Articles on Small Business Financing

Ask yourself: Don’t overestimate and ask all the hard questions. How much can you finance yourself,how much will you need to borrow? Is your business cyclical or seasonal? Does it seem risky? Trust us, the banks will want to know. Your loan eligibility will depend on the answers.

Check personal finances: Prepare a worksheet of assets and liabilities. On the asset side, record details like cash at hand, savings, investments in stocks, bonds and real estate, life insurance policies, vehicles owned and other liquid assets you can think of. On the other, record your credit card debts, auto loans, real estate loans, insurance payments, taxes and other liabilities. The difference between the two will give you your net worth. This will come in handy while requesting a loan.

Prepare a family budget: Effective small business financial planning requires you to have a clear idea about your family’s annual expenditure. Prepare a budget that covers all the major expenses incurred and the income earned in the past year. Divide the expenses into fixed and flexible. Fixed expenses should cover such details as auto and insurance payment, mortgage or rent and taxes. Flexible expenses should cover all others such as clothing, entertainment, gas, repairs, gifts etc. Use this to make a survival plan for your family, in the event that your business does not make or loses money. To be on the safer side, save at least one fourth of your annual income and cut down on expenses that can be done away with.

Figure the costs of your venture: What is small business financial planning without a plan for your business? You need to calculate startup and operating costs. Ordinarily, start up cost comprises expenses on advertising, equipment, insurance, legal fees, licenses, remodeling, deposits and other one time expenses. Operating cost is what you need to run the business. You need to account for supplies, utilities, rent, wages, telecom bills and so on. Balanced against your net worth, the costs will give you an idea of how much you can finance yourself and how much will have to be borrowed. On an average, small businesses must have ready cash to meet with at least three weeks of operating costs.

Investigate financing options: The success of small business financial planning will lie in the sort of financing you finally opt for. You could borrow capital from banks, raise it through the stock market or opt for tradeable instruments like debentures. We recommend a mix, to help you leverage expenses and share risk.

Calculate break even: Once in the business, it is essential to know how much you need to sell before you cover all your costs. The formula to be employed is:

Total Fixed Costs/(Price per Unit - Variable Cost per Unit) = Sales at Break Even Point

Calculating this beforehand can help you plan targets for sales.

Keep an eye on the cash: Prepare a cash flow statement to keep track of your financial strength. Maintain details of cash balance at the beginning of the month, all cash received and paid out during the month, and what your balance at the end of the month is. Such statements effectively capture lags in sales that you would have missed otherwise as well as help you find avenues to save.

Do an industry comparison: Look up some industry reports and compare your profits with others in the business, to know whether or not you need to buck up.

Can’t wait to start? Try “201 great ideas for your small business” by Jane Applegate, for some neat ideas on starting your own small business. ”Financing your own small business” by Art Dethomas could give you a useful insight into small business financing.

Small business financing can be a success only when you do a reality check on your finances and your business. Apart from making a good financial plan, research your industry, look out for competition, and explore cheap financing options.

Raising Money For Your Business:

Finance A Business - Easier Than You Think
Do you want to finance a business? Read these smart suggestions to get the best deal.

Small Business Finance - Here Are Your Options
You will be surprised as to how many small Business Finance options there are. Make sure you've explored each one.

Business Start Up Funding - What Does It Really Cost?
Many entrepreneurs who look for business start up funding do not realize that there are many hidden costs to raising money effectively.

Your Options For Getting Finance:

Business Start Up Grants - Free Money?
Getting Business Start Up Grants is not as easy as it seems. Read the secrets here to discover how you can get free money!

Private Equity Finance - Understand How These Investors Think
If you are looking for private equity finance for your business, it is important to understand what makes Private Equity firms tick.

Raising Venture Capital - How To Get Those Investors
Do you have ambitious business plans with little personal funds? You need to look at raising venture capital. Understand the tricks of getting those tough investors to fund you.

Bad Credit Finance - How To Find The Right Lender
Getting bad credit finance for your business is not neccesarily difficult nor do the interest rates have to be high. This article shows you how you can get this sort of financing.

Business Loan Finance - Get Funded The Smart Way
Look at a business loan finance option to fund your business. It is cheaper than using a credit card if you do not need much money. This article tells you how to get a low cost loan easily.

Managing Your Business Finances:

Business Account - Choosing the Best Bank
We’ve put together the five most important factors to consider before choosing a business account.

Budgeting - Critical Plan For Your Business
We’ve put together some great tips to help you make the most of your business budgeting exercise.

Business Debt Consolidation Loan - Reduce Your Interest Payments
Consider a business debt consolidation loan if you are paying high credit card interest rates to finance your business. It can drastically reduce your costs, but beware of the pitfalls.

Debt Collection - It’s Payback Time
Doing debt collection is neither as unpleasant as it sounds. Here are some tips to help you get your money.

Small Business Valuation - What's Your Worth?
Get a small business valuation on your company with an eye to selling it can give you a wide variety of results depending on how and who does the valuation.

Investible Surplus - Dealing With The Extra Bucks
Investible surplus is what remains after all liabilities have been taken care of and therefore could be ploughed back into the business.

Personal Finance Issues:

Debt - How To Get Out of It
Do you find yourself perpetually running out of cash, before the month is over? This article shows you how to get out of debt quickly.