Taking Control Of Your Business Finances

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StrategyDriven Managing Your Finances Article |Business Finances|Taking Control Of Your Business FinancesIt is well-documented that the majority of new businesses fail. Cash flow is an obstacle for many aspiring entrepreneurs, and this is why taking control of business finances is so critical. If you’re preparing to launch a startup, or you’re in the early days of growing a small business, here is some advice to help you reduce risks and manage your money effectively.

Plan ahead

Your business plan should outline how you’re going to fund your company and how you’re going to monetize ideas to generate a steady income and make a profit. Whether you’re new to business, or you’ve been established for several years, it’s crucial to plan in advance. Create budgets, evaluate spending and look for ways to make savings without compromising on quality or customer service. Increasing efficiency is an excellent way to lower expenses while also increasing your profit margins. Use forecasts to influence growth plans and resist the temptation to run before you can walk. It’s wise to consider investing in expansion once you start generating profits and demand for your products or services is increasing. Until you reach this point, it’s beneficial to tread cautiously when it comes to your finances.

StrategyDriven Managing Your Finances Article |Business Finances|Taking Control Of Your Business FinancesMake budgeting simple

Budgeting is an incredibly useful tool for businesses, particularly those looking to reduce spending or save money. To make budgeting simple, make use of software and apps and keep track of expenses. Monthly web hosting enables you to pay a set fee every month, for example. You could also look into annual options. Make sure you know which payments are coming out of your accounts every month, which services you’re paying for once a year and what you’ve signed up for on an ad hoc or on-demand basis. If you have a firm grip on your expenses, this will help to prevent overspending and cash flow problems. It’s very easy to forget about payments when you have direct debits or you touch to pay via apps or instant web payments. Analyze your accounts and update or revise your list of regular payments every few months to make sure that your budget is accurate.

Invest in protection

Running a business carries risks, and none of us know what is around the corner. Even if your financial situation is rosy, you can never be too careful. Natural disasters, cybercrime, theft, incidents that affect your brand image and reputation and economic and political uncertainty can all jeopardize even the most successful, profitable businesses. Investing in protection is essential for all entrepreneurs. Make sure you have the relevant insurance and try and draw up plans and policies to minimize disruption in the event of unexpected curveballs. If you have insurance, you have an emergency fund available and you have a plan B to keep the business running smoothly, this will stand you in good stead if the waters get choppy.

Managing accounts and trying to generate profits year in, year out can be hugely challenging for business owners. One of the most important jobs to master as an entrepreneur is taking control of your finances. Plan ahead, keep a close eye on your accounts, budget and make sure you have protective measures in place.

How To Secure Business Financing After Declaring Bankruptcy

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StrategyDriven Managing Your Finances Article |Business Financing|How To Secure Business Financing After Declaring BankruptcyPitching to banks and investors to get funding for a new business is always daunting, but it’s particularly scary if you’ve already had a failed business and declared bankruptcy in the past. You can be sure that investors will do their homework and they’ll know all about it, so there’s no point trying to hide it. A lot of people assume that having a failed business in the past means that nobody will touch you but that isn’t the case. In fact, a lot of the most successful business people in the world have had failed business and declared bankruptcy before they landed on an idea that took off. Investors understand this and they are willing to take a chance on people, even if things haven’t worked out in the past. However, it is more difficult to convince them that their money is in good hands.

There are a number of concerns that investors may have and you need to address them. Firstly, they will worry about why the first business failed and whether it was down to poor management. Secondly, they will want to know about outstanding debts. If your new business is very similar to the old one, creditors may be entitled to collect debts from it, which is a big problem for investors. If your new business looks quite similar to the old one, you also need to help them understand how things will be different this time and how you will avoid another failure. Addressing all of these issues can be tough, but it’s not impossible. Here’s how to secure investment for a new business after declaring bankruptcy.

Focus On Your Business Plan

Your business plan is more important than ever if you have already had failed business ventures in the past. Any lenders will want to know exactly how you plan to spend the money that they give you and what specific steps you will take to grow the business and return their investment to them. Banks will want a clear plan for exactly how you are going to repay any loans that they give you, so it’s vital that you can prove you have thought about every tiny detail of your new business. You can find some great templates for business plans online, which will help make sure you haven’t missed out anything important and keep everything well organized. When writing your business plan, you must be specific about the numbers because this is what lenders will be really interested in, considering your previous business failures. Although you are pitching the product, it’s vital that you demonstrate a clear understanding of the finances if you want to inspire confidence in investors.

Approach Private Investors First

Although some banks will still lend to you, private investors are more likely to take a chance on your new business, so you should focus on them first. They have more control over their money than a loan approval officer has over the bank’s money, so they can make that judgment call and decide to back your business even if it doesn’t seem like a good idea on paper. You will also find that if you can secure partial investment from a private party, this drastically increases your chances of being approved for a bank loan because you are not asking for as much.

Search For A Business Partner

Having a failed business and declaring bankruptcy in the past presents two major problems; the first is that you have a terrible credit rating, which means that banks and private investors are naturally cautious about lending to you and many people will reject you immediately when they run a credit check on you. The second problem is that people will assume that you lack business skills. You tried to start a business on your own and ended up bankrupt, so the evidence would suggest that you are not capable. There are, of course, other factors involved and you should explain these to potential investors, but it’s still likely that they will have concerns about your skills as a business person.

You can address both of these issues if you search for a business partner. If you are able to find a partner with good credit, you improve your situation immediately and with them listed as co-owner of the business, your chances of getting a loan shoot up. If your business partner has a good track record and a lot of experience, that works in your favor too. The investors are a lot more confident because it’s not just you that’s running the business, you have an experienced, successful partner to help you manage the workload, meaning you’re more likely to make it work.

However, you should be very careful when choosing a business partner to work with. Find somebody that is equally as passionate about the product but, most importantly, somebody that is on the same page in terms of the future direction of the business. When you start having fundamental disagreements about where your business is headed, you’re in big trouble. You need to think about what your relative strengths and weaknesses are too so you can choose a partner that compliments your skill set. If you’re a marketing whiz but you struggle to get to grips with the accounts, there’s no sense partnering with somebody that has spent their entire career working in marketing. Instead, you need a partner that knows the financial side of business inside out.

Put More Of Your Own Money In

This one might be tricky if you are already in a tough financial position but it really helps if you can invest more of your own money. If you are willing to back the business yourself, it shows that you are confident about it and that plays well with investors. If you’re not willing to risk that much of your own money, why should they risk theirs?

If you are struggling to raise any of your own money to put in, you should consider holding off for a while. It’s not a good idea to start a business when you are in a precarious financial position because, if it doesn’t work out, you’re in serious trouble. It might be best to spend a few years restoring your credit rating and building a healthy savings account. This will reduce the risk on your part and make it easier to secure financing.

Look For Alternative Financing Options

Banks and private investors are the most common ways to finance your business, but there are alternatives you should consider if you are struggling.

Crowdfunding, for example, is a very popular way of funding a new company these days and many successful businesses have started out this way. If you didn’t already know, crowdfunding works by asking lots of people to put a small amount into a business idea, usually with the promise of a finished product or access to exclusive content once the business is up and running. This allows you to pitch your business without any financial risk and people are more likely to back you because you’re only asking for a small amount. However, crowdfunding sites have become very popular and they’re incredibly competitive. If you stand any chance of getting the required amount, you must invest time and money in creating a high quality pitch with video demonstrations of your products. If you are going to try crowdfunding, manage your expectations and remember that your product could get lost amongst the thousands of others on crowdfunding sites.

Peer to peer lending is another alternative funding source that you might want to consider. These platforms connect investors with people that are in need of loans, and many of those investors are more willing to overlook poor credit ratings. Again, you are not guaranteed to get a loan this way but many struggling business owners find that it is a good place to find potential investors.

Depending on where you live, you might also be entitled to a small business grant or loan through a scheme of some kind. These grants are created by local authorities to encourage new businesses to open in the area. If you can get a grant, you won’t need to pay it back, which is a huge bonus for a new business that doesn’t have much money. Even if you do have to pay your loan back, the interest rate will be very reasonable and some may not charge any interest at all.

A lot of people give up after their business venture fails and they are forced to declare bankruptcy. They assume that nobody will ever finance them again and it’s too much of a risk to open a new business. But if you have a great business idea, you should take a chance on it because there are still ways to secure financing. As long as you learn from the mistakes that you made the first time around, you stand a good chance of making your new business work. Just follow these tips and you can get the financing you need.

The Basics of Franchise Accounting

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StrategyDriven Managing Your Finances Article |Franchising Your Business |The Basics of Franchise AccountingOwning a franchise is an easy and affordable way of starting a new business. As a franchise owner, a lot of the heavy lifting involved in starting a business is already done for you. Franchisees can take on an already established brand and don’t have to worry about marketing themselves, as this is done by the franchise centrally.

All the franchisee needs to worry about is dealing with the day to day running of the business, which includes the accounting. Many aspects of a franchise business will be managed centrally. In particular, the costs of marketing and developing new products don’t fall on the shoulders of individual franchisees.

Franchise accounting is similar to accounting for any other type of business, although there are a few extra steps. Let’s take a look at exactly what a franchise is and how they are run and managed.

How do Franchises Work?

A franchise location is owned by an individual, the franchisee. However, the franchise as a whole is owned by a larger corporation. For example, each individual McDonalds store is owned and operated by an individual franchisee. However, McDonald’s decides what’s on the menu, how the store functions, etc. They also handle all of the marketing and other costs of developing and growing the business.

franchising makes owning and operating a business accessible to people who would otherwise be unable to. Returning to the example of McDonald’s, a franchisee may be able to open a McDonald’s franchise as the first business that they run themselves. It’s hard to envisage most people launching a startup that has the kind of name recognition that McDonald’s does, or the existing infrastructure.

With the franchising model, new locations can be opened easily and quickly. From the perspective of the larger franchise business, this makes expanding a much simpler proposition. New franchisees will bear many of the responsibilities, and some of the costs, of opening a new franchise. If the new franchisee fails, the franchising corporation hasn’t lost as much in terms of time and money as it would if it had invested fully in a new physical location.

Franchisees, on the other hand, get to open a new business with an already established customer base, marketing strategy, etc. The franchisee will have to pay the franchising business according to their contract. This can either be in the form of a percentage of the profits, or it might be a flat rate.

Role of the Franchisor

The franchisor is the larger corporation that ultimately owns all the franchises. They manage the brand and business as a whole, deciding how to market the business and how to develop the available product ranges. The franchisor also provides assistance to their franchisees as and when it is needed.

Fees and Franchise Accounting

A franchisee owns the franchise location that they run, even though the business they operate is under license from the franchisor. They are required to follow all the guidelines set out by the franchisor. If they don’t, the license can be revoked and the franchisee can end up with a location but no business to occupy it. The franchisee will be required to pay fees to the franchisor; that’s how the franchising business makes their money.

The fees a franchisee pays are used to cover a number of costs. For example, these fees allow the franchisee to use the franchisor’s trademarks, brands, products, and services. Franchisors are legally required to set out all the fees involved in being a franchisee upfront and they cannot spring unexpected charges on the franchisee at a later date.

There will be an initial fee to pay the franchisor, which serves as a kind of entry charge. There will also be some form of ongoing fee, usually a royalty fee. Proper franchise accounting requires you to be familiar with all the expected fees and charges; you won’t be able to maintain accurate accounts unless you know what deductions and fees to factor in.

Initial Fees

The initial fee is the entry fee that grants the franchisee the right to use the franchisor’s trademarks, including brand, products, services, logos, etc. And, of course, the most important thing your initial fees will pay for is the right to use the franchisor’s name. Finally, your initial fee will cover some of the costs associated with opening a new business.

For example, the franchisor will cover the costs of training staff to use their point of sale systems, as well as any other in-house sales software. Initial costs are paid as a lump sum to the franchisor. Before you pay any initial fees, it is important that you establish exactly how much business capital you will need.

Amortizing Initial Fees

When filling out a business tax return, a franchisee can deduct their initial fee from their total profits; this is known as amortizing. Amortizing is similar in nature to depreciation, except that it deals with tangible rather than abstract assets. By amortizing a fee, its cost can be spread out over several years. This makes it possible for franchisees who can’t afford to pay a lump sum to instead pay the fee gradually over the useful lifetime of tangible assets, such as trademarks.

You can amortize the fee over a relatively long period of time, paying off fractions of it annually. For example, if you amortize your initial fee over a period of 20 years, you divide the total fee by 20 to work out how much of it you will pay per annum.

Royalty Fees

Royalty fees are the main way that the franchisor makes their money. Royalty fees are a little bit like a tax that the franchisee pays on every sale. This is the cut of the profits that the franchisor gets in exchange for essentially providing the core business. In some cases, royalty fees might be specified at a flat rate. However, the majority of the time they will be paid as a percentage of sales.

Marketing Fees

Some franchisors will further charge franchisees to cover the costs of marketing. Even though individual franchisees aren’t involved in the centralized marketing efforts, they still benefit from the effects of new marketing campaigns, so it does make sense that the franchisor would want to recover some of their investment.

Both franchisors and franchisees need to understand the intricacies of franchise accounting if the arrangement is to work. A mistake in a franchisee’s bookkeeping can end up in the franchisor being paid incorrectly and can lead to a distorted image of how healthy individual franchises are. For this reason, many franchisors are now centralizing their accounting and utilizing cloud-based accounting software. This allows individual franchisees to access and update their business accounts on a daily, weekly or monthly basis.

Conclusion

Franchise accounting needs sophisticated accounting software like QuickBooks Enterprise hosting which can be accessed on Citrix Xendesktop VDI that enables accountants to work remotely for franchise-based models to work from anywhere anytime.

5 Reasons Why Online Payday Loans With No Credit Check Are Preferred By Teachers

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StrategyDriven Managing Your Finances Article |Payday Loans|5 Reasons Why Online Payday Loans With No Credit Check Are Preferred By TeachersIt is astonishing to note that our children and our country’s future lie in the hands of people who are paid very little for the work they do. According to a survey conducted in 2020, it was found that the median annual wage for a teacher is $60,000. An alarming fact was presented through this survey that teachers’ entry-level positions are only paid $40,000 per year.

This leaves our educators no choice but to pick up extra jobs and extra shifts to fulfill their basic needs. The state of our education system rests upon the hands of our teachers. Many already have previous loans resting upon their head, either for their previous education or for a house. If they cannot pay the installments back on time, they rack up a bad credit score, which makes it extremely difficult for them to apply for another loan. This is why teachers, left with no option, choose to go for online payday loans. These are a lifesaver for teachers when they are left with no viable financial option.

Teachers are given relief through no credit check online payday loans

It is not easy living a life where you can barely cover your expenses every month. As reported by many teachers, they tend to run out of cash-in-hand by the end of the month and usually have to do some serious budgeting to get through the whole month.

Payday loans offer a lot of relief to teachers in this regard. Payday loans are short term loans that can be repaid by the borrower within 30 days, that is, till their next payday. This loan is supposed to be paid back in one go. Teachers can easily apply for a loan to get some ease and convenience until their salary comes again.

Many teachers can have a bad credit score due to late loan repayments or even late credit card payments. This leaves them no way to apply for another traditional bank loan. A lot of lenders approve online payday loans without any credit check. You can learn more about no credit check online payday loans with instant approval to see how they can benefit you. This is quite an attractive feature for teachers looking for other viable financial options.

Help offered during emergencies

How many times have you had an emergency come your way? Maybe you had to take your spouse or child to the hospital suddenly. Maybe your car broke down, or maybe you had an unexpected household expense come up. We all know how hard it can be to deal with such emergencies, especially when we do not have any savings kept on the side.

As reported by many teachers, they barely have any savings kept on the side since all their salary goes into fulfilling their basic needs and necessities. Payday loans offer the borrower money in case of emergencies. Unlike traditional bank loans, these loans are provided almost instantaneously to the applicant after approval.

This offers a huge safety net to teachers by providing them with an option in hard-hitting emergencies.

No collateral is needed for a payday loan

Loans such as business or home loans require the borrower to put up security or collateral for borrowing the specified amount. Lenders do this to guarantee that the borrower will return the loan amount within the specified time. It is quite difficult to obtain such loans when the borrower does not have any collateral to put up or is quite skeptical about it.

Online payday loans do not require the borrower to put up any collateral at all. In case the individual is unable to pay back the loan, they can simply talk to the lender about changing the payment schedule. They do not have to worry about losing their property or whatever they have put up as security. This is quite a viable alternative for teachers.

Full control over the money

Business loans can only be used for specified purposes such as construction, payments to suppliers, employee salaries, or new equipment. Similarly, home loans can only be used to purchase property, home renovations, and similar things. Such loans do not give any control to the borrower on how to spend their money.

On the other hand, online payday loans offer full control of the loan amount to the borrower. Teachers can use the loan amount for anything such as their child’s tuition, household emergencies or bills, groceries, or even just for a vacation. They can use the amount in any way they wish to.

Applications have never been this easy before

Whenever we think of applying for a loan, the first thing that comes to mind is the extensive amount of work we have to apply for a loan. Traditional bank loans require the borrower to visit the branch multiple times, fill out a ton of forms, and go through an extensive credit score check to consider the bank’s application.

This is not a viable option for teachers since most of them are working two jobs to support themselves. Payday loans can be applied for online. All you need is five minutes of your time and a good internet connection to apply for a payday loan.

Unlike the endless requirements that are needed to be fulfilled for a bank loan, payday loans only require a few things. They need the applicant to be at least 18 years of age, have a valid and active bank account, provide their Social Security number, and have a stable income source.

It isn’t charming to see the median annual wage of teachers in this country. Sadly, our educators have to resort to other methods of income to survive. Till this country gears up and recognizes the need to pay teachers a better salary, payday loans have provided immense relief. Indeed, payday loans are a perfect financial alternative for teachers. So, if anyone is distressed with their financial situation and is finding it difficult to find any reliable source to borrow money, online payday loans can be of great help.

How to Decide if Contractor Material Financing is Right for You

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StrategyDriven Managing Your Finances Article |Contractor Material Financing|How to Decide if Contractor Material Financing is Right for YouAs an entrepreneur in the construction industry, you might find yourself juggling a backlog of accounts payable, a stack of past-due invoices from suppliers and new projects in your pipeline that require even more equipment and materials ASAP. Though suppliers typically offer 30-day terms, any contractor knows it often takes much longer than that to get paid on completed work, leading to inconsistency in cash-flow.

While there are several contractor financing options available, credit card limits are many times too low on limits for your needs (especially for larger commercial projects) and traditional lenders are known to require blanket liens on your business just to work together. However, project-based financing for purchasing construction materials is an ideal option that’s growing in popularity with many savvier contractors today. In particular, contractor material financing can provide the flexibility you need to close the cash-flow gap, keep projects on schedule, bid on bigger projects and scale your business faster.

How Does Contractor Material Financing Work?

You obviously can’t begin a project without materials — but, chances are, you probably won’t get paid on your last project before the next one begins. That’s why materials are such a popular option for project-based contractor financing.

In this scenario, your business partners with a construction partner who gets to know your business and the types of projects you work on. Then, they pay your supplier directly with upfront cash so you can secure materials exactly when you need them. Finally, you repay the cost of the materials to your financing partner over an extended period of time, versus in one lump sum, in order to keep your projects running smoothly, allowing you to simultaneously bid on more projects.

And with material financing, you’ll enjoy:

  • Higher credit limits – funded to your needs and the project.
  • Faster funding – in many cases, as quickly as same-day.
  • Better supplier pricing – by paying in cash, take advantage of supplier cash discounts.
  • Lower monthly payments

Perhaps the greatest benefit is that, unlike the experience of working with a lender from a bank, you’ll gain a financing partner with construction industry expertise who understands the needs of your business.

But how do you know if contractor material financing is right for you? Here’s a helpful checklist:

1.Are You Trying to Grow Your Construction Business?

Contractor material financing is an optimal way to kickstart growth by helping you take on more projects at once, as well as larger, more ambitious projects.

Do you currently feel comfortable bidding on a project twice the size of your typical bid? Do you have a relationship with a lender who will extend the necessary credit on a project that large? Even if your supplier will extend terms, you’re likely going to end up coming out of pocket to purchase materials when you need them. But when you work with a material financing partner, you can confidently bid on a variety of projects knowing the material costs will be covered, with the flexibility to repay on a timeline that works for you.

2. Are You Striving to Innovate and Improve Your Business?

Even if you’re comfortable with your ability to pay suppliers through cash flow, utilizing material financing will give you the financial clout and strength necessary to enhance your business-growth initiatives, generate more revenue and compete more successfully with larger construction firms in your market.

Enjoying flexible payment terms on materials frees up cash to hire skilled marketing and sales talent, increase your advertising spend, or add more field workers to your team necessary to take on more projects. You’ll be amazed at the opportunities to innovate and grow when you’re no longer held back by inconsistent cash flow.

3. Do You Want to Move from Residential to Commercial Jobs?

If you’re making the move from residential to commercial construction, material financing is one of the best ways to lower your risk and support your success. The stakes, the budgets and the expectations are all much higher on commercial projects, so you can’t afford to let inconsistent cash flow stand in the way of meeting your objectives.

Timelines are especially crucial on commercial projects, where one hiccup from a subcontractor can slow down the entire train. If you fail to pay your supplier for materials by the time new material is needed, they may refuse to sell you more, forcing you to find a new supplier altogether and potentially slowing down the project. Needless to say, this is not a circumstance where you want to rely on funds from one project to pay for materials on another.

By working with a material financing partner, you’ll be poised to pay your suppliers upfront, complete your commercial construction projects on-time, and continue to build a great reputation with the GC.

To read more about tips for moving from residential to commercial construction, check out this article by Billd.

4. Would you Like to Minimize Everyday Business Stress?

Entrepreneurship is stressful enough as it is, without the added burden of erratic construction payment cycles. When the success of your business and the wellbeing of your employees is your responsibility, the pressures of being stretched too thin financially and unable to keep your projects moving forward on time can keep you up at night.

A significant benefit of working with a project-based financing partner is the pure relief that comes with the ability to pay your supplier upfront, without having to worry about when you’ll receive payment from your last project. With the freedom and flexibility of material financing, your supplier gets paid and you can stay focused on growing your business.

5. If Contractor Material Financing is Right For You, So Is Billd

Don’t let the construction cash-flow gap prevent your business from moving forward and achieving its full potential. With contractor material financing, you can free yourself up to accept a greater amount of projects, take on more ambitious projects, innovate in all areas of your business — and lower your stress along the way.

At Billd, we’re experienced construction professionals who understand the struggles of your payment cycles. While many banks are unable (or unwilling) to provide short-term funding to contractors for construction projects, we’ll work with you to provide a flexible financing solution that will free you up to achieve your business goals. If you’re ready to try material financing or just want to learn more, contact us today.

About the Author

StrategyDriven Expert Contributor | Jon KatzJon Katz is the Vice President of Marketing at Billd, a simple payment and finance solution for the construction industry. Jon oversees all marketing at Billd, including paid user acquisition, demand generation, email and owned channels, website, marketing budgets, brand, content creation, and more. Jon lives in Austin, TX, where Billd is headquartered, and he brings an entrepreneurial spirit, self-starter mentality, and passion for life-long learning to his role.