Funding Tips for SMBs

Tips for Funding Medium-Sized Businesses in Today’s Environment

When running a business, one of the biggest problems many have right now, is obtaining funding. In the past, money has been much easier to borrow, but with current economic conditions, easy funding is gone. Businesses borrow money for any number of reasons including to hire employees or open up new locations. In reality, a lot of businesses of any size falter because of the lack of adequate funding. Here, are 5 tips for obtaining funding for medium-sized businesses in today’s environment.

Venture Capital
When running a medium sized business, one needs to determine how much they are willing to give up in regards to control. Venture capital money is usually obtained for higher risk, higher reward companies. This is an excellent way to get a serious amount of money to take a business to the next level. The downside with venture capital is; they end up owning a portion of the business. Oftentimes, they even want to control aspects of the day to day operations. Venture capital money can be used to start up a company, or to expand operations or ideas.

Traditional Banks
By the time a business is medium-sized, they will no doubt, have a banking relationship. Even though, receiving funding is difficult, an established business can still get money. Banks are exceedingly strict when giving out loans, so be prepared to have financial statements on hand. A business that over the long term has made money will have no problem qualifying for a loan. Establishing a banking relationship with a local bank is a terrific idea for a business owner.

SBA-Guaranteed Loan

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If a bank will not loan money, there are other options. One is through the SBA guaranteed loan program. There are SBA district offices all over the country where one can fill out a loan application. The people at the SBA will be able to assist one in filling out the application. Many medium sized businesses can get more consideration if they are hiring new workers or in a certain industry. The small business association can help one qualify for the maximum amount of money.

Angel Investor
If a business is viable and profitable, an angel investor may be able to assist. Like borrowing from a bank, one needs a solid plan for what they plan to do with the money. One would need to have financial statements and proof of profits to have a serious chance of receiving funding. Angel investors are different from venture capitalists in that an angel investor does not seek to run the operations of a company.

Sell Stock
A company that is seeking funding, can also sell a portion of their company. This is a way to gain funding, while still controlling the company. This is a way a business can get a large amount of money, to really fund operations needed for growth. Stock can even be sold to employees who are confident in the companies operations.

Anyone looking to obtain funding for their business needs to be prepared. Financial statements and a serious business plan are needed. This is because anyone giving out a loan wants to be sure they are dealing with a legitimate business. When obtaining funding, a business has an excellent opportunity to take expand exponentially.

Skylar Rickman writes about business, finance & more at www.creditreport.org.

Working Together, Working Better – Part 2

The Google Apps platform helps you and your team work smarter and faster by making it easy for everyone — employees, partners, vendors, anyone — to work together effortlessly across companies, teams and locations. Google Apps allows you to share and edit many types of files (documents, spreadsheetspresentations and more) in real time. Forget about the wasted time and efficiency spent emailing documents back and forth and worrying about the problems of version control. Storing docs in the cloud will mean everyone automatically has the latest version of any file. Doesn’t that just make sense?

You’re able work with your colleagues like you’re in the same room (even if you’re on opposite sides of the world). You will be able to arrange video chats right from your Gmail inbox or jump into the same document and edit it together as if you’re sitting right next to each other at the same computer. With Google Docs, you can share just with a couple of clicks and every member of your team has access to the right versions of any documents, spreadsheets or presentations. Everyone can jump in and make changes at the same time. No need for back-and-forth email attachments or versions that you can’t keep track of. Google Apps also helps you work with your partners, vendors and customers just as you would with your colleagues. You can do things like schedule meetings, share docs, hold video chats and create project sites with people outside your little world, reaching new locations, industries and markets.

So there you have it, Google apps for business helps you communicate in real time across organizations and long distances.

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Fees Exposed – 401K Disclosure Coming to You and Your Employees 3rd Quarter

With 72 million participants in the US and a total of $3 trillion in assets, you would think there would be a bonanza of information about the average 401K available.  That has not been the case but it will be so as of July 1, 2012.

Until now, you as the plan provider (plan “sponsor” and possibly contributor in the form of matching contributions to the plan) have only been required to ascertain that the expenses levied for services and investments are reasonable.  On July 1st all service providers must provide additional information about the compensation they receive to plan sponsors – and by August 30 the plan sponsor (you) must make these disclosures to plan participants.

Until now, it was OK to simply assess the reasonableness of investment fees and expenses – going forward you must assess the reasonableness of what the service providers get – even if it’s not from the plan itself.  And this information must be displayed in written reports to participants, quarterly going forward and annually for any investment related fees.

What this addresses is the fact that participants, most of them anyway, don’t believe that these plans cost much if anything. A survey published February 2011 by AARP, for example, found that 71 percent of those polled believed that they did not pay fees on their 401Ks. Six percent said they did not know whether fees were levied.  This means that more that 75% of plan participants are not aware of the costs of their plans!

A more shocking finding is that not only don’t participants know about fees, neither do some 30% of plan sponsors!

As a plan sponsor, you have a duty to pick a good plan and a good provider for your employees, and now you must display the costs to participants.  If this thought of disclosure causes you pain, maybe it’s time to find a new provider.  Some good options for small companies are cited here.

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Let’s Get Phygital!!! Phygital…

As a 2 year old outsourcing startup that services SMB back office operations for the likes of established firms and new economy businesses, PARR is often faced with difficult decisions about how to find and use facilities to better serve clients.  For all of the firm’s collective experience in complex transactions and professional service delivery, finding the right facility and long-term office arrangements has proven to be one of the company’s hardest challenges.

Given the emergence of the digital economy, real estate choices have grown for all firms.  But the volume of options can predictably lead to some paralysis.  Throughout the search for the ideal facility, Parr faced the constant dilemma of finding the right balance of a functional and attractive physical space with the needs of a flexible, modern and scalable technological infrastructure.

Maybe the whole episode would have been easier if the company learned early on that there was a name for this trend – “Phygital”.   Where have we heard that word before?

One Chicago firm describes the development as applied to commercial real estate:

The “phygital” trend – the blending of physical and digital commerce – continues to redefine the commercial real estate industry. Retailers such as Home Depot and Paypal, Foursquare and Walgreens, and Amazon are exploring ways to bridge the phygital divide. Tools and apps like QR codes and Belly bring the mobile world into the physical consumer experience. The use of social media among landlords is increasing, while traditional office spaces redefine their use as incubators for the next generation of internet giants.

We’ve known about the ongoing convergence (or collision, if you will) of the bricks and mortar world with the digital world for some time, but it was never so clear that the phygital trend has application to the process of site selection that small- and mid-sized businesses (SMBs) struggle with today.

Site selection is a well-established field (actually it’s a conglomeration of many disciplines) that engages some real-estate professionals full-time, and is important enough globally to draw the devoted attention of multinational firms that track the industry on a much larger international scale.  Real estate expertise is so valuable that you can find experts to guide your company’s site selection process within a 5 block radius or a 5 continent radius.  Don’t expect a glossy insert or double-sided brochure to convey the importance of these issues.  This stuff is the subject of white papers, full-blown analytics platforms, and dedicated site selection specialists, all of which cater to both supplier and buyer segments.  Global consulting giant KPMG has a whole vertical devoted to this area with its own brand identity under the Competitive Alternatives moniker.

In some ways the intertwined macro/micro views are like the yin and yang of the commercial real estate market – each exists in its own space, but is integrally bound with the forces of the other.  Despite having a principal with significant experience as a development specialist, Parr experienced first-hand the difficulty of applying that specialized academic and professional knowledge to its own operations, particularly in a quickly evolving local urban realty market like Chicago.

As they do for many SMB firms, the significant capital costs and onerous restrictions of long-term commitments common to commercial leases have proven to be a barrier to setting up shop in a permanent home for Parr.  Some professionals remind us that office costs are probably the second largest expense for most companies behind personnel and labor expenses, and other forms of human capital.  No wonder that it’s tough to pull the trigger on such a significant capital investment when firms are trying their best to remain capital lean. 

Can companies ever commit to a home when they covet their mobility?  This fear of commitment sounds a lot like a bachelor’s restlessness to maintain freedom at all costs.  I guess corporations really are people too, right?

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