How to Obtain Funding for a Business

How to obtain funding for your service business

How to obtain funding for a business is something that is on the mind of every entrepreneur who has ever had an idea for starting their own enterprise, and with good reason. In order to get anywhere, regardless of the stage that the company is in, you need to be able to successfully manage your finances down to the last penny.

For the average startup, this applies to being able to get the enterprise up and off the ground. Established businesses need effective money management for growth and expansion. In a long-standing business, managing finances has everything to do with holding on to market share and keeping competitors at bay.

Proper business funding is essential to everything from day-to-day operations on up, but just what is the answer to the question of how to obtain funding for a business?

Well, let’s take a look at some of your options:

You could receive funding for your company through equity financing

If equity financing is the route that you decide to take in order to finance your company, then you should know the basics behind this practice.

  • Equity financing is the same as getting investors on board with supporting your company. You agree to allow these investors to purchase part of your company. They give you money for operations and they, in return, receive a percentage of the profit that comes in
  • This approach for securing funding means that you can come across a large amount of money on which you will not have to pay interest but, at the same time, you lose some control in your enterprise.

Investors who own a large enough part of your company may have some input into how things are run, so you want to think about who you approach if you decide that this is the answer to how to obtain funding for a business.

If handing over part of your company to an investor doesn’t sound like an appealing option, then….

You could look at taking out private loans

When business owners are trying to figure out how to obtain funding, this is often the most common approach.

This comes with its own unique characteristics, of course:

  • By borrowing money from a bank or finance company, you can obtain the kind of capital you need to get going without having to give up a controlling interest in for company.
  • Your company’s profits belong to your company and no one else.
  • Like with any other kind of loan (such as a car loan) you will have a timetable by which you have to pay back what you borrowed. That loan will, of course, carry interest with it.

When it comes to getting a loan from a bank or finance company, you should also know that doing so requires a lot of research.  Lenders are hesitant to extend loans to first time entrepreneurs because of the level of risk associated with running your own business for the first time.

You can increase your chances by constructing a strong business plan that will outline how your company will be run. You should be aware of the fact that, even if you are successful, you may have to put up collateral.  When figuring out how to obtain funding for a business, these are two ways that you can approach it.

But, in a few instances…

You can obtain a grant

Free money that doesn’t have to be paid back; how does that sound?  In answering how to obtain funding for a business, this is the most attractive option.

This is what a grant is, in essence. Since grants are given to an entrepreneur and don’t have to be paid back, this is the best way to find a business but, of course, there are some things associated with grants that make them harder to come by than any other source of funding.

  • Some grants may not give you full funding, but what you do get may still be substantial enough to get you going.
  • As stated, the money is yours. There is no paying it back.
  • Grants are only given to enterprises that are applicable, meaning that your company has to be in a certain field or sector to even be considered. This usually means something like a non-profit organization
  • You will likely have to abide by certain conditions once you begin your operations

Because grants are free money given only to certain enterprises, they can be harder to find and harder still to obtain.

If a grant is your answer to how to obtain funding for a business, then you want to get started on applying as soon as possible, because the application and approval process can take time.

Which one is right for you?

What’s right for one kind of business may not necessarily be correct for another, so you want to think about your source of funding very carefully when you are running your business.  Take a look at the kind of business that you want to run and what you need in order to make your vision happen.

Your startup might not require the things that others need in their daily operations, so look at every area of your business, from personnel down to supplies, and you’ll get a general idea of how much seed money you need.  Once you take that into account, the task of answering the question of “how to obtain funding for a business” gets a little easier.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.

Why Hire a Business Coach?

why hire a business coach for your business

As someone who runs their own business, you may ask yourself “Why hire a business coach?” While you may have a good grasp on running your company, you should know that you still have a lot to learn. It could be argued that this is true for a business owner no matter what stage of development the company is in.

While someone who has never run a company before certainly has a lot of growing to do, you may not realize that someone who has been an entrepreneur for a while could also stand to consult an expert on certain matters related to the business. It’s a common misconception that only the inexperienced could benefit from the insight that an outsider can bring to the table, but this blog post will illustrate just why that’s a misconception.

So, why hire a business coach?

Well, let’s take a look at several scenarios where such expertise could come in handy, and you’ll quickly see why working with someone from the outside could be to your advantage.

You’re New to Running Your Own Business

This is the most obvious scenario in which you might benefit from some coaching. When starting out, it’s all too likely that you’ll have countless questions about how things should go. It’s no secret that getting a company off the ground, never mind making it a success, requires a lot of different things to happen.

Besides having a strong business plan that helps you define the path that you’re going to follow, you also need to be sure that everything you’re doing is in compliance with both local and federal laws. From making sure you have the right licenses, to being certain that you have the right marketing practices in place in order to get as much exposure as possible, there are a lot of gaps to fill in between coming up with your idea and getting customers to hand you their hard earned money.

If you’re new to running a company and you’re wondering “why hire a business coach“, then you should be thinking about roadblocks that you could potentially come across and how you’ll deal with them. You could certainly find a way to remedy these issues yourself but, without experience, how long will it take you? During a company’s early days, resources are especially scarce and you can’t afford to let anything go to waste.

So why spend more time dealing with a problem than you would need to? In all likelihood, a good business coach has the experience necessary to foresee potential issues and help you deal with them as quickly and efficiently as possible.

Your Company Is Running and Bringing in Steady Revenue

If your company has been in business for a few years and you’ve been able to get a handle on how operations should run, it somewhat makes sense to ask “Why hire a business coach?” It makes sense, but that doesn’t mean you shouldn’t consider hiring one. Business owners whose firms are beyond the startup stage, but ask “why hire a business coach”, may not have much to learn about what goes into getting the company on its feet, but they have much to learn about growth, development, and expansion.

With everything that it took to reach this stage, the last thing you want to do is get comfortable to the point where the business plateaus and growth stagnates as a result. As your company establishes lasting relationships with customers and adds to its staff, there will be greater demands on your time and money.

A good business coach can help you effectively manage your revenue to make sure that it goes to the appropriate places all in the name of continued growth. It’s also important to maintain strong ties with banks and other lenders, in case you need access to additional capital for a project that would be beneficial to your company. This may also be the stage where you evaluate the feasibility of moving into new markets. If that’s the case, then the answer to the question of why hire a business coach is obvious.

Moving into a new market can be an alien prospect for you as an entrepreneur, and good executive coaching will help you determine what you can expect to see as you move forward. You will have to conduct thorough research and planning when expanding your business. Having a good coach at your side during this stage can go a long way toward making sure that the process goes smoothly.

Your Company Has Been Around For a While

A business owner whose company is in a mature state may ask “why hire a business coach”, but they need to be aware of the fact that companies in the same sector may be looking for their own market share, and will be aiming for the established companies as a result. During this time, companies can benefit from the services of a business coach in order to examine the feasibility of going back to exploring new markets and creating ways to retain customers and keep revenue up in the face of increased competition.

If increased competition affects business, good executive coaching can help with a turnaround in order to successfully restructure the company and become viable again. It’s important to remember that, as your business grows over the years, you have to do everything necessary to keep the doors open and revenue coming in. With all of the uncertainty that is a part of entrepreneurship, you want to take every advantage that comes your way and use it to make your company a success.

The question shouldn’t be “Why hire a business coach?”

Instead, it should be “Why NOT hire a business coach?”

From helping a startup establish itself, to helping a distressed company reinvent itself in order to keep the doors open, a good business coach can do a number of things from an objective point of view that just about any business could benefit from in the long run.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at out our website www.portalcfo.com.

How to Enhance Business Performance

Enhance Business Performance

When you’re running your own business, one question you’re constantly asking yourself is how to enhance business performance?

If it isn’t, then it should be!  Starting your business and making a name for yourself in your given industry is a tough enough task and you should never rest on your laurels once your business is off the ground and earning money.

As with any kind of operation, there is always room for improvement. There is always something that you could be doing better, more efficiently, and in a way that you will win over more customers and bring in more revenue for your company.

Businesses like yours involve a lot of different moving parts that work together to make the entire venture run smoothly.  Things will only become more complicated as your company grows and expands with time. You need to learn how to enhance business performance while your company is still young. If you don’t, then the road ahead will be that much harder as time progresses.

Let’s take a look at many of the different things you can do to optimize your company’s performance and you’ll see just how involved the process of getting the most out of your company can be.

Sharpening Your Talent

Your company wouldn’t be anything without the talent that goes into selling your products and services.

Whether you have a team of employees, or your company is a single-person operation, the skills used to persuade potential customers to part with their hard-earned money requires that your talents always be in the best possible shape in order for you to have the competitive edge.

With that in mind, know that there are several things you can do in order to keep your skills current:

  • Follow industry-relevant news and developments like it’s your job because, in a way, it is!

In just about any industry, things can change at the drop of a hat. The latest and greatest can quickly become obsolete. The last thing you want to happen is having to play catch-up because you weren’t aware of a development that affected the whole industry.

  • Take continuing education because graduating from school doesn’t mean that you stop learning. In order to keep up and make sure that you’re using the latest bit of knowledge related to your company, you should look into enrolling in classes every now and then.
  • Learning from your mistakes is practically “how to enhance business performance 101.”  Everyone stumbles at some point in their lifetime, and it’s no different in business.  You want to be sure that any shortcomings you’ve faced in the past are looked at closely so that you know what went wrong and how to keep it from happening again.

It’s important to note that dooming yourself to repeat a mistake can ultimately lead to failure or, at the least, stunted growth as a company. Whenever you make a mistake, you should note it, regardless of how insignificant it might seem. You’ll be glad you did later.

Make Use of All Resources Available to You

Some entrepreneurs have already figured out how to enhance business performance by going beyond their immediate circle and outsourcing certain aspects of their business. There’s no reason you shouldn’t do the same.  Outsourcing means fewer resources used than would be the case if the task was taken on in-house and doing so can save you time and money.

In figuring out how to enhance business performance, many companies have turned to outsourcing services like:

  • Accounting
  • Information Technology (IT)
  • Marketing
  • Payroll

With important aspects like these being handled by other specialist companies outside of your own, you can easily focus on what makes your business work and how your customers can best benefit from what you offer. You won’t have to fumble around with things that require a certain level of expertise in order to execute effectively.

Build Your Alliances

In a way, this tip harkens back to the previous one about sharpening your skills.

Every entrepreneur wants to know how to enhance business performance, but few realize that one extremely effective way to do this is through networking, building alliances, and creating mutually-beneficial relationships with other entrepreneurs.

In the world of business, it pays to have as many allies, contacts, and partners as you can. You want to take every available opportunity to attend events, seminars, and conferences where you can meet people who will be able to help you in the development of your business.

Whether these people are potential clients, suppliers, business partners, or even industry veterans who can offer you some help and guidance, it pays to put yourself out there and see how others will be able to help you.  You never know who you might meet!

Giving It Your All

When running your business, you should never skip out on anything that could help your company move to the next level.   You want the product or service that you offer to have a strong reputation in your markets, but you can only do that with enhanced business performance and efficient management.

From making sure that the people working for you have the skills and equipment they need to do their jobs, to looking at your resources and planning ahead, your company’s day-to-day practices are just as important as your long-term plans.  When figuring out how to enhance business performance, you need to look at all possible avenues to be sure that you’re employing the best possible practices.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.

How to Fund a New Business

fund a new business

The question of how to fund a new business is one that any entrepreneur will ask his or herself sooner rather than later.  After all, how are you going to be able to do anything in the world of business without the right funding to get the wheels in motion?

Think about all of the things that a business needs in order to run and you’ll quickly see why it’s important that you secure funding for your enterprise. Keep in mind that the funding you secure must be enough to help see your business through its formative period once it’s up and running.

You need start-up funding to cover things like:

  • Equipment
  • Payroll (if you aren’t the only person involved in running your company)
  • Licensing
  • Office space
  • Insurance

The costs don’t end with just these essentials either. While you may be able to find more cost effective alternatives in many instances, not including any one of the important aspects of business operation could ultimately mean that your company ends up suffering in the long run.

So how do you fund a new business, knowing that it involves so many different aspects from the start?  Let’s take a look at some of your options.

You Could Get a Bank Loan

Many entrepreneurs go the traditional route when funding their startups by appealing to banks for loans or lines of credit.  Money extended to you by a lending institution like a bank can help get you started. If this is the path you decide to take in order to secure your funding, you need to be prepared.  Banks want to be sure that the money they extend to startups will be returned to them, which is why you need a strong business plan. It’s no secret that start-up businesses can be a gamble, so you need to have proof that your business venture is something that will be worth the lender’s trouble.  It won’t be an easy task.  Therefore, have other options available to you.

You Could Try to Apply for a Grant

For many reasons, grants are more difficult to obtain than loans when you’re looking to fund your business.  Funds available to distribute via grants are often very limited, as are the types of businesses that the federal government will extend grants to.  Grants can also be available through local governments and organizations depending on where you live but they often have many of the same strict reporting requirements as federal grants.

If pursuing a grant is an avenue you’re interested in when figuring out how to fund a new business, you should know that a business plan can help you much in the same way that it can with pursuing a loan. The federal government wants to be sure that any money they extend to a new business owner won’t go to waste. Therefore, you want to come up with a plan that is as detailed as possible if you want a fighting chance at securing a grant for your business. To learn more about small business grants, you can go to the official website of the US Small Business Administration.

You Can Try to Find Investors

When thinking of how you can fund a new business, have you thought about appealing to potential investors who can provide your company with startup capital?  Look for business-minded people who might take an interest in your enterprise and make them partners. In this scenario, you may have to cede some level of control, but you will get money to fund your company. Therefore, it’s up to you to determine whether or not that trade-off would be worth it in the long run.

You Could Try Contract Work

Starting and running a business, even planning to do so, is a full time job. In figuring out how to fund a new business while it’s going, you might not have time for a traditional 9 to 5. Depending on the size of the company you plan on starting, however, you may be able to use money that you earn through freelance and contract work to supplement money that your startup brings in. The flexibility of freelance work means that you would be able to dedicate a good amount of your time and energy to running your company while gathering some extra revenue at the same time.

Finding the Method That’s Right for You

The options listed here to fund a new business are some of the most widely-practiced among entrepreneurs.  It’s important to remember that anyone who was a stake in your business wants to be sure that they won’t end up losing anything on the deal.  Therefore, your investigation into how to fund a new business should include some reassurance that stakeholders will come out on top at the end of the day.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.

 

What Is Purchase Order Financing?

what is purchase order financing

It isn’t uncommon for owners of small companies to ask What is purchase order financing? when looking for ways to gain some quick capital for mission critical operations. The thing is, however, that purchase order (PO) financing is something that might be ideal for a certain type of business in a certain type of situation, but it may not be something that works out in other scenarios.

In this post, we’ll explore PO financing and see just what you can use it for. Afterwards, you’ll have another bit of financial knowledge that will benefit you as an up-and-coming entrepreneur and will be that much closer to running your business with the best of them.

So, what is purchase order financing?

It’s a Way to Make Purchases Without Depleting Cash Reserves

As a small or medium sized business, you have to make sure that every dollar is spent wisely, right? That means that you need to be absolutely sure that you’re getting the best possible deal on supplies, equipment, and services that you need to run your business.

During the early years of a business, margins can be thin, so you can’t afford to let any of your resources go to waste. Still, cutting back isn’t an option. If you scale back on what you need to serve your customers, your reputation could suffer, people might turn to competitors, and you could lose market share quickly. That’s where PO financing comes in.

Whether your situation has your company seeing a lack of revenue as you attempt to turn your company around, or you’re saving your reserves for potential growth and expansion, you can use PO financing in order to continue operations.

When asking the question of “what is purchase order financing”, it’s important to think about how such a tool works as well.

In many ways, it acts as a form of cash. You can use a purchase order to pay creditors tomorrow for something that you’ll receive today, so to speak.

What happens is that you go through a PO financing company. That company then buys from your suppliers on your behalf.

The suppliers then fulfill their end of the agreement that your business has with them and the end product is delivered to your clients.

After the transaction is complete, the money from the letter of credit that the PO financing company drafted is released to the supplier and you typically have 30 to 60 days to pay an invoice to the PO financing company.

When to Use PO Financing

The question of “What is purchase order financing” goes hand-in-hand with when it should be used.

One such ideal situation for using this financial tool to further your business would be if one of your customers came to you with a large order that could potentially mean big things for your company.

While this is the break that you have been waiting for, the reality of the situation may be that you don’t have the capital or resources on hand that you need to make the order happen.

Bank loans may be out of the question as well, even if you have strong relations with your lenders.

When that happens, PO financing is your best bet for making that large order a reality so that you can deliver your product to your customers and grow as a company.

More About PO Financing: Who Uses Them

While many entrepreneurs may ask “what is purchase order financing”, they may fail to realize that the nature of this type of financial agreement limits exactly what kind of entrepreneur can use it.

These are the types of businesses that should typically be asking “What is purchase order financing?”

  • Producers – If you make a product, then PO financing could be an easy way for you to secure a large amount of raw materials that you use as ingredients. 
  • Distributors – You may find yourself having to send out a larger volume of a product than you usually would. In that case, PO financing can help you reach that goal.
  • Wholesalers – If you need to fill a larger than usual order with an existing customer, or are expanding to clients who purchase more than you normally supply, a PO financing may help cover the difference here. 
  • Resellers – Business owners in this industry who ask themselves “what is purchase order financing” can benefit from having more of a product to sell to customers by using PO financing.  

If you’re a business owner who wants to fulfill larger obligations to clients, but you aren’t asking yourself “what is purchase order financing”, then you should be.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more information on business analysis, business planning, and ways to grow your small business profitably, please check out our website www.portalcfo.com.  Follow us on Twitter @portalcfo