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Posts Tagged ‘small business financing’

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Crowdfunding Sites Offer Insights Into Hot Business Trends

August 17th, 2011 ::

By Rieva Lesonsky

Are you a business-to-business marketer looking for new prospects who own growing firms? Are you a trend-watcher looking to spy up-and-coming new trends your business can profit from? If either of these descriptions fits you, you could benefit from paying attention to the growing trend of crowdfunding, the Enterprise Council on Small Business (ECSB) reports.

If you’re not familiar with crowdfunding, it’s a relatively new way to obtain capital by getting small amounts of money from a large number of people. Crowdfunding typically operates via online communities and websites; IndieGoGo, Kickstarter and SoKap are a few that ECSB cites.

Startups or companies ready to expand use the sites to pitch their business ideas or reason for seeking funding. Then members of the “crowd” have the chance to invest whatever they choose. In essence, they vote with their dollars, funding the businesses and ideas that they believe have the most potential.

Crowdfunding has several uses for your small business even if you’re not seeking financing, ECSB contends. Because these sites act as a kind of referendum on viable ideas, they enable you to see new business ideas in action and how the crowd responds to them. By seeing what investors think is (and isn’t) fundable, you get a good idea of what products, services and markets have growth potential as hot future trends. For instance, the growing market for smartphone apps is one that you could have spotted by watching crowdfunding trends a few years ago.

If you’re a BtoB marketer, watching crowdfunding sites is also a great way to find potential customers. Crowdfunding sites give you access to people who are, or are going to become, entrepreneurs—and lets you access them right at the moment when they’re launching or undergoing growth. Both situations are times when they’re likely to need new products and services and be more open to making a change to new vendors.

If you’re in a high-tech industry or other arena that caters to young entrepreneurs, crowdfunding sites can be particularly valuable to you. The people seeking crowdfunding, by nature, tend to be younger and more tech-savvy, ECSB points out. Participating on crowdfunding sites helps you see what these business owners are thinking and what their business hopes and dreams are—all of which can help you market to them more effectively.

Image by Flickr user Vinoth Chandar (Creative Commons)

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Posted in Business Development, Capital Access, Marketing, Raising Capital, Small Business, small business, Social Media, social media | No Comments »

Do Women Make Better Angel Investors Than Men?

August 10th, 2011 ::

By Rieva Lesonsky

If you’re looking for angel capital, what’s the best way to boost your chances of success? Does it depend on your connections? Your business plan? The images you use in your PowerPoint presentation?

No, no and no. Instead, your success could depend on how many women are in the investor group you’re pitching, according to some new research from the University of New Hampshire Center for Venture Research.

The research by Jeffrey Sohl, director of the UNH Center for Venture Research, and John Becker-Blease, of Oregon State University, studied 183 angel investment groups from 2000 About 60% of small-business bank-loan applications have been rejected this year, according to a study by Pepperdine University to 2006. The researchers found that an angel investment groups with only a small percentage of women investors tended to be more cautious about investing. However, as soon as women composed more than 10 percent of the investment group, the group became more active and made increased investments.

“At first the results were counter-intuitive, since previous research on women investing, in general, shows women to be more cautious investors. Since angel investing involves substantial risk, one would assume that this cautious behavior would also be exhibited in angel investors,” Sohl said. “However, our research indicates that when the number of women in an angel group increases, so does their investment activity as angel investors.”

The researchers say this behavior is based on “stereotype threat.” According to this theory, when a stereotype exists about a person, that person will conform with that stereotype when they are in a situation that highlights their status as an outsider. In other words, the fewer women in an angel group, the more women stand out, and the more likely they are to conform to stereotypes that they’re cautious investors. “As the number of women increases, there is less of a stereotype,” Sohl explained, noting that the more women in a group, the more they are recognized for making smart investment decisions as opposed to just for being women.

The Center for Venture Research has been studying the angel market since 1980. While Sohl says the percentage of women angel investors has remained fairly constant at about 15 percent over the last five years, the number of women pitching angel groups has grown from 13 percent in 2006 to 20 percent in 2010.

The current research suggests that forming more women-dominated angel groups would boost investment in all types of startup ventures—not just those that are women-owned—by making the angel groups more likely to make larger investments and more investments. So if you’re considering seeking angel capital, looking for a group that’s got a sizable percentage of women could give you the edge you need.

Image by Flickr user Randy Robertson (Creative Commons)

 

 

 

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Posted in Capital Access, Raising Capital, Small Business, small business | No Comments »

Small Biz Resource Tip: FastUpFront

July 18th, 2011 ::

FastUpFront

All business owners face a time in their careers when they need an influx of cash—fast! Whether a sought-after location opens up, or a major piece of equipment needs replacing, getting a quick loan can be stressful if your credit history is a little shaky or the repayment terms don’t meet your needs. FastUpFront offers small businesses access to money based on the business’s future credit card sales. To get the cash advance businesses must be U.S. based, must already be established and cannot be home-based businesses. Approval can take less than 24 hours and funding can be as fast as 48 hours.

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Posted in Capital Access, Raising Capital, Resources, Small Business, small business | No Comments »

Getting Business Credit Still Difficult for Small Businesses

July 14th, 2011 ::

 By Maria Valdez Haubrich

Small business owners’ access to capital is still being squeezed, it seems. Entrepreneurs’ ability to get credit when they need it is easing somewhat, but is still in decline compared to pre-recession levels of access to credit, according to the most recent Wells Fargo/Gallup Small Business Index survey.

In the survey, conducted in April, slightly fewer small business owners say credit is difficult to get now than in recent years. However, nearly three times as many say credit is difficult to get compared with the number who said this in 2007.

Business owners were asked, “Over the past 12 months, how easy or difficult has it been for your small business to get credit when you needed it?” In 2007, 54 percent said it was somewhat or very easy to get credit; in 2011, just 21 percent said the same. In 2007, just 11 percent said it was somewhat or very difficult to get credit; in 2011, that figure had risen to 30 percent.

On the positive side, the percentage of small businesses describing access to credit as somewhat or very difficult declined from 35 percent in the prior survey. On the down side, the percentage saying credit is somewhat or very easy to get has remained largely unchanged since mid-2009.

Gallup notes that the collapse of the U.S. housing market continues to be a major factor in small businesses’ problems accessing the credit they need. Before the recession, many small business owners used their homes and real estate to secure business loans and lines of credit. The collapse of home values, which still haven’t rebounded in most parts of the country, combined with tighter lending practices on the part of banks, has virtually wiped out many small business owners’ only source of collateral. In many cases, this is making it nearly impossible to get a business loan or line of credit. “Returning housing to price stability or better is a key to returning easier credit to the nation’s small businesses,” Gallup concludes.

How has the housing collapse affected your business’s credit-worthiness? Are you having trouble getting what you need?

Image by Flickr User Let Ideas Compete (Creative Commons)

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Posted in Capital Access, Raising Capital, Small Business, small business | 1 Comment »

New Data on Small Business Lending: Outlook Is Positive

June 14th, 2011 ::

By Karen Axelton

Small business lending showed some positive signs in new data recently released by PayNet. The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of small business financing, increased 17 percent in April compared to the same time a year ago, Reuters reports.

While this was a decline of about 1 percent from the prior month, this was the ninth straight month that the Index had shown a double-digit increase. Those sustained gains are a good sign that small businesses are ready to grow as soon as customer demand for their products and services increases again, said PayNet president and founder William Phelan.

“The fact that small businesses are hanging in there is a good sign for the economy” Phelan told Reuters. “The data tells us [small businesses] are having more of a pause than a major contraction.”

While economic signals have been up and down recently, overall, increased small businesses is considered positive for the economy as a whole because small companies traditionally account for the majority of new hires. The Thomson Reuters/PayNet index has proven to be an accurate predictor of GDP trends about two to five months in advance.

More good news: In separate data released by PayNet recently, fewer companies are falling behind on existing loan payments. This indicates more businesses are ready to take on new loans if needed for growth.

Accounts behind by 30 days or more (considered moderately delinquent) fell to 2.06 percent in April—a typical level before the recession. Accounts 90 days or more behind (considered severely delinquent) fell to 0.64 percent in April from 0.67 percent in March. And accounts behind 180 days or more (in other words, in default and unlikely to ever be paid) dropeed to 0.76 percent of total receivables in April, from 0.77 percent in March.

Overall, these are promising signs. In recent years, small business lending had slowed to a crawl, first by banks tightening their requirements and later by small businesses reluctant to borrow because of concerns over the economy. If small businesses are showing the confidence to take on new debt, that’s a positive thing. Are you ready to take on a loan?

Image by Flickr user Steve Snodgrass (Creative Commons)

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Posted in Capital Access, Raising Capital, Small Business, small business | No Comments »

Small Biz Resource Tip: Angelsoft.net

January 6th, 2011 ::

 

Angelsoft.net

If you’re looking for a way to reach venture capitalists and angel investor groups, check out Angelsoft.net’s detailed list of investors. Angelsoft.net provides access to 588 angel groups, VCs and funds, plus over 29,000 investors. Search by the amount of funding you’re seeking, the kind of businesses the investors are interested in, and even the terms the firms usually offer. Angelsoft then manages the deal for the investors, help entrepreneurs with their business plans and more. Prices range from free to $250 a month. Entrepreneurs are limited to three applications at one time.

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#GrowSmartBiz Conference Recap: Raising Capital with Effective Finance Strategies

September 30th, 2009 ::

Panelists:

- Jeremy Brown (RapidAdvance)
- Edward Tuvin (Capital Bank)
- Denise O’Berry (The Small Business Edge Corp)
- Shannon Nash (Nash Management)

Where does small business get financing?

According to Jeremy Brown,  the Wall Street Journal said that in 2004, 46% of small business owners used credit cards to finance their business. He suggests that there isn’t a one best solution. There are a variety of solutions to explore. There is no right or wrong solution to raise capital. But you need to look at what suits you and your business. RapidAdvance provides a cash-based system where the potential recipient is a just established company (~1 year). The product factors in a certain period of payment and looks at a percentage of the business that comes from credit cards and also what the business can afford to pay back based on cash flow. Companies that use RapidAdvance are for expansion purposes. It’s not a loan so there’s no personal guarantee. Can be more expensive than a traditional bank loan.

In seeking a loan, what’s the best way to present your case?

Edward Tuvin says that you should take the time and show that you care when applying for a loan. Don’t go into a small Rockville bank with a Bank of America loan application – just not sensitive to the process. Make sure that you write and understand your business plan in-depth so that when you’re asked questions, you’re going to have the answers, not the answers given by someone else who may have wrote the business plan. Make sure that you understand the talk of the lender – you have only ONE shot. Make sure you convince the lender that you’re going to pay the loan back, but you’re going to be the winner of this horse race.

Every business doesn’t need a business plan for a loan, but it’s really important for owners to go through a business plan exercise to understand who their competitors are.

What’s the best way to manage the cash flow needs of our business?

Denise O’Berry says that you should do a cash-flow budget that looks out 6 to 12 months and projects what money will come in to pay off expenses. You need to base some of this on your past track record but also what kind of marketing strategies are going to be taken during this time period – and need to be conservative. O’Berry loves to look out 12 months to cover all expenses that may not occur regularly – 9 out of 10 times, you’re going to see any and all expenses. Also make sure you include your cash target for every month. Actively participate in this process.

You are not a bank. You need to make sure that you’re doing everything to manage your receivables and have your customers pay your invoice as quickly as possible. Make sure you put a due date on your invoices.

Is it necessary to have a software program to manage your financial projections?

Shannon Nash thinks that it’s great to have a program to enter in the numbers to help you project – but it’s not great to tell your story. YOU need to tell the story. Don’t be afraid of the numbers. Embrace the numbers. The software program is a tool.

Some small businesses can’t afford an accountant or financial advisor. Nash suggests that you check out SCORE.

SCORE is a bunch of retired executives around the country that will help you with your business plan for FREE. Nash recommends you set up an appointment with a SCORE counselor and then talk to your smartest friend and see if they’re going to buy into the program.

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Posted in Grow Smart Business Conference, small business, Videos | No Comments »

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