11
Jan

Business Tips for Improving Your Working Capital

The lifeblood of a business is its cash flow. A business owners main goal is keep that cash flowing and to use it for generating profit. When a business running smoothly and taking in profit, then it will undoubtedly have cash surpluses. If these things are not happening for you and your business does not have this cash surplus, expect to run out of cash and go out of business.

In today’s world of business, cash has once again become king. Actually, cash is earnings and worth more than inventory to many businesses as their financial managers try to maximize it whenever and wherever it is possible. Here are a few ways you can improve your business through gaining working capital:

  • Proper cash flow forecasting is what working capital management is all about. Yours should include the impact of unforeseen events, fluctuating market cycles, loss of a large customer, and your competition. Unforeseen demands and its effect on your business all need to be factored in.
  • There is nothing wrong with putting together a contingency plans just in case of unexpected events. It’s true that market leaders manage uncertainty much better than in years past, but you really should have risk management procedures for your company as insurance. Base it on both an objective and realistic view of how working capital is used in your business.
  • There is definitely an advantage to addressing working capital on a corporate-wide basis. The cash you generate at one business location is often times better used at another provided one is more profitable than another. However, for this type of internal business exchange to work you must have certain practices already in place. Your business better have efficient banking channels and an open line of communication between production and billing as well as an internal systems to move cash to and from the locations.
  • A new and different approach can be used to make use of the combination of operational and financial skills provides an encompassing outlook of your business’s overall operations. It also has shown to improve the identifying and implementing strategies used to generate short term cash. Only businesses with executives willing to personally define targets and performance levels make this happen. They need to be held accountable for delivering what they promise as well as pushing everything into motion as agents of change.
  • As a business owner, you need procedures in place that properly deal with dispute management. You want your customers to basically go away during disputes and free up that locked up cash. Not only that but it can also improve your overall customer service by using that energy towards sales, order entry, and cash collection. You’ll be pleasantly surprised how much of an increase you’ll see in your business’s efficiency on top of a reduction in operating costs.
  • Contact a few of your best customers and ask them what can be done to improve your operations. Many businesses tend to focus solely from their point of view instead of seeing how others perceive it. One recent study showed that by listening to their customers, a wholesale company saved a great deal of money through inventory reduction levels.
11
Jan

Cut Costs by Ordering Concession Stand Equipment Online

Whether operating a restaurant under a large umbrella franchise, or running a small, independent concession stand, the rules of business remain the same: Buy low, sell high, and reduce costs wherever and whenever you can. Online shopping is truly here to stay, with many online wholesalers and retail outlets conducting most of their business over the web. Large restaurant equipment takes up a lot of space, so stocking inventory and maintaining full shopfront facilities introduces overheads that are simply unnecessary for modern business.

Online business reduces costs for everyone. Retailers can save on inventory and shop floor costs, and accordingly, they are also able to offer more competitive pricing on kitchen equipment for their customers like you. While credit card fraud and scams are plaguing smaller inexperienced retailers who conduct business only online, more experienced online vendors are typically able to offer you better pricing and a more trustworthy exchange. These more knowledgable merchants offer the confidence you expect in a company before making any big purchases.

Concession equipment and restaurant equipment are pretty diverse areas of business, with the product range available to you from professional online retailers including crockery and cookware, cutlery, air purifiers and extractors, barbecues and stove tops, bar accessories, bus and service carts, coffee machines and espresso makers, dishwashers, display cases, drink dispensers, display refrigerators, walk-in and chest freezers, ovens, ice-makers, meat cutters, fruit juicers and shelving, to name just a few. The good online retailers have access to the full range of kitchen equipment that any other seller does, and with their limited requirement for warehousing and inventory space, they are often able to supply you with a much wider product selection than the competition.

Good sellers have access to a wider range of manufacturers also, and as there is no shortage of specialized articles of kitchen equipment, there are hundreds of respected brands to supply good quality equipment for your restaurant or concession stand. With such a wide variety to choose from, competition allows you to make the best selection according to your needs while being guaranteed a cost-effective price-point. Sellers who have access to a wide range of manufacturers evidently have built up a degree of credibility in the business.

As mentioned, one of the ways online retailers of concession equipment cut costs is to reduce or eliminate storage costs. The best retailers do maintain some warehouse facilities by shipping orders first to their own building before moving purchases onto customers. This allows you an extra level of quality assurance from manufactured defects. Some sellers elect to include shipping costs in their list price, ensuring that you pay nothing above the advertised price, even for postage and handling within the US.

Despite the many perils of conducting business online, there are respectable kitchen equipment retailers online who maintain the same shipping, returns, and warranty policies as competing wholesalers who operate conventionally, allowing you restitution in the event of concealed damage during shipping, or premature equipment breakdown. Dealing with a reasonable company who can offer some recourse is always preferable to forcing a point in a dispute by going through credit card companies or the courts, as may be required when dealing with amateur online retailers on fraud-ridden auction sites.

Doing business online can be affordable, be safe, and offer the widest product selection when dealing with good retailers. The best sellers are able to ship products anywhere within the contiguous 48 States, and offer the same reasonable returns and warranties required by consumer affairs laws.

11
Jan

International Trade

International trade can be broadly termed as exchange of goods and services between two countries or across two international boundaries. Trade between nations existed from ancient times. International trade often had a significant influence in determining the socio-economic, political and cultural scenario of a country.

International trade between two countries is heavily influenced by the existing bilateral relations between the nations. During the early times, international trade was strictly regulated and was under the influence of high tariffs. During this period, countries mainly adopted the policy of mercantilism where the inflow of capital determined the prosperity of the nation. However, with the advent of globalization and industrialization during 19th century, these regulations have been relaxed and the concept of free trade has been adopted. In this model, the trade is not regulated by any government-imposed restrictions which include taxes and tariffs. All the developed and economically powerful nations including United States, United Kingdom and the entire Europe have been the strongest advocates of this policy.

There are several theories in practice for the purpose of determining the tariffs and patterns of international trade. These include the Ricardian model, Heckscher-Ohlin model, Specific factors and the Gravity model. However, the gravity model of trade presents a more detailed analysis regarding the trading patterns around the globe. In this model, the geographical distance between the countries and their economic sizes are considered while making the analysis.

In the current scenario, international trade is mostly regulated through the guidelines established by World Trade Organization. But, the trade between two countries is also influenced by the economic treaties between the countries. Some of these agreements include NAFTA between US, Canada and Mexico, European Union between 27 countries in Europe and MERCOSUR in South America.

Inspite of all the regulations involved in the process, international trade still offers several potential risks at the economic and political fronts. Some of these include cancellation of international export or import licenses, risks involved due to war, risk of imposing a ban on imported products after the shipment of the consignment and currency exchange controls.

11
Jan

The Magic Of Renting Money

When asked about home business opportunities I always state that the best way to make money, is to rent money and always
make sure that the money you are renting is someone else’s! This statement seems ridiculously simple because it is just that
simple.

If you look at it seriously, the individuals that make the most money are NOT the real estate investors (although traditionally they
make more money than most), stock market aficionados, or people that hold certificates of deposits with their banks, but it is
the bankers or money lenders themselves that fund these real estate investors or hold the money for the cd holders. I mean
think abut it, what are they doing? Hey are turning around and lending your money out and making MORE
money off of YOUR money!

Let’s look at the big picture for a moment and see where you can place your money: Once we see how to rent the money,
then I will show you how to rent money that’s not even yours!

Regular Bank Account 2% interest annually

CD Account 4% interest annually

Stock Market 10% interest annually (If you have a fantastic year)

Real Estate 15-30% interest annually typical

Selling Money 100-600% interest annually

I don’t know about you, but 100-600% annually is the type of return that I would like to see on my money. I want to stop here
for a moment and tell you that I am not going to propose that you open a paycheck advance operation or that you open a chain
of pawn shops (although there is some extreme money to be made in these venues). There is a certain way that you want to
go about renting your funds and this will make all the difference in the world when it comes to success and failure.

When first starting out in the money rental business, you will want to take it slow and work only in the areas where your money
is most secure. I have found that real estate is the best avenue for this. What should typically be done is to attend as many
local investor meetings as possible and simply let the word get around that you will lend money for small rehab projects or for
down payment financing. Add to this a few well placed ads in your local weekend thrifty nickel newspaper and you will be ready
to rock and roll. You should never have to advertise again as your name will become one with those individuals looking for quick
cash. When doing these types of deals, you always want to make sure that your investment is secured by the real estate or at
least some form of collateral (in case the person defaults). Most of the time, you can see getting 10-25% for the use of your money
for a two weeks to a month (sometimes a great deal more).

The big question comes in when you say, “Great…I love this concept, but I don’t have any money to rent out”. I hear this all of the
time and that’s where the creativity comes in. The best way to have the money to make you the money is through unsecured lines
of business credit. Whether you have a business or not, whether you have great credit or not, there are ways that you can establish
yourself as a business and obtain lines of credit in the hundreds of thousands of dollars. Imagine making 100% return annually on
$500,000 in credit lines? Hmm, let’s see…That means that you would be making $500,000 annually using other people’s money.
Forget about what you pay for interest, there are ways around that too!

Each and every day I make money showing others people how to make big money with other peoples money
(whew, that was a mouthful). There is no reason why you cannot do the same. It takes creativity, desire and
above all, it takes the know how. Why not give it a shot?

11
Jan

Seven Alternative Sources of Capital for Setting Up a Business

Borrowing from banks is every small entrepreneur’s nightmare. One gets turned down for bank loans for a variety of reasons, including lack of assets, collateral and business experience. Don’t despair, however. There are several common types of alternative sources of capital for setting up a business available to young companies.

Savings and Investments

The first source you should consider is your own savings and investments. One disadvantage though of self-financing is that if things did not turn out the way you want them to be it will be your money that goes down with the ship.

Angel Investors

Angel investors are affluent individuals who provide capital for a business start-up, usually in exchange for ownership equity. These individuals are looking for a higher rate of return than would be given by more traditional investments (typically 25% or more).
Angel investors are an excellent source of early stage financing and high-growth start-ups. They are often willing to tread where there is too much risk for banks and not enough profit potential for venture capitalists. And since angel investors are often retired business owners and executives, they can also provide valuable management advice and important contacts.

Peer to Peer Lending

Peer-to-peer lending is a means by which borrowers and lenders may transact business without the traditional intermediaries, such as banks. It can also be known as social Lending, ordinary people lending money. The process may include other intermediaries who package and resell the loans–examples are Prosper.com and Zopa-but the loans are ultimately sold to individuals or pools of individuals. Prosper.com, which is available in the US only, offers business loans for small companies.

An enabling technology for peer-to-peer lending has been the internet, which connects borrowers with lenders, for example through an auction-like process in which the lender willing to provide the lowest interest rate “wins” the borrower’s loan. (wikipedia.com)

Money pool

Instead of a bank loan, borrow smaller sums from several family members, friends, or colleagues. The lenders have no legal ownership in the business, but can act as advisors and cheerleaders for your venture. Remember though that nothing causes tension in a family like lending money that is never paid back.

Credit Cards

Many business owners use their credit cards to fund their businesses. Credit cards offer the ability to make purchases or obtain cash advances and pay them at a later time. But as a long-term financing method, they can be expensive. Most credit cards will charge you 2% to 4% of the face value of a cash advance as a “fee” making this method of financing very risky.

Bootstrapping

Another source of capital for setting up a business is bootstrapping. It is a way to finance a business by saving rather than borrowing money. It’s being as frugal as possible so your business can be started on as little cash as possible.

The use of private credit cards is the most known form of bootstrapping, but a wide variety of methods are available for entrepreneurs. Other forms of bootstrapping include owner financing, minimization of accounts receivable, joint utilization, delaying payment, minimizing inventory and subsidy finance.

While bootstrapping involves a risk for the founders, the absence of any other stakeholder gives the founders more freedom to develop the company. Many successful companies including Dell Computers were founded this way.

Venture Capital

Venture capital is not suitable for all entrepreneurs. It is an option for small companies that have a seasoned management team and very aggressive growth plans; however, venture capitalists will rarely invest in small businesses that have no intention of going public. If a company does have the qualities venture capitalists seek such as a solid business plan, a good management team, investment and passion from the founders, a good potential to exit the investment before the end of their funding cycle, and target minimum returns in excess of 40% per year, it will find it easier to raise venture capital.

The venture capitalist objective is to invest in a company for a short period of time – say 5 years – and then cash out of the business while making a significant return on their investment.

11
Jan

Techniques To Improve Human Capital

Companies have to learn the ways to improve human capital in order to ensure that their invaluable asset, human capital, is not under-utilized or underestimated. Successful companies are those that understand the importance of managing and organizing the use of its human capital. If the human capital is to function as expected, and to ensure that they are equipped with the skills necessary proper employee training programs have to be enforced. The key is to make each employee feel his service is invaluable to the company, motivating them, make them feel proud to be working for an ethical and reputed company by following strict guidelines and by giving them incentives to give their job their best effort.

Some companies improve their human capital by hiring intelligent students from India and china etc. to prevent this, good education can be given to our kids to ensure a sure fire way to improve human assets. Human capital is judged based on his productivity, knowledge, sociability and the way he uses his skills and all that he has been taught.

Ways to Improve Human Capital:
Education and Training: Some companies provide constant training and sponsor the education of their employees knowing that employees need to keep updating their skills to meet the challenges of new technologies and innovations at work. When the employees are trained, their work efficiency improves, improving productivity thereby benefiting the company as well as improving the human capital.

Monitoring Performance: To conduct periodic tests to determine the ways to improve human capital. You can learn if your human capital heed your advice and take steps suggested by you to improve their work or implement new skills they had recently been trained for.

Hiring Qualified People: When qualified people are hired, the human capital will improve, as they know their job and will perform it without wasting time in learning and understanding what has to be done.

Motivation: When companies offer incentives and other means of recognizing the talents of good employees, by promoting them or offering a salary increase, it will motivate them and make hem perform the best they can.

Never Under-Utilize Human Capital: Never under-estimate or under-utilize your human assets, make them know they are instrumental in your company’s growth and this will help boost morale. If you show that, you care and nourish your human capital; it will surely be reciprocated and can be one of the best ways to improve human capital.

These are just a few ways to improve human capital. There are firms offering services as well as products to help new business run a successful business.

11
Jan

6 Ways to Fund Your New Business

I’m often asked: what is the best way to finance a new business venture. This question is usually followed by “So, do you ever invest in new business ventures?”

The answers, respectively, are: 1. there is no “best” way to fund a new business; and 2. I do invest in new business ventures, but darn it I can’t today because I left my checkbook in my other suit.

The truth is there are a variety of ways to finance a new business and which way is best for you depends totally on your product, your market, your financial requirements, your burn rate, and most importantly, your personal and financial situation.

So with that in mind, here are a few of the most common ways to finance a new business without hitting old Tim up for a loan. Keep in mind that all methods have pros and cons and some (or most) may not work for your specific situation. No matter what financing method you choose thoroughly investigate the ups and downs and don’t jump in with both feet until you’re sure you’ll land on solid ground.

Savings and Investments

The first source you should consider tapping is your own savings and investments. I’m a huge fan of self-financing when it comes to business because it doesn’t make you responsible to others should the business fail. The bad thing is that it if things do go under, it will be your money that goes down with the ship. If you’re not willing to risk your own capital you certainly shouldn’t be willing to risk anyone else’s.

Friends and Family

After tapping their own savings and investments, many entrepreneurs turn to friends and family for help. This works well for some, but here’s the creed I live by: NEVER borrow money from anyone you have to eat Thanksgiving dinner with. Nothing causes tension in a family like lending money that is never paid back. And notice I say “lending money” rather than investing money. Venture capitalists invest money. Your relatives lend you money. They will expect it back someday even if they say they won’t. Remember, when a loved one invests in your business they are emotionally investing in you. It would be tough to tell mom and dad that their favorite son lost their life savings because his business went down the drain.

Credit Cards

I financed my first business on credit cards, which was an incredibly stupid thing to do given the fact that my business could have failed and left me with thousands of dollars in credit card debt that would have taken until the year 2099 to pay off. It worked out in the end for me, but if you decide to finance your business on plastic keep in mind that you will be paying extremely high interest rates on the money you’ve borrowed and unless you hit it big you will be paying for that money for many years to come.

Mortgage The Farm

Bank loans are next to impossible to get if you don’t have collateral and a track record of business success, which is why many entrepreneurs use the equity in their homes to finance their business after being turned down for a bank loan. While this makes more sense than building a business on a deck of credit cards, the financial risks are no less abundant. You must pay this money back whether your business succeeds or not, but it is a good source of low interest money to get you started and the interest may be tax deductible (check with your accountant to make sure).

Angel Investors

An angel investor is typically a wealthy individual who invests in start up ventures for a share of the ownership. Angel investors are usually the first formal investors in a business and provide the seed money to get the business up and running. Some angel investors will write you a check and leave you alone to run your business while others consider their investment a license to “help you” manage and make decisions. If you do accept angel money make sure the terms are clearly defined on both sides. Angel money always comes with strings. Make sure you know whether those strings come in the form of a bow or a noose before you accept an angel’s check.

Venture Capitalists

Venture capitalists are to angel investors as pit bulls are to Chihuahuas. That’s not to say all VC are big, bad dogs, but they do have powerful jaws that can chew up your business and spit it out if things don’t go their way. VC money doesn’t come with strings, it comes with chains and locks and lots of legal documents. VC always have the upper hand in any deal they invest in. That’s just how it works and that’s the price you pay to get access to VC money.

If your business gets to the level that VC money becomes a viable option, don’t jump at the first bone a VC dangles before your eyes. If one VC likes your idea, others will, too. Present to multiple VC and carefully consider each offer before you accept the check.

Just remember, no matter how you finance your business, use the money wisely. Don’t buy $1,500 plasma monitors and $1,000 Hermann Miller chairs.

Have a very clear plan of how the money will be used and how it will be paid back.

And remember this, the more you can shoestring the business, but more of the business you will own in the end.

11
Jan

How To Get Financing For Your Business Venture

Brief overview: It does take money to make money! There are costs to be covered by entrepreneurs seeking large amounts of $$$. Be prepared for what is a fair cost, and what is not…

“It takes money to make money” is very pertinent when it comes to raising millions of $$$ for a new business. There are very real costs involved in creating that winning business you have in mind. You will soon find that the costs of employing professionals to work on your new project takes a lot of money – unless they are shareholders… You also have the long list of licences, permits and approvals that you shall usually need to acquire. It can get to feel that you’re paying out a lot of money. But that is part of the cost of securing your financial future – this stuff is necessary, and it costs money.

It’s also true that when it comes to raising money from investors you have the costs of getting your business a top quality business plan, cashflow forecasts, and some basic modelling of the business to show that it’s robust and ‘bullet-proof’ in changeable conditions. There are also a few financing consultants who can guide you through the application process with an investor. If they are experienced and capable, they should know what the investor needs to feel safe investing in you and your project.

Without a good business plan you’re not going to get to face-to-face with the investor to make your pitch. Many would-be business developers then find that approaching an investment source costs money too. A broker should only charge for success – a commission at settlement of your financing.

Be wary, and check everything. Since the Global Financial Crisis a huge amount of capital has been destroyed – severely limiting the ability of banks and other financial institutions to fund investment. Be just as wary of the ‘famous names’ as you are of those you’ve never heard of… The company you approach may have been an active investor in the past, but check on how much they are currently investing…

However, an investor may also want to be paid for you lodging an application. This is valid – because they need to know who you are and whether you’re ‘credit-worthy’.

Investor due diligence costs you money – and it can be quite a lot of money. If the investor doesn’t live in your country, they shall want to have their people travelling to make on-site inspections, face-to-face interviews with everyone associated with the project. They have to. It’s unavoidable. If you’ve been working with good people, who can deliver, then they shall be working 12-16 hours a day on the due diligence, and avoiding partying and girls. The other sort you don’t want to be involved with…

Overall budget for the application process to be about 0.5% of what you’re seeking. So if you’re applying for US $50,000,000, that would involve costs of about US$250,000 in the whole process, application and investor due diligence.

11
Jan

How to Pitch Successfully and Recruit Investors?

A small talk with a potential investor could lead to your dream investment. But how do you approach such a conversation? You are working day and night on your startup. You got a winning team and are doing your best to develop a great product. Now all you need is to find investors. You know that what separates you from your life’s dream is one phone call. Well, there are some good news and some bad news. Starting with the good – it’s possible! The bad news is that it’s going to take, apparently, a lot of time and effort to succeed. If it took Churchill one hour to write every minute of his speech, than writing yours, which presents your startup, generates impact and willingness to hear more, will be a much difficult task. By combining several tools and one simple solution, you too can transform the most complex product or service to be exciting, simple and valuable. Let’s get started:

Set a goal for your Pitch

Before you sit down to write your pitch, set your self a clear and defined goal. This goal should include a timeframe, clarity and quantity.

What’s your end goal? Getting funded? Another meeting? Cooperation? Advice?

It needs to be even more focused. For example, you would like to get funded: how much cash do you need? When will you need it? In stages or all at once? You need to know exactly what you are going to ask for. If you don’t have a clear goal, the chance of reaching it becomes a product of luck.

After you are clear about the goal of your pitch, you can sit down to write it.

Teaser: stimulate the investor

So you got a great opportunity and you are a sitting alone in a room with your potential investor. That doesn’t necessarily mean his brain and attention is given solely to you. Your mission, right from the beginning, would be to capture his full attention and have him completely focused on you.

There are several ways to generate attention in a very short time. One of them, is to present a big fact that is relevant to your product or market. This will generates curiosity and the listener will likely try to understand what is it about. The teaser could also be a personal story, an interesting article from a newspaper, a breakthrough research, anything that will skyrocket his attention. Your teaser will work best if the value in it will be “flooded”.

“Value flooding”: what’s in it for him?

As a way to turn your product or service to fascinating, you have to ensure, that the person sitting in front of you, understands the value relevant for him. Once we can connect between the teaser and the value, we are creating a “mental shortcut” and the level of attention grows significantly.

For example, when we walk down the street and see a scratch card Ad saying “scratch now and win 1,000,000$” – the Ad both grabs our immediate attention and floods the value – we want to win those 1,000,000$.

So even if our chances of winning goes against all statistical and logical calculations, our attention was already caught because we were immediately presented (“flooded”) with the value, even before explaining the general idea or logic behind it.

Make it Simple

After we managed to grab attention, it is time to tell the story of our product or service. Here comes the real challenging part: can you really explain, sometimes in a single sentence, what does your company\product\service does? The true greatness of really good or complex products is the ability to make them simple and tangible.

Make sure not to use extremely high or too complex language, which usually creates opacity and covers the inability to generate a clear definition. If you managed to do so, in a minimized form, it will leave you with more time to invest in the other parts of your pitch.

Why you?

Towards the end of your pitch, it’s time to explain why you. Why you are the one who can turn this vision into reality. This is a critical point as you ask your potential investor for his trust (… and money).

Here is the point to emphasize your unique background in the field, winning team combination or previous successes. It is important to remember that most decisions we do are irrational, so it is imperative to use your attitude and presentation methods to strengthen your message, no less than the list of your titles or achievements.

Tip: we tend to associate self-confidence – and hence trust – when the shoulders are straight up. So straighten up!

Combining these ingredients, which builds a winning pitch, will require your time and efforts in order to sharpen your messaging. Sometime, using external consultants as well as using new technologies could upgrade your performance.

Note: apart from using the old PowerPoint, I can highly recommend Prezi and Bunkr.

Each year there are hundreds of new startups being founded, and with them grows the competition for investors. The first impression and effect you project at the beginning could be that critical point that would separate you from the rest, and will cause the investor to invest in you, over the other sea of startups.

Sometimes, this small conversation could make your life dream come true – don’t let it slip away.