum number of people. It is being used to entice potential buyers and inform the existing customer base of new arrivals.Why choose digital marketing over traditional marketing?
Following are the reasons that show digital marketing is a wise investment and effective channel that can help in the growth of business:
Cost-effective in comparison to Traditional marketing: New and small businesses having a tight budget and should opt for digital marketing for quick and effective results. They can analyze the fruitfulness of different strategies being applied and accordingly choose which to go further with.

More power to small companies: Small companies can interact with multiple numbers of customers even without having call centers across the world where they don’t even have physical branches.

Higher conversion rate: Success of business enterprises is measured in terms of percentage of conversion of incoming traffic into leads, sales or subscribers. Digital marketing programs help you to opt out from a number of options that can help you get a higher conversion rate. Some of these tools are Search Engine Optimization, email marketing and social media marketing.

Get better revenues: With higher conversion rate comes higher number of sales and ultimately better revenue that can be invested in expanding business and workforce.

Helps in building brand Reputation: It helps in interacting with people who might be interested in your product and services. If you provide your customer what you promised, they will also help you by word of mouth.

Make use of the next generation technology: The world is welcoming “internet of Things” which is a global ecosystem comprising of interconnected smart gadgets like tablets, computers, smartphones and smart-watches etc. It is going to play a crucial role in the future and a course in digital marketing in advance is going to give you an edge over others.
A course in marketing from a reputed institute not just helps you understand different facets of marketing and makes you techno-friendly, but it also helps you in understanding the minutes of business strategies.What a marketing course has to offer you?
During the course, you would come across the benefits of online marketing over traditional marketing. Valuable sessions about web hosting server, domain registration, TLD and SLD servers, Windows and Linux servers are an integral part of digital marketing course. A well-planned curriculum comprises of syllabus segregated in different modules dealing with topics like social media optimization and marketing, SEO basics, Google ads, email marketing and lots more. By the time you complete the course, you will have a clear vision and mission to implement digital marketing and make the best out of it to impart new heights to your business.

What Should a Reference Page Look Like?

There are multiple documents involved in the job-search process: your résumé, your cover letter and your follow-up or thank-you letter. If you haven’t done so already, consider adding one more item to your application package: a reference page. Since prospective employers almost always ask for references, it’s smart to have a list immediately available for them to look over.Employers use a number of strategies to get to know job candidates and make a determination about the candidate’s suitability for employment. Contacting references is a key part of the process. However, listing references on your résumé is a bad idea. It’s better to use every inch of your résumé to showcase your skills and education; putting references down could appear as filler. The best way to share your references is by showcasing them on their own page.A reference page is much simpler to write than a résumé or cover letter, but don’t overlook its importance. This step requires nearly as much thought and analysis. You must use care, thoughtfulness and communicate openly with the people you’ve chosen as your references. More than one person has lost out on a position for failing to properly vet references. While you don’t want to be portrayed as a saint without imperfections, you want to make sure your references share your goal of helping you find new employment, and keep that in mind when speaking to potential employers.The accepted standard is three professional references, such as supervisors and co-workers, and three personal references. Personal references, which allow prospective employers to see another side of you, can be people you know from volunteer activities, church, or school. Avoid choosing personal references that are too personal, like spouses and parents.Once you’ve contacted your references, obtained their approval, and collected their information, you need to create your reference page. Don’t simply type out the information; remember you’re creating a package of documents to represent you to your employer. The same level of care you put into your résumé and cover letter should go into your reference sheet. As a résumé writer, I give the reference page the same heading as the résumé, and use the same font. I use bold text and italicized text sparingly, to emphasize job titles or places of employment, and follow the same format for each reference:NameTitleOrganizationAddressE-mailPhone/FaxAs with your other job-search documents, you want to make sure you proofread, focusing on the contact information for each reference. A misused letter or number could result in missed communication, causing embarrassment for you along with a possibly missed opportunity.Try to view the reference page as one more item to represent you to employers, and give it the same care and attention you give the rest of your application package.