Funding For Your Business

Raising Finance for a start up business or securing expansion finance for an established business can be an overwhelming experience.

There are various sources of external finance available such as relatively simple overdraft facilities or European Grant funding programs which require detailed applications. Although taking on an additional financial commitment can be daunting, the rewards for the growth of your business can be substantial.

This article details all of the various options open to you should you want to raise finance for the growth of your business.

OVERDRAFTS

Overdrafts are one of the most common short-term sources of finance available. They provide a simple and effective way of financing the growth of your business. If your business has a good credit history, your bank will require little information from you to secure a short-term overdraft. Once they have the confidence that you are able to pay it back, the additional borrowing can be instant. It is important that you use the overdraft facility wisely to minimize the cost. Charges for exceeding overdraft limits can be substantial. Use it for seasonal fluctuations in sales, not long term financing.

Why overdrafts?

They are simple and relatively easy to set up.

You only pay interest on the amount you use.

Pitfalls

In most circumstances, the bank can demand repayment at any time.

The overdraft may have to be renegotiated approximately every six months

Before you approach the bank, put together a proposed cashflow forecast for 12 months to ensure your needs are accurate and that you are able to keep within the limits.

LOANS

Business loans will provide you with longer-term finance, usually up to 8 years. You will probably need some form of business plan to present to the bank or loan company in order to inform them of the viability of the business and your ability to make the extra payments . They will want to see a proposed cashflow, a profit and loss account and any previous financial accounts you have available. You will also have to prove that you are investing the additional borrowing into the business.

Why loans?

You can normally secure a fixed rate and spread the payments over a term that suits you
You may be eligible for a loan such as “Women in Business” or “Small Firms Loan Guarantee Scheme” which provide lower interest rates or special dispensation should you not be able to keep up with repayments.

Pitfalls

If you fail to make a payment on a loan, you will acquire a default status which will affect your business credit score.
You may need to provide personal security for the loan

GRANTS

There are currently hundreds of Government, Council and European grants available for small businesses. The grants are allocated to businesses to meet political or economical objectives and most require no repayment. Many of the funding programs are not promoted as the demand would outweigh the supply. Grants will typically be available under the following criteria:

If you have a clear project in mind such as office refurbishment or staff recruitment.

If you are able to part-finance the project yourself.

If the project is planned in the future, not already undertaken.

If you have a business plan.

Grants are normally allocated according to sector or location. Some regeneration areas are awarded finance to assist businesses, while other funds are allocated for specific industries.

Local, small value grants normally have a simple application procedure while high value grants will require detailed applications. In most cases you will be expected to have a sound business plan and financial forecast.

HIRING OR LEASING

Hiring or leasing equipment can ease your cashflow by allowing you to spread costs and minimise capital expenditure. Equipment available for leasing can include vehicles, office equipment such as printers or technical equipment. You must ensure of course that the financing does not exceed the life of the equipment as this will result in negative equity. In addition, you can also upgrade equipment as new technology comes onto the market.

FACTORING

Factoring allows you to raise finance on outstanding invoices. This is not a short term fix for cash flow problems – factoring companies will require at least a 12 month contract and you will be required to factor all of your invoices during the contract period. You generate a clients’ invoice and send it to the factoring company who will then pay you typically 80 – 85% of the invoice value. They will then collect the full invoice from the client, thereby retaining the balance as their fee. This can be a good system to use for cashflow purposes, but you will need to ensure your profit margins can afford to incur this loss.

INVOICE DISCOUNTING

Invoice Discounting works in a similar way to factoring. The difference is the customer has no knowledge that you are using an invoice discounting service. You distribute your invoices in the usual way and send a copy invoice to the Invoice Discounting company. You receive an agreed proportion of the invoice value from the invoice discounter immediately. When payment is received from the customer you are required to submit payment into a dedicated account managed by the invoice discounter. They will then settle the amount owing to you less fees and interest. The cost of this service is dependent upon your turnover and customer base but typical interest rates will be 1.5 – 3% above the Bank of England base rate.

BUSINESS ANGELS

If you are looking for a higher level of investment than the banks are willing to supply, you may consider sourcing a business angel. Business Angels are usually wealthy individuals with an interest in business who will provide capital in return for shares in your organization. They will often seek involvement in the business which limits the control you retain but they can also offer sound advice and many are entrepreneurs themselves and have experience of running a successful business. Business Angels will typically be looking to invest between £10,000 and £750,000.

VENTURE CAPITAL

Venture Capital or Private Equity finance is very similar to Business Angel finance. However, VC’s are willing to invest much larger amounts of money. Venture capitalists are typically large organizations looking for opportunities to return around 30% of their investment per annum and will not be interested in investments of less than £250,000.

Whatever funding you select for your business, ensure that your ability to repay (if appropriate) is investigated before you make a final decision.

The 5 Biggest Home Business Mistakes

Unfortunately the sad fact remains that 97% of home business owners will taste failure! But why is this? Why in an industry which creates more millionaires then any other is there such a high rate of failure? Well the simple answer is that most home business owners have no idea what steps they should be taking in order to be successful and as a result they are simply lost and there are 5 common mistakes that most home business owners will make…

1. Treating it as a hobby instead of a business. Too many people get involved in a home based business opportunity with completely the wrong mindset. They tend to look at their business as a lottery ticket, crossing their fingers, hoping that large pay cheques will eventually come to them. In others words they are amateurs and not professionals. Successful home business owners have a clear vision of what they want to achieve with their business and they take constant and effective action towards their goal. They understand it takes work and dedication to make their dreams a reality and they take fully responsibility for every area of their business. The amateur on the other hand will choose to work on their business when it is convenient to them and will often put things off that need to be done. Excuses always come up as to the why they can’t work on the business. They have other commitments which continue to get in the way, the gym, the party, the washing, the beach. A home business needs to be treated as a “business”

2. Not getting the right training. If a person wants to become a pilot then they must go through the appropriate training before they will be an accomplished pilot. It is no different with a home based business. It is essential that home business owners get appropriate training and education in all areas of running their business. Successful business owners continually invest in their own training and education and they understand that building up their knowledge is a continuous process. There will never come a point where a business owner can stand up and say they know it all and don’t need to learn anymore. Obviously anyone new to the world of a home based business must invest a significant amount of time and money into learning the fundamentals as quickly as possible. The company and more importantly, the sponsor, should be responsible for offering appropriate training and support to all new associates, but ultimately it is the responsibility of the individual to invest in their own training and education.

3. Not building relationships. Success with a home-based business is all down to relationships. Building up trust and creating bonds with people is a must. Because people will only do business with people they know, like and trust. Understanding people’s needs and wants and offering solutions to help people get what they want should be a top priority for any home business owner. The home business industry is often referred to as network marketing and therefore networking and creating bonds with people is of up most importance. In the age of the internet many home-business owners think they can simply hide behind the websites and emails. But unfortunately these people will only achieve a certain level of success. There is nothing wrong with using websites and emails of course, it is just important that a connection is created on a personal level as well.

4. Not following a proven system. When it comes to a home business there is no need to reinvent the wheel. Anyone just stating out needs to find a company, team or sponsor who is achieving the kind of results they want to achieve and plug into their system. This could be a turn-key automated marketing system or a certain way of working and a methodology which has created success for others. Simply find successful people and successful systems and follow them. And remember, the network marketing industry creates more millionaires then any other, so there’s plenty of successful people and systems out there to follow.

5. Not telling stories. The majority of home business owners have a tendency to offer facts, facts and more facts. They will explain how long the the company has been in business, how great the compenstation plan is, how wonderful the company’s product is and an infinite number of facts, features and benefits. There’s nothing wrong with sharing these kind of details with prospects, but if this is all that is done then problems will arise. Why? Because people do not connect emotionally to facts and figures and it is emotions which motivate people to action. Connecting with people on an emotional level is essential for any home business owner to be successful. Personal stories and accounts need to be shared. What challenges have been overcome? What successes have there been? How was it decided that a home based business was right? How did it feel when the boss was fired? When these kind of stories are shared either via a website or during personal communication an emotional connection is made and people are inspired to take action.

Anyone stating out with a home based business needs to be aware of these 5 common mistakes if they want to achieve the level of success they have envisioned for themselves.

Social Marketing For Free Network Marketing Business Leads and Traffic

Everyone wants something for nothing. It’s true. In a Network Marketing business, it is no different. Why is it, then, that we still think we have to pay out loads of money, particularly when it comes to business leads, to make money? Well, there are a lot of business opportunities out there that would like you to think you must pay to play. You can get plenty of things for free if you just take the time to look around.

We all want to believe that because we think our Network Marketing opportunity is great, so will everyone else that sees it. That belief alone will not help us generate Network Marketing business leads. That still doesn’t mean we can’t learn how to market our Network Marketing opportunity for free. That reminds me…your prospects have to be able to find you on the Internet in order to become your business leads!

So, before I get off on a tangent, I want to state that you CAN expect to get tons of business leads and traffic to find you on the Internet, without spending any money at all!

Start Getting Free Business Leads with Social Marketing.

Social Marketing is a form of Internet marketing that attempts to reach marketing goals by communication and participation in various Social Media markets such as MySpace,Facebook, YouTube; and bookmarking sites like Digg, StumbleUpon, Squidoo, and others, like Blogs.

What this means is that you can change the way you obtain business leads for your Network Marketing business opportunity, and remove some stress from your life. Be more social; take time to learn new Internet Network Marketing training concepts, and spend less money by learning free methods of attracting business leads to you, instead of paying for them, or hounding them. Think about what a unique tool this could be for your Network Marketing business!

How to start Attracting Free Business Leads:

By using Social Marketing methods, and socializing on social media sites to attract leads to you instead in hunting for them, you can enter the Social Media Sites and set up house with this new Internet Network Marketing style. This is a form of Attraction Marketing, which is the practice of attracting pre-qualified prospects, or business leads, to find what it is that you are offering on the Internet. So get started on setting up some new social marketing sites and make some friends! Try those listed above, or there are tons of other sites to choose from.

How Does Social Marketing Bring You Business Leads?

Just think of the extremely successful people you know in Network Marketing…what is different about them? In most cases, they are extremely likable and charismatic; some may say…lucky. People are drawn to them like a moth to a flame. Business leads just seem to appear. I think that’s the key…business leads come to them! They’ve established themselves as a “likable leader”. I doubt they chase any prospects, or pay for them.

That’s the way I want you to think…that success comes easily to you by just being yourself. You are already a leader. Your prospects just need to know “who” you are…without your “sales hat” on. You can do all this with Social Marketing; on sites like FaceBook, MySpace, YouTube, StumbleUpon, and others. Work on being a friend and sharing your knowledge, but in a giving way, and not selling. People usually do business with people they like and trust. Business leads will be attracted to you! Doesn’t that sound a lot less stressful? And, it doesn’t cost you a dime!

Next: To learn techniques on how these Social Media sites work best for business and Internet Marketing, just search the Internet for free training on Internet Network Marketing. You can find valuable training information at a support site for Internet Network Marketing trainees. I found that I really needed this type of support to keep my training on track when I was just starting out as an Internet Marketing Coach.

You can quickly learn how to set up these sites correctly and then learn how to get business leads and traffic to find your sites without sending unsolicited network marketing information. You can find tons of free Internet Network Marketing training on how to learn Social Marketing in order to help prospects, or business leads, find you and your business opportunity.

Once these wonderful, free business leads start coming to you, you must have a way to find out who’s interested in what you are offering. You need to have a “lead capture page” in place in order to capture the information of those who have “asked” for more information, or to be kept informed. After all those years of verbally bludgeoning people over the head to pay attention to your network marketing business opportunity, they simply ask to be associated with you, the leader! It’s a beautiful thing! I initially joined a free Internet Marketing training class to help me set it all up.

Last: There are Internet Network Marketing coaches out there, like myself, that enjoy teaching how to successfully bring in free business leads for your Network Marketing business. We are all beginners at some point, in something. And, it’s much easier to learn from someone willing to share what they’ve learned, than to stumble around and learn everything the hard way. I have plenty of my own examples to share about that subject!

Just remember the principles about being yourself, having fun, making friends, and presenting your Network Marketing business opportunity in a giving and “Attractive Marketing” manner. And don’t forget the Golden Rule, “Treat Others as You would Like to be Treated”.