When Is The Best Time to Start a Business?

It may be surprising, but it can be easier to start a business in a slow economy. You might have less competition because other would-be entrepreneurs are often more reluctant to risk launching a new business, and existing business owners commonly cut back on costs (especially marketing), limiting the number of new customers they can attract. Of special note is that consumers do not completely stop spending during economic downturns; most simply look for better deals and the companies that can provide those better deals are stronger once the economy improves.  Consumer loyalty to those companies frequently remains strong even after the economy recovers and spending increases again.

Below are some notable examples of successful businesses that were started during economic downturns in U.S. history:

  • FedEx Corporation began operations on April 17, 1973 as Federal Express, and today manages daily shipments worldwide.
  • GE (General Electric Company) was established in the mid-1870s by Thomas Edison.  In the middle of the Panic of 1873, Edison created one of the best-known inventions of all time, the incandescent light bulb.
  • HP (Hewlett-Packard) was inauspiciously born in a Palo Alto, CA, garage at the end of the Great Depression, and now operates in nearly every country in the world.
  • Hyatt Corporation opened its first hotel’s doors at the Los Angeles International Airport on September 27, 1957 during the recession of 1958.  The chain rose to worldwide fame in the following decades and now operates more than 365 hotels in 25 countries.
  • Microsoft Corporation wasn’t always the company it is today.  In 1975, when it was started by Bill Gates and Paul Allen, Microsoft was just a little company in Albuquerque, NM.  Currently, the company is estimated to earn more than $60 billion in revenue per year.
  • CNN might be a news giant now, but in recession-plagued 1980, it was a little-known station called The Cable News Network founded by Ted Turner.  It revolutionized how people received information when it premiered as the first 24-hour all-news channel.  Today, 1.5 billion people around the globe watch CNN.
  • MTV Networks brought something new and different to the music scene when it debuted in the economic slump of 1981 and is now a global brand with dozens of television shows.
  • Burger King Corporation is another recession startup.  The company began in 1954in Miami, FL.  During another recession in 1957, the company introduced its successful signature burger:  the Whopper.  The company currently operates more than 11,000 locations in over 60 countries.
  • The IHOP Corporation chain opened its doors July 1958 in Toluca, CA. The fast growing company, which began franchising just three years later, today has more than 1,300 locations across the U.S.

Recessions, however, are not only advantageous to startups.  Existing companies can make incredible gains in years when the economy is down.  Some of the most recent success stories include Google and PayPal.  From 2000 to 2001 each of these companies thrived, leading PayPal to go public in 2002 and Google in 2004.

If your dream is to start your own business, give us a call.  Not only do we provide financial solutions for our clients (including startups) we also offer business consulting services, ensuring that our clients have long-term success.

La Mancha Sims is the Founding Partner and CEO of Triton Financial Solutions, a business funding consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357.

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3 Essentials for Operating Your Business

TritonOver the years, I have had several discussions with clients and other business owners about the challenges of operating and sustaining a successful business. These discussions are a reminder that small business owners should return to the fundamentals of running a business and not allow poor decision making to affect their long-term success. For instance, many business owners decide to save money by cutting back on marketing, customer service and accounting. This decision can have long-term consequences and affect the future success of the business. Below are three essentials for operating almost any type of business:

1. Marketing: When money is tight, many business owners decrease their marketing budgets. However, this is when you should be increasing your marketing efforts so that you can attract more customers as well as promote your products and services in different and more creative ways. Your competitors are likely reducing the amount they are spending on marketing in order to save money, so now is the opportunity for you to entice their potential customers to your product or service. Be creative, be constant, be aggressive and be smart. Marketing is more important now than ever.

If you are attracting fewer customers than normal, expand your market to other industries or a larger geographical area. Perhaps you have been heavily marketing to prospects in only one or two industries, but try to find out if there are other industries that could also benefit from your product or service. You can easily expand to a larger market area by using internet marketing.

2. Customer Service: Don’t forget these customer service basics: always be polite, professional and helpful to potential customers, return calls to existing customers as soon as possible and do everything possible to ensure each customer contact ends on a positive note. Most importantly, make sure your product or service delivers on its promise; if for some reason the product or service cannot produce the expected results, let the customer know immediately and offer a satisfactory solution.

Being friendly and helpful to potential customers should be clearly understood by any business owner, but I am often amazed at how rude or disinterested some receptionists and salespeople are when I call a business or when shopping in a store. Believe me, almost nothing makes a potential customer more disinclined to purchase your product or service than poor customer service.

3. Accounting: Many small business owners overlook hiring an accounting professional and try to do everything themselves. Not only can this become overwhelming as your business grows, but you could also get into trouble with the IRS and your state and local taxing agencies. Tax laws, especially for small businesses, can be a quagmire difficult to sift through even for the most educated; don’t skimp on hiring a Certified Public Accountant (CPA), tax attorney or bookkeeper. Typically, CPAs and tax attorneys must remain current on all new tax laws in order to ensure license renewal, and bookkeepers know the basics of accounting and will keep your books in order. The CPA or bookkeeper can track your business transactions daily, weekly, monthly and quarterly to generate comprehensive financial reports. You can then use this information to focus on your most profitable products or services and eliminate anything that does not make a profit.

I know that reducing your marketing and accounting budgets may save money in the short-term, but in the long run you will be much worse off. Keeping the doors of your business open is vital and anything that accomplishes this should never be eliminated.

La Mancha Sims is the Founding Partner and CEO of Triton Financial Solutions, a business funding consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357.

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What Do You Know About Invoice Factoring?

Is Invoice Factoring for you?  If you own a small business that needs access to working capital and you:

  • Have been unable to obtain financing from a traditional bank;
  • Have little or no credit history;
  • Need financing more quickly than a traditional bank can provide;
  • Have exceeded the credit limit set by your bank;
  • Have customers who are paying beyond terms.

Then invoice factoring is a great opportunity for you. Traditional banks are no longer the only choice for business owners because invoice factoring offers flexible, customized lending options to qualifying small businesses.

The Basics - Usually, invoice factors purchase a company’s accounts receivables or assets at a discount, providing the business owner with the financing they need. The assets can be of any type, but more commonly these are assets not typically utilized in traditional loans.  This could be commercial accounts receivables, inventory, purchase orders, or any combination of these and other like assets.  Most often, funds are received in the form of a line of credit collateralized by these assets, with the total being equal to a percentage of the assets being collateralized.  The interest rates are generally higher because the lender is assuming a higher level of risk than a traditional bank, but interest is only paid on funds drawn.  For many businesses, the increase in interest rate is worth it for quick and flexible availability of funds.  Invoice factoring has become quite common and is one of the most popular options for business owners seeking funding alternatives from Triton Financial Solutions.

How It Helps – Invoice factoring can help a small business grow in many ways.  Unfortunately, a business can be hindered before ever getting started because it cannot afford growth opportunities when they occur.  For example, if a new business were to get a larger order than is typical, one of two things can happen.  It could fill the order, reap the profits, reinvest these profits into the business, and continue to take larger and larger orders.  The opposite of this scenario would be that they have to turn down the order due to the lack of funds needed to order the necessary inventory, materials, etc.  In this scenario, the vicious cycle continues and growth is continually stunted.  However, with invoice factoring, the business owner would have access to funds from the line of credit and be able to easily fulfill the order.

Another possibility is that a small business is presented with the opportunity to purchase an existing business and absorb it into itself, thus growing by taking in the other business’s customers.  Without the available cash flow, this may not be possible.  However, the ability to draw on an asset based or invoice factored line of credit could allow for the buyout and facilitate the growth of the business.

Other Uses – Of course, these funds can be used for many other reasons.  They are frequently used as an advance on receivables or sales (collateralized by commercial receivables and/or inventory) to handle day-to-day finances.  They can also bridge any cash flow gaps due to seasonal market changes or a period of high growth with less cash reserves on hand.  In today’s market, traditional loans are simply not an option for many small business owners for various reasons.  Invoice factoring offers a practical alternative to help support growth when needed.

La Mancha Sims is the Founding Partner and CEO of Triton Financial Solutions, a business funding consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357.

Posted in Alternative Lenders, Alternative Lending, Business, Business Financing, Business Lines of Credit, Business Loans, Business Tips, Entrepreneurs, Entrepreneurship, Factoring, Finance, Invoice Factoring, Small Business, Start-ups, Startups, Success | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

2014 Finance Conference

2014 Finance ConferenceOn March 21st, I will be a guest speaker at the 2014 Finance Conference in Raleigh, North Carolina, to help entrepreneurs and startups better understand how to utilize business loans and lines of credit for their small businesses. The business loan application process can sometimes seem intimidating, which is why I want to make sure business owners have the tools necessary to navigate the many opportunities available.

The conference will connect participants with other speakers to ask questions about business finance opportunities and learn how your business can become a solid competitor in the small business space. This event is open to everyone, but registration is required due to limited space. Please contact my office at 770-249-2357 to reserve your spot.

I am committed to helping small business owners succeed. Whether you are just starting out or hoping to grow an already successful business, my office can guide you on how to obtain and best utilize various financial resources to reach your goals.

We can provide an introduction to the business lending process as well as a variety of other services including business consulting, franchising and exporting opportunities. We can help you understand the various programs available to businesses depending on size, industry type and location.

Supporting small business owners so they can thrive is our top priority. Starting a business from scratch is a huge challenge with great potential reward, but those who undertake that challenge can sometimes feel like they are doing so alone.

My office is here to help entrepreneurs looking to start or grow their businesses. These businesses are vital to the overall economy and to our communities, and we want to make sure you have the tools you need to succeed.

Please contact my office if you’d like to attend the Finance event on March 21st. If you cannot attend but would like more information about the various finance options available from Triton, give us a call at 770-249-2357.

La Mancha Sims is the Founding Partner and CEO of Triton Financial Solutions, a business funding consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357.

 

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Is There a Franchise in Your Future?

Have you thought about starting a business, but have no idea where to begin?  If so, perhaps you should consider buying a franchise.  There are several reasons why buying a franchise can be a better option for new entrepreneurs.  In many cases, franchising can be less of a risk than starting a brand new business.  Below are only a few of the advantages to becoming a franchisee instead of starting a business from scratch:

    • A franchise already has brand recognition and is a proven business model.  As a franchise owner, you will also have corporate support.
    • Franchises already have an existing customer base that will be very familiar with your product or service.
    • Franchises already have a built-in marketing plan to attract new customers, a plan in most cases already well-established by the franchisor.
    • There are numerous franchise opportunities available in a variety of industries, such as restaurant chains, tax services, learning centers and even fitness clubs.

The decision to become a franchise owner is just the first step. One of the most important decisions is to evaluate franchise opportunities and select one that best suits your needs as well as one that can provide a good income for you and your family. There are numerous online resources where you can find more information, such as the International Franchise Association.

Once you decide which franchise opportunity is best for you, contact Triton and we can provide you with funding options.  Get started today!

La Mancha Sims is the Founding Partner and CEO of Triton Financial Solutions, a business funding consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357.

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When Banks Won’t Lend, There Are Alternatives, Though Often Expensive

We wanted to share this great article originally published in the New York Times.

By Ian Mount
Published August 1, 2012
New York Times

After years of a small-business credit crisis, conditions seem to have improved. But with the economy still struggling and new regulations meant to eliminate bad lending, bank loans continue to lag.

“The days of yesteryear when you could go to your corner bank are over,” said Kenneth Walsleben, who teaches in the entrepreneurship and emerging enterprises department at the Whitman School of Management at Syracuse University. “Small, emerging, growing businesses have few traditional sources to turn to. You have to get a little creative.”

Some creative alternatives have been around forever; others emerged during the crisis. Almost all are substantially more expensive than traditional bank loans, which is why they have been sources of last resort. But as demand for alternative options has increased, some prices have come down. This guide, based on conversations with lenders, brokers and business owners, suggests which products make the most sense for different types of businesses.

Asset-Based Lending

HOW IT WORKS. Companies sell their receivables, or invoices, to a factoring company, which gives the companies 80 to 90 percent of the value upfront and the rest when the invoices are paid off. Some lenders offer loans based on a company’s purchase orders, contracts or inventory.

WHO USES IT. Business-to-business companies that cannot wait for payment and especially troubled companies, because an invoice factor depends on the client’s ability to pay, not the borrower’s solvency. Purchase-order, contract and inventory loans require more creditworthiness from the borrower. “If you’re in the office supplies business and you get an order from Staples, you can use purchase-order financing, and it can level the playing field,” said Neil Seiden, managing director of Asset Enhancement Solutions, a financial adviser in Port Washington, N.Y.

COST. Purchase-order financing costs 4 to 5 percent monthly; factorers usually charge an effective annual interest rate of 18 to 30 percent, said Mr. Walsleben, who is also a co-owner of the Hamilton Group, a factoring company.

SUPPLIERS. Liquid Capital, the Interface Financial Group, Triton Business Solutions, Simplified Leasing, Rosenthal & Rosenthal and scores of other firms offer factoring and other asset-based lending services. Many are members of the International Factoring Association trade group.

Lease-Back

HOW IT WORKS. A company sells its real estate or equipment for cash and simultaneously leases it back.

WHO USES IT. Healthy companies with warehouses, manufacturing locations or other properties that hold value that could be put to use elsewhere. The borrower sells at market value, usually the average of several appraisals, and leases the property back at the market rate for 10 to 25 years.

COST. The lease-back adds a monthly lease payment where previously there was none. Companies get less value from equipment than real estate because, unlike real estate, equipment depreciates over time, and lenders tend to value it at what is known as forced liquidation value, a lowball price based on what it would fetch at auction. Equipment lease-backs can create tax burdens as well. “If I own a press outright for 10 years and it’s worth $1 million, but it’s on the books for $250,000, and I sell it for $1 million, I’ll have to pay tax on a gain of $750,000,” Mr. Walsleben said.

SUPPLIERS. AIC Ventures, W.P. Carey, Calkain Companies and many others. Borrowers can search on the Commercial Finance Association trade group’s Web site.

Cash Advances

HOW IT WORKS. A business receives a lump sum from a lender, which then takes a percentage of the business’s daily card receipts until the loan, plus a predetermined fee, is paid.

WHO USES IT. Restaurants and other retailers. Business-to-consumer companies generally have more limited financing options because they do not have wholesale invoices to factor or factories to borrow against.

COST. Twenty percent and up, but highly variable.

EXAMPLE. When he needed money last year to cover utilities and taxes during the slow winter months, Dennis Sick, owner of the Mohegan Manor restaurant in Baldwinsville, N.Y., took out a $45,000 advance on credit card receipts. The lender said he would take 13 to 18 percent of Mr. Sick’s daily credit card sales until he had received $64,000, which would take 12 to 15 months and give him an annual rate of 60 to 75 percent. But Mr. Sick ended up paying the $64,000 in seven months, giving the lender an annual return of some 130 percent.

SUPPLIERS. AdvanceMe, RapidAdvance and many others. The North American Merchant Advance Association trade group gathers many providers.

Nonbank Loans

WHO USES IT. Seasonal businesses, microbusinesses and other businesses that cannot meet bank requirements.

HOW IT WORKS. Lighter Capital, a revenue-based finance company in Seattle, offers loans of $50,000 to $500,000 to small businesses with high gross margins. The borrower pays Lighter Capital 2 to 8 percent of its monthly revenue until the repayment amount is reached, and usually gives the lender warrants for 1 to 5 percent of the company. The country’s 400 or so nonprofit community development financial institutions, on the other hand, fill the role of small community banks, lending to microbusinesses. “Our clients are supplemental income businesses, like cupcake trucks and Main Street businesses whose lines of credit got called,” said Claudia Viek, chief executive of the California Association for Micro Enterprise Opportunity, a network of California C.D.F.I.’s.

COST. Lighter Capital’s chairman, Andy Sack, said the cost of obtaining financing from his company was around 20 percent annually. Ms. Viek said she expected California C.D.F.I.’s to make some 2,000 three- to five-year loans of up to $50,000 this year, at an average interest rate of about 8 percent. The rates can go as high as 14 percent.

EXAMPLE. “In the past, we would go to the local bank and get loans on signature,” said Christi Riggs, 40, co-owner of Lone Star Linen laundry service, based in Taylor, Tex. When the bank said no, Ms. Riggs took out a loan from On Deck Capital, a New York-based company that analyzes business performance data — cash flow, credit, even social media information — to review loan applications from small businesses. Once granted, the loans, up to $150,000, are repaid through automatic daily bank account withdrawals, much as a merchant cash advance works. The short-term loans, typically for three to 18 months, charge an annual rate of 18 to 36 percent, said Noah Breslow, chief executive of On Deck. Ms. Riggs ended up paying $27,750 on a six-month loan of $25,500, or an annual rate of about 35 percent.

SUPPLIERS. Lighter Capital, On Deck Capital, Kabbage and others. Many C.D.F.I.’s are members of the CDFI Coalition.

Peer-to-Peer Loans

HOW IT WORKS. Individual investors combine to lend money to small-business owners through online vetting platforms like Lending Club.

WHO USES IT. Small-business owners with good credit scores who need money to expand or to buy equipment.

COST. Depending on the owners’ credit ratings, annual rates can run from less than 7 percent to more than 25 percent. The loans are small, however, with a maximum of $35,000 at Lending Club.

EXAMPLE. When Hannah Attwood wanted to raise money to open a cloth diaper supply and cleaning service, she went to four banks. “They just kind of laughed at me,” said Ms. Attwood, 34, founder of Adore Diaper Service, based in Ventura, Calif. She applied to Lending Club on a friend’s suggestion, and within a week, 61 investors had jointly given her a three-year, $6,000 loan at 11.36 percent. She combined the loan with an equal amount of savings to buy industrial washers and dryers and cloth diapers.

SUPPLIERS. Lending Club and Prosper dominate the peer-to-peer market in the United States.

Originally published in the New York Times.

La Mancha Sims is the Founding Partner and CEO of Triton Financial Solutions, a business funding consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357.

Posted in Alternative Lenders, Alternative Lending, Business, Business Credit, Business Financing, Business Loans, Business News, Business Startups, Business Tips, Credit, Economics, Entrepreneurs, Entrepreneurship, Factoring, Finance, Small Business, Small Business News, Start-ups, Startups, Success, Veterans, Women | Tagged , , , , , , , , , , , , , , , , , , , , , , | 3 Comments

Is This The Golden Age of Invoice Factoring?

We think you will find the information in this article very useful. 

First Published December 16, 2013 by Don D’Ambrosio in Factoring Investors.

It’s usually during this time of year where you will find a bunch of business articles that reflect upon the events of the past year or take a stab at making predictions for the next earnings period whether it be quarterly or annually. Instead of following suit and subjecting you to the same old topic I would rather take a look at…

The present state of the factoring industry.

When you hear the term “Golden Age” of something it typically represents a period of great peace, prosperity and happiness. Usually we think of periods of history in Greek and Roman mythology when civilizations thrived in the arts, literature and science. Obviously it sounds like a stretch to associate invoice factoring with the historic cultural periods of the past, but think of where we are today compared to just a few decades ago.

In the past, invoice factoring was limited to a few select industries and was generally regarded as a last ditch effort for businesses to get cash for their survival. Compare that to today where invoice factoring is now one of the most widely used forms of business financing that is embraced by small local shops to multi-national corporations across the globe.

So what has led the acceleration and widely accepted use of invoice factoring?

First let’s start with the most obvious – business owners realize that cash flow is king and it is vital for growth. A company can be profitable on paper but if they do not have consistent cash flow to fuel operations and increase sales they will never make take their business to the next level.

Next, technology has made transacting business in the factoring industry simple. Think about what the internet alone has done for the growth of factoring.

Today, with just a computer, an internet connection and a multi use printer, you can perform credit checks, file UCCs, generate agreements, notify account debtors, wire funds, receive funds electronically and anything else that can be scanned, emailed or faxed. With a bank lockbox, you can receive paper checks that are automatically deposited to your account daily then scanned so you can view them online. It’s like having a designated accounts receivable person to handle all of your receipts. For us, transparency is everything and factoring software has also come a long way in a very short period of time.

Having a good factoring software program is vital for any factoring company. Why is it so important? Besides tracking all your invoices, a good factoring program allows clients to interface with the factor allowing them to upload schedules, check balances and run a multitude of reports for accounting and finance purposes. Having a solid factoring software program can be a very cost effective tool and keep clear lines of communication between the factor and client.

Finally, as the heightened popularity of invoice factoring continues, so is the acceptability from account debtors. At our company we are fortunate to work with many Fortune 500 companies that pay us on a daily basis. These account debtors represent many diverse industries such as energy, advertising media, governmental contractors and so forth. Our experience has been nothing less than favorable when notifying and verifying these companies. Many of the larger firms pay us directly through an ACH transfer and some even have specialized departments that deal specifically with factoring companies.

For full disclosure, not all companies are accepting of factors and yes, there are times when your team will have to roll up their sleeves to get an invoice approved and fully verified. As I’ve stated in previous articles, the amount of due diligence you perform is your call since each client is unique.

Only time will tell if we are in a golden age of invoice factoring but the future looks very promising. In the meantime, be bold, venture wisely and prosper.

Don D’Ambrosio is the president of Oxygen Funding, Inc., an invoice factoring company located in Lake Forest, California.

For more information, he can be reached at don.dambrosio@oxygenfunding.com or you can visit his company’s website at www.oxygenfunding.com.

Posted in Alternative Lenders, Alternative Lending, Business, Business Credit, Business Financing, Business Loans, Business News, Business Tips, Credit, Economics, Entrepreneurs, Entrepreneurship, Export, Exporting, Factoring, Finance, Franchises, Franchising, Invoice Factoring, Small Business, Small Business News, Success, Women | Tagged , , , , , , , , , , , , , , , , , , , , , | Leave a comment