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5 Ways to Take the Pain out of Your Bookkeeping

May 23, 2019


A few years back, SCORE conducted a poll asking entrepreneurs what was the worst part of owning a small business. A whopping 40% answered bookkeeping and taxes.

That survey wasn’t an anomaly. In that same year, TD Bank asked over 500 business owners that same question, with 46% listing bookkeeping as their least favorite task. A 2012 survey by Mavenlink had 41% of respondents giving that same answer.

So, it’s no wonder that so many small businesses put it off for as long as possible. If a person despises doing something, it’s not exactly going to jump to the top of their to-do list. Unfortunately, this can have a severely negative effect on a business’s performance.

So, what can be done to fix it? Short of miraculously developing a passion for accounting, what are some simple tricks to reduce the pain around bookkeeping?

1. Understand the purpose.

One thing that has helped a lot of our clients is understanding why they’re doing their books in the first place. To be able to file their taxes? To provide records to a bank for a loan? To give something to their annoying CPA to get them off their backs?

Sure, all of those things are real reasons. But they are far from the primary purpose that bookkeeping serves.

Accounting is called “the language of business.” A business’s books are the truest reflection of its operations. They show the successes, the failures and the opportunities. They provide data on cash flow, receivables turnover, seasonality, and the profitability of different products and services. They give a snapshot of the business’s performance – all backed up by cold hard data. As a friend of mine bluntly put it, “If you don’t know your books, you don’t know your business.” They can and should be …

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Debt or Equity? Determine the Right Capital Mix for Your Business

May 22, 2019


In such scenarios, raising loans through banks for small business or relying on individual investors becomes unavoidable. However, raising small business loans poses a challenge for startups, and business owners struggle to find the right capital structure or funding mix for their company. Differentiating between the two funding options, debt and equity, raises issues. In this regard, a clear demarcation between the two and the cost of capital to be incurred will help entrepreneurs make the right financial decisions, ensuring business growth and higher valuation.

What’s the difference between debt and equity funding?

Debt financing is a process of arranging funds for your business through borrowings. These borrowings can be in the form of secured or unsecured loans that will eventually have to be paid back to the lender at a certain interest rate. On the other hand, equity financing is a process of raising funds by selling off part of stocks of your business, or shares. Under this type of funding, ownership of the business is traded off in return of funds.

Is debt or equity better?

While the key underlying difference between the two types of funding structure is clear, further distinctions are vital for an entrepreneur to make the right decision.

In the case of debt funding, the downside is the payment of interest, which results in a greater sum than the amount repayable to the lender, making it a costly proposition. Moreover, the loan has to be repaid regardless of whether your business generates revenue. On the other hand, equity funding dilutes ownership and reduces the controlling stake in the business. The main obligation under equity financing is the need to generate consistent profits to distribute dividends.

Further, debt financing offers the benefit of tax deduction, as interest paid on debt can be deducted from a …

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3 Tips for Building an Investor-Ready Franchise Business

May 22, 2019


Franchisees usually benefit from a ready-made, tried-and-tested business model from the franchisor, which often includes a known brand, marketing strategy, and benefits associated with economies of scale when buying supplies and other relevant business inputs. 

That package of goodies, however, doesn’t come without a price tag – sometimes a hefty one, depending on the franchise brand you want to associate with. In addition to a franchise fee, which typically ranges from $20,000 to $50,000, franchisees often have to meet contractor and professional fees, as well as costs associated with signage and inventory. As with any other business, they also have to raise sufficient working capital to launch the business and keep it running until it breaks even.

Franchisees must always be on the lookout for funding opportunities to help with some of these costs. Because of the highly competitive nature of business funding, it pays to build a business that will not only get loan approvals from banks and other traditional lenders but also attract independent investors, including private equity firms that might have more favorable lending terms.

 

Editor’s note: Looking for financing for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

 

 

Here are a few tips to help you build an investor-friendly franchise business.

1. Cover all your legal bases.

When you’re looking to bring investors into your franchise business, remember that you’ll be adding another independent party, the investor, into an already complex web of interactions. To ensure things run smoothly, it’s crucial to take up the services of a franchise attorney from the get-go who will help with things like the franchise agreement, the franchise disclosure document, and issues of liability that often carry serious implications for franchise businesses.

Liability issues can weigh heavily on any business, …

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Talking Shop: What You Need to Get a Small Business Loan

May 19, 2019


While some small businesses try to scrape by with what they have, others look to banks, alternative lenders or the government for a quick infusion of cash.

For those looking for added funding, there is no shortage of places to turn. Traditional banks, nontraditional lenders and the Small Business Administration, via its loan program, all offer small businesses access to additional capital. Then you must decipher which lender will serve you best, and which will give you the greatest chance of success. [Looking for a business loan? Check out our reviews and best picks.]

As the head of small business lending and decision sciences at Capital One, Iskender Eguz has a ton of insight into the various loan options and what it takes to secure one.

Eguz has more than 15 years of experience in advanced analytics, strategy development, valuations, marketing and credit risk management. In his current role, he leads all aspects of Capital One‘s small business and business banking lending, including P&L and credit risk management, valuations and pricing, underwriting and portfolio management, data science, product development, and technology investments.

We recently had the chance to speak with Eguz about the various lending options, the types of loans available, how to apply for one and what mistakes to avoid throughout the process.

Editor’s note: Looking for financing for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

 

Applying for a loan

Q: What should small business owners do to prepare for applying for a loan?

A: As you prepare to apply for a business loan, you should keep the five C’s of credit, a common lending framework, in mind. The five C’s are capacity, capital, collateral, conditions and character.

  • The underlying business or the business plan should have
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Top Ways To Convert Subprime Leads Into Customers

May 19, 2019


You would be amazed to know that the subprime leads in America alone, is worth more than $1 trillion. Thus, it is necessary to understand how to convert these subprime leads to profits. 

What are subprime loans?

A subprime loan is a kind of personal loan, which is provided to a borrower that reluctantly applies for a subprime loan because of being rejected by the bank or private lender due to poor credit score. When banks and lenders do not facilitate people with a loan due to their highly risked income ratio, they look for the alternative and end up with money lenders and become high-risk borrowers.

What is a low personal loan interest rate?

The interest rate of a personal loan is between 8 and 34%. Usually, banks and credit unions offer personal loans at 20% interest rate. However, some private lenders can provide subprime loans at minimum 10% interest rate. Variations in the interest rate depend on the lender. With the enhanced competition and high expenditure ratio of the population, these lenders widen up the gate of opportunities to borrow money other than official financial institutions and sustain.

How are personal loans used?

A personal loan is a facilitation of money to the borrower depending on their income level. Sometimes, personal loans can be as simple as signature loans or credit loans, which can go through banks or private lenders. Personal loans include credit cards and signature loans from the bank. Loans from online lenders and peer-to-peer lenders often are personal loans.

Editor’s Note: Looking for a business loan? Fill out the below questionnaire to be connected with vendors that can help.

 


How to convert your subprime leads into your customers

It is evident that subprime leads are the best option marketers have to connect with customers who …

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