Tag: Small Biz

6 Common Challenges Startup Businesses Face
About a million small businesses launch every year, according to the U.S. Small Business Administration (SBA). More than three-quarters make it to the two-year mark, but certainly not without grit and the ability to overcome the multitude of startup challenges entrepreneurs face. Whether you’re already wrestling with issues or want to prepare yourself for some of the biggest challenges in the startup journey, you’ll walk away with the insights you need here.

1. Cashflow

Poor financial management is one of the leading reasons why startups fail. According to research presented by the National Federation of Independent Business, Inc (NFIB), eight out of ten business failures can be traced back to poor cash flow management. To be clear, this is distinct from profitability. New businesses can be profitable and still fail due to cash flow issues by doing things like failing to collect on invoices in a timely manner or overspending based on their available working capital.

Good bookkeeping is paramount here, particularly if you’re making good predictions about your cash flow. However, you still may find yourself in a bind if you face unexpected expenses or a large invoice goes unpaid for an extended period. Founders can also struggle during periods of rapid growth simply because you’re funding the cost of more orders, additional payroll expenses, and greater overhead with the limited resources you amassed before leveling up.

It’s imperative to have multiple funding solutions to fall back on when this happens. It’s also wise to think beyond traditional lending, as just 44 percent of small businesses that apply for loans, lines of credit, and merchant cash advances receive full funding per the latest Small Business Credit Survey. Consider applying for invoice factoring. It works by giving you immediate payment on your B2B invoices and has much higher approval rates. Plus, you can typically choose which invoices you want to factor, so you can set it up and not use it until you need a cash injection.

2. Partnership Decisions

Nearly 87 percent of nonemployer and 13 percent of small employer small businesses are sole proprietorships, meaning there’s a single person at the helm. Running a sole proprietorship may seem ideal if you’re not keen on involving someone in your business decisions or sharing the profits, but there are advantages to bringing someone else on board. For example, teams with more than one founder outperformed solo founders by 163 percent, according to First Round research. Seed valuations are also 25 percent less for solo founders, which can be a major sticking point if you’re trying to entice potential investors or making a case for other forms of funding.

If you’ve already worked successfully with someone in the past, choosing a partner is easy, provided that person is eager to work with you again. If not, you still have options.
- Connect with other entrepreneurs through local organizations to see if you can find someone who complements your skillset.
- Explore working with investors who have experience and connections in areas you don’t.
- Hire employees who might serve as cofounders and give them the opportunity to demonstrate their skills before bringing them on as an equal.
3. Hiring Suitable Employees

Hiring good employees is one of the biggest business challenges startups face. Unless you’re starting with a major chunk of cash, employee pay is typically going to be lower, there won’t be a swanky benefit package, and work/ life balance is often an issue. Adding to this, the most qualified candidates are all too familiar with the failure rates of startups, which can make them wary of even entertaining a conversation.

Thankfully, you can overcome many of these challenges by highlighting what you can offer good candidates, such as rapid career growth and positive company culture. You may also want to include perks like stock options or flexible schedules.

It’s also worth noting that your earliest people will need to wear many hats and serve specific purposes. Spend time evaluating your business plans and the types of people and skills you’ll need to get to where you want to go, then hire strategically to ensure each person is a good fit for your needs.

4. Fierce Competition

There’s undoubtedly fierce competition in every industry and learning how to deal with yours is key to business success. As a small business owner, it’s easy to get caught up in what each competitor is doing too. You may see one on social media and want to develop a following like they have or invest in product development to outdo someone else’s latest feature.

The thing is, you can’t outdo everyone at everything. Each competitor has distinct advantages that have helped them get where they are. Instead of focusing on what they’re doing well, look more at opportunities they’re missing or areas in which your startup has an advantage over them.

5. Finding Customers

Finding customers fast is key for startup businesses. Your survival hinges on it. But, what can you do when you don’t have a massive advertising budget like your competitors?

For starters, get familiar with your target market. Do research to find out who might use your products or services, what might motivate them to buy, and what stands in the way of them making a purchase. To start, you may want to focus on a group your competitors are overlooking or that you can make a unique case for.

You can also attract new customers through an educational blog. Share helpful information on topics your audience cares about on platforms like Facebook and LinkedIn depending on where your target audience congregates. Research shows it’s equally important for a CEO to have an online presence too. Not only does it build bridges with employees, but will help humanize the brand and it will help with PR concerns, per Forbes research. In other words, just being active online will help address many of the common challenges you face and it’s easy to do.

Ask for feedback as you grow your customer base as well. That way, you’ll learn more about what your prospects are looking for and identify ways to boost loyalty too.

6. Time Management

New startups are demanding and there’s only one you. Plus, you need time for sleep, family, and personal interests. Around 30 percent of entrepreneurs suffer from depression and 50 percent of those who hit that stage wind up with burnout, according to Entrepreneur magazine. Effective time management means giving yourself what you need to feel good and help your business down the path of success too. If you’re coping with small business problems, carving out the necessary time for things like sleep may fall low on the priority scale compared to something like making payroll, but when you manage your time effectively, you don’t have to choose. Consider these quick tips:
- Delegate as much as reasonably possible.
- Let go of the idea of perfection.
- Outsource specialty work, such as bookkeeping and legal contracts.
- Break up your longer projects into small tasks that you can accomplish in one sitting.
- Create a schedule that allows ample time for tasks and stick to it.
Address Your Financial Startup Challenges with Factoring

Find yourself short on working capital due to increased sales, certain times of the month, or during slow periods? Invoice factoring may be the easy-qualify, no-debt solution you’re looking for. Learn more and request a free Charter Capital rate quote now.
October 27, 2021
The Best Business Structures to Consider for Tax and Legal Purposes
Which business structure is best? There are several types of legal structures to choose from, each with its unique benefits and challenges. It’s a good idea to familiarize yourself with all the options when you’re setting up a new company so you can select the right structure for your needs and make sure it will suit you in the long run too. We’ll give you a quick overview of the options and some tips to help you choose the best one below.

Choosing a Business Structure That’s Right for You

First and foremost, your business structure impacts how much you’ll pay in taxes and how your taxes are paid, plus determines your personal liability for business-related issues. It also affects how you can raise money and the types of paperwork you file. With that in mind, there’s no singular “best” business structure. Instead, you’ll want to choose the one that aligns with your business needs.

Can My Business Structure be Changed?

Before we begin, it’s important to note that the ability to change a business structure depends on the structure you’re presently using. It works in a linear fashion. For example, if you start with a structure designed for one owner, you can change it later to include multiple business owners or to a more advanced level. However, if you’re running a corporation, you cannot change the structure later. You’d have to dissolve the corporation and create a new business. For that reason, it’s always a good idea to speak with an attorney and/or accountant specializing in business matters.

Different Types of Business Structures

Sole Proprietorship

Sole proprietors have total control and ownership of their companies. With more than 23 million sole proprietors across the United States, this is the most popular option for small businesses per Small Biz Trends. All assets and liabilities are exclusively yours and indistinguishable from your personal assets and liabilities. You’ll even pay taxes, under ordinary income tax rates, on your business earnings when you file your personal tax returns rather than paying taxes separately as a business. This is known as pass-through taxation or flow-through taxation.

It’s easy to file sole proprietorship paperwork. Your business will automatically be designated as one if you’re doing business alone as well. You can operate under a trade name or “doing business as” (DBA) name for professionalism or privacy too. However, raising money as a sole proprietor can be more difficult as banks and investors are a bit more hesitant to lend, and you can’t sell stock.

Partnership

Partnerships are the simplest business structure for two or more people. Though there are several types that vary in form and function, taxes are managed through personal returns in all of them, but sometimes there are additional IRS requirements.
- The general partner has unlimited liability and must pay self-employment taxes, but also typically has more control over the company than the limited partners do.
- Only certain types of professional service businesses qualify for this designation. The list varies by state but typically includes professionals like doctors, attorneys, accountants, and so forth.
- Limited Liability Limited Partnership (LLLP): There’s a gap between LPs (Limited Partnerships) and LLPs (Limited Liability Partnerships) that leaves general partners unprotected from business issues. In the past, some businesses would create an LLC to serve as the general partner to avoid the risk. Nowadays, some states allow the creation of an LLLP to serve the same purpose.
Filing partnership documents for any of these arrangements is comparatively easy. However, it’s always a good idea to have an attorney examine the partnership agreement to ensure there are no questions or misunderstandings about the rights, privileges, and profits any partner will receive.

Corporation

A corporation is a distinct legal entity from its owners and has its own rights. There are several types of corporations.

C Corporations: A C corp can own and sell property and sue or be sued. It’s also responsible for paying income tax. This is done when the profit is made and when dividends are paid to shareholders too. Corporations can raise money through the sale of stocks and usually have an easier time getting funding from banks and other sources. However, it’s more expensive to form corporations compared to other options. A C Corporation is not only subject to corporate income tax, but its owners must still pay personal income tax on profits (known as double taxation). Plus, there’s less flexibility for management as corporations are required to have a board of directors, and additional recordkeeping is involved.

S Corporations: S corps are the most common business structure for small businesses with employees. The biggest benefit to running an S corp over a C corp is that double taxation of profits is not an issue. Only shareholders pay taxes on profits received. However, there are additional requirements to file as an S corp, such as all shareholders need to be U.S. residents. There are limits set on how stocks are handled too. For example, there can only be a maximum of 100 shareholders, and owners can only get common stock.

B Corporations: Sometimes referred to as a benefit corporation, a B corp is guided by a societal mission. It aims to generate profit and provide some kind of public benefit. Taxation is the same as with a C corp. However, B corps can qualify for additional certifications that can shape public perception and sometimes qualify for special programs or discounts.

Limited Liability Company

A limited liability company (LLC) is similar to a hybrid between a partnership and a corporation, though you can also form one alone. Your personal assets are largely protected under an LLC, and double taxation is not an issue. Taxes on profits are paid by the individuals on their personal returns rather than at the corporate level. However, all members of an LLC must pay self-employment taxes and contribute to Medicare and Social Security.

Guidelines vary quite a bit at the state level, so it’s a good idea to check your local laws to see how they’ll impact your business before settling on an LLC.

Cooperative

Cooperatives are unique in that they’re owned and operated by a group of members for their own benefit. These members, known as user-owners, usually vote in a board of directors who make decisions for the cooperative. Any profits are split, and taxes are paid as a pass-through.

Best Type of Business Entity for Tax and Legal Purposes

There’s no single best type of business entity. But, again, each one comes with unique advantages and disadvantages, so you’ll have to familiarize yourself with them all and see what fits best with your business needs. The highlights are covered below.

Considerations Before Choosing a Business Structure

As you’re deciding which business structure to choose, consider the following questions:
- Am I ok with being held personally liable for my business debts or lawsuits?
- Do I want to retain total control of my company, or am I ok with a board making decisions?
- Does the option I’m considering minimize my tax liabilities?
- Will I be able to get the funding my business needs with this business structure?
Get the Funding You Need at Any Stage

Small businesses often have a difficult time getting the funding they need to grow based on the type of legal structure they choose. At the same time, it’s not always best for the business to move to a more advanced business structure, as moving can drain resources and reduce the amount of control you have over your business. If your company is struggling with funding issues, consider invoice factoring. It’s like getting an advance on your unpaid B2B invoices, except your clients pay the factoring company rather than you after you’re funded, so you don’t accrue debt and are free to move forward. To learn more, request a complimentary rate quote from Charter Capital.

DISCLAIMER: This article is not intended to provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
October 13, 2021
5 Reasons to Consider Using a Third-Party Payroll Service

5 Reasons to Consider Using a Third-Party Payroll Service: Considering using a third-party payroll service? You’re far from alone. Nearly half of all small-business owners describe processing payroll as “confusing,” “complicated,” and “frustrating,” according to a survey published by Small Biz Trends.

Yet, as much as a thorn in your side as it may be, payroll can’t be delayed. Nearly 70 percent of professionals say it would be very or somewhat difficult to meet their current financial obligations if their paychecks are even a week late, per the Getting Paid in America Survey.

Could payroll outsourcing be a better solution for your small business? Let’s take a quick look at who it works best for and reasons it might be time to find a good payroll company.

In-House vs Outsourcing: Which is Better for Your Business?

As a small business owner, you’re likely involved in every core aspect of your organization, from managing finances to overseeing your in-house human resources department. According to Small Biz Trends, a staggering number of business owners find themselves knee-deep in financial activities. But, as statistics show, a whopping 79 percent of them find the payroll process, especially staying compliant with payroll taxes, extremely time-consuming. This pain point often leaves many pondering the many advantages of alternative payroll solutions.

That means your choices generally boil down to outsourcing your payroll services or hiring someone and keeping the job in-house. Bear in mind, a full-time payroll specialist earns a little over $50,000 per year on average per PayScale, which puts having a full-time professional out of reach for most. In most cases, that would be overkill too, but you should still expect to shell out around $20 per hour as a base wage even if you’re not going full-time. Still sounds like a lot? Let’s look at outsourcing.

Considering these expenses, the benefits of outsourcing payroll start to shine. Third-party payroll services offer expertise and experience in managing payroll efficiently and can also handle tax withholdings, ensuring compliance with evolving tax regulations.

5 Reasons to Consider Using a Third-Party Payroll Service

Paying a third party to manage your payroll can be surprisingly affordable, with fees ranging anywhere from $25 to $200 per month, according to Chron. However, it’s not so much the upfront savings that make finding third-party payroll services a slam-dunk decision for small-business owners, it’s the five reasons outlined below.

1. Data Security

Whether you’re crunching numbers manually or using payroll software, you’re ultimately responsible for confidential payroll data. That means if your computers are hacked, or someone unintentionally leaks info, you may be legally liable for an employee identity theft that occurs. When you choose an outsourced payroll provider, they’ll have measures in place to keep data secure so you and your employees are protected.

It’s also worth noting that payroll fraud impacts 27 percent of all businesses, according to Forbes. Small businesses face double the risk as their larger counterparts in this respect. Common issues include having ghost employees on payroll and padding or falsifying hours. Payroll service providers can help protect you from embezzlement and fraud by using sophisticated software to monitor for the telltale signs.

2. Government Regulation Compliance

Different labor laws across cities and states are a major complaint for 70 percent of business owners, per Small Biz Trends survey data. With complex rules that change at every turn, it’s easy to underestimate your tax obligations. Not surprisingly, about a quarter in the Small Biz Trends survey have been taken to task by the IRS, with 15 percent being audited and 17 percent facing fines.

Stats from the American Payroll Association are a bit more grim, indicating that around 40 percent of small businesses face an average of $845 in IRS penalties annually, as reported by B2C.

On the bright side, payroll services providers have expertise in tax regulations. You can rest assured your tax filings are being handled appropriately and that withholding for things like Social Security and Medicare are accurate.

3. Save Time

Small-business owners spend nearly five hours per pay cycle just managing their payroll taxes, according to Small Biz Trends. All that calculating, filing, and paying eats away 21 days each year. Certainly, this is time better spent on all the other important aspects of your business.

Yet, this only speaks of the payroll process itself. Oftentimes, third-party payroll services will handle other HR tasks too. For example, they may help manage employee benefits and compensation packages or offer employee self-service portals so team members can monitor their pay stubs and request changes as needed. Many provide direct deposit too. With direct deposits, paychecks are automatically added to employee accounts, which saves them a trip to the bank and you the trouble of disbursing checks.

Consider all these additional time-savers when calculating the expense and benefits of working with a third-party payroll service, and you’re likely to see you’ll come out on top by a significant margin.

4. Reduce Payroll Mistakes

While up to eight percent of companies use traditional timecards, leading to errors, 82 percent of small businesses manually review their payroll processes, making in-house payroll management time-consuming. By outsourcing to third-party payroll service providers, companies gain access to professional payroll expertise. These providers streamline payroll operations, ensuring compliance with tax regulations and offering cost-effective, cloud-based solutions.

As businesses grow, the benefits of outsourcing payroll become evident, safeguarding against costly penalties and ensuring efficiency in payroll practices.

5. Recruiting Support

Ever hire seasonal or temporary employees? Or maybe do temp-to-hire programs? Sorting out the new hire details can be incredibly difficult, especially if your new hires are subject to different guidelines. An outsourced payroll company will take care of all the calculations and ensure you follow pay-related regulations, so you can grow your business confidently.

Benefits of Outsourcing Payroll for Small Businesses

For startups to established businesses, the benefits of outsourcing payroll to third-party service providers are clear. By partnering with these experts, companies free up valuable time, streamline their payroll process, and ensure data security. Such professional assistance guarantees compliance with shifting tax regulations, reducing the risk of costly penalties. These third-party payroll services provide cost-effective solutions and a team of experts equipped with cutting-edge payroll software, ensuring accuracy and timely payments. By leaving the intricate aspects of payroll in trusted hands, businesses can focus on core growth objectives.

Get Help Funding Payroll with Invoice Factoring

While third-party payroll service providers can take the headaches out of your calculations and streamline your processes, they’re not always a good solution if you’re short on cash and payday is looming. That’s where invoice factoring comes in. It gives you an immediate cash injection by turning your unpaid B2B invoices into working capital right away, so you’re not stuck waiting 60, 90, or more days for your clients to pay. To learn more, request a complimentary rate quote from Charter Capital.

September 3, 2021
Tips on Valuing a Small Business When Buying or Selling
Not sure where to start with a small business valuation? Unless you’re an accountant or specialize in buying or selling small businesses, it’s not something most people will have experience with. Even still, it’s a great skill to have and can be easy to do if you follow a few rules of thumb. In this article, we’ll break down the basics so you can start performing your own calculations right away.

Know When and Why to Perform a Small Business Valuation

There are many reasons you might want to perform a small business valuation. You may need to if you’re:
- Applying for a loan or line of credit
- Trying to attract investors
- Buying out your partners
- Engaging in tax planning
- Trying to understand your business growth better
- Considering selling your business
- Planning to sell stock or offer employees equity
Gather What You Need to Perform a Small Business Valuation Ahead of Time

Depending on which valuation method you choose, you’ll likely need a variety of documents handy.
- Three to five years of business tax returns
- Three to five years of financial statements (balance sheet, income statement, cash flow statement, etc.)
- List of tangible business assets (cash, property, equipment, etc.)
- List of intangible assets (copyrights, patents, trademarks, licenses, etc.)
- Sales reports
- Business plan
- Industry forecasting documents
Bear in mind that even things like the business brand, reputation, and customer or subscriber base can have an impact on the overall valuation. You might even be able to argue that your low employee turnover rates increase the value of the business, as a new owner will have highly trained employees on board to create a smooth transition. However, if you’re considering including these and don’t have experience with business valuations, it may be better to hire a business valuation expert or have a professional appraisal performed, as an improper valuation can cause future financial issues or damage your reputation.

Choose the Right Valuation Method for Your Situation

There are many business valuation methods. Each is used in different circumstances and has its own pros and cons. Below, we’ll give a quick overview of the five most popular. The first four work for businesses of all sizes, while the final method is just for small businesses.

Adjusted Net Asset Method

If your balance sheet is well organized, using the adjusted net asset method is straightforward. For example, you might use this method if you’re valuing a company that is losing money or one that has modest earnings. In addition, small-business owners sometimes use the adjusted net asset method to set a floor price when selling a business. It’s also used to determine the value of a company that has real estate or serves as a holding company.

To use the adjusted net asset method, you’ll simply add up all your assets and then subtract your liabilities. However, the “adjusted” component comes in because you’ll also spend more time ensuring your asset valuation is accurate. For example, your receivables are an asset you’d include in your valuation, but if you know certain receivables aren’t going to be paid, you’ll subtract them. You’ll also need to take depreciation into account.

Capitalization of Cash Flow Method

There are two common ways to determine business value based on income. The capitalization of cash flow (CCF) method is the simpler of the two. It’s more often used with mature companies that don’t see significant cash flow shifts and are experiencing steady growth. You’ll need to know the business’s expected rate of return, also known as a capitalization rate or cap rate. You’ll generally narrow your numbers down by a set period of time, such as a quarter or year.

Cap Rate = Net Operating Income / Current Market Value

Most small businesses will have a cap rate of 20-25 percent.

From there, you can perform the final calculation: Business Value= Cash Flow / Cap Rate

Discounted Cash Flow Method

The second and more complex income-based method is the discounted cash flow (DCF) method. It’s unique in that it considers where a business might be years from now, so it’s used more with companies that are experiencing rapid growth and those that are reducing in size. So, for example, if you’re running a startup that isn’t profitable yet, but you think it will be soon, you’ll probably want to choose this method. You might also prefer to use the DCF method if you’re comparing multiple companies and want to gauge which one will deliver the most return on investment (ROI).

This calculation typically uses the weighted average cost of capital (WACC) as a discount rate in the formula.

If you’re only looking at one year, the formula is: DCF = Yearly Cash Flow / (1 + Discount Rate)

The same formula can be added to itself as many years as you’d like, substituting the appropriate anticipated yearly cash flow in the first portion as you go.

Market-Based Valuation Method

There’s no official formula for the market-based valuation method. You’ll simply look at the purchase price of similar businesses in your area. If there haven’t been recent purchases or no businesses of the same size and industry have recently sold, you can sometimes look outside your geographic area too.

Seller’s Discretionary Earnings Method

The seller’s discretionary earnings (SDE) method is exclusively used in small business valuation. It might be your best bet if you’re a business owner presenting your company to potential buyers because it can help them better understand what they might earn. It’s similar to earnings before interest, taxes, depreciation, and amortization (EBITDA) in that it looks at the profit of a business.

To calculate business value using the SDE method, you’ll start with the business’s earnings before interest and taxes (EBIT). Then, you’ll add back in all expenses that relate to the current owner including salary, health insurance, and other benefits. You’ll also add back any expenses that aren’t related to the business as well as non-essential and non-recurring expenses. For example, if you’ve been claiming educational or trip expenses against the business, you would add those back in. As a final step, you’ll also subtract liabilities from your net income. This includes any debts you’re currently paying or will have to pay.

Sometimes prospective buyers will argue sellers are adding things back in that shouldn’t be in an effort to bring the estimation back down. For example, let’s say you sponsored a little league team this year and paid for their jerseys. Since it’s a one-time expense, you add it back in. The buyer might contend it’s part of an ongoing marketing campaign and that they’ll need to sponsor again next year. Any items such as this that come up for debate will need to be resolved before the valuation is set.

It’s also worth noting that professional appraisers will use multiples when working with the SDE method. Multiples vary based on the business, industry, and other factors and make it easier to see what a business is really worth. For example, it’s conceivable that a company that makes parts to repair VCRs could have the same value as a company that produces smartphone parts if you’re looking at a one-year snapshot. However, the company making VCR parts has a limited audience that’s only getting smaller while the smartphone parts company has room to grow.

Know When to Get Help and When to Pivot

If calculating a small business valuation is too complicated or a lot hinges on getting it right, it may be better to bring in a business broker or specialist in valuations. On the flip side, you may find that having a formal valuation performed is a bit more trouble than it’s worth or won’t help you if your goal is to secure funding. In this case, you may prefer invoice factoring. With factoring, you get instant payment on your B2B receivables that you can then apply to your business in the way that makes the most sense to you. To learn more or get started, request a free rate quote from Charter Capital.
August 20, 2021
6 Business Growth Strategies for Successful Small Businesses
You’ve created a product or service that your target audience appreciates, developed a brand, and finetuned your processes. You’re profitable and doing well, but your small business isn’t growing. What gives?

Developing effective business growth strategies is a serious challenge. Just one in five manage to scale their businesses, according to McKinsey research. Despite this, more than 60 percent can succeed, provided their business growth plan is detailed and addresses key areas. On this page, we’ll outline six foundations of successful growth strategies so that you can take your enterprise to the next level.

The Impact of a Successful Business Growth Strategy on Your Company

All too often, entrepreneurs and company leaders focus on the creation of the company as a revenue stream. Still, more than two-thirds of value creation is achieved through scale-ups, McKinsey consultants say. That’s because a focused business strategy lets you cut out the noise and target your resources on a single aspect of the business.

Strategies for Effective Business Growth

With the right formula, most businesses can thrive and grow. Use the strategies outlined below and follow the steps to ensure you’re primed for success.

1. Identifying your Target Market for Business Expansion

Before you begin to develop expansion strategies, it’s important to consider which specific area of your business you want to develop more. You can’t grow every area at once, or you’ll dilute your resources. However, a few common tactics are outlined below.

Market Penetration – Maximizing Your Marketing Efforts

A market penetration strategy aims to successfully launch a new product or increase the market share for an existing one. Examples include:
- Reducing your prices to attract a wider audience
- Running specials
- Creating packages of your products or services
Alternative Channels

It’s a big world, and there are many ways for you to reach new customers or increase the spend of your current customer base. Examples of channels you might try include:
- Business website or online storefront
- Email
- Social media
- Digital ads
- Permanent brick-and-mortar shops
- Temporary pop-up shops
Market Development – Reaching a New Target Audience

With a market development strategy, you’ll be trying to get your existing products or services into the hands of new customers in new markets. Examples include:
- Expanding your territory
- Selling in new locations
- Reaching a new potential buyer with a different message. For example, you may sell yoga mats online, but perhaps you could create a model in which yoga teachers or gyms sell your mats for you and get a cut of the sale.
Market Segmentation – Streamlining Your Marketing Efforts

Often, segmentation is thought of in terms of marketing. You’ll want to reach individual customers with a message that resonates specifically with them. Perhaps you have customers of all ages, but you know your younger audience will prefer different language and contact methods than your older audience, so you’ll make different ads and brochures for them. When you use market segmentation as part of your growth strategy, you’ll zero in on a specific group and cater to them so that you can build out your customer base with that particular group.

Product Expansion – Aiming for Sustainable Growth

Sometimes, changing up your line can make it more appealing to new customers and your current customer base. Examples include:
- Creating new products
- Adding new features to existing products
- Modernizing your offerings
Diversification – A Risky but Potentially Rewarding Growth Strategy

With a diversification strategy, you’ll be trying to launch a new product or service in a new market. It can be particularly challenging for small businesses to make this work because it generally requires immense amounts of market research and resources. Plus, it can be hard to recover if you don’t nail it. However, if your new market is similar to an existing market you serve and there’s a fair amount of crossover, it can work. For example, let’s say you run a trucking company and you operate a fleet of refrigerated trucks for the restaurant industry. It might not be a far stretch to purchase additional equipment and begin delivering supplies or chemicals. Again, though, research is paramount.

2. Conduct Research on Whether your Chosen Area of Growth is Feasible

As you explore potential target areas, ask yourself two questions:
- How will expanding in this area help my business in the long run?
- Is this focal area feasible?
You may need to conduct market research to get a definitive answer. Consider polling current and potential customers or hosting some focus groups if you can’t find existing data to clarify the feasibility of your plan. For example, you may think expanding your territory is a good idea and have your sights set on operating in a neighboring county or state.

3. Invest in Good Staff

Your team can make or break the customer experience, so you’ll want to have the right mix of people on board and ready to help when your business levels up. When hiring, consider:
- The total number of people you’ll need.
- The skills each team member needs to have as well as unique skillsets you’ll require.
- The culture you’re trying to create and the personalities, traits, and behaviors your business needs to achieve it.
4. Setting Tangible Business Goals for Growth

To measure your success later, you’ll need to set clear goals now. Most are familiar with the SMART Goals framework. That means the goals you set are specific, measurable, attainable, relevant, and time-bound.

To give an example, let’s say you want to focus on product development. Your goal is to modify some of your current products, so they’re new products. Maybe you sell wooden horses, and you can easily convert them into unicorns. Instead of stopping there, you’ll want to quantify the number of unicorns you intend to make and set a clear date by which you wish to have them ready. Your final goal could be, “Have 500 unicorns ready for market by November 1.”

To improve your odds of success, break this goal down into smaller milestones. You might need to note when you’ll need supplies by, how many you should have ready by specific dates, and so forth.

5. Allocating Resources for Achieving Business Growth Goals

No matter what your goal is, you’ll need resources to reach it. Consider making a two-pronged list that includes non-negotiable resources you must have to execute your plan and resources that can help you grow your business faster or more efficiently. A few areas that can serve as jumping-off points are covered below.

Funding

If you don’t already have cash and aren’t sure which solution is best for your situation, read “What Working Capital Options Are There for Small Businesses?” for an overview of solutions.

Professional Service Providers

You may need someone to handle your marketing campaigns and advertising, a consultant to help you nail down your market expansion strategy, a lawyer to examine contracts or help from another specialist. Connect with professionals ahead of time and build the expense into your budget too.

Tools and Equipment

Some costs are obvious. For example, maybe you operate a trucking company and are adding another trailer as part of your growth strategy. But, there are usually hidden costs too. In this case, there may be licensing and insurance too. You might also discover it’s hard to track all your trucks and trailers after your expansion, so you could need to include software too. Brainstorm with your team to uncover potential needs to ensure you’re prepared for them.

Raw Resources and Supplies

Take time to evaluate both obvious and hidden costs here too. For example, you may need extra wood and paint to make your unicorns, but you’ll also require additional packaging material for shipping if all goes well.

6. Look at What Your Competitors Are Doing

Watching what your competitors are doing too closely can kill innovation, but you should have at least some general knowledge of what they’re doing. That way, you can capitalize on any opportunities they’re missing and bring your offerings up to speed if they’re doing something that will chip away at your share of the market.

Financing Your Business Growth with Debt-Free Working Capital

If you’re in the B2B sector and invoice your clients after work is performed or goods are delivered, invoice factoring can give you cash injections as needed to help you scale your business. Top factoring companies like Charter Capital provide working capital solutions without adding debt, allowing businesses to grow sustainably. It’s similar to getting an advance on an invoice, but there’s no debt to pay back because your client ultimately pays their invoice, and most businesses can leverage it because it doesn’t have the same stringent requirements that bank funding options do. To learn more or begin the approval process, request a quote from Charter Capital, or contact us today for more information!
June 25, 2021
No Better Time than the New Year to Prepare for Your Next Business Success

“If you don’t know where you are going, you’ll end up someplace else.” – Yogi Berra, former New York Yankees catcher

The confetti’s been swept up, the noisemakers have been put away, the toasts have all been made, the last auld lang syne’s faded, and, surprisingly, resolutions have already been broken. New Year’s Day is over. It’s time to get back to work.

Not the words you want to hear, of course. But there is an upside… do some smart business planning today and at this time next year, you could have a reason to celebrate even more.

The opening days of the year represent a great opportunity to lay out a road map for future success. A solid, well-founded plan with clear goals can ensure you’ll end up right where you want to be instead of someplace else wondering what went wrong.

Getting from Point A to B

A lot of businesses like to tell interviewees and new employees that there’s no such thing as a typical day at their company. Perhaps that’s true. But here’s something else that’s true: No successful business has ever been run in a random or haphazard manner. Oh, it may seem that way during a hectic time or an emergency. If you want to be a successful small business owner and entrepreneur, making and having a clearly defined set of goals and targets is a must.

As the New Year gets under way, look back at how the past year has gone. What have you accomplished? What is still in progress? What did you fail to achieve? Examine each of these scenarios carefully. It’s not only important to understand why you lost, but how you won as well. Each offers valuable lessons. When you lost, was it because of poor planning, bad execution, a target set too high, or events simply out of your control? What could you have done differently? Don’t overlook your wins. For those areas in which you were successful, what did you do right? Was it due to your preparation? A heroic effort by a part of your staff? A misstep by a competitor? Were you simply in the right place at the right time? It’s never a bad idea to learn not only from your mistakes, but from your successes as well. After all, you want to succeed again, right?

Once you’ve looked back, take an objective view ahead. How can you avoid last year’s setbacks? How can you turn a loss last year into a win the next? How can you improve upon last year’s triumphs? How can you push yourself and your staff to even greater heights?

It’s important to set attainable goals and reachable targets. Place the bar out of reach and you’re just setting you and your team up for disappointment. With reasonable goals in front, everyone knows it’s possible to not only work hard, but that management understands the best challenge is one that pushes and rewards as well. That makes for a better workplace with everyone working toward the same end.

It’s all about the bottom line

The primary business of a business is to make money, otherwise it wouldn’t be a business, it would be a charity, right? If the customer is king, then the bottom line is the emperor. How was your bottom line last year? If it was healthy, congratulations! If it was a little anemic, now’s the time to give it an infusion.

Ask yourself what steps can you take in the new year to either keep your success going in the months ahead or what decisions need to be made to ensure your bottom line is a dark black instead of a blazing red.

Perhaps an acquisition can grow your business? Maybe a new partner would give you some fresh blood or new ideas? Could a move to a bigger space help you accomplish more? Or would a reduction be more in order? Do you need more staff to satisfy growing sales? Better marketing to help you identify more prospects? Don’t be afraid to examine every component of your business. Look closely at how revenue is coming into your firm. Is it generating profit? Or being eaten up by debt or expenses? There’s no better time than when the calendar flips to determine the answers to these questions.

New products and services

One way to generate greater revenues is to open up new revenue streams. That means additional products and services. If you already have a product or service in the works, give them a news release on your website or social media trumpeting this fact. Get them looking ahead and pique their anticipation about what’s to come.

If you don’t have anything yet upcoming, get your team together and brainstorm about ways you can deliver more value to your market. You can also gather a group of your clients and ask them directly about what new products or services you can add to your portfolio to meet their needs. Facetime with your clients helps build rapport, trust and understanding.

Key performance indicators

One of the most important business questions of all is: How do you define success and failure? If you as the business owner don’t know, who else will?

Still being in business on January 1 isn’t the best definition of success. You need something a little more definitive than that. As you set your goals and target for the year ahead, be sure to list important milestones and indicators to meet along the way that show you’re either on the path to reach your ultimate goals or are in danger of falling short. Tie these to months or quarters and review regularly. Pulling up the spreadsheet in late November and discovering your production targets are far behind or your sales nowhere near where they need to be is, well, not a good idea.

If your key performance indicators show you’re behind, you’ll need either to increase your effort or adjust your targets downward. If indicators show that you are ahead of your goals, give yourself a big pat on the back for your hard work and keep up the pace.

With some thoughtful planning and careful consideration, you’ll have a clear idea of where you’re going in in the new year. You stand a better chance of getting where you want to be instead of somewhere else.

January 14, 2020
Improving Your Odds of Getting a Small Business Loan and Identifying Your Alternatives
For a bettor or a gambler, few things are as revered as a “sure thing.” That’s because few things are ever truly assured. OK, in horse racing, seeing Secretariat’s, Seattle Slew’s or Seabiscuit’s name in the lineup is never a bad sign. The same can be said for holding a royal flush in a high-stakes poker game. But how many times do these happen? In most endeavors, success is never a sure thing, which is why so many people want to stack the odds as much in their favor as possible before taking a chance. And even then, there’s still the possibility of walking away empty-handed.

A small business owner faces that dilemma each and every time they apply for a loan. Getting a small business loan is far from a sure thing. In fact, the odds are often greater of failure than success.

An estimated 30 percent of all businesses fail not because they had a bad idea or they lacked customers but because they ran out of money to keep the operation afloat. So, access to capital, be it to launch a small business or to grow it, is vital.

Small businesses can be capital hungry ventures

They borrow approximately $600 billion a year, a Small Business Administration study has found. About 40 percent of small business owners applied for a loan in 2017, according to the Federal Reserve. The average loan size was $633,000. However, more than half of borrowers applied for loans of $100,000 or less.

Banks and other traditional financial institutions typically reject far more small business loan applications than they approve. Alternative lenders are a slightly better bet with a little more than half approved. But even then, it’s not much more than a 50-50 proposition. Not the best of odds. Is there anything you can do before you apply for a loan to improve your chances? Can you swing the odds more in your favor? The answer is yes, and there are alternatives too.

Build Up Your Personal Credit Score and Business Credit Score

When applying for a loan, no matter what kind of loan, one of the first things a financial institution will look at is your credit history. Personal credit scores show the lender (especially traditional lenders such as banks) your ability to repay personal debts, such as credit cards, mortgages, and car loans. They also look at if you repay your bills on time, how often you have late payments, and the lines of credit you have taken in the past. If you are applying for a small business loan, financial institutions will look at your personal credit score to see how you manage debt.

More established businesses, or companies that have been around for longer, will have business credit scores

Your personal credit score is known as a FICO score and usually ranges from 300 to 850 (the higher your score, the better), while business credit scores usually range from 0 or 1 to 100. Credit bureaus like Experian, Equifax, and Dun & Bradstreet are able to provide you with one free credit report per year.

You can build your business credit by establishing trade lines and keeping your public records clean

To qualify for an SBA loan or a traditional bank loan, you’ll need excellent business credit and good personal credit. However, online lenders may be more lenient because your business’s cash flow and track record are typically considered more important than your credit score.
- Have a solid business plan: Lenders are not gamblers. They are risk-averse. It’s simply their nature. Your job is to convince them you’re a sure thing. How? By having a complete, thorough, and well-presented business plan, accompanied by a concise executive summary. Demonstrate your knowledge, foresight and planning skills. Show you’ve thought of every conceivable contingency as well as a way to overcome any potential issues. Let your passion shine through, but also display your sound judgment and fiduciary responsibility.
- Have some skin in the game: Don’t walk into the lender’s offices expecting them to finance your business 100 percent. Even with the best business plan in hand, you still represent a risk. The lender is going to want to see you’re willing to share at least some of that bet with your own money. The more equity you have in the business when asking for a loan, the greater your odds of approval. Anything less than a 25 percent stake jeopardizes your chances of success.
- Invest first in things that generate income: Lenders want to see a revenue stream that can be put back into the business to grow and expand towards continued success. What they don’t want to see are things that constantly take away from that revenue. One example is your business’s physical location. Do you plan to purchase or construct a building or rent space? If it’s the former, the bank will likely frown on that, considering those costs to be a drain on future revenues and your ability to repay the loan. Rent space in the beginning. You won’t be tied down and if trouble comes, you can easily downsize as needed. Plus, it will show the lender your first interest is generating income not expenses, something they want to see.
- Shop around: As we’ve already seen, small business loan approval rates vary greatly among different types of lenders. Generally, the bigger the lender, the less likely a small business is to get a loan, as larger banks often favor more established borrowers and stricter approval criteria. Focus more on smaller institutions. Not only do they have a higher approval rate, but they are also more likely to give you greater attention and service. If you’re considering an alternative lender, such as an online loan provider, first check out our previous article on the potential pitfalls of going this route.
Five Essential Tips to Enhance Your Small Business Loan Application

Securing a small business loan can feel like navigating a complex labyrinth, especially for first-time applicants. However, understanding what lenders are looking for and preparing accordingly can significantly increase your chances of approval. Here are five tips that can make the difference:
- Solidify Your Business Plan: A detailed and well-articulated business plan is not just a document; it’s a reflection of your foresight, strategy, and preparedness. It should outline your market analysis, financial management strategies, and a clear summary of your business’s goals and operations. Lenders want to see a viable path to profitability and growth, as it directly impacts your ability to repay the loan.
- Strengthen Your Credit Score: Both your personal and business credit scores are critical to your loan application. They indicate your repayment history and financial responsibility. Before applying, check your credit report for any inaccuracies and take steps to improve your credit score, such as reducing credit utilization and ensuring all bills are paid on time.
- Demonstrate Strong Cash Flow: Cash flow is king in the eyes of a lender. It’s the lifeline of your business and a key indicator of your ability to manage financial obligations. Prepare to show detailed financial statements and projections that illustrate a robust cash flow, sufficient not only to cover operational costs but also to comfortably repay the loan.
- Prepare Comprehensive Business Documents: Beyond the business plan, be ready with all necessary documentation that a lender may require. This includes financial statements, tax returns, legal documents, and a detailed plan on how the funds will be used to grow your business. Being thorough and organized can speed up the application process and increase your chances of getting approved.
- Explore Alternative Lenders and Loan Types: Don’t limit your search to traditional banks. Credit unions, online lenders, and SBA loans offer various terms and conditions that might be more suited to your business’s needs. Each lender has a different criterion and understanding these can help you apply to the right institution, thereby enhancing your chances of securing a loan.
By focusing on these five areas, small business owners can not only improve their odds of loan approval but also position their business for successful growth and expansion. Remember, preparation and understanding the lender’s perspective are key to navigating the loan application process successfully.

There’s another way to get same day funding

Engage an invoice factoring company to fund you the amount of your outstanding accounts receivable invoices upfront, giving you the cash you need today to run your business today, and eliminating the worry and hassle of waiting to collect payments from your customer accounts. You’re left free to run your business. Invoice factoring is a convenient alternative to a traditional bank loan or fee-laden online loans.

Factoring gives you the money you need when you need it with no long-term obligations. You can also get cash quicker through invoice factoring – usually within a day or two. To learn more, simply call toll-free 1-877-960-1818 or email [email protected].
September 30, 2019
Bottom Line: Prepare Now for the Next Downturn

Not long ago, a well-known professional wrestler had a popular catchphrase he would shout out during TV promos. “That’s the bottom line, ‘cause Stone Cold Steve Austin said so!” This meant the audience could bank on what the hulking grappler had said would come true, usually to someone else’s grief. Stealing a phrase from Mr. Austin, what’s the “bottom line” on the current economy? And is there something coming that could cause small business owners grief?

Right now, as of mid-August 2019, the line looks encouraging. Unemployment stands at a low 3.7 percent. The latest small business confidence index has fallen slightly to 103.3, but still remains historically high. The annual inflation rate for the 12 months ending in June 2019 tallied a modest 1.6 percent. Even stocks continue to rise, with the current bull market now past its 10th anniversary, making it the longest on record. One small negative blip recently appeared when the Purchasing Managers Index fell to 51.2 in July, its lowest level in three years.

If there’s one thing certain about good times, it’s that they don’t last forever. Somewhere, sometime in the future a downturn in business or some other crisis will occur. As Austin would put it, “that’s the bottom line.” History has shown it time and again. Austin made a career out of sneaking up on unsuspecting opponents and applying his dreaded “Stone Cold Stunner” with devastating results. But unlike a clueless brawler, you don’t have to be caught by surprise. Here are a few heavyweight suggestions that may ensure that even when times do get tough, you’re still standing when the match bell rings.

Don’t Cut Advertising, Publicity and Marketing – It’s always cheaper to try to wrestle new sales from existing customers than to find new ones. As a result, many small business owners believe the first department to cut in a downturn is marketing. That belief can prove fatal. True, building upon and expanding existing client relationships is never bad policy, but not going after new customers is. Without new customers continually refreshing and growing the sales pipeline, an operation quickly stagnates and ultimately shrinks or even dies. A downturn is a great time to renew marketing, advertising and publicity. For one thing, your competition may be foolishly cutting back, leaving an opportunity for you to build market share at their expense. For another, customers may be using the downturn to search for new vendors and better deals. If you’ve cut back on or eliminated marketing, you may not find them nor they you.

Recession-Proof Your Personal Credit – Just as a homeowner prepares for winter by weatherproofing a house in the fall, wise small business owners use prosperous times to ensure their personal credit can withstand tough economic times. Small business loans are hard enough to get as is, with nearly 50 percent getting denied. Those loans are even tougher to secure in a recession, as banks keep money close and become risk averse. This means you may have to use your personal credit to keep your business afloat. Do what you can now to boost your credit rating and available credit lines.

Manage Inventory, Vendors and Debt – When you’re in a hole, the first step in getting out is to stop digging. In a downturn, excessive inventory, costly vendor contracts and excessive debt can tag team your business, making a bad situation even worse. As a recession begins, take steps to reduce inventory, renegotiate vendor contracts or seek out new ones, and pare down debt. These actions will turn your organization in to a lean, mean fighting machine able to better withstand a downturn.

Focus on What You Do Best – When times are good, businesses naturally expand into new areas and diversify their offerings outside their primary area of expertise. This is a good and healthy thing. But when times get bad, these extras may drag you down. Every business has a core competency that forms the basis of their business and sets them apart in the marketplace. Focus on this strength during a downturn. If you’re a widget maker that does event planning on the side, event planning probably distracts you and wastes resources better spent on the real center of your business and earnings.

Protect and Improve Cash Flow, the Lifeblood of Your Company – It’s no revelation that in tough economic times, access to money tightens. The best way to keep your business off the mat in a recession is to keep a healthy stream of cash coming in. This means, as mentioned in the first tip, to resist the urge to drop marketing efforts that identify new customers. It also means ensuring those who have done business with you pay you for your products and services in a timely manner. In an economic downturn, businesses will naturally try to delay paying expenses and invoices if possible to keep funds on hand. A 30-day invoice can quickly turn into a request for 60 or 90 days, greatly impacting your cash flow and harming your small business’ ability to function.

In a recession, one proven method to improve cash flow and protect your business is to engage the services of a factoring company. The factoring company can fund you the amount of your outstanding accounts receivable invoices upfront, giving you the cash you need today to run your business today, and eliminating the worry and hassle of slow pay collections. You’re left free to run your business.

Invoice factoring is a convenient alternative to a traditional bank loan or fee-laden online loans. Factoring gives you the money you need when you need it with no long-term obligations. You can also get cash quicker through invoice factoring – usually within a day or two. To learn more, simply call toll-free 1-877-960-1818 or email [email protected].

August 15, 2019
Put Some Wind in Your Sails During the Slow Season

Mariners once dreaded sailing the seas around the Earth’s equator. Not for the heat or the sharks or the waves. Rather for the lack of wind. Sailing ships would often become stuck for days or weeks, unable to move due to the shortage of any breeze. The nautical term for this area is the doldrums, meaning windless waters.

Nowadays, the doldrums carry other meanings, as well. One of the most used is to denote a period of stagnation or inactivity. Like an ancient sailing ship leaving the trade winds, businesses also go through doldrums. Often these doldrums occur during a specific season and can be forecasted in advance.

For example, new home construction slows during the winter months as bad weather makes work difficult. Furnace repair contractors don’t get many service calls during the summer. The hospitality business grinds to a halt after Labor Day and the end of vacation season. Companies need to plan and budget accordingly to make it through these slower times until their next peak season rolls around.

Your business probably also has its own doldrums or slow season. For you it may be in the spring. Or perhaps in the summer, when customers and employees alike take off for some needed escape from work. No matter when your doldrums occur, you need to have a plan of action to properly deal with them and to make sure your sails are in tip-top shape when the trade winds return, and business takes off. Here are some quick tips to get you going:

Work on your business instead of for it – When sales are popping, you’re often too busy to take care of some basic house… well, make that business-keeping chores. Now that times have slowed, it’s the perfect opportunity to take care of many tasks you just had to put off. Such as…

Update your marketing plan – A good marketing plan never stands still. It’s always moving, dynamic and flexible. Look back over the past 12 months. What didn’t quite go as planned with your marketing plan and could use some tweaking or revamping? What went right and should be done again? And, what went totally wrong and needs to be sent to Davy Jones’ locker at the bottom of the sea?

Give your website a fresh face – Have you looked at your website lately? Your customers do. Is it a proper and energetic reflection of your company that engages customers and encourages them to do business with you? Or is it a reflection that you really don’t know much about modern marketing? Even worse, is it a reflection that the last time you updated your website it was in the age of dial-up modems? A static, never-changing website can give your customers the impression that nothing’s going on with your company. A new, dynamic design, on the other hand, tells your prospects you’re a company on the move, ever striving to improve your products, services and your ability to help them. There’s no better time than your doldrum period to ask yourself these questions and act to ensure your site best showcases your firm’s knowledge, expertise and solutions-oriented approach.

Reconnect with old clients – There’s so little time to talk and interact in this fast-paced world of the early 21st century. The doldrums are a great time to reconnect with those with whom you’ve lost touch. No, not Aunt Mabel. In this case, your old clients. Give them a call, or better, stop by their office to catch up. If they still do business with you, let them know how important they are and update them on any new offerings that could help them. If they’re no longer clients, call anyway. Let them know you appreciated their business in the past and that you were thinking of them. Update them on your company’s progress and see if there’s any chance to rekindle a business relationship. Don’t forget, it’s much cheaper to get old clients to either do more business with you or come back to the fold than it is to prospect for new business.

Get organized – Remember last tax season when it took you two days to find that important documentation? And remember how you swore it would never happen again… you were going to get organized next time around. Well, guess what? Now’s your chance to do that. Organize your office, files, marketing materials, supply cabinet, and whatever cluttered, disorganized, and frustrating thing that has driven you to distraction.

Efficiency is the mother of success – Closely related to the above tip, the doldrums allow you to not only make your operation more organized but efficient as well. Every operation, no matter how perfect at its start, has inefficiencies creep in over time. Your boat’s engine may purr as you glide out of the marina, but overlook the occasional necessary tune-up, and you have an engine guaranteed to leave you stranded somewhere. Examine your operation; Look at each step from the moment you meet a prospect to the making of a product or until you deliver the service. Examine your billing process and your follow-up. No matter how many steps you have in your company’s process, there’s a good chance you need at least a little tweaking at best, or at worst, a complete overhaul. Make productive use of your slow season to get back on course!

Help your bottom line – Your finances may need a boost during the doldrums as business drops. This can cause cash flow problems for small businesses. If revenues drop more than expected or you haven’t set aside sufficient funds to tide you over, your business could be in jeopardy. In slow seasons, many small business owners may turn to small business loans, cash advances, or line of credit in an attempt to get working capital needed to keep their business afloat. If your cash-inflow is not where it should be, you may not have the money you need to pay suppliers, cover payroll, perform any maintenance, or buy equipment.

There is an option that could put some wind in your sails during these doldrums. This convenient alternative to a traditional business loan is called invoice factoring. Invoice factoring allows you to “sell” your accounts receivable invoices to a third party lender (factoring company) for a discount fee known as a factoring fee. This third party pays you upfront for outstanding invoices, giving you the working capital you need today to run your business, and eliminating the worry and hassle of slow pay collections.

In comparison to invoice discounting or invoice financing services, where you will still need to do the debt collection, invoice factoring offers you a more convenient cash-flow solution. After you go through a quick and easy application process on an online platform, the factoring agency will perform credit checks on your clients (not on you, so your personal credit history is not a problem) to determine any risk involved. Once the service has been approved, the invoice finance provider will pay you a percentage of the invoice amount, and collect on the invoices for you. Giving you more time to perform your business operations. You’re left free to run your business.

Invoice factoring is a convenient alternative to a traditional bank loan or fee-laden online loans. Factoring gives you the money you need when you need it with no long-term obligations. You can also get cash quicker through invoice factoring – the money for your unpaid invoices is usually paid into your bank account within as little as one business day.

You may ask yourself, “Who can use invoice factoring?” Invoice factoring services are best suited to B2B or service-based businesses and SMEs, which is why it is often used by those in industries like manufacturing, real estate, consulting, and healthcare.

If you would like to learn more about how invoice factoring works, simply call toll-free 1-877-960-1818 or email [email protected].

June 12, 2019
Considering Online Funding? Don’t Get Played for a Sucker

Considering Online Funding : As a small business owner, no one needs to tell you that getting a loan from traditional banks can be a real crapshoot, whether it’s a business or a personal loan. Far more often than not, when a small business rolls the dice and asks for a loan, they get double sixes and walk away empty-handed. Nationally, banks reject small business loan applications 80 percent of the time, on average.

A new form of online funding has arisen in recent years. This source promises to be more willing to loan small businesses the money they need to start a company, hire employees, pay your employees’ next paychecks, expand operations, and buy or lease new equipment. Online funding/loan and cash advances have filled a big gap in the capital pipeline, but in several cases, the payout has not been worth the gamble. Many small businesses have been stuck with high-interest loans laden with hidden fees and sky-high monthly payments.

This isn’t to say there aren’t good online lending companies. There are those who are more lenient with their repayment terms. But as with anything on the Internet, there are a lot of unscrupulous operators online and they aren’t looking to help you or your business. Quite the opposite… they’re out to scam you. Like a crooked card dealer, they want to deal you a bad hand so they can steal your credit, your good name and anything else they can grab before you catch on that you’ve been had.

No one likes being played for a sucker, especially when you are just trying to handle your business’s financial needs. So, how can you protect your small business and even the odds so that, when you make an online funding/loan application or apply for a cash advance, you’re not really funding someone else’s scam?

Here are five things to keep vigilant for when investigating any online funding or cash advance company:

No contact information:

Before you do anything else, the first sign to look for to see if an online lender is legit is the simplest task to perform. If you can’t easily find the company’s address and telephone number on the website, that’s a very bad sign. When you do find the info, if the address is only a P.O. Box, leave. If there’s a physical address, look it up on Google Maps Street View feature. Is it an office? Or is it a home, apartment or worst of all, an empty field? If an office, how many other companies share that same address? Believe it or not, there are firms that lease the same office suite to dozens of companies so that they will have a physical address. No one is ever in that office, of course.

Closely related to that is the email address. A legitimate company will have its own email address that matches the firm’s URL. If the contact information is for a generic address, such as g-mail, y-mail, Hotmail or some other free email service, bail out.

Guaranteed loan:

This should be an obvious red flag. No legitimate lender would ever guarantee a loan before knowing anything about you. Read the fine print… this loan is sure to come with an interest rate in the stratosphere or have fees for nearly everything under the sun. Even worse, they may promise a guaranteed loan but leave you instead with a guaranteed nightmare when they steal your information. Save yourself the trouble. Walk away from any “deal” like this.

Too aggressive:

Who hasn’t bought a used car at some point in their life? If you’ve ever had a pushy salesperson, what was your instinct? To run, right? Same with online loans. If you’ve contacted the lender and that person seems pushy, wants you to make a quick decision, seems hesitant to answer more than a few questions, or gets angry when you ask for additional options, then you’re very likely dealing with someone out to pad their bank account, not yours. Take a pass.

Money upfront:

If you’re asked for money upfront to get a loan, flee immediately. No legitimate lender will ask for money upfront before approving a loan. When you pay money upfront, what’s very likely to happen is that money – and the lender – will quickly disappear. Don’t do it. Ever.

The best advice of all – if it sounds too good to be true, it probably is:

We saved the best one for last. Actually, this is the only one you really need, isn’t it? Like any other business, lenders need to make money on their services. As a small business owner, you certainly don’t begrudge anyone for making money. But if someone offers you a “deal” that sounds like a dream come true, you need to ask yourself is it really a dream, or a nightmare waiting to happen. Why would someone offer a loan that seems to offer all the benefit to you? They wouldn’t. Any business needs to make a return. Even unsecured loans, which don’t ask for collateral, still look at your creditworthiness (if you have a good credit history) to determine risk.

If you’re staring at a loan deal that sounds to good to be true, you can bet it is. The lender will get something in return – something you may not have counted on. For example, online lenders often express interest as “simple interest.” The truth is “simple interest” is anything but simple and the actual APR (the annual percentage rate) can often be four to eight times the amount stated. And, in some cases even more! Make sure that your terms are not expressed as simple interest, so you know your true cost of borrowing. This is not to say every “too good to be true” deal is a scam. Just like not every online lender that matches one of these tips is a scammer. But do you really want to take that chance? Move on while you can.

If you are considering an online loan or cash advance, do your due diligence. If something doesn’t seem right, if you aren’t comfortable, then that’s your intuition warning you of danger. Heed those warnings.

There is another, less-risky way to raise money for your small business. This option is called invoice factoring. Invoice factoring allows you to “sell” your accounts receivable invoices to a third party. This third party pays you upfront for outstanding invoices, giving you the cash you need today to run your business, and eliminating the worry and hassle of slow pay collections, leaving you free to run your business.

Invoice factoring is a convenient alternative to a traditional commercial bank loan or fee-laden online loans. Factoring gives you the money you need when you need it with a flexible term length and no long-term obligations. You can also get cash quicker through invoice factoring – usually within a day or two. You also don’t need to worry about having excellent credit because factoring companies will look at your customers’ credit profiles rather than that of your business. A factoring company will also not require you to have a specific loan purpose: if you sell your invoices, you can spend the money on what your business needs, whether it be for payroll, equipment, or maintenance.

If you would like to learn more about how invoice factoring works, simply call toll-free 1-877-960-1818 or email [email protected]. You may find it to be the best hand you’ve been dealt in a long time.

May 21, 2019