Tuesday, December 30, 2008

Secured and Unsecured Credit Cards

Credit card spending is something that the majority of consumers actively participate in. For some it's a matter of convenience. It's easier to use a credit card than worry if you have enough cash. Credit card purchases offer some recourse to the buyer/consumer if they feel they didn't get what they paid for. The charge can be reversed by the credit card company. Some people use credit cards because they want to, while others find themselves doing it out of necessity just to make ends meet.

When it comes to credit cards, there are basically two types available today. They fall into these categories: secured and unsecured credit cards. The exact credit cards you are eligible for will be dependent on your credit history.

An unsecured card is issued to consumers with (at least) a good credit rating. The 'perks' that are attached to it, also depend on one's credit score. Financial institutions determine the credit limit on each card after reviewing things like: debt to income ratio, time on the job, number of open accounts, late payments and missed payments.

This type of credit card typically carries a lower interest rate and fewer miscellaneous fees than a secured credit card. You do not have to pay anything upfront, other than a membership fee, and that can often be waived, in order to be issued an unsecured credit card.

On the other hand, a deposit of some sort is required in order to get approval for a secured credit card. Usually, this deposit will be equal to the credit limit issued. Although, in some cases the credit limit will be higher. It depends on the applicant's credit worthiness. The deposit is not used to make any monthly payments. Don't expect the creditor to do so. It can't be withdrawn for emergencies as long as the credit card account is still open.

Secured credit cards are issued to consumers with a fair to poor credit history. Individuals who have gone through a bankruptcy are typically eligible as well.
These credit cards have very high interest rates and higher fees attached to them. But, most consumers are more than willing to pay these extra fees, in exchange for a second chance at building good credit. Sometimes a secured credit card is the only option.

Many banks refund the initial deposit, after a pre-determined number of on time payments have been made… usually between 12 and 18.
Making timely payments will go a long way, when it comes to re-building credit. It is recommended that a secured credit card be used sparingly, to avoid repeated problems. Use it enough to re-establish your credit but make sure you make the payments on time every month.

Monday, October 20, 2008

How to Refinance with Poor Credit

Mortgage interest rates have greatly decreased over the past seven or eight years, mainly due to the economy sagging. If you got your mortgage before the interest rates went down, you're probably envious of the people who have the same amount of mortgage you have, except their payments are far cheaper due to the lower interest rate. However, you don't have to be envious, as you can get the same interest rate they have—or perhaps an even lower one. All it takes is refinancing your mortgage, and you can accomplish this even if you have poor credit.

What Refinancing Is

Refinancing is can be used for debt consolidation, but also different. When you refinance your mortgage, you essentially take out a new loan to pay off the existing mortgage. This loan comes with a cheaper interest rate and—typically--cheaper monthly payments.

Refinancing can also help you to better your poor credit score, if you decide to refinance for more than the mortgage is worth and use that money to pay off other existing debt. This is known as wrapping your credit card debt into your mortgage, which is a bit like consolidation.

4 Steps to Refinance with Poor Credit

1. Shop Around. Many people believe that in order to get good refinancing, you need to have good credit. That's simply not the case, as in this economy, lenders are more willing to extend refinancing to those with fair or even poor credit. The key is to simply shop around and be willing to do a bit of research before you refinance.

2. Look for Lenders that Specifically Offer Refinancing to Those with Poor Credit. Some of the big name lenders only publicize that they refinance to those with good credit. But most of them also offer plans for refinancing for those with poor credit. Seek those out, and if you find a lender that says they only offer refinancing for people with good credit, ask them if they offer anything at all for people with poor credit. More than likely, they will, especially with how this economy is.

3. Don't Fear the Higher Interest Rate. Let's set one thing straight right now: you will not get the same interest rate refinancing as someone with a better credit score would. You should see a rate that is lower than what you currently have, though, and it's important to realize that even if it's a little lower than you'd like, you can always refinance again in a few years once you've bettered your credit score.

4. Apply Over the Phone or Via Mail. When you apply for refinancing over the internet, the application is usually reviewed by a computer, which can spell automatic bad news for refinancing if you have bad credit. That's why you should apply by the phone or via mail, as you'll be turning your application into an actual human being. Again, with how bad the economy is, and how desperate lenders to loan money, you'll have much more favorable results as the person who is reviewing the application will see that you are genuinely interested in getting a lower interest rate and in making your refinanced mortgage payments on time.

Sunday, October 12, 2008

Hidden Credit Card Fees: Where to Find Them

If you have above average credit, you probably have at least one no fee credit card. Credit card companies reward individuals, who have good credit, with this type of card. Should you be appreciative? In a word no.

All credit cards have hidden fees. Financial institutions issue the cards to make money. Money is made on both sides of the transaction. The merchant pays a per sale fee and a percentage of the total sale as well as a monthly service fee. And of course the consumer pays fees as well. These hidden fees alone add up to millions of dollars each year. Some of them include:

Cash advance fees. There are very few credit cards that don't charge for obtaining cash from an ATM. In reality, these cash advances are considered loans. So, not only do you pay a fee for withdrawing the money but you are charged interest from that moment on. Rates vary, but typically range from 3% to 24%. Your payment usually goes to pay off the balance first before any cash advance is paid back. And that's because the interest rate on cash advances is normally higher than that on merchandise and services purchases.

Pay-by-phone fees. If you usually pay your bills by phone, you may be charged a convenience fee, by your credit card company. Some credit card companies charge an even larger fee if you are paying your bill on the actual due date.

International fees. If you travel abroad and use your credit card, chances are you will be charged an international or foreign transaction fee. The only good news is that this fee is typically lower (1% - 3%) compared to other fees.

Late fees. Don't assume that if you get your payment to the credit card company on the due date that it will be processed that day. Late fees are regularly assessed on payments that were received on time, that way you are not reported for a late payment, but that the company processes the next day or so, that way they can charge the late fee. Check your bill because the due date can change without notice.
Convenience check fees. If you use the convenience checks that are usually included as a perk with many major credit cards, you are probably in for a big surprise. These checks are considered another form of cash advance, so there are fees attached to using them.

Worse yet, in the event that the check is returned because your available credit balance won't cover the amount of the check, you will be charged additional fees, as well.

Look closely at the terms and conditions your credit card company offers and make sure you understand the fee structures so you don't get caught paying extra money.

Tuesday, October 07, 2008

Do Credit Scores Really Make a Difference - 3 Tips to Improve That Score

If you have ever wondered if your credit score makes a difference, in day to day credit situations, the answer is a resounding... yes. In fact, the lower your credit score the harder it will be for you to obtain any type of credit. However, it is not impossible as long as you are willing to pay the price.

The price you pay is the percentage of interest your loan or credit card will carry. Since financial institutions are in the business of making money, most don't think twice about issuing credit cards to individuals who have been deemed a 'high credit risk'. To say this practice is big business is putting it lightly.

Currently, the average credit score is 720. As a rule, if your score falls under 600 you will probably pay more in interest than someone with a higher rating.

Several factors are used to determine your credit score. They include: payment history, total debt owed, length of credit history, types of credit used and new credit.

The best thing you can do to improve your credit score is to pay your bills on time. As noted above, this is the most important criteria when it comes to determining your rating.

It is also important to keep your balances as low as possible. This will go a long way in improving your credit score. Why? When your credit cards are almost 'maxed out' you are considered a higher risk, because this shows you probably have a need to reach for a credit card, instead of paying with cash.
Just because you currently have bad credit doesn't mean that it cannot be improved upon. There are steps you can take to 'fix' the situation.

Unfortunately, this process won't happen overnight. Depending on the extent of your ailing credit it will take months, sometimes even years, until you are fortunate enough to have good credit. Look at it this way, it probably took quite a while for your credit to deteriorate... you can't expect the bad stuff to disappear in just a matter of weeks.

Step number one. Obtain copies of the credit reports. You will need one from each of the three major credit bureaus... Equifax, Experian and Trans Union. There are two ways to get your credit reports, at no cost. Every individual in the US is entitled to one free credit report per year, per credit bureau.
If you have already taken advantage of this offer, apply for a credit card. Obviously you won't be approved because of your credit rating, but the denial will entitle you to a free report.

Step number two. Determine a budget. This will give you some idea as to how much extra income you have that can be put toward your outstanding bills. It is always best to pay off higher interest credit cards first... even if the same amount of money will pay off two lower interest cards. You will end up saving money, in the long run.

Step number three. Change your shopping habits. Chances are impulse buying is what got you into debt in the first place. If you can curb the problem, it will make it easier to achieve creditworthiness in the future.

Follow these tips and you can repair your credit rating yourself.

Thursday, October 02, 2008

Debt Settlement Scams: What to Watch Out For

With the declining state of the current economy, more and more individuals are turning toward debt settlement as a means of eliminating their mountains of debt. Debt can cause stress and an overall decline in health. Creditors calling at all hours of the night even bothering you at your place of employment, no wonder many consumers reach a level of extreme desperation, even depression. Is there a light at the end of the tunnel?

There are many debt settlement companies that are completely legitimate. A debt settlement company will review your loans, your income, and assets, and determine a realistic level of payment for each debt you owe. They will then contact each creditor and negotiate a payment plan that's realistic.

Once you've made the lump sum settlement with your creditors you're out of debt. Debt settlement companies don't work for free. The fees can be based on a percentage of your loans, a set up fee, payment fees, and even closing fees.

Unfortunately, there are many debt settlement companies that are only after your money and have no intention of working with you or your creditors.

These companies exist only to bilk service fees out of desperate consumers who see no other way out. Instead of a light at the end of the tunnel there's only a brick wall.

They promise to contact your creditors in effort to lower your current balance and reduce your current payments as much as 50% or more. While legitimate debt settlement companies typically negotiate your balance scam companies offer empty promises, take your money and run!

One debt settlement scam that is gaining in popularity is the no hassle enrollment plan. This occurs when the company in question wants you to enroll in one of their plans over the phone, without any type of qualifying process or verification of your actual debts. Of course you have to pay a membership initiation fee and, most likely a monthly fee while they review your finances. If you decide not to continue in the program, too bad, there aren't any refunds.

Another popular debt settlement scam is one in which the company tells you that your creditors have agreed to the repayment plan and they haven't even been contacted. Or the settlement company has sent a letter to the creditor telling them the payments are being held in a trust account and have to reach a certain balance before they'll be paid. The consolidation company comes up with a monthly payment that the consumer pays them every month. A good chunk, as much as $50 to $100, goes to the settlement company as service fees. The money is held in a "trust" account until the balance reaches a certain level.

The consolidation company then pays the creditor. But if the creditor hasn't agreed to this plan, and most won't, they can continue to collect on the debt through whatever means legally available.

This type of plan could only make matters worse, because most creditors will not wait that long to receive full payment. In all likelihood, they could still take you to court.

Be aware that debt settlement is not the same thing as debt consolidation, or debt counseling.

Tuesday, September 30, 2008

Why Use a Debt Consolidation Company or Service

Facing a mountain of debt? Consider using a debt consolidation company or service to aid you in rectifying situation. As the unemployment rate and the cost of goods and services continue to rise, more and more people are choosing this option.

A debt consolidation company does just that ... consolidates your unsecured debt into one payment. This makes it much easier to keep track of things.

Instead of issuing checks to several creditors each month, you simply issue one payment to the debt consolidation company. In turn, they distribute agreed-upon payments to creditors.

hen you work with this type of company they will contact your creditors on your behalf. They have the ability to negotiate with them, in regard to lowering your interest rates and removing fees for things such as late payments and over limit balances.

The majority of creditors are willing to negotiate because they would rather recoup some money rather than no money at all. This also will help to ensure that they will not have to take you to court, in the future. Doing so, means they would have to pay for their own legal representation.

In some cases a debt consolidation company can lower your payments, up to 50%. This means you will pay off your debt in half the time, saving hundreds and even thousands of dollars in interest alone.

There are Internet-based debt consolidation companies that will work with you in the comfort of your own home. You can easily fax required documents and make your payments online.

Wednesday, September 24, 2008

Double Your Living Space With Outdoor Garden Rooms

Garden Rooms are an extension of your living room; and of course dining room, bedroom, and family room. A small house can seem to have doubled in space when the backyard, side yards and front yard are divided into livable areas each with a specific purpose.

If you're buying a new house that is in the process of being built decide now what the priorities are for your outdoor spaces. For example if entertainment is high on the list you'll need a level patio for dining with ample room for tables and chairs. Evening lighting extends the usability of the area well into the night. The dining room shouldn't be too far removed from the kitchen as getting the food to the area while it's still hot will be a challenge.

The first task is to measure the yard and draw a scale map. Include any trees, fencing, slopes or terraces. Note which way the yard faces. A yard facing the west will need some shade area from the brilliant late afternoon sun. A north yard has the advantage of shade but will be considerably cooler in the Spring and Fall months.

An automatic watering system cuts down on chores and can actually conserve water when it's preset. No forgetting to turn the lawn sprinklers off and flooding the garden. More than one station is efficient for watering different zones. Trees may only need to be water once very 10 days to two weeks while a perennial border needs at least an inch of water on a weekly basis. Two, or more, watering stations make it possible to accommodate both.

House builders can install the pipes needed for a watering system at the same time the plumbing for the house is installed. And they can provide for outside lighting as well. If you're considering a natural gas powered fireplace for evening fires it can be installed at the same time as the gas for the home's heating system.

If your home is custom built, expanding the plans to include the outdoor rooms shouldn't be a problem. And even if your home isn't being custom built, your house builder can lay the foundation for a backyard patio at a more cost effective rate if it's done at the same time as laying the foundation for the house.

After you've decided on your backyard priorities and have your scale map, sketch out where you would locate major hardscape features such as a gazebo, play yard for children, water features, and patios. Establish a budget for each feature and for the yard as a whole. Remember you don't have to complete the entire yard at once.

Flexibility is important. You may have your heart set on a huge swimming pool and then find out that since you have children, the pool will have to be fenced even within your own backyard. Or that bedrock may prevent excavation of a pool without expensive blasting.

Friday, September 12, 2008

When Should You Consider Bankruptcy?

If you are in midst of a financial crisis, bankruptcy is just one option. There are no set in stone rules when it comes to filing. Everyone's situation is different and must be analyzed on a case-by-case basis. Keep in mind this final action will follow you for at least 10 years and perhaps longer. While it falls off your credit report, many loan applications ask if you've ever filed for bankruptcy. Court records are open to the public and many are easily electronically accessible.

Of course your credit report will reflect your financial actions and as such will affect your ability to get insurance, loans, and perhaps even employment.

If you are questioning the possibility of filing for bankruptcy, there are several things to mull over before making your final decision.

If you have a good job that provides you with a steady income, you are probably not the best candidate. You should seriously consider modifying your lifestyle in order to begin paying back your debts. The judge has the option of dismissing a case if he feels there is adequate income for re-payment, over a specified time period. This is especially true if the majority of debt is credit card related.

The court will review your income, assets, and debts before allowing the action to be finalized. If the judge feels that you could pay off your debts by selling assets or cutting back on expenditures your request may not be granted.

With the recent changes in the law, filing is quite expensive. If your case were to be dismissed, you would be out hundreds of dollars that could have been put toward your debt.

Many credit counselors will tell you that you should other actions first. They recommend selling items such as jewelry, electronics or even antiques and using the profits to pay down your debt.

They also recommend getting a second job, if at all possible. Of course, not everyone's schedule can accommodate this option, but if you have time the additional income will probably go a long way when it comes to paying off your creditors.

Bankruptcy will not allow you to keep assets that have been secured by a loan. The asset, such as a car or furniture, will have to be surrendered to the creditor. Some debt such as back child support and student loans won't be forgiven. You'll still owe them.

Whether or not you file for bankruptcy is the personal decision. Consider your options carefully, before making your final move.

Monday, August 25, 2008

Why Tenant Screening Reports are Important

Investing in real estate can be a profitable way to increase your wealth in two ways. The first is simply the gain on the property when you sell it. The second is that if the property is leased it can generate an ongoing stream of revenue. In some cases that revenue stream can be enough to pay the mortgage on the property every month.

Most commercial properties depend on rental revenue as a primary factor in their income projections. The value of the property includes the discounted value of the rental revenue in the calculation, as well as the value of the building itself and land.

Residential property, especially single family homes, usually sell on a square footage basis and don't consider any leasing income in the determination of value.

Tenant Screening is a critical aspect of successfully managing a portfolio of residential rental properties. The wrong tenant can not only result in lost revenues but property damage as well.

Different states (and countries for that matter) have different rules, regulations, and laws which determine when and how a tenant can be evicted. The process can take up to a year. Not only do you lose the incoming cash flow from the rental payments, you have the additional expenses of paying an attorney to handle the eviction. A pre-leasing investigation known as a tenant report can help you avoid this situation.

While it's important to real estate investment companies to make sure that their tenants are financially stable, it's critical for individual investors. The loss of rental income from just one property can be devastating to an individual. The property can't be leased again until the current tenant is evicted for nonpayment.

Most investment companies have a number of properties and can absorb a loss on an occasional basis. Individuals who invest in residential properties that they intend to lease must complete the required due diligence to assure themselves that the tenant is credit worthy, ethical, and doesn't have a history of property damage, a criminal record, or prior evictions. A rental application is just the first step in this process. Tenant reports verify that the potential tenant is who they say they are by checking social security numbers, driver's license, prior addresses, and of course that they have the financial wherewithal to make the rental payments.

Tenant credit reports verify any bankruptcies, short pays, loans and credit accounts, all important factors which should be taken into consideration when signing a rental or lease agreement. A tenant who has not historically been financially responsible in the past has a much higher probability of being irresponsible in the future. In other words if there have been problems in the past with making the rental payments on time and in full, those problems will most likely continue in the future.

While in most cases the landlord won't be held liable for any criminal activities that take place on their premises, their insurance will most likely increase.

If you're considering investing in residential real estate and leasing the properties, there are services which will compile a tenant report for you. It's money well spent.

Friday, August 22, 2008

Loans for Business Start Ups

Starting a business is pressure enough. Trying to find loans for business start ups is doubly difficult. Your local Small Business Development Center can help. The Small Business Development Centers are funded by the Small Business Administration and the local community colleges. Their counselors can provide you with direction on what types of loans are available for small businesses in your area.

Many cities have offices to help business start ups, as do many chambers of commerce. The cities themselves sometimes offer localized loan programs. These programs are to encourage businesses in disadvantaged areas of the city. Some of the city loan programs are tied to increasing employment in the area.

Another option is to contact your local SCORE (Service Core of Retired Executives) office, many of the SCORE participating executive come from the banking industry. They’ll know which bank is actively recruiting small business loan applicants and which banks aren't.

One word (okay more than one) about loans from the government. The US Federal government has an office called the Small Business Administration. The SBA does not make loans for business start ups directly but guarantees the loan to the financial institution who actually makes the loan. There are no grants through the SBA. Contact your bank to see if they participate in the SBA loan programs.

Don't overlook a credit card as a way to get a loan for a business start up. Many cards offer low rates for the first six months. If your personal credit rating is good you should be able to get a card (or two) to get your business going.

You might reconsider whether you actually need a loan for your business start up or whether there might be other ways to finance your business. You might consider trade and barter, getting merchandise on consignment, leasing equipment including office furniture, or obtaining 90 day payment terms for inventory you purchase.

Sunday, August 17, 2008

Marketing Strategies


When customers think of your company and its products/services what will come to mind? Will your image emphasize high quality and exclusiveness, or perhaps friendly, and value oriented. Fast response, high tech, or customer service oriented? Young and on the edge or traditional and well established? The image you define for your company is then carried through in your marketing materials.

Distribution or how will you get your product to market? What channels of distribution will you use? Will you sell directly to the end user or wholesale the product? Will you use outside sales representatives or an in-house sales force? Commissioned or non-commissioned? Will you license the product and have someone else market the product for you? If a website will you develop an affiliate program, partnerships and links with other websites?

Promotion or how will you tell your customers your product is available? Word of mouth? Referrals? Advertising through print, TV, newspaper, radio, direct mail, websites, brochures, coupon, or co-op? Trade shows? How will you use publicity?

Search Engine Optimization (SEO) are the methods used to increase the ranking of a site in the search engines so it shows up high. That's important because people searching for a subject usually will choose one of the sites on the first page to visit, usually one of the first 3 or 4 sites listed. The higher a site rates the more traffic will be generated from the search engines. SEO Consultants use a number of techniques such as meta tags, directory submissions, and backlinks.

Website Design is important to every business whether they have a physical presence or are strictly an Internet based business. A poorly designed site can lose sales and chase visitors away. A site that uses too many flashy bells and whistles can come off as unprofessional. Web Site Designers use many tools to develop a site that represents your business.

Friday, August 15, 2008

Marketing Objectives

Marketing strategy matters and its importance can't be overstated. Entrepreneurs have a tendency to fall in love with their product/service and just assume that everyone else will feel that same attraction. Too often all the company funds have been expended by the time the product is ready for market under the logic that very little marketing will be required once customers realize the product is available.

"Build it and they will come" works in the movies not in the business world. Search Engine Optimization, keyword strategies, website design and much more are part of marketing your company and product on the Internet.

Entrepreneurs often talk more about how much of the product they intend to sell rather than how they are going to sell it.

The Marketing Strategies consists of:

Marketing Objectives
Image Definition

Marketing Objectives

This is the nitty gritty of the marketing. The objectives should be expressed as either units sold, or revenues achieved, within a time period. Justify the objectives based on the size of the market, market trend, target market, and your marketing strategies.

Thursday, August 07, 2008

More on Angels

It has often been stated that angels do not have as much expertise with negotiations, especially with establishing a value for the company’s equity, as venture capital firms might. They may not have standard contracts or terms to present to the entrepreneur. It is important that the entrepreneur has an experienced attorney to consult with during the negotiation process.

Angels are remarkable in that they invest in companies at the riskiest stage of all, before the company has reached enough milestones to be able to say with confidence it will survive, let alone become a thriving, valuable business. Experienced angels know that they will likely not make money with the majority of businesses they invest in. But finding a “winner” can mean extraordinarily high returns on their invested capital, along with the satisfaction of watching a company they assisted grow and become a force in the marketplace.

Angels want both types of “returns”: financial plus a feeling of making a positive contribution. Entrepreneurs who wish to entice angels into investing must make sure they appeal to both these needs.

It is a mistake to not view angels as professional investors. They did not become millionaires by making naïve investment decisions. Entrepreneurs approaching angels need to be as thoroughly prepared as they would when approaching “professional” venture capital firms.

Another mistake is believing that there is an angel investor for every conceivable business idea. A business that will never be able to do more than provide a good living for the owners is not a suitable candidate for angel investment. They seek companies that have a good chance of growing rapidly, gaining significant market share, and have barriers to competitive entry—pretty much the same thing venture capitalists look for.

Angels do not want to invest in a yogurt shop in the strip mall. Now if you came up with a new formula for yogurt that could be franchised, it might be a different story.

Monday, August 04, 2008

Angel/Private Investors

When an entrepreneur says, “I need to go out and get venture capital,” what does that really mean? In one sense, ‘venture capital’ could be defined as any type of financing for an early stage company. But entrepreneurs who believe that they need to go out and contact Venture Capital Firms for their capital needs, can be starting down a long and frustrating path. Many of these firms are not terribly interested in seed stage or pure start-up companies, preferring to jump on board when the company has achieved a certain number of milestones in product development and securing customers for the product. And no amount of persuasion by the entrepreneur can get the Venture Capital Firm’s partners to deviate from their investment focus.

So who does assist the usually cash strapped start-up entrepreneur?

The financial life cycle of a company often looks like this:

Stage Need for Capital Amount Needed Likely Source

Seed Organizing company $ 50,000 Friends, family, yourself

Start-up Product development, launch $500,000 Angel investors

First stage Market penetration $2 million Angels & Venture Capital Firms

Second stage Expansion $10 million+ Venture Capital Firms

Wealthy individuals, often termed angel investors, are by far the most important source of equity capital for early-stage companies. Typically, these individuals have been successful entrepreneurs themselves, and as such have a keen understanding of the trials and tribulations of building a company. In the ideal situation, an angel investor, or a group of angels, can provide much more than financing for an entrepreneur: the angels can often bring organizational, technical, marketing, and financial expertise. And of critical importance, the angels often have valuable contacts with potential customers, vendors, and even sources of capital for the next stage in the company’s development.

Angels vary widely in their investment experience and their approach to working with companies they invest in. Some invest only in companies related to there area of expertise; in other words, an angel who built and sold an enterprise software company would look for other enterprise software companies. In general, however, angels are willing to consider investments in a broad range of companies: high-tech, traditional or “old economy” companies, distribution, manufacturing, service.

From the entrepreneur’s standpoint, there are two major difficulties with obtaining angel financing: how to find the angels in their local community, and how to handle the negotiations. Finding them is difficult because, in the past angel, investing has been done on an extremely informal basis.

The entrepreneur’s company was referred to the angel through a mutual friend or business acquaintance. And angels do not seek publicity for their investment activities, for fear they will be overwhelmed with entrepreneurs seeking capital. There are no reliable directories of individual angels as there are for venture capital firms. For the entrepreneur, this means that the best way to find angel investing is through diligent networking in their local business community, attending events and letting people know that the company is seeking financing. Contacting angel networks, and participating in angel online matching services, both described below, are additional ways to meet angel investors.

Friday, August 01, 2008

How Much Capital Do You Need?

As much as I can get! This would be the answer readily shouted out by most entrepreneurs. The fact is though, both over and underestimating the amount of capital needed to fund a business can have serious negative consequences.

Underestimating what you need can cause problems ranging from having to go through the whole time consuming fund raising process again, to having to shut down the company because funds have run dry. Having to go back to the original investors and ask for more money often undermines the entrepreneur's credibility with the investors and can cause a significant dilution in the founder's ownership.

Obtaining more than enough capital may seem like a blessing at first, but it can breed a lax attitude toward expense control. "If you have it, spend it," is not an advisable motto for a new company. If the investment takes the form of equity, raising too much money means that the founder's share of the business was reduced more than was necessary--and this violates one of the maxims of entrepreneurship: hold on to those equity points!

Typical advice given to entrepreneurs is to do a cash flow projection, or cash budget, and then add 10%, 20% or even 50% to this amount, for "contingencies." These contingencies are all the things that can go wrong in a start-up venture, all the unfavorable events that can negatively affect results.

Contingency planning is a skill that does not come easily to all entrepreneurs--even those with a finance background. How do you get the cockeyed optimist (what you absolutely must be to even conceive of the idea of the starting a company), who expects the best, to plan for the worst?

Tuesday, July 29, 2008

Money and your Startup Business

What is the most common reason small business fail? Lack of adequate funding. Money may not buy happiness but it is critical for the success of any business. Cash is king and don't confuse cash with profits. Your income statement may show a healthy profit and your bank account show a deficit.

Say Startup Finance to most entrepreneurs and they immediately think of venture capital. Venture capital isn't appropriate for probably 99% of startups. In 2007, according to PriceWaterhouseCoopers venture capital survey, only 3,914 companies received venture capital in the United States, and the majority of the funding was invested in established companies.

The August issue of Entrepreneur magazine states that $29.4 billion was invested in 2007. Sounds like a lot, but private investors, or angel investors, account for about ten times that investment amount and in quite a few more companies. Angel investors also invest in earlier stages, often when there really isn't a company, just the management team and a business plan.

Since angel investors have no reason to report their investments to the public, it's difficult to estimate exactly what their contribution is. However, the Center for Venture Research at the University of New Hampshire says that angel investors invest 30 times more money than VCs. And while the average investment per company for venture capital is roughly 10 million dollars, angels invest about $75,000 per company per investment according to a study done by Profit Dynamics.

So why do entrepreneurs often focus their capital raising efforts on venture capital firms? Probably the most common reason is that they're easy to find. Most VCs have websites where they not only highlight their previous investments but outline what types of companies they currently are looking to invest in.

Besides venture capital and private investors, there are other sources of capital for startup businesses. Loans, family and friends, and credit cards comprise some of the more easily accessible sources of capital. Many small business people use the equity in their home to fund their business. Or use a portion of their savings or equity investments.

What about Business Startup Grants? According the Small Business Association there are no grants for businesses. What they do offer are SBA backed loans that can be acquired through traditional lending sources. Any grants awarded by the US government are on a competitive basis for specific purposes and usually are related to research.

Private foundations offer grants, but most often the grants are awarded to nonprofit organizations.

Startup Funding is important to the long term success of your business.

Sunday, July 27, 2008

Can a person with Poor credit get debt consolidation?

Since debt consolidation features lower interest rates, it naturally relies on the credit score of the individual. It's easy to see why many with poor credit think they will not qualify for a debt consolidation loan of any kind. The thing is, everyone can qualify for a loan, regardless of their credit score, as there is always at least one lender who will loan the money. So if you have poor credit, yes, you can get a debt consolidation loan.

How to Get Debt Consolidation with Poor Credit

Unfortunately, getting debt consolidation with poor credit is not as easy as getting it with good credit, so you're going to have to do a bit of searching around to find debt consolidation loans. You can try looking online for lenders by using Google or any other search engine and typing in terms like “debt consolidation with poor credit” or “debt consolidation poor credit”.

Once you find a few lenders offering debt consolidation for those with poor credit, take some more time to research each of them. Make sure they're legitimate and aren't in trouble with Better Business Bureau or any credit agencies. To do this, simply type in the name of the lender followed by the term “review” and you should find a ton of information.

You should keep in mind that because you have poor credit, you'll usually have a higher interest rate for the debt consolidation; however, it will still be lower than the credit card interest rates themselves, so you'll still end up saving money.

Monday, July 21, 2008

Is debt consolidaiton possible with poor credit?

Is debt consolidation possible with poor credit?

You've dug yourself into quite a hole with several thousand dollars of debt on 5 or 10 different high interest rate credit cards. Your credit score is very poor due to all the debt you've accumulated and the missed payments that have ensued. Given the scenario, you may think that you have a long road ahead of you before you'll get out of debt—and that's definitely true. You might be thinking about debt consolidation and whether or not it's even possible with poor credit. You'll find out about it here.

What is Debt Consolidation?

If you've only heard of debt consolidation, but don't know what exactly it is, it's time to learn. In simple terms, debt consolidation is a technique of paying off debt in which the person who is in debt takes out one large loan to pay off all other loans. The newer, bigger loan is typically a much more secure loan featuring a cheaper interest rate and cheaper monthly payments than the individual loans would have. As a result, hundreds of dollars can be saved every month when using debt consolidation as opposed to paying loans off individually.

Wednesday, July 16, 2008

Boost your Management Team Part 2

Business Appraisers can tell you how much your business is worth and why. If you're considering refinancing, that business appraisal can help you determine how much debt the company can carry.

If you're considering selling your business the business appraiser can provide a ball park valuation. Of course the buyer will want to conduct their own due diligence and may even hire their own independent business appraiser, that's to be expected. The appraisal you have completed gives you a bench mark to start negotiations.

A Business Plan Consultant can expedite the business planning process. If you're looking for investors a well thought out concise business plan is critical. If you're considering starting a company, a business plan will help you improve your chances for success and avoid making serious mistakes. You may be the only one who reads this plan, although you should have input from a number of other people with business experience. A business plan is an important ingredient to the success of a start-up business.

Using Consultants to provide services you need on an outsourcing basis can be much less expensive in the long run than hiring someone as an employee. The consultant probably will cost more on an hourly basis but you only need their services on a project basis. Consultants can provide programming, technical assistance, and communications expertise, just to name a few areas.

When hiring a consultant, or consulting firm, ask for references and check those references. A good place to start the search for a consulting firm is to ask your attorney and accountant for recommendations.

Saturday, July 12, 2008

Boost your Management Team Part 1

A key element to entrepreneurial success is choosing the right people to be part of your management team. In fact, angel investors and venture capitalists both view strength of the management team as the major determining factor in whether they are willing to make an investment in the company. But it is also important for an entrepreneur to have outside advisors he or she can trust and rely on, an accountant being one of these. Even a start-up company with little or no revenues needs to have a good accountant available, as well as an attorney who has experience with young businesses.

Accountants are important members of a company's team. If you're a start-up or small business you may not have the resources to hire an accountant full time. There are software programs that can do most of the data entry but it's still a good idea to hire an accounting firm on a consulting basis to oversee your accounting systems, processing, and tax returns.

Attorneys are just as important, perhaps more so than accountants. An attorney can guide you to select the most appropriate way to set up your business. The best time to retain an attorney is before you need one. It's worth the money to know that if something comes up you have a legal expert who is familiar with your company. Attorneys have valuable contacts with venture capital firms and private investors. They know what is reasonable in a private offering , what isn't, and what must be included.

An attorney can also help you protect your intellectual property, trademarks, trade names and trade secrets. While it may seem expensive to have an experienced attorney on your management team it will avoid problems later.

More tomorrow.

Wednesday, July 09, 2008

Is franchising for you?

Wouldn't it be great if someone handed you a successful business that came with an owner's manual that told you exactly what you needed to do, when to do it, and how? Well that's pretty much what you get when you buy a franchise. You probably recognize the big names in franchising like McDonald's, or Holiday Inn, but there are lesser known names and franchises that can be started slowly and with much less cash.

A franchiser sells the rights to use their business, name, practices, and methods. When you buy a franchise you are basically buying a clone of a successful business and the method to reproduce that success. In exchange you usually make a cash payment up front which can range from a few thousand dollars to substantial amounts of money. You may also have to pay an on-going percentage of your revenues to the franchiser.

Every kind and type of business has been franchised. For example: there are pet franchises for those who love animals and want to use that love and knowledge in a business. If the perfect cup of coffee makes you giddy with delight you might want to consider coffee franchises. Or perhaps you like to get down to the nitty gritty and consider cleaning franchises . If you want to see a wide variety of examples, Entrepreneur Magazine has an annual issue devoted to the top 1000 franchises.

Different franchises vary as to how much freedom you have to run your business. Some franchises retain control of how you operate the business, how, what, and when you advertise, and the quality of the product. They can even mandate what suppliers you must purchase from. Check the contract to make sure you understand what you can and can not do.

A franchise can be a profitable business and has a proven track record, but they don't run themselves you'll still have to work, but at least you'll know that your work has a good probability of paying off.

Commercial signage on cars

It sounds like a good idea: put a vinyl sign on your car advertising your business or website. It works if you have a short and snappy url, business name, or phone number and your car is exposed to lots of other cars or pedestrians. Of course if you don't drive much and your car stays in your driveway or garage it's not going to get a lot of visibility.

There is a hidden problem with placing advertising on your vehicle. Some states will classify your car as a commercial vehicle if it has signage on it. Car insurance for commercial vehicles can be much higher than for private use vehicles. There are also ramifications if you get in an accident with the car, your business could be liable for any damages as well as you personally.

Complete auto insurance coverage is important, whether you use your car in your business or not, but it's vitally important if you do. There can be a fine line between using a private vehicle to conduct business and a commercial vehicle. For example you may use your car to get to your place of business and perhaps conduct errands such as picking up office supplies, but that doesn't necessarily make it a commercial vehicle. If your car is an integral part of your business, you make deliveries, pick up clients, or provide transportation then it would be considered a commercial vehicle.

Ignorance is not bliss in this case. If you're in an car accident and the determination is made that your vehicle was not properly insured as a commercial vehicle you may not be covered at all. Your home, savings, any assets, even your business could be at risk. Check your state regulations and talk with an insurance agent. If you would prefer to acquire insurance without an agent you can still do that.

Shop around for the coverage you require. You might be more comfortable with higher deductibles for damages but lower premiums. Your driving record, credit rating, make of the car and how many miles you drive each month all affect your premiums.

Sunday, July 06, 2008

4 Options to Get a Credit Card Even with Bad Credit

When you get turned down for a credit card because of bad credit, it's really not the end of the world. You still have many options, as you're about to find out.

Option #1: Your Credit Union/Bank

Most credit unions and banks now offer special credit cards for their customers. If you have a checking or savings account with a financial institution, check with them and see if they offer a credit card. If they do, apply for it. Chances are, you'll get accepted, albeit with a low credit limit, simply because you've proven yourself worthy based on your history with them. If, however, you've overdrawn your checking account, you may want to wait a few months and make sure you have a good history with them before applying.

Option #2: Local Stores

Generally speaking, getting a credit card from a place like JC Penney or Sears or Target is frowned upon because of the high interest rates these stores have for their credit cards, but for those with bad credit, they really don't have anything to lose by applying for a card with a store. In fact, it can be the start of re-establishing credit and getting a better card in the future. More than likely, if you apply for such a credit card, not only will you be accepted, but you'll probably get a decent credit limit. As long as you pay the balance in full, it'll be a good deal for you.

Option #3: Co-Signer

A lot of people with bad credit overlook one fact: if they get someone with decent/good credit to co-sign with them for the credit card, they'll most likely be accepted for even those credit cards that require good credit. Most people don't like asking someone to co-sign with them, as it can make them feel as if they're unworthy, but it is really a solid solution provided you're willing to make payments on-time every month on the credit card. If you have a spouse, getting a co-signer should be very easy.

Option #4: Secured Credit Card

Because of the fact that so many have bad credit, a lot of credit card companies now offer something called a secure credit card. A secured credit card is a credit card that is backed by the borrower's own savings account, so that if they spend too much, it comes out of their own money and not the company's money. While secured credit cards aren't for everyone, they're a great way of helping someone with bad credit to re-establish themselves.

Wednesday, July 02, 2008

Forex and the Stock Market: What are some differences?

Volatility is much less with Forex.

An individual stock can increase or decrease in value tremendously during a one day period. The stock market itself can climb 100 points and then spiral downward in a two day period. Currencies change much more slowly. On a day by day basis, volatility of the major currencies is less than 1%. Profits are made on fractions of a percentage point in change in value.

Buy in pairs: sell one currency and buy another one in the same transaction

Forex trading is done by selling one currency to buy another currency in the same transaction at the same time. Stocks are sold one stock at a time. Each transaction is independent and has no effect on the other if more than one stock is bought and sold at the same time.

Buying on margin

Trading on the margin or leveraged trading, as it is also called, means that you are not required to deposit, or put up, the full value of the trade or position. When trading stocks you can usually only buy 50% of the value of the stock on margin. The remainder has to be deposited in your brokerage account. The brokerage house charges interest on the balance. Trading through a Forex trading platform on the margin means only a small percentage of the lot has to be deposited and there is no interest charged. In fact up to 200 times the value of your account can be leveraged. In either case the buying and selling on margin can substantially increase profits and losses.

There is no centralized exchange system for forex trading. It's all OTC, over the counter. The transactions between the seller and buyer is conducted by telephone or via an electronic network. There are websites that provide the required network or you can buy software.

24 hours a day from Sunday through Friday

Stock markets open in the morning and close every evening. Not so with forex. The trading begins on Sunday 5:00 PM ET and continues until Friday 5:00PM ET. FX begins in Sydney as the business day starts then continues around the world as each market opens. Tokyo is first, then London, and New York. Forex traders don't have to wait for a market to 'open' to respond to currency fluctuations. They can react to changes caused by economic, political or social events in real time as they happen.

Tuesday, July 01, 2008

Forex: Is it for you?

Forex trading is the buying of one currency and the selling of another at the same time. The trading is always done in pairs. There is no physical market where the exchange takes place. The transaction occurs between banks, corporations and individuals. One entity is buying and the other selling. The market is open 24 hours a day and only closes for 48 hours from Friday to Sunday.

About 90% of the foreign exchanges are for profit, while 10% are completed by companies who have sold their goods and services in another country and want to convert that currency back to their own.

The internet has made it possible for individuals to compete in forex trading through online trading platform and using a Forex broker. Minimum accounts can range from a few cents to thousands of dollars.

Monday, June 30, 2008

4 Options to Get a Credit Card Even with Bad Credit

When you get turned down for a credit card because of bad credit, it's really not the end of the world. You still have many options, as you're about to find out.

Option #1: Your Credit Union/Bank

Most credit unions and banks now offer special credit cards for their customers. If you have a checking or savings account with a financial institution, check with them and see if they offer a credit card. If they do, apply for it. Chances are, you'll get accepted, albeit with a low credit limit, simply because you've proven yourself worthy based on your history with them. If, however, you've overdrawn your checking account, you may want to wait a few months and make sure you have a good history with them before applying.

Option #2: Local Stores

Generally speaking, getting a credit card from a place like JC Penney or Sears or Target is frowned upon because of the high interest rates these stores have for their credit cards, but for those with bad credit, they really don't have anything to lose by applying for a card with a store. In fact, it can be the start of re-establishing credit and getting a better card in the future. More than likely, if you apply for such a credit card, not only will you be accepted, but you'll probably get a decent credit limit. As long as you pay the balance in full, it'll be a good deal for you.

Option #3: Co-Signer

A lot of people with bad credit overlook one fact: if they get someone with decent/good credit to co-sign with them for the credit card, they'll most likely be accepted for even those credit cards that require good credit. Most people don't like asking someone to co-sign with them, as it can make them feel as if they're unworthy, but it is really a solid solution provided you're willing to make payments on-time every month on the credit card. If you have a spouse, getting a co-signer should be very easy.

Option #4: Secured Credit Card

Because of the fact that so many have bad credit, a lot of credit card companies now offer something called a secure credit card. A secured credit card is a credit card that is backed by the borrower's own savings account, so that if they spend too much, it comes out of their own money and not the company's money. While secured credit cards aren't for everyone, they're a great way of helping someone with bad credit to re-establish themselves.

Friday, June 27, 2008

With gas prices escalating it seems there ought to be a way to decrease the money we spend on gas. Not the science fiction method of converting your car to run on water instead of gas, or buying an expensive hybrid car that runs on electricity and gas. If you did that you'd have to own that car for the next bjillion years to come out ahead on the gas savings.

One method of saving on gas is to bunch your errands all into one trip. For example if you take your kid to school, also do your grocery shopping, pick up the dry cleaning, and return the books to the library on that same trip. Even better is to get a car pool going in the neighborhood where you only have to drive to school once a week. Picking up the other children that one time a week will use less gas than driving to and from five days a week.

When you're waiting in line at the drive up window at a fast food, bank, dry cleaning store. Turn off the engine if you'll be waiting more than a few minutes.

One way that will help you earn money on your gas purchases thereby decreasing the money you spend on gas is to get a gas card. Gas cards are credit cards that reward you for your gas purchases and other purchases. Every time you use the card you can get cash back, earn reward points for gas purchases. It's something to think about.

Thursday, June 26, 2008

Even With Bad Credit, You Can Get An Auto Loan

Getting an auto loan for people with bad credit isn't as hard as you might believe. An auto loan is a secured loan, which makes it a little easier. With a car loan, the lender will hold on to the title to the car until you have paid the loan in full, so they at least can repossess the car if you don't pay as agreed. Hopefully, that won't be the case, and you can use the auto loan to help rebuild a good credit history.

A lender will determine you can pay. They will check to make sure you're employed, and also that you can pay your current debts and the new loan out of your monthly salary. Expect to demonstrate at least three or four months of employment with your current employer, and some employment history before that. A lender will calculate what percentage of your income is already going to pay off debt - and as a guideline they will look to see if your debt is under 30% of your monthly paycheck. Every lender has their own in-house guidelines to follow. Remember that even though a lender has the car as security for an auto loan, they are not in the car sales business, and they would rather not repossess your car if at all possible.

If your situation is fairly stable, and you have regular employment, and are able to pay the debt you have now, then even if your credit is less than perfect, you will probably qualify for a car loan. Again, because a car loan is secured against an asset, the car, youmay qualify even if you have foreclosure, bankruptcy, or other serious credit events on your credit report.

When you're working to rebuild some good credit, getting an auto loan for can be just the ticket. You'll need a working vehicle to keep your job of course, and if you need a better car, getting a loan can help. You will have to make sure you pay the loan on time each month to re-establish a good credit history.

If you are stuck with a poor credit history, don't worry. Several lenders in the marketplace realize that many people with bad credit need cars. They may charge you a higher interest rate on the loan, and perhaps an application fee. You'll also need money down on the loan. One loan term to watch out for is a prepayment penalty, which means you'll pay a hefty fee if you pay off the car loan early - which could happen if you need to resell the car. Avoid prepayment penalties whenever possible.

It's also best to check with your bank and other lenders before turning to the car dealership for a loan. Most car dealers will not offer loans for individuals with bad credit, but the ones who do will likely offer very high rates and fees. Use them as a last resort.

Getting into a new car with an auto loan for people with bad credit is certainly possible. Just use caution when taking on new debt, and make sure you pay if off on time to rebuild your credit score.

Wednesday, June 25, 2008

Tips for Investing in Foreclosed Properties

Thanks to the explosion of the real estate market a few years ago and the amount of people who are now defaulting on their home loans, the real estate foreclosure market is booming. Unlike a decade ago when a foreclosure was almost certainly a broken down/condemned piece of real estate, now foreclosures are just as likely to be beautiful and well kept homes! This makes investing in foreclosed properties incredibly lucrative.

If you are interested in investing in foreclosed properties, here are a few tips to help you get started:

1. Do your research! Before you jump off the high dive, make sure you do your research on each and every property that you are thinking of investing in. If you can afford it, you should have each property professionally appraised before submitting an offer on the foreclosed property. Make sure that you aren't going to be investing in something that is going to be more of a "fixer upper" than you originally thought.

2. It is better to buy a foreclosed property at public auction. This is because sometimes homeowners who are facing foreclosure will take the money they make from selling it to you and, instead of using it to pay off their current home loan; they use it to purchase a new home. This means that, technically, the bank could still seize the house you just paid for and you have little chance of recouping your investment.

3. Investing in foreclosed property shouldn't be looked at as a full time job, especially if you are just entering into the field. It is best to start investing in foreclosed properties while you still have a full time job or some sort of steady income to ensure that you are still able to pay your bills while you work on your foreclosed property and wait for it to "flip."

Investing in foreclosed properties isn't for the faint of heart, but it can prove to be quite a profitable business! Make sure that you do your research and learn every thing you can about the field before you get started!

Monday, June 23, 2008

Venture Capital Conferences

Venture capital forums/conferences

Most regions of the US have a least one of these conferences annually. They are often sponsored by chambers of commerce, economic development agencies, technology associations, venture capital firms, or local venture capital clubs.

The forums are usually a combination of networking, speeches by experts in the field of raising capital, and presentations by a carefully selected group of companies seeking capital.

It is hoped by the conference organizers that a significant number of attendees to the event are venture capitalists or angel investors, or others who at least have access to investors.

Entrepreneurs are most interested in being included in the roster of companies making presentations. They need to keep several things in mind: there are usually hundreds of applicants to a well-publicized conference and only a half dozen or so companies selected to make presentations. The odds of being chosen are slim.

A public forum is not the best venue for some entrepreneurs who may not be comfortable with performing to an audience. Great care must be taken in organizing and practicing the presentation. If the audience loses interest in the first few minutes of the presentation, it is unlikely the entrepreneur will be able to get their attention. It is best to hammer home a few very important points rather than trying to present an entire business plan, or describe a complex technology in great detail. The most effective presentations tell the audience:

• What is truly great, unusual, groundbreaking about the business concept
• How this will result in investors being able to make money

These may sound like simple points, but in a large number of these presentations, the audience walks away not even understanding exactly what the company does.

The real benefit to these events for most entrepreneurs comes in the form of networking opportunities and social events, being able to introduce your company or your business idea to people who may have money to invest or know of people who do. Ideally, you may find someone who is so excited about your company’s prospects that he or she agrees to be your “champion,” recommending your company to potential investors and perhaps willing to help you in a mentoring capacity.

Wednesday, June 18, 2008

More on venture capital

Venture Capital Leasing

Some companies specialize in providing lease financing for equipment to high-tech start-up companies that wouldn’t ordinarily qualify. The financing can be provided at a higher fee to offset the risk and/or the finance company can have the option of purchasing stock at a preferential price if the company goes public.

Venture Capital Online services

Many intermediary-type firms have an Internet presence, which expedites the process of contacting them. Some perform a basic matching service, bringing companies and investors together. These services are not as prevalent as they were in 2000 and early 2001. As the environment for venture capital becomes more positive, more will pop up again. It is debatable whether established venture capital companies actually use these types of services to begin with. Most VCs have more deals and potential investment than they know what to do with.

Thursday, June 12, 2008

Venture Capital for Your Company

Venture capital funds are actually money management firms, sort of like mutual funds. Except instead of offering shares to the public, the partners of venture capital funds go out and raise money from large institutions such as pension funds. Most Venture Capital firms (VCs) are organized as limited partnerships. The partners in the firm may have some of their own money in the fund, but most of the money comes from outside sources, the limited partners. This is the major distinction between a venture capital fund and an angel investor: The venture capital fund invests money it has raised. An angel invests money he/she has earned.

In recent years, the average size of investments made by VCs has risen considerably. It is not unusual for $10 million or more to be invested in one company.

When venture capital funds raise the money from the limited partners, they do so on the basis of agreeing to invest in certain types of companies. Often the firm has a focus on one type of technology, such as networking systems. Many times, the fund will only allocate a limited percentage of its capital to early stage investments, which are inherently riskier, and devote most of it to companies that are already well on their way to success and just need capital to expand more quickly.

Entrepreneurs can save themselves a great deal of time by studying the types of investments the various venture funds have made in the past and only contacting those that are a close match with their entrepreneur’s company.

The good news is that there are many excellent directories, some online, of VC firms that describe the firms’ investment focus in great detail. Nearly all the major VC firms now have web sites that provide a wealth of information about how to contact them and about what investments they are particularly interested in making.

When preparing a business plan or executive summary to send to a venture capitalist, it is important to focus on the most important factors VCs uses to evaluate investments:

Quality of the Management Team
Size of the Company’s Market
Proprietary, uniqueness, or brand strength of the company’s product
Potential return on investment (ROI)
Company’s potential for growth

Which of these is the most important factor? Hands down, the Quality of the Management Team.

Wednesday, June 04, 2008

Does the term refinance loan scare you off. Here are a few tips that might make it a little less scarey.

Be realistic as what can be accomplished and what can't. Most mortgage lenders require that the appraised value of the home be at least 20% higher than the mortgage. That gives them a cushion in case values drop. The appraisal is based on what comparable homes in your neighborhood have sold for. That's different than what homes are listed for sale at.

Check your credit scores. Don't be unpleasantly surprised. If there are errors, such as a debt showing up that has been paid, get it cleared up before applying for a new mortgage. There is refinancing available for those with less than stellar credit but it's not at the low rates you might be expecting. You can check your credit scores online but you do have to sign up and provide some personal information. It's not instantaneous. Your identity has to be confirmed before you have access to your reports.

Don't wait until the last minute. Prepare the materials you think you'll need ahead of time. Most mortgage lenders want verification of income through tax returns, or paycheck stubs. They'll also want copies of bank and checking accounts, stocks, bonds, and other assets. If you're considering a major purchase put it off until you've refinanced your mortgage. Don't use your credit card or savings to finance that purchase.

Know what you want. There are so many alternatives from the standard 30 year mortgage. Mortgage rates and terms vary. Don't let yourself be talked into terms which may sound good in the short term such as an interest only loan, but may turn out to be trouble in the long term. Refinance at a level that's comfortable for you. You may think that taking out a loan that is as high as possible is the best course of action, but remember you'll have a bigger monthly payment.

Shop around and compare mortgage lenders before you get mortgage quotes. Check the fees they require, time it takes, application procedures, points, and interest rates. It's amazing the variance you can find.

Wednesday, May 14, 2008

Part 2 Tips to Pay Off Credit Card Debt.

Your next step is to set a target amount of money that you can pay in addition to the minimum payments. Without getting all tangled up in a complicated math explanation just keep in mind that for every $100 over the monthly minimum payment, you'll be erasing $1200 a year of debt. It will still take about 10 years to pay off the $10,000. But $100 a month isn't that much money if you break it down. If you eat lunch out every day at work that's $100 right there if you switch to brown bagging your own lunch. And that's what you'll have to do next. Figure out where you can find some extra cash.

If you rent movies two or three times a week, get them from the library for free instead. Switch from department store clothing to big box stores. Use coupons to save on groceries. Have vegetarian meals like pasta twice a week instead of meat. Use chicken instead of beef. Once you get started on where you can cut your budget you'll come up with lots of ways. Some of them entirely painless.

Put any cash gifts toward your credit card debt. If you get an income tax refund pay down the debt. Use your raise to pay off even more debt.

Some people are so overwhelmed by their debt that even if they implement the above steps, getting all that debt paid off isn't really possible without some help. If that's you, you still have a couple of options.

Debt settlement is using some of your cash and getting your creditors to agree to take the lesser amount as payment in full. That will hurt your credit rating and there may be some income tax consequences but the debt and the monthly debt payment will be gone.

Credit counseling is a possibility. The counseling service will set up a reasonable, although tight, budget and use every extra dime to go towards debt payment. They'll negotiate with each creditor to adjust the interest rate, waive late fees, and sometimes decrease the amount owed.

Consolidation loans are another option. In most cases you'll use the equity in your home to secure the consolidation loan. Each of your creditors will be paid and you'll have a fresh start.

No matter what you do, at least do something. That credit card debt won't go away by itself.

Credit Card Debt: Several Tips to Help You Pay Down Your Credit Card Debt

This is the first part of the article.

Summer vacation is just around the corner and you're still trying to pay off that holiday buying spree. Your credit cards are just about maxed out. Is there anything you can do? Yes. Here are tips for help pay off credit card debt.

It may seem extreme but the first thing you need to do is to put those credit cards away where you can't get at them easily. Only carry one card with you and use it only for emergencies. A café latte isn't an emergency even if you're tired and are having a caffeine attack. Either is being low on gas. An emergency means that you've had an accident and need medical care. Or your roof caved in.

Now drag out the most recent credit card statement for each account you have. If you have a student loan, store credit, bought furniture on time, or other unsecured loans get those statements out as well.

Make a chart listing the name of the account, interest rate, minimum payment, outstanding balances, and payment due date. Add all the minimum payments together to see what your total debt payment is each month. And add all the outstanding balances together as well. You might be shocked to see just how much money you owe and how much you have to pay each month.

Let's say for example that you're like the average family with $10,000 of credit card debt. If you only make the minimum payments it could take you up to 20 years to pay off that $10,000 because of the very high interest rates credit cards carry. If you have 5 cards each with a minimum payment of $50, you'll be paying $250.00 every month and not making much progress towards whittling down your balances.

Monday, May 05, 2008

Should You Sell Equity to Raise Cash for Your Company

Equity capital is money given for a share of ownership of the company. Equity can be provided by individual investors, sometimes known as "angels", venture capital companies, joint venture partners, and the sweat equity and capital contribution of the founders of the company. Equity providers are more interested in the growth potential of the company. Their objective is to invest an amount now and reap the rewards of a 5 to 1, or even 10 to 1, payoff in three to five years. In other words $100,000 now will be worth $1,000,000 in three years if invested in the right company.

Since the objectives of investors are different from lenders, the factors they evaluate in determining whether to invest are different from lending sources. Investors like to put money in companies that have the potential for rapid growth. Growth potential is based on the quality of management of the company, product brand strength, barriers of entry to competitors and size of the market for the product.

So Debt Or Equity Capital?
The answer is dependent on the answers to several questions: Why does the company require additional capital? What stage is the company at? What is the financial condition of the company? How much capital is required? What constraints will the financing source put on the day-to-day operations of the company? And finally, what impact will the financing source have on the ownership of the company?

Thursday, May 01, 2008

What Kind Of Capital Is Right For Your Business?

There are two kinds of capital: debt and equity. Both kinds are typically used by a company during its lifetime. Lenders have different objectives than investors and therefore look at different factors about a company when deciding whether or not to invest or make a loan. Keep in mind that while there are two kinds of capital, there are many ways to find money for your company.

Debt is money borrowed, which must be repaid at a set time period and generates income for the lender over that time period. Lending sources include not only banks, but also leasing companies, factoring companies and even individuals.

Lending sources look primarily at two factors: how risky the loan is; and whether the company can generate sufficient cash to pay the interest and repay the principal. The growth potential of the company is secondary; the primary considerations are the track record and asset base of the company. Usually the debt must be secured against the assets of the company and very commonly must also be secured against the assets of the owner of the company, also called a personal guarantee.

Assets of the company are not usually given full book value in securing a loan. In other words, if your inventory has a book value of $50,000 (or it cost you $50,000 to produce that inventory) a lending source will only give you 50% to 75% of that value. The reason being is that the lending source is not in your business and would have to quickly liquidate the inventory, rather than selling it at market prices.

Accounts receivable, or money that is owed to you from customers who have previously purchased your product but not paid for it yet, are also discounted. Using the same example, $50,000 worth of accounts receivable may only be worth 60% to 70% of that value to the lending source. Customers may not pay the full amount owed, or feel they have to pay for the product at all, if an outside lending source is demanding payment. And so on.…with equipment, land, buildings, furniture, fixtures and what ever other assets the company has, the same general rule applies.

The lender often requests that the personal assets of the owner of the company are pledged as a contingency and as a gesture of faith by the owner. Obviously, if the owner of the company does not believe in his/her own company's ability to repay the loan, why should the lending source?