Business and Finance

Archive for August, 2010

Outside of obtaining the necessary financing that you need in order to launch or support your business operations, your business LOC also assists in establishing a credit profile for your corporation. As your business expands, you may need to acquire additional credit facilities or loans in the future. Much like a personal credit report, your corporation also develops a credit report. However, the credit reports related to business operations are typically provided by a company called Dunn and Bradstreet. By establishing a credit profile for your business, you will be able to expand your credit acquisition capacity over time. The mechanics of a business credit report versus that of a personal credit report are almost identical.

By establishing a business LOC, you also assist with developing an ongoing relationship with your banking or financial institution. Again, it is important to remember that banks want you business. Banks want to lend to you. Banks also want you to hold your deposits. By selecting a bank that can provide you with all of the necessary tools that you need to conduct business, you will become a valued customer. This is especially true if you conduct ongoing borrowing activities with the bank as this is their most profitable revenue center. Outside of fees, banks typically do not generate substantial income from managing money market accounts or checking accounts.

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Although not the most common method of acquiring startup capital, using a business LOC as financing to launch your business venture is not uncommon. As we have discussed in previous articles, there are a number of different method of financing your new business venture including using your own capital, raising money from private investors, or taking out a lump sum business loan.

However, using a business line of credit gives you more control over your business development. If you intend to build your business over a period of time then it may be to your advantage to use a business LOC versus as business loan. This allows you to only draw down the funds as needed, and you will only be required to pay interest on the portion of principal that you have drawn down. Although many new entrepreneurs seek to acquire all of the funds that they need via a traditional business loan, the flexibility of a business line of credit is often overlooked. When developing your business plan, you should entertain the concept of using a term based credit line rather than a business loan. Again, your accountant or financial advisor can assist you in making the proper determination of whether or not using a line of credit is more appropriate than a standard lump sum based credit facility.

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Of the three keys to business success, financial management is often the most feared among entrepreneurs. Even if you don’t consider yourself a “numbers person,” keep in mind that the down and dirty reality of running a business is in the numbers. If the business isn’t profitable, it won’t last long. Managing finances the right way is actually not that complicated, especially with the tools available, but is a critical factor in the success of any business.

There are a few things to think about before starting your business that will simplify the financial management. There are several accounting software programs on the market that cater to small businesses. Although Quickbooks by Intuit is currently the most popular and is very easy to use, Peachtree Accounting by Sage is a better choice for any startup with intentions to grow. Peachtree is just as user-friendly, and includes some less-than-obvious features that make it the best choice.

Peachtree is completely GAAP compliant, meaning it meets or exceeds all generally accepted standards for accounting. Quickbooks is not, and when you need to produce financial statements for banks or investors, you will likely need to pay your accountant to clean up the books before you present the numbers to anyone. For a growing business, the basic Peachtree program significantly outlasts Quickbooks, in terms of how soon you will need to pay to upgrade and add users. In addition, once your company reaches the point of needing a comprehensive, enterprise accounting system, only Sage offers an appropriate product. Thus, switching over from Peachtree to the Sage enterprise accounting product is relatively streamlined, while switching from Quickbooks to any appropriate system is a greater hassle (and a greater expense).  Read more... (974 words, estimated 3:54 mins reading time)

It’s unbelievable that schools does not teach us everything that we have to know but left out one important subject, that is Personal Finance Management. No wonder we see rising cases of people with bad debts and bad credit.

Here are 5 ideas to better manage your personal finance.

Build a savings account
Your money is something that you work very hard for. If you want to build a savings account for yourself, and for your family, you can do it – but perhaps a little slower than you might like. You can get started by saving all the change you get from shopping at the grocery store, from the gas station and from anywhere else you might go. Putting all this change into a container, you can then fill the container, day by day. As the container is full, roll the coins and deposit this money into your new savings account. You might be surprised, but in just two weeks it is possible you saved twenty dollars, or even one hundred dollars. Your savings account will grow, and you will be managing your money at the same time!  Read more... (828 words, estimated 3:19 mins reading time)

Much like a real estate brokerage, a loan brokerage can assist you in securing a business line of credit. These firms, much like any other type of brokerage, receive a fee for securing a business LOC on your behalf. However, like any industry, there are some unscrupulous people that work in this industry. It is important to note that you should avoid any loan brokerage that requires excessive fees before attempting to secure credit for your business. While it is not unreasonable to have some upfront fees before providing you with this service, you should always know how these fees will be used in conjunction with securing you with a business line of credit. When dealing with a loan brokerage you should make sure that any upfront fees are for acquiring credit reports or producing a business plan that will be used to show to banks and finance companies. Additionally, you should always verify the legitimacy of a loan brokerage by checking not only with your local Better Business Bureau but also with your state’s banking/finance regulatory agency. Please note that not every state requires that loan brokerage firms carry a specific license in order to render this service.

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