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Archive for March, 2011

When thinking about carrying out a company formation and running a new business in the UK, your main worry may well be finance. Every business necessarily needs money to get off the ground and to keep running into the foreseeable. A great deal of businesses fail in the first year. So it can be a scary thought, taking the risk. However, the benefits often outweigh the risks and many other businesses before you have managed it, so why can’t you? Luckily, the government is keen to help small business thrive. They are offering a number of grants, tax reliefs and other sources of help to support new companies and their continued growth. These aren’t the only options. There are a number of financing options available to those entrepreneurs who need them. Which is suitable for you will depend on both your circumstances and your intention. Every business is different.

Below is a list of the top 5 popular ways to finance a new business. It’s not necessarily definitive, but we hope you will find it useful.

1. Raiding the savings

Many new companies start this way. Using savings, borrowing from family members or maxing out personal credit cards as a way to kick start a business venture. It can be a risky undertaking, but may pay off in the long term.

2. Bank Loans

Using a bank loan is probably the second most common approach adopted by new companies. With a suitably prepared business plan and sufficient security a company may be able to acquire a substantial loan from the high street banks. The downside is the interest rates a company will be likely to pay and the length of repayment, meaning a long term cash flow burden on a growing company.

3. Grants

A number of grants are available for new companies, from a variety of sources. Local authority, European Union and general government. They are usually granted for specific criteria for the advancement of business which the authority deems to be in their interest. As such, grants are often harder to obtain than other sorts of finance, but are preferable due to their nature. Grants for things like Research and Development can be found via the Solutions for Business scheme provided by central government. A number of finance “products” are available under this scheme, including the Enterprise Finance Guarantee which offers help to those businesses seeking loans that might not otherwise be able to acquire them. Advice on these financing options can be found using your local Business Link office.

4. Factoring

Certain businesses may be able to take advantage of this finance method. Factoring is quite simply a transaction under which a company sells invoices to another business in order to acquire funding quickly. Usually the invoices are sold at a discount to the other business who then recovers the debt. It necessarily means that the business makes a loss, but also allows swift finance which can be used in the short term to cover debts or finance new projects. In some industries this is a very common occurrence and perfectly normal practice.

5. Business Angels/Venture Capitalists

These are wealthy individuals who are specifically looking to invest in new companies and fresh ideas. They may be able to invest large amounts of money in the right project but in turn will likely want a share of the business or some level of input into how it is run/managed. This can be off putting for some new business owners who want to run it their own way, but at the same time, the experience and knowledge may be of great benefit to a new company in the early stages of growth.

If you have a good business plan and know where you are going to get your finance from, why not kick start your new company today by carrying out a low-cost, professional company formation with the UK’s leading company formation agent? We’re keen to give support and guidance to new businesses, helping them the thrive and grow. Running a new tax, efficient company has never been easier.

If you are a small business owner, you know there was welcome relief in the American Recovery and Reinvestment Act of 2009, popularly known as the Stimulus Act. So what was so great about the Act? Among other things, section 501 reduced the fees paid by borrowers so they did not have to pay the dreaded “SBA loan guarantee fee”. This was traditionally 2% of 75% of the loan amount on the large 7(a) loans. Also, section 502 increased the guarantee percentage which pays banks their losses upon default, from 75 to 90%. Cause for celebration? Absolutely. But we must temper our excitement with the fact these benefits may no longer be in effect if Congress does not appropriate more money. In fact, some pundits think it may run out in December based on the volume of SBA loans.

To understand this, you have to get a grasp on why more money is needed. Prior to the Act, banks were given more incentive to make loans because the SBA would step in and pay their losses by a certain percentage. When the guarantee rate went from 75% to 90%, coupled with a higher default rate because of the economy, the Feds had to shell out more money to the banks. And then there was the waiver of SBA guarantee fees which are subsidized by taxpayers-you and I. Without the money, those incentives go way.

So, things were really percolating along as a result of these incentives. In the beginning of 2009, the SBA approved approximately 165 million loans. But by July and August, the figure had risen to 320 million and 400 million respectively. More loans simply meant more risk-increased expenditures by the government.

And so what is Congress doing to find the extra funds? It is probably unlikely to secure additional appropriation in the new Stimulus Act amendments since they have already passed committee and did not include such measures. Instead, Congress is looking into any unused money under our friend (depending on what political aisle you’re sitting on) the Troubled Asset Relief Program (TARP). This originally allocated funds to prop up the secondary market. Amendments to that bill could provide some of the appropriation necessary.

Translation: as small business owners we don’t care what you call it or who’s doing it, just as long as these incentives continue. The fact that there are actually banks making small business loans does wonders to provide needed capital and at least keep our hopes alive in this anguishing financial market.

So what does that mean to me as a small business owner? I’m not interested in a large loan with a lot of paperwork. I simply want a streamlined loan application where I can receive unsecured monies in the neighborhood of 5K to 50K . The last thing anyone wants to see is this type of loan going away. Well, you are in luck. Because of these incentives, banks are actually making these loans under a popular program called SBA Community Express. It does not require business plans, tax returns, or financials , and is now running at the rate of approximately 7.75% or $60 per month for every $5,000 borrowed. We can only keep our fingers crossed that this golden egg laid by Congress remains available.

Business is all about getting to know other people. Whether it’s meeting clients, finding a business partner or making connections in your own field, sooner of later you’re going to need to do some networking. But if you’ve ever been to a networking event, you know that not everyone who shows up is really prepared for action.

Here is a quick ABC primer on the basics of effective business networking to keep your networking strategy ready for action at any time:

A is for Act, as in Getting It Together. The very first step in business networking is to know what you want to achieve, why and how. Are you looking for clients, trying to expand your market, hoping to find a business partner or scouting for venture capital to launch your next great product? You can waste a lot of time and energy networking without a purpose. On the other hand, once you know the answers to these questions, you can tailor your activities to tightly target your needs and maximize results.

B is for Business Card. Your card is your portable business face; make sure it’s up to snuff. At the very least, it needs to have all of your pertinent contact information up-to-date and accurate. But in most cases it pays to go the extra step. Your card has two sides – why not use them? The back of your card is a great place to include samples, portfolio shots, charts, discount codes, service plan comparisons, etc. The key is stickiness – the longer your contact keeps your card, the better your chance of getting the call. If your card provides value beyond just acting as a carrier wave for contact info, they’ll hold onto it much longer.

[If you want to get really creative, one cool option is Moo Cards (www.moo.com). Moo cards are printed on very heavy art card stock and cut into a non-standard size, featuring graphic images on one side and text on the other. Their unusual shape, size and feel attract and hold attention. They're perfect for artists, photographers, architects, models - anyone, really, who can benefit from something a bit hipper and more visually interesting.]

C is for Cyberspace, as in Online Networking. Should your networking profile be up online? If so, where? While there are no universally right answers to those questions, there are a few things you can ask yourself to help clarify the issue. Are your clients likely to go online to research you and your company? Are prospective clients likely to be hanging out at online networking sites, or looking for you there? Is your field heavily represented in online networking sites? If so, then online networking is probably a good idea, because people will expect to find you there and may wonder why if they don’t find you. On the other hand, if you’re part of a conservative industry (banking or law, for example), online profiles might seem unprofessional at any but the most rigorously businesslike sites.

As for which site to set up shop on, the best option is to browse a few and get a feel for the population. MySpace is great for musicians and artists, while Facebook tends to attract the college-grad set. LinkedIn leans toward the white collar and corporate, while Ryze caters heavily to the self-employed. It’s all a matter of what you do and who your customers are. About.com has a whole page of articles on Online Networking (http://entrepreneurs.about.com/od/onlinenetworking/Online_Business_Networking.htm). Check it out for more ideas and answers.

D is for Dating (In a Strictly Professional Sense, Of Course). Now that you’ve got your act together, you cards are ready to go and your online profile is up and running, it’s time to actually start meeting some people. The obvious choice is to attend a networking or other professional event such as a conference or workshop. But before you go, step back for a moment and remember what we said at the beginning of the article. If you’re trying to meet prospective customers, then you’ll want to be with a completely different group than if you’re looking for venture capital or trying to track down collaborative business partners. Being picky about where you network will save you a ton or time and effort. Oh, and one more thing – before you go, contact the host or hostess and ask them for a list of attendees. That way you can learn ahead of time who’s going to be there, and who you’re most interested in meeting.

E and F are for Effective Follow Up. There are actually 3 F’s in business networking. Follow up, Follow through and moving the relationship Forward. Without these actions, you’re just socializing. Follow up is the first step – at the earliest opportunity, you should follow up with everyone you exchanged cards or otherwise connected with. When doing so, don’t get carried away – be brief, on point and professional. Step two is to follow through – if you made a promise to send along an article or make an introduction, do it now (before you forget). Finally, move the relationship forward. Never leave one connection (email, lunch date, phone call, etc) without making plans for the next one (follow-up letter, another lunch, a phone call, etc.). Your goal is to become part of your connection’s schedule, not something extra to remember in addition to all the other stuff in their life.

Some things are not easy to get like the best brand strategy for your firm that requires the expertise of a well seasoned brand strategy company. Thinking about big stuff like brand strategy may seem overwhelming to you as an executive of your company, but look at your business and the path where it is now heading to and you can’t help but think about how you can manage to survive even in the midst of a worse global economic crisis. How can your products and services stand out in the midst of severe competitions and be known from among the rest.

Considering a brand strategy company as the means of keeping your company afloat nowadays is nothing new. This has been the avenue through which many of today’s giant firms have evolved, from just being a small and seemingly insignificant business entity that endeavors to thrive through the ups and downs of the world’s economy, to what they are now, progressive and making a highly positive impact in the marketing industry all over the world. Their brands can be seen marketed, used, and gaining people’s loyalty in the whole face of the globe.

Think big and achieve big things for your business not only for you as the owner but for your employees as well. You just don’t have any idea of what great things you can accomplish when you are focused on getting your dreams. Of course, the business world is not fantasy world where you can do things in just a snap of your fingers, or be who you want and get what you want by just waving your wand in the air, or reciting some magical sentences. The business world is real world with real people to deal with and real issues to work out. The good thing is that real success comes if you don’t give up.

Fortunately, as it has always been said, no man is an island. Thank goodness for the ties we have with people, friends, families, and business partners. Knowing that we are not alone in this life and in the business venture we tread on makes us feel good and realize there is hope for things to get better especially in business industry. Yes, things can be hard at times. But when you know the art of delegating tasks and motivating people to take their part for a just cause, things would become bearable and success can be seen from the horizon.

A brand strategy company is an industrial firm that takes away some marketing burdens off your shoulders. Instead of you doing the tedious task of creating and developing brand strategies for your firm, they will do it for you. Of course, they will charge you a fair amount for doing the job. But if your concern is getting your desired success for your industry, then getting the help of a brand strategy company is worth every cent you spend for them because the outcome would be multiplied several times.

For professionals who specialize in buying new pieces of property, the sluggish state of the economy can actually be very beneficial. Although the global economy is showing signs of recovery, it’s still far from being at its peak. As a result, many professional home buyers are finding lots of great opportunities to add new properties to their portfolio. If you’re currently in this position, while there may be lots of quality opportunities available to you, that doesn’t mean that there aren’t any challenges to doing your job. One issue that many professionals face is securing the funds to complete this process in a timely manner. Being successful in this business is all about getting the deal done, so it’s important to have access to adequate funds when it’s time to close a deal.

If you’re looking for a reliable way to get this financing without dealing with lots of hassles, bridging finance can be an excellent option. This type of finance can come from a bank or another type of financial institution. Bridging finance works by providing you with financing based on the value of your home. Depending on the institution, the value assigned to your home can be determined in a variety of ways. Because this process is fairly simple to complete, it has lot of benefits for professionals who are in the market to pick up new properties. One of the best aspects of this kind of finance is that it’s a quick way to give yourself a substantial cash flow. Liquidity is very important in business, and this is an option that can give it to you.

Another reason that so many professionals choose to use bridging finance is because it usually comes with attractive rates. Instead of dealing with the extremely high interest rates that are associated with other kinds of financing options, bridging finance rates can help you maximize your profits on a deal. This type of finance can also work well because it’s not only limited to your personal property. If you already have other properties in your professional portfolio, you can use this type of finance with those properties as well. Because the terms are so attractive, it’s easy to see how you can use bridging finance to build up an impressive list of properties in a fairly short period of time.

Bridging finance is attractive thanks to the fact that you have control over how you pay it back. With some forms of financing, even if you want to pay everything back ahead of schedule, you’re not allowed to do so. This ends up costing you more money in the long run. However, with bridging finance, you can pay back the money as soon as you want. If you’re quickly moving through property deals, you can just as quickly pay back what you owe to keep any additional interest from cutting into your profit. Because bridging finance can be so useful, it’s something that every property professional needs to consider.

Insurance agencies are normally started by insurance professionals and people with experience in financial services who want to spread their wings and become entrepreneurs. While it’s okay to get excited about starting your own insurance agency, try to stay rooted in reality. Operating an insurance business is challenging to say the very least. It takes a lot of hard work, resolve and determination to kick-start an insurance business and keep it running smoothly. If you’re thinking about how to start an insurance company, first talk to others already in the business to get an idea about the obstacles you’re likely to encounter.

Skills

The first step in deciding how to start an insurance company is assessing your own personal skills. Are you good at sales? If you’re already in insurance sales, are you reasonably successful? Do you have an interest in financial services? If you lack the go-getter attitude present in most successful insurance salespeople and have only a passing interest in finance, then perhaps this is not your cup of tea.

Insurance Products

The next thing on your agenda should be to decide the type of insurance to deal in. You can deal in life and health insurance, auto insurance, property insurance, liability insurance etc. Auto insurance is perhaps the easiest to sell but not as lucrative as life insurance. When determining how to start a life insurance company, you have to remember that your main source of income will be commission and residuals from the policies. The higher the policy amount, the greater the commission. You might want to keep this in mind while deciding what type of insurance to specialize in.

Get a License

While you’re planning how to start your insurance company, make sure that you study the licensing laws of the state that you live in and get licensed. For this, you’ll have to pass an examination. You need a separate license for each type of insurance product you plan to sell. Also, keep abreast with the latest tax laws and others related to financial products.

Financing

Draw up a business plan enumerating the capital you need to get started, monthly expenses, projected future commissions and profits. Finance is the lifeblood of any business. So ensure that you accumulate more that what is generally required. If your business runs into rough spots during the initial stages, lack of finance will cripple you. Common sources of finance are banks, financial institutions and investors from the industry. Some of the expenses you have to provide for include advertising, commissions, salaries, professional fees, rent, taxes, conveyance, office supplies etc.

Advertising

The survival of an insurance business depends on a smart advertising and marketing strategy. Hard-selling skills are the hallmark o good insurance salesman. A smart salesman never misses an opportunity. So, whether you’re at a social occasion or a formal business meet, never pass up an opening to make a good sales pitch. But avoid offending and pushing people into a corner. Ask for leads from existing customers and advertise extensively over the internet, in the yellow pages and also in your local newspaper. The bulk of your expenses will be on advertising. So be prepared.

When planning how to start an insurance company, you can recruit people to work for you on salary. Alternatively, you can network and split percentages with freelancers who send business your way. If you’re still asking yourself, “Should I start my own insurance agency? – make sure that you do a proper risk analysis, keep track of the pros and figure out ways to sail over the cons. This should get your insurance business off the ground and keep it soaring.

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