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.

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.

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.

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.

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.

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.

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.

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.

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.