Basic Principle of Financing

Poor management is often referred to as the main factor of why businesses fail. Lacking or poorly timed financing is a nearby second. Whether you are a starting up business or expanding your business, adequate capital is important. Yet it is insufficient to essentially have enough financing; understanding and planning are necessary to control it well. These qualities will ensure business owners to avoid mistake like having a wrong type of financing, or underestimating the cost of borrowing money.

Ask yourself this question before inquiring about financing:

  • Do you need more capital or can you work on with your existing cash flow?
  • How do you characterize your need?  Do you need the money because you want to expand? Or as a cushion against risk?
  • How vital is your need? You can get the best terms when you foresee your needs rather than looking for money under pressure.
  • How big is your risk? All businesses suffer from risks and danger, and the level of danger will influence expense and accessible financing plan B.
  • How strong is your management team? Management is the most important element surveyed by money sources.

Possibly most importantly, how does your need for financing mesh with your business plan? If you don’t have a business plan, make writing one your first priority. All capital sources will want to see your plan for the start-up and growth of your business.

Don’t assume all money is similar

There are two types of financing: equity and debt financing. If you are looking for money you should consider your business debt to equity ratio – the difference relatively concerning dollars you’ve borrowed along with dollars you’ve invested in your organization. The harder money masters include invested in the organization, the more it really is for you to entice loan.

If your company has an excessive percentage of equity to debt, you may want to seek debt financing but if your company has a high percentage of debt to equity, experts say you should increase your ownership capital for added funds. In this way you will not be over-leverage to the point of ruining your company’s welfare.

Equity Financing and Venture Capital

Most small scale businesses use limited equity financing but with debt financing, additional equity mostly come from non-professional investors like friends, relatives, employees or customers. However, the most common source of professional equity funding comes from venture capitals. These are institutional risk takers and may be groups of wealthy individuals, government-assisted sources, or major financial institutions. Most specialize in one or a few closely related industries.

Venture capitals are sometimes seen as deep-pocketed financial gurus looking for start-ups in which to invest their money, but they most often prefer three-to-five-year old companies with the potential to become major regional or national concerns and return higher-than-average profits to their shareholders. Venture Capitals earn money by owning equity in the companies it invests in. They generally prefer to influence a business passively, but will react when a business does not perform as expected and may insist on changes in management or strategy. Changing some of the decision-making and some of the potential for profits are the main disadvantages of equity financing.

Debt Financing

Banks, savings and loans, commercial finance companies, and the SBA are some of the sources for debt financing. State and the local government have come up with programs in the recent years to give encouragement to the growth of small business to help increase the economy. Family members, friends, and former associates are all potential sources, especially when capital requirements are smaller.

Banks traditionally have been the major source of small business funding. Their main role has been as a short-term lender offering demand loans, seasonal lines of credit, or single-purpose loans. Banks generally have been unwilling to offer long-term loans to small firms. The SBA guaranteed lending program encourages banks and non-bank lenders to make long-term loans to small firms by decreasing their risk and leveraging the funds they have available. The SBA’s programs have been an integral part of the success stories of thousands of firms nationally.

In addition to equity considerations, investors or lenders mostly require the borrower’s personal guarantees in case of default. This will assure that the borrower has a sufficient personal interest at stake to give attention to the business. For most borrowers this is a burden, but also an obligation.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our
Copyright 2014 LLC

The secret behind the success of small businesses

The secret behind the success of small businesses

People often think that having a small business is a difficult venture and while this is generally true to some degree, it must be emphasized that there are people who actually think of their small businesses as some sort of their pastime activity. This might be considered as a secret behind the most successful businesses.

The reality is that success of a business is relative to the level of passion of its owner. There are those whom people call “passionpreneurs,” who used their love for some things and transformed this into a small business.

For instance, there are people who love greeting cards who decided to start their own greeting card store. There are also those who love animals, and decided open pet shops to earn from what they like to do. These kinds of ventures hit two birds in one stone – establishing a small business and doing what the things the entrepreneurs love.

Unfortunately, having a passion and transforming it into a viable venture will not be as easy as it sounds. There are things that have to be addressed in order for the small business to become profitable and successful. Here are some things that a prospective entrepreneur will have to think about if he or she decides to turn his or her passion into a small business:

The Product

This is the most important thing that one has to think about when starting a business. For those who love greeting cards, it’s easy to think about the product – the greeting cards themselves.

But what about those who are passionate about other stuff like animals? Will the business sell animals, or offer services for pets? This is perhaps the most important question that a would-be entrepreneur will have to ask his or herself. After all, the product is the most important thing for a small business.


Business is about engaging other people to avail of the product or service. And while there may be a handful of people who are also passionate about the idea of animals or greeting cards, there is also a need for the business owner to engage other “less passionate” customers to look into business. This is where marketing comes in, and it asks the question: How will you encourage other people who are not as passionate as you are to pay for your product or service?

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our


Copyright2014 LLC

Important Things to Consider Before Starting a Business

Important Things to Consider Before Starting a Business

Profit is considered by many as one of the most important things that drive people to establish business startups. After all, businesses would not be considered as such if they fail to provide their owners with income that could ensure its continuous operations.

Despite its importance, however, people who are thinking about starting their own businesses must think about other things. It must be emphasized that the profit is just one of the many aspects that business owners have to consider before establishing their startups.

Here are some of the things that potential business owners must also think about before committing into something that could make or break a person’s career:

Reasons for establishing a business

People establish businesses because they want to earn a profit. However, there should be other reasons that could support a person’s decision to enter the world of entrepreneurship. It is often said that successful entrepreneurs are those who do not focus much attention on profit, but rather on the fulfillment brought about by the business.

Moreover, a person must also think about the reasons for choosing a particular type of business – would it focus on the field of medicine, or perhaps services that could improve people’s lives? Thinking about these things would ensure that the business would follow a right track to success.

More importantly, the would-be entrepreneur must think about his or her endgame. What is his or her ultimate goal for the business – to expand in the future and head the company until the end of time, or sell it once it’s profitable enough for the partners? Thinking about this also sets the right path for the entire business.


A person’s drive to establish a business – while an important element when it comes to entrepreneurship – is not enough if the owner wants a successful startup. Aside from the drive and conviction, there are other more tangible things that potential owners must think about before starting a business.

These include financial capital, enough human resources, and even the right amount of consumers in a specific target market.

Once these things are determined, the next question must be asked: Where will I get this? This is particularly true when it comes to money. While there are cases when friends or relatives shell out to support a business startup, this is not particularly true for everyone. A good way to solve the problem of having financial support is by looking into potential investors who would be happy to partner with business plans that exhibit promise of success.


More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our


Copyright2013 LLC

Splitting Equity Equally among Founders, Is it the right decision?

Splitting private equity among the founders of small businesses may seem an easy task. After all, it is widely accepted that founders – and even just the pioneers behind a successful business – deserve equal shares in the company’s equity. Or are they? Some experts believe that equally splitting the equity among the founders is not really the best decision that entrepreneurs can have.

Splitting the equity equally seems fair for those involve. Actually, it is. But fairness should not be the only thing that matters when it comes to equity and revenue discussions. There are possible scenarios that founders must think about when discussing about the sharing of equities. Among these scenarios, one expert notes, is the possibility that someone from the group of pioneers would back out and leave the group. Why give him people equal shares of the equity if they will just leave the business after a few months?

The role of the people involved in the business is also crucial. Consider this scenario: Marco has a business idea and he decides to share this to Paul. Later on, the two of them decide to establish a business based on Marco’s idea.

During the establishment phase, Marco and Paul realize that they need money to finance the operations of the business. To solve this, they decide to contact their friend Anna to ask for some capital. Anna agrees to provide money for the business on the condition that she will be considered a “founder” of the business.

The question is, would it be fair to split the equity equally between Marco, Paul and Anna? Paul would definitely agree to the proposal, but it may seem unfair for Marco and Anna.

Marco was the one who had the idea, and it was Anna who provided the capital for the business All Paul did was to agree with the idea and probably help in convincing Anna to fund the business.

Unless Paul did something relevant for the company (such as managing the manpower or using his networks to help in the actual formation of the business), it may seem inappropriate to give him an equal share of the equity.

Founders of small business often have personal relationships prior to the creation of the business. However, entrepreneurship is a professional field, and people should understand that partnership should always be prioritized over personal ties.

Instead of looking into the years of friendship or familial ties, co-founders of the business should look into the professional aspects of the company when they are deciding on equity split.

Some of the factors that should be considered include the business idea, the intellectual property, the capital, time, opportunity cost, and expertise of the person on the industry where the business is a part of.





More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.


Copyright 2016 LLC

Guidelines For Successful Postings

Guidelines For Successful Postings

Rules and Guidelines For Successful Postings

Posting your Funding request is essential part of raising capital as creating your Business Plan. In order for you to get the funding you should be able to catch the eyes of the investors. Here are some tips you can follow to attract Investors and funding providers.

Title. Make your title attractive this is the first section our investors will see. Include the title of your business or invention. Make it enticing and give them something they want to hear and continue reading to your letter.

Posting. Write a short summary of your Business idea or Invention that will catch investor’s attention. Make it 2 to 3 paragraph short and make it concise and simple. Avoid too much information and do not copy and paste your Executive Summary. Your posting is not to be confused with a chat or blog. You are selling you and your business to investors and funding providers to raise capital and any posting that is not about your business is not allowed. Remember, concise and to-the-point.

Attach your Business Plan or Executive Summary. If you are looking for an Angel Investor or Venture Capital make sure you attach your Business Plan don’t wait for the investors to ask your Business Plan. Remember your Business Plan is the eye view of your business/invention.  If you don’t have a Business Plan yet at least upload an executive summary.  (You can use the Free Executive Summary template available upon creating your membership). This will give the investor the immediate reaction that you are serious in getting funds.

Private or Public posting. We have two ways of posting your request either public or private post. If you publically post be aware that everyone who not a member of will see your postings. While private posting only our registered investors and funding providers can see your funding request.

Avoid Personal Information. Even though we pre-screen funding providers, it is an ever increasingly large group and it is ultimately up to you to protect yourself from anyone saying who they are not and promptly reporting any concerns to us. Therefore we suggest not putting your email or telephone number on a public post. Private postings may not have the traffic like a public posting but is limited to our investor network that is viewing your funding request. Keep in mind that if there are investors that are interested in knowing your business venture they can always email you via and you will receive an email notification on your personal email if they replied on your posting.

Be patient for responses give some time to our investors to see your request. If you are not getting any responses try to re-write or revised your posting. You may also call us and we can look at your posting and give you tips for success.  Try to be more creative and remember you want to create interest in your business or idea and sometime it takes time for investors and funding providers to notice you, especially the right one that will fund you.




Working Without an Office: Can Business Startups Pull It Off?

business startup

One thing that would come to mind when we talk about business startups and small businesses is the idea of having a small office crammed with idealistic people who want to succeed in their chosen field.

In recent years, however, there has been an increase in the number of businesses function well despite the lack of an office. For the owners of these businesses, having a remote team is not so different from having a group of people work together in the same room. In fact, for many of them, they believe that these setups might even help in the success of their companies.

So what is the reality behind this trend? More importantly, can business startups really succeed if they adopt this kind of setup?

The answer, of course, is dependent on the nature of the business. Sometimes, businesses would require having a physical space where the employees can function efficiently. Others, meanwhile, are okay with the idea of working together via the cyberspace.

Entrepreneurs, therefore, should look into the status of the company before approving any plan of shutting down the office and hiring a remote team.

There are advantages in this kind of setup. For one, the company would not be limited to a group of people who live in the same city. They could even hire a competent consultant from another country since he would not be forced to go to an office every day.

Despite the advantages, there are downsides in not having an office. For instance, Continue reading “Working Without an Office: Can Business Startups Pull It Off?”

Are You Ready In Getting Customers This Holiday Season?

imagesLet’s face it! We all know that small businesses have a lot of competition during the holiday season, and your success depends upon a very good marketing plan. Nowadays social media and email marketing are one of the most effective tools you can use to help you stand out from the rest.

Here are some tips that you can follow to get started:

1. Come up with a plan to Help Create Holiday Momentum

Momentum will likely be serious in figuring out whether or not this year’s holiday season will be one really worth organizing for your small business.  Prepare a master plan that maps out the weeks leading up and all the way through the holiday season with particular objectives for each of the big days (Black Friday, Small Business Saturday and Cyber Monday are among the biggest).

2. Consider what exactly your Fans, Followers, and Readers Really Need this Year

If you like your small business to be part of your customers’ holiday plans this season, you’re likely to have to provide content they really value. You can do this year-round; however this is very beneficial throughout the holidays while potential customers are not just busy, but are likewise becoming swamped by content from a number of other businesses dealing with for their interest.

Tell your readers and followers regarding soon to be released holiday campaigns or maybe give a sneak peak at new seasonal items to create excitement and provide them with the exclusive content they need. But make sure to be an investment, and not simply a sales pitch. Give them an item they will use this holiday season— Continue reading “Are You Ready In Getting Customers This Holiday Season?”

The Benefits of Advanced Technology to Small Business Lending

Small business lending is just one of the markets that greatly benefits from the technological advances that we are experiencing in this day and age. Because of the accessibility to larger scope information about the potential lenders, banks and other lending institutions are now able to make more detailed assessments of the risks involved in a possible agreement.

Here are some of the advantages of having an advanced technology in the small business lending markets:

  • The possibility of broadening the risks to a larger geographical and industrial market
  • Cheaper acquisition costs despite wider geographic reach
  • Lesser necessity of opening new branches
  • Paperless application of loans, improved underwriting, and faster processing of applications
  • Develop new products that will focus on providing services to smaller businesses and those that have been declined by larger lending firms
  • Significantly lower capital, especially for non-bank lenders

Since the start of the credit crisis – or the period of reduction in the general availability of loans – small companies and business that have been operating for not more than two years started to have a hard time applying for financial support from the traditional banks. But because of the advances in technology, smaller lending companies that were able to get large amounts of information about the borrowers were able to provide loans for these small businesses.

Because of the availability of information, even people who have very low credit scores can secure loans as long as they have positive credit history and the industry and economic status in the area where they live in show optimistic figures.

Nowadays, banks and other lending institutions can check not just the basic information included on loan application documents but also wider range of data that come from credit ratings agencies such as D&B and Equifax. The availability of large information about the potential borrowers allows lenders to develop and offer special financial packages designed for small companies and startups.

This phenomenon became more common among non-bank lenders, especially after 2008 when the credit market started stringent loan application processes. In fact, Biz2Credit Small Business Lending Index noted that the so-called “alternative lenders” or those that are not affiliated with large financial institutions approve around six out of ten loan applications, significantly higher than the approval rate of banks and other large financial institutions.

Aside from these benefits, the use of technology in assessing loan applications made it easier for companies owned by women or members of the minority to secure financial support. Moreover, as small business lending markets start to integrate technology in their operations, entrepreneurs save a lot of time and encounter less problems in their bid to get financial support to start or expand their businesses. This proves how technology truly transformed for the better the market of small business lending.


More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

National vs. Community Banks: Where to Apply for a Small Business Loan?

For small business owners, getting a loan from traditional lending institutions such as banks is very difficult, if not close to impossible. This assertion, however, is contrary to the claims of bankers who insist that the number of loans granted to small businesses have already increased. So who’s telling the truth?

Initial survey of the situation shows that a lot of national banks have decreased the number of loans granted to small companies and startups. Moreover, some small business credit cards also decided to close its customer accounts.

However, on the other side of the spectrum, a survey of lending conducted by the Federal Reserve revealed that the condition in most cases has already loosened. In addition to that, Small Business Administration also showed an increase in the volume of loans granted to small business. Community banks added that they are ready to accept applications from those who were shunned by the larger banks operating nationwide.

So on one side we have information saying there is a decrease in the number of loans granted to small business, while on the other we have contradictory figures that show an upward trend. The question is fairly obvious, how is that possible?

Observing the data provided might be the key to this phenomenon. Indeed, large national banks are turning away a lot of loan applications in an apparent bid to preserve their capital. On the other hand, however, smaller banks that have traditionally made a living on small business loans still approve a lot of application. In a nutshell, it appears that it is still business as usual for the community banks.

This claim is proven by a survey conducted by Barlow Research Associates which showed that small companies that are applying for loans have higher chances of getting credit in smaller community banks than in larger national banks. This information is essential for small businesses out there

According to several bankers, the lack public knowledge about this issue led to a number of complaints from small business owners who insist that there were no loans available. Surveys even revealed that many have insisted on this assumption even if they have not applied for credit in the past year. A bank official said that the idea that there were no available loans may have been seeded by those who were turned down because of the usual banking reasons.

Whether there is a credit crisis or not, small business owners should know the usual business measures implemented by lending institutions such as debt-to-equity ratio and net margins. Moreover, they should be able to provide satisfactory information with regard to how they plan to use the money in case their application is approved.

Moreover, bankers and potential borrowers alike note how the human element in the agreement is as essential as the technical aspects of the lending market. After all, establishing a good relationship with the banker would help small business owners in their bid to get their loan applications approved.

Nevertheless, despite the looser lending system in community banks, small business owners should keep in mind that their applications will still be scrutinized, especially by the banks that have started to adopt the formula used by the national banks.



More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

10 Common Mistakes That Entrepreneur Makes

When it comes to beginning a Small Business, there’s no guaranteed playbook that contains the successful strategy. On the other hand, there are about as many mistakes to be created as there are entrepreneurs to make them.

Here, in my experience, are the top 10 common mistakes that entrepreneurs make when beginning a company:

1. Going it alone. It’s difficult to develop a scalable company if you’re the only individual involved. True, a single public relations, web design or talking to firm may require little investment to begin, and the price of selecting even one management associate, revenue rep or entry-level worker can eat up a big piece of your earnings. The solution: Make sure there’s enough edges in your costs to enable you to produce other individuals. Customers generally don’t mind freelancing provided that they can still get face time with you, the experienced professional who’s handling the project.

2. Asking too many people for advice. It’s always good to get feedback from experts, especially experienced entrepreneurs with built and sold effective organizations in your industry. . But getting too many people’s opinions can delay your decision so long that your company never gets out of the starting gate.  The answer: Set up a strong advisory board that you can tap regularly but run the day-to-day yourself.

3. Investing too much of your time on product development and not on your sales. While it’s hard to develop an excellent company without a great item, entrepreneurs who invest too plenty of their time fiddling may drop clients to a competitor with a more powerful sales organization. “If you don’t keep one eye strongly targeted on revenue, you’ll likely run out of money and energy before you can efficiently get your item to promote.”

4. Targeting too small a market. It’s appealing to try to corner a niche, but your company’s development will quickly hit a wall if the industry you’re targeting is too small. Think about all the school High School basketball stars who desire of playing in the NBA. Because there are only 30 team and each team utilizes only a few gamers, the chances that your son will become the next Michael Jordan are pretty sleek. The solution: Pick a bigger industry that gives you the chance to pick up a piece of the pie even if your company continues to be a smaller player.

5. Coming into an industry with no distribution partner. It’s easier to break into an industry if there’s already a network of providers, manufacturers’ associates and other third-party merchants ready, willing and able to sell your item into current distribution channels. Fashion, food, press and other significant sectors works this way; others are not so fortunate. That’s why service companies like public relation, yoga exercises companies and pet-grooming organizations often battle to endure, changing between feast and famine. The solution: Create a list of potential recommendation resources before you begin your company and ask them if they’d be willing to send company your way.

6. Paying too much for clients. Investing big on promotion may produce lots of clients, but it’s a money-losing strategy if your business can’t convert those dollars into life-time client value. A magazine or website that usually spends $500 worth of promotion to acquire a client who pays $20 a month and cancels his or her registration at the end of the year is simply serving money down the strain. The solution: Test, evaluate, and test again. Once you’ve done enough evaluating to determine how to make more money selling goods and services to your potential customers than you invest obtaining those clients in the first place, throw out a significant promotion strategy.

7. Raising too little investment. Many start-ups think that all they need is enough money to lease space, buy equipment, stock inventory and drive clients through the door. What they often forget is that they also need a capital to pay for employee’s salary, utilities, insurance and other expense costs until their company begins turning a profit. Unless you’re running the kind of company where everyone’s working for perspire value and deferring settlement, you’ll need to increase enough money to tide you over until your earnings can cover your costs and produce positive income. The solution: Determine your start-up costs before you open your gates, not afterwards.

8. Raising too much Capital. Believe it or not, raising too much money can be an issue, too. Over-funded organizations tend to get big and swollen, selecting too many individuals too soon and spending useful resources on display cubicles, events, picture ads and other extras. When the money runs out and traders drop perseverance, start-ups that frittered away their money will have to shut their gates. No matter how much money you increase at the beginning, remember to bank some for a stormy day.

9. Not having your own Business Plan. While not every company needs an official business plan, a start-up that needs significant capital to grow and more than a year to make money should map out how much money it’s going to take to get to its destination. This means considering through the key analytics that develop your company check and building a model to rotate off three decades of revenue, earnings and cash-flow forecasts. “I misused 10 decades [fooling around] considering like an specialist and not a company owner,” says Louis Piscione, chief professional of Avanti Media Group, a New Nj company which makes video clips for business and private events. “I discovered that you have to put some of your innovative professional toward your own strategic strategy that predictions and sets objectives for development and success.

10. Over-thinking your Business Plan. Thinking too much can have an enormous impact on the outcome of a decision. For many businesses, decision-making often take one of two directions; either over-analyzing a situation, or forgoing all the relevant information and simply going with their gut. However, in trying to avoid over-thinking a decision for fear of decision paralysis, managers often ‘over-correct’ and end up not thinking enough. The truth is that your own business plan is not an amazingly ball that can estimate the future. At a certain point, you have to shut your eyes and take the step of trust. Recognize when you’ve been staring at the problem instead of trying to solve it. Then relax: Make a plan, narrow down your options, then just do it.


More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.