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Posts tagged Financing
Business Financing: A Look at Venture Capital
Sep 2nd
Raising business finance isn’t always easy, and especially so when you’ve not got enough assets to secure against your ambitious plans. In some cases, you’re going to have to part with equity. Venture capital funding can help you grow your business, and plays a vital role in fuelling growth and innovation in the world economy.
Venture capital has helped to fuel the growth of some of the world’s biggest public companies at one stage in their life-cycle. Venture capitalists are willing to run the risk of making poor returns, or losing all of their money, for a chance to hit a home run. That’s why their capital tends to follow big ideas, and is hard to get when you’re looking to do something that isn’t too innovative with huge growth potential.
The Dynamics of Venture Capital Funds
When entrepreneurs are looking to raise money from venture capitalists, they often have a poor understanding of how the market works. Venture capital firms do not raise their funds from shareholders; they usually raise their funds from private institutions. They will then charge a management fee, and take a percentage of equity for themselves. They also have a tendency to work together – often they will have other firms invest in a deal along with them. This can be to limit their exposure, and bring in expertise. Some VC firms will take an active role in managing their investments, while others prefer to watch carefully on the sidelines.
Market Research is a Vital Aspect of Any Business Financing Plan
Aug 31st
A difficult task for any business is conducting market research. This research can impact a business in many ways including how they brand their products and who they market to. Although market research can aide a lot with your businesses marketing efforts, it also plays a key role when your business is attempting to obtain financing.
The lenders or investors main objective when evaluating your business is to determine whether or not they will get their money back. Good market research will help set your potential lenders mind at ease, and you will be more apt to obtain the business capital you need. The lender also wants to know things about the market such as the competition and the demand for your product or services.
To begin the process of researching your market you can start by searching trade associations, trade show websites, and trade magazines. They exist in nearly every industry and can supply a wealth of information related to your market. The best part is that many of the trade related websites provide the information free of charge. The government also provides a number of valuable resources for market research. For example, the Economic Census, released every five years from the U.S. Census Bureau, provides an excellent glimpse at industrial activity including the Industry Series report that offers separate reports for many industries and shows the number of businesses within an industry, sales volume, number of employees, and more. Other good resources for market researching are corporate websites of your competition and press releases from your competition. White papers provide good market research data because they are well-researched documents.
Start Up Business Financing In Canada
Aug 3rd
Startup business owners and entrepreneurs know the challenging of raising financing in Canada. While many firms are successful in some forms of business financing the reality is that many are unable to obtain the financing they need – we would qualify that comment by saying that are often unable to obtain ‘ all ‘ the financing they need .
Studies done in the U.S. ( Mason Harrison study ) seem to suggest that companies that obtain initial and long term equity from owners and others seem to do better than those that borrowed their way to growth . We will leave that debate for another day.
Start up business financing in Canada revolves around two issues – how much and when. How much funds does the company need at what stage in their growth do they need it. As firms become more successful they can move up the financing food chain because they are viewed as ‘less risky ‘than companies that are in start up or pre revenue mode.
There is an acknowledged pecking order in who provides financing to start ups. That order is as follows:
Owner’s investment
Friends /Family/Angel investors
Banks
Non bank financial institutions
Equity markets
We would also observe that companies tend to move through that process in the exact order as stated above. Obviously not every firm wishes to do a public offering, and in fact many firms never reach the size or financial structure that would allow such a move to a public entity.
Business Financing Produces A Bumpy Ride For Small Businesses
Aug 2nd
With business financing and working capital loans, commercial borrowers need to be prepared for a long and bumpy ride. Based on how chaotic the commercial banking climate is currently, this situation is expected to prevail for a long (but unpredictable) period of time. In spite of the frustrating and confusing business lending environment, a prudent commercial loans strategy is likely to produce the most effective results that can be hoped for by small business owners.
Finding appropriate commercial finance solutions will be an outcome that business borrowers will always hope for, but misinformation and insufficient information will play a somewhat unpredictable role in this process. The eventual success of commercial financing efforts will depend on an individualized and detailed assessment of the unique financial circumstances for a specific business, although it is appropriate to note that there are new and effective business loan options that will satisfactorily fill the commercial funding gap for many small business owners impacted by their current ineffective commercial bankers.
Anticipating the long and bumpy ride that lies ahead for even the most ordinary business financing request will be prudent and wise for small businesses. It has not been unusual for commercial borrowers to wait for one to two months before their bank finally declines to make a commercial loan that had appeared to be a mere formality when the lending process began, either because banks do not want to publicly admit that they are not presently making business loans or perhaps due to their somewhat secretive and changing guidelines for making such loans. Regardless of their prior description of “normal” for working capital management and commercial financing options, many business owners have already discovered how much and how quickly this has changed.
How to evaluate your business’ financing needs
Jul 31st
Business financing should be carefully planned long before a particular project takes place. The success and longevity of a business by definition will depend on its carefully chosen Financial Structure. Let’s do it one step at the time.
First you need to know exactly what you are planning to do:
Starting a new business?
Exploring opportunities for an existing business?
Buying a competitor?
The second question you should ask yourself:
Do you have enough capital or you need to obtain an additional financing for your project?
If you require financing and you want it to fit into your business structure, you need the right financing at the right time.
In order to appraise your business’s financing needs ask yourself the following questions before seeking financial assistance:
How soon do you need the money?
In order to get the best possible terms for you financing it is always a good idea not to do it in a hurry, to have a time cushion.
Have you evaluated you business’ risk?
The more risk you have the less favorable terms or financing you will get. If you do not have enough knowledge on this topic, you can hire a financial professional to do that.
What is your business development stage?
Start ups are more vulnerable and need more cash than established businesses.
Q. What is the purpose of this loan?
