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5 ways to finance your small business

In this guest blog post, Marcus Ferrari from Cashflow Direct discusses options for financing your small business.

Cash flow is one of the main concerns of most small businesses and is often cited as a top reason for business success or failure. Here are five forms of financing for different types of small businesses to make sure you always have the cash you need:

1. Bank loan

The most common form of financing is a commercial bank loan. However, it can be difficult for a small business to qualify for this form of financing. Banks prefer to lend to companies with experienced owners that can show a history of profit and stability. Even companies that are eligible for bank financing sometimes find the terms stifling.

2. Asset- based lending

This is similar to a bank line of credit, but with a few key differences. The main one is that the amount of money you are able to borrow is primarily based on a percentage of the total assets under consideration. Typically, assets considered for this type of loan would be accounts receivables with some combination of machinery, inventory and equipment.

In most cases the lender can provide up to 85% of the accounts receivables and up to 60% of the inventory. Asset-based lending is often used when a bank line of credit is too inflexible, slow or unattainable.

3. Factoring

This form of financing fills a gap in the credit market because it creates an immediate influx of cash based solely on invoices. It tends to have more flexibility and it’s easier to qualify for than asset-based lending or bank financing.

A factor purchases your accounts receivables and advances 70% to 90% of the total. Often, factoring is used by service-based companies that don’t have collateral: startups, companies with seasonal work, and companies that are growing quickly.

In other words, factoring is a feasible option for financing your small business. It’s also useful for companies that have hit hard times and need cash flow to turn around their business.

4. Merchant Cash Advances

This form of financing is a solution for companies that are having difficulty securing traditional loans or need funding for a special project. As opposed to factors (that purchase current invoices), cash advance providers purchase future income.

These providers offer businesses a lump sum of capital. Unlike a loan, you pay a set percentage of your daily credit card sales until the cash advance company recovers their advance and premium.

Although this is a more costly form of finance, it is a useful solution for companies such as restaurants with strong credit card sales that need capital to grow their business or purchase new equipment.

5. Purchase Order Finance

This form of finance generates working capital to pay for finished goods or components based on your customer’s purchase order. A Purchase Order Finance company pays your supplier to produce and ship goods so you can fulfill a customer’s order.

Once you fulfill the order, you invoice your customer and send a copy to the P.O. finance company. They collect payment for that invoice and return the payment to you, less a fee. This is a solution for companies that need increased cash flow to take on new business or expand their operations.

These are just a few of the types of financing available to small businesses. There are many options to explore that can free up cash and help grow your business. Whichever form of finance you pursue, you'll find that the revenue you generate from expanding your operations can far outweigh the cost of alternative finance solutions.

 

As the Managing Director of Cashflow Direct, creating cash flow for small and medium-sized businesses is Marcus’s top priority. Marcus is known for his ability to generate fast and flexible funding solutions for companies from start-ups to established businesses.

cashflowdirect.com

 

 

 

 

 

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The Solo Entrepreneur's Notebook: Keeping the Passion High in Good Times and Bad

Guest post from Lori Wagoner

Solo entrepreneurs

A solo entrepreneur’s journey is unlike any other journey. The trials, tribulations and elations are the same, but the difference is that you don’t have someone who commiserates or celebrates with you.

When you set out on the path of becoming an entrepreneur, you know the journey is going to be difficult. From obtaining legal permissions to finding new hires, nothing is easy. This difficulty rises to altogether new heights if you are a solo entrepreneur. While Paul Graham proclaimed not having a co-founder the top mistake that a startup could make, Mark Taber wrote otherwise. Brittany Hodak, Co-Founder of ZinePak, likened starting a company alone to raising a child as a single parent. And I think there is no better comparison.

Passion burnout is real and it can wreck your startup. However, my intention is not to scare you — the solo entrepreneur or single founder — away, but express my empathy. I know how lonely it gets at times and how difficult it is for you to keep going. (Sometimes, you secretly wish there were two of you, don’t you?) But, it is indeed possible to keep your passion high in good times as well as bad.

Before we try and do that, let’s get this small obstacle out of the way: ask yourself these three questions:

  • Would I have been happier in my old job / another career?
  • Is this worth the blood, sweat and tears?
  • Are my goals too lofty?

These questions will help you to reflect upon your past decisions, weigh your present situation, and set a corrective course for the immediate and long-term future of your business.

The fact is no matter how down you are feeling right now, you wouldn’t have traded places and if you were given a second chance, you would have still chosen this path and shed blood and tears all over again. It takes a few minutes of introspection to make you realize that you are not on the wrong path and revive your confidence.

Sometimes, you will find that you have set the bar too high not only for your business but also for yourself. Understand limitations and boundaries: there are only 24 hours in a day, your employees are bound to make mistakes; in fact you are prone to make more mistakes yourself.

Once you take stock of your situation, revise your goals and then try again. Once you have a clear picture in your head, you can try these awesome, actionable tips to revive your passion and confidence:

1. Be OK with Being Wrong

Learn to accept that you are a human being and it is human to err. Don’t judge or criticize yourself too harshly. Most of the time, you feel low because you are beating yourself up about something or the other.

My advice: Simply note down your mistake and the lesson learned and stick it on a board where you can’t see it all the time. This way, it will be less about the mistake and more about the lesson learned.

learn from your mistakes solo entrepreneur

2. Circumvent Decision Fatigue

Entrepreneurs feel real burnout when they are burdened with decision-making. From selecting the font for the new microsite to hiring developers, decision-making can cause fatigue. So how do you reach decisions faster and avoid decision fatigue?
The answer lies in plain sight – in technology and automation.

Instead of lingering over every detail for your branding and website, get feedback directly from your target demographics, using usability testing services and survey tools. You'll remove the fear from your decisions, because you'll have data to rely on. 

3. Seek an Advisor

If you are finding yourself at crossroads one time too many and your instincts are particularly silent, trust an advisor. Don’t have one? Get someone onboard now. It could be anyone from your spouse to your best friend, or a senior whom you particularly respect.

A lot of startup incubators help startups not only with funding but also mentoring, so an alternative method would be to get help from these incubators and angel investors.

advice for solo entrepreneurs

4. Do Something Totally Different

At times, you may feel you are stuck in a rut with the same old problems and challenges staring you in the face. This can be also one of the reasons why you may find the flame of your passion dwindling. At times like this, take a break from your current task and do something creative (if you are doing something creative, try some arithmetic). Take up physical exercise or sports. Take a day or weekend off if your schedule allows you. The idea is to break the chain of thought and recharge your brain cells.

If you don’t feel like getting up from your desk though, try simple games that can make you smile and rekindle your passion again.

5. Get a Liberal Dose of Positivity and Energy

Be around people who are excited or positive about their life and career. As you stay in the company of highly motivated people, you will find their enthusiasm rubbing off on you. Famous American entrepreneur and motivational speaker Jim Rohn put it very nicely,

“You are the average of the five people you spend the most time with.”

If you find yourself surrounded by toxic people who are sapping passion out of your life, whether they are buddies you drink with at the pub or business associates, make a point to minimalize contact with them and find better, positive company.

Clichéd or amateurish as it might sound, binging on motivational quotes works like a charm all the time. As attributed to Henry Ford,

“Whether you think you can, or think you can’t – you’re right.”

Stick your favorite quotes up on the wall or read them whenever you are feeling the blues. Here are some of the most inspirational quotes by business giants that you can relate to at different steps of your entrepreneurial journey.

Over to You

None of the ideas we discussed chew away at your time. And all of them are easily actionable. If group talks are not helping you or you can’t hit the gym regularly, these small but effective pointers will keep your passion running high. I’ll let you get back to work now. All the best!

Image credit: Entrepreneurfail.com
 

Lori Wagoner is a market research consultant. She advises small businesses on new ways to find local and national business. She's an avid blogger and writes for sites such as Small Business Can, Tweak Your Biz and Customer Think. You can catch her on Twitter @loridwagoner.

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Wave now works with Zapier. Here's how.

Great news! You can now use Zapier (rhymes with "happier") to connect Wave with potentially hundreds of different applications, and automate your workflows. (See the guest blog post from Zapier's Alison Groves.)

Here's how it works:

Think of Zapier as a connector between Wave and applications like Gmail, MailChimp, Slack, SurveyMonkey and more.

That connection between app A and app B: That's called a zap. And zaps make it easy for non-technical people (like me!) to connect services without having to know anything about APIs.

 

You get started with a free Zapier account. Then, from inside Zapier, you use a zap to connect the applications. You can choose from a bunch of pre-made zaps, or you can build a zap from scratch, using the available applications.

A zap is an "if this, then that" type of a formula: IF something happens in app A (this is called a trigger), THEN do something in app B (this is called an action).

In Wave, the available triggers (i.e., IF statements) are:

  • creating an invoice
  • creating a customer

Available actions (i.e., THEN statements) in Wave are:

  • creating a customer

With those triggers or actions, you can build zaps like:

IF you create an invoice in Wave, THEN post a message about it in Slack.
or
IF you create a customer in Wave, THEN add that customer to a MailChimp newsletter list.
or (my new favorite)
IF you "star" an email in Gmail, THEN create a customer in Wave.

 Check Zapier for applications you already use, and explore how you can connect them to Wave to save time and simplify your To Do list.

We're looking forward to seeing how our customers use Zapier, with zaps related to invoices and customers. We'd also like to know what other zaps you wish you could use. Let us know what you'd like to do, that's currently not possible.

 

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Getting Started with Wave Webinar!

Looking to get started with Wave? 

Look no further! Our Wave Pro of the Year, James Krener, will be hosting regular free webinars to give you all of the information you need and more! 

James grew his own business from the ground up with Wave and he is passionate about helping others do the same. With his accounting and bookkeeping background, you can get all of your complicated questions answered in a snap! 

To register click here!

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We love when our Wave Pros love us back on TrustRadius!

We are excited to announce that Wave has been named a top rated accounting solution in TrustRadius’ first Buyer's Guide to Accounting Software

A big thank you goes out to all of our Wave Pros who have been so generous with their time in providing honest and detailed reviews on TrustRadius. This is an important part of how we shape the future of Wave’s products and help our small business owner customers find the tools that they need.

Take a look at what accounting professionals have to say about Wave and find out if it's a fit for you and your business.

You can also download a free copy of the Buyer's Guide to Accounting Software: click here

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