Funding A Business With Equity - Not Debt

The Global Entrepreneurship Monitor suggests that 20% of new businesses in the United States fail in the first year (Barringer and Ireland, 2006). The most common reason for business failure is insufficient operating cash. New businesses are often more expensive than anticipated. The initial cash flow sometimes cannot support the business overhead, draining cash reserves over a period of time until an owner is forced to close it down. SBA loans and Home Equity Lines of Credit (HELOC) are the most common forms of business financing. Both of these types of loans are tremendous solutions in rate-driven markets. However, when interest rates are on the rise, as in recent years, business owners find their variable SBA loan and HELOC payments (company overhead) rising as well. Since July 2003, the Federal Reserve has raised the Prime Rate nine times to the latest rate of 8.25 the same place we found it in 1996. Because of this, HELOC and SBA loans are commonly being offered at between 10 and 13 percent.


By [David Nilssen

Rising interest rates are a significant reason why companies like Guidant Financial Group are experiencing such tremendous growth. Guidant helps individuals buy a business or franchise using their retirement funds without taking a taxable distribution. Since 2004, Guidant has experienced an increase of more than 400% in their business funding services. David Nilssen, CEO and co-founder of Guidant, attributed the company significant growth to greater awareness of this strategy in the general business community. CPAs and attorneys are beginning to embrace and understand the benefits their clients can receive by utilizing this form of financing. Guidant can help individuals establish plans that allow their retirement funds to invest in their new business. It is very similar to buying stock in Microsoft inside a 401(k), Nilssen said. In this case,we are talking about a privately held company as opposed to a publicly traded entity.

Entrepreneurs who feel their new business opportunity would be a worthwhile investment for their retirement plan may have a great chance of business success. It is possible to use a HELOC or SBA loan in addition to retirement financing. Nilssen suggested that it is preferable to buy the business entirely with retirement cash. A tremendous benefit is that our clients are buying a business with equity, not debt. They are not obtaining a loan. They are using cash from their retirement plan. This means the initial revenue the business generates can be reinvested in the business rather than sent to a bank in the form of interest payments.

For a small business or franchise owner, using retirement money could significantly improve the longevity and ultimate success of that business. For instance, a $150,000 SBA loan obtained today at an 11% interest rate for 10 years would require almost $100,000 in interest payments. Using equity rather than debt to buy the business would not only save nearly $100,000 in interest, it would free up more than $2000 each month for reinvestment back into the growth of the business. Nilssen explained that using retirement funds to purchase a business offers additional benefits, such as allowing the owner to contribute more money into their retirement plan and if the business is successful the profits generated will increase the value of the plan.

Guidant Financial Group, Inc. is a retirement account facilitator focused on providing investors with safe and innovative options to invest for their retirement futures. Guidant is the leading provider of self-directed IRAs and business funding solutions through individuals� IRA and 401(k)s, which gives investors the freedom to make alternative investments in real estate, franchisees, businesses, tax liens and more. For more information on Guidant Financial Group�, visit http://www.guidantfinancial.com or call 1.888.472.4455.

Article Source: [http://EzineArticles.com/?Funding-A-Business-With-Equity---Not-Debt&id=468846] Funding A Business With Equity - Not Debt-->
Article Index - RSS Feed of new and past blog posts[Click Here] _______________________________________________________ Every year, the government--local, state, and federal--gives away millions of dollars to people just like you for business ideas. Leon Edward shares information on government funding, Federal, State ,Local Grants , where to find start up business grants, sources, how best to fill out applications, grant management step by step tips, setting up a business steps at his website Grants to Start a Business
L. Edward helps people to start a business, get grant money, build, market online at Home Business Management
Learn where to find money for funding starting a business, grant sources, grant programs. Our onsite free information will walk you through step by step setting up a business as research required , business types, business plan, start up costs, business license, taxes, funding. Grant Programs and sources include Government Grant Money as Federal grants, State grants , Local grants, Federal assistance, grants.gov and Development Offices. Learn the Business Grants Step Management and 'know how' to spend your time, proposed business clarity, know your business needs, know how to avoid scams. Learn online step by step How To Write A Grant Application including how to write a business proposal, the summary, grant justification, project description, budge, qualification proof, outsourcing if needed.
Get A Free Legitimate Home Based Business Report , Internet Business Ideas and Free Internet Business Library with Online Business Ideas, Free Training Newsletter at Leons Home Business Website Internet Home Business Leon Edward Helps people to start, grow legitimate Internet Based home business income with business structure, small business legal service information, step by step guides and online business training articles, reviews, marketing blog and newsletter... with legitimate business ideas and opportunities as top BBB rated home businesses, turnkey internet business, a 3 steps to internet income business proven mlms, even a start free work at home program Also for self Improvement visit Personal Development Training and Brain Training Software

Financing Your New Business

If you are starting a business but need some financial support to start or develop your business activities, then this article is for you. We will take you through the many options of raising finance and provide you with a list of the upsides and downsides to each option to that you can make the best decision for you and your business.
By []Simon P Misiewicz

Open a new business account today.

At this time you should know what your costs are but if you would like to put your costs into a user friendly cash flow / profit & loss template.

What are my options?

The following options are available to you.

Bank Overdraft:

A bank overdraft provides customers with a short term financial support but will be regularly reviewed by a bank manager and may need to be paid back within a short time scale.

Upsides

-Short term financial support to get started
-Getting money from the bank in this fashion is relatively fast

Downsides

-Can be expensive with high interest charges
-Banks may require personal guarantees
-Interest rates may be variable so can fluctuate over time

Bank Loans:

Bank loans are longer term financial support and can have a fixed rate of interest so you know what you need to pay back. This is particularly useful for one off events such as setting up a business, making a new product etc

Upsides

-Borrowing is for a longer period of time
-The rate of interest can be fixed and you can forecast your repayments
-Once paid back you still have full control & ownership over the business

Downsides

-Can be expensive due to the levels of interest
-Certain banks may wish to spend time with you to understand the business and request financial reports pulling you away from your customers.
-Banks may require personal guarantees
-Repayments are not usually flexible and will require you to pay a fixed amount of the agreed term
-Loans may be secured against assets of the company and you could lose assets if loans are not repaid

Creation of shares:

If you have a limited company you could sell part of the company to people that may be interested in investing in the business and take a share of the profits.

Upsides

-If you wanted to have a limited company then you could sell shares to someone in exchange for money
-People investing into your business may also provide some management support in developing the business

Downsides

-Understanding the value of shares is subjective and disputes can arise
-Decision making may become less flexible if the shareholder wishes to get involved in the business.
-There may be conflict of interest between you and the shareholder as to what to do with the business as certain intervals, especially if someone makes an offer for the business.

Friends & Family:

Family and friends that you have a good relationship may also wish to support you and your activities and lend you money.

Upsides

-There may not be such rigid ties to the administration of the borrowing compared to bank and investors
-The arrangement of money may be quicker than other borrowing options.
-Invariably the cost of borrowing will be cheaper than other arrangements

Downsides

-Unless agreed at the start the amount of interest or the time to repay the debt may be disputed
-Debts between friends and family can affect relationships especially in troubled times
-The length and valuing of borrowing may not be stable as it depends on their circumstances not just yours

Investors:

People may wish to invest in start-up companies in return for a share of the business

Upsides

-Investors may provide some support to you in the running of the business
-Investors may take more risk and invest more into the business compared to banks

Downsides

-Investors may take some time to reach decisions about your business
-The cost of investors may be considerable if not by way of interest returns but by way of their ownership in the business
-Your decision making process may be slower if they need to be approved by the investors

Simon Misiewicz

Director [http://www.optimise-gb.com]

0115 946 1991 [http://www.optimise-gb.com]

Article Source: [http://EzineArticles.com/?Financing-Your-New-Business&id=6738283] Financing Your New Business--> _______________________________________________________ Every year, the government--local, state, and federal--gives away millions of dollars to people just like you for business ideas. Leon Edward shares information on government funding, Federal, State ,Local Grants , where to find start up business grants, sources, how best to fill out applications, grant management step by step tips, setting up a business steps at his website Grants to Start a Business
L. Edward helps people to start a business, get grant money, build, market online at Home Business Management
Learn where to find money for funding starting a business, grant sources, grant programs. Our onsite free information will walk you through step by step setting up a business as research required , business types, business plan, start up costs, business license, taxes, funding. Grant Programs and sources include Government Grant Money as Federal grants, State grants , Local grants, Federal assistance, grants.gov and Development Offices. Learn the Business Grants Step Management and 'know how' to spend your time, proposed business clarity, know your business needs, know how to avoid scams. Learn online step by step How To Write A Grant Application including how to write a business proposal, the summary, grant justification, project description, budge, qualification proof, outsourcing if needed.
Get A Free Legitimate Home Based Business Report , Internet Business Ideas and Free Internet Business Library with Online Business Ideas, Free Training Newsletter at Leons Home Business Website Internet Home Business Leon Edward Helps people to start, grow legitimate Internet Based home business income with business structure, small business legal service information, step by step guides and online business training articles, reviews, marketing blog and newsletter... with legitimate business ideas and opportunities as top BBB rated home businesses, turnkey internet business, a 3 steps to internet income business proven mlms, even a start free work at home program Also for self Improvement visit Personal Development Training and Brain Training Software

New Business Funding Start Up Grants

Starting a new business is the dream of many people across the United States. However, with the current economic climate, it has become a tad bit more difficult than it used to be. Many potential business owners are scared out of starting their own business for one reason or another. They don't have enough cash in reserves, they can't get approved for a business loan, or any number of other reasons. While these are all viable reasons to stand on the sidelines, there is another alternative to overcome these excuses. Government grants can help you overcome the difficulties of starting a new business.

While most people are aware of grants, they really don't even consider them in most cases. They think that they are unattainable or something that only certain people can get. In actuality, they are available to anyone as long as you know where to look. So where can you find grants that help you with your new business? There are a few different places to look. Let's look a little more in depth on this topic.

The Federal government is the best place to look for grants. You can check out their website at grants.gov. On this website, they list all of the available federal grants in the near future. They'll have all kinds of information and categories to look in. You'll find the requirements that it takes to qualify as well as the amount of money that they're considering granting to the winner. In addition to that, you can download the necessary applications that you'll need to fill out for the grant proposal.

In addition to the Federal government, state governments have a number of grants available that can help new businesses. They aren't nearly as numerous as the Federal government, but it will give you a few more options to consider.

In general, these grants tend to be given to non-profit organizations or those affiliated with them. Therefore, it is probably to your advantage to become affiliated with one or start your own. This increases your chances of receiving a grant exponentially.

These grants are not usually designed to cover living expenses that you will incur during the grant period. As a rule, they are pretty much designed to help you complete a certain project. Beyond that you either have to figure it out on your own or apply for living expenses at govbenefits.gov.

When you're applying for a grant, make sure that you fit all of the criteria before you waste your time writing a grant proposal. It can be a lot of work, and you want to make sure that you're eligible before you start it. For example, if the grant you're looking at is only available in Maine and you live in Florida, you better not waste your time on it. Make sure you read the criteria thoroughly before you get involved.

Overall, grants for new businesses are a great tool that can help you out immensely. If you have been putting off starting your own business because of the money, you might want to look into grants. They are an often overlooked alternative that can really make a difference.


_______________________________________________________
Every year, the government--local, state, and federal--gives away millions of dollars to people just like you for business ideas. Leon Edward shares information on government funding, Federal, State ,Local Grants , where to find start up business grants, sources, how best to fill out applications, grant management step by step tips, setting up a business steps at his website
http://www.business-idea-grants.com/

L. Edward helps people to start a business, get grant money, build, market online at http://www.HomeBusinessIT.com L. Edward Recommends As Seen on FOX NEWS TV , A Work At Home Program that is changeing peoples lives, visit Cash Monthly Lifetime

Learn where to find money for funding starting a business, grant sources, grant programs. Our onsite free information will walk you through step by step setting up a business as research required , business types, business plan, start up costs, business liscence, taxes, funding. Grant Programs and sources include Government Grant Money as Federal grants, State grants , Local grants, Federal assistance, grants.gov and Development Offices. Learn the Business Grants Step Management and 'know how' to spend your time, proposed business clarity, know your business needs, know how to avoid sccams. Learn online step by step How To Write A Grant Application including how to write a business proposal, the summary, grant justification, project description, budge, qualification proof, outsourcing if needed.

Get A Free Legitimate Home Based Business Report , Internet Business Ideas and Free Internet Business Library with Online Business Ideas, Free Training Newsletter at Leons Home Business Website
http://www.homebusinessit.com/

Leon Edward Helps people to start, grow legitimate Internet Based home business income with business structure, small business legal service information, step by step guides and online business training articles, reviews, marketing blog and newsletter... with legitimate business ideas and opportunities as top BBB rated home businesses, turnkey internet business, a 3 steps to internet income business proven mlms, even a start free work at home program

Software Tools Will Help You to Manage Your Home Business Successfully

Starting a home business and running it well provide benefits many people see as better than having a nine-to-five job. But handling a home-business is not something anyone can do on the fly. There are aspects to this business one would need to learn about and learn well enough to do well.

One aspect is using software or programs that let you organize your work and do some tasks faster. The time saved using the right software means a better run business, more time for you, and less stress. Here are some software programs that you might need to get a handle on your home business.

Customer relationship management - When your business is just starting, you try to amass a list of customers or affiliates, and even people who might be able to help you along the way. While a small list is more manageable, when a good business grows, that small list of customers will swell up as well.

If you're old fashioned, you'll probably have folders with printouts in them. In the digital age when information must be interlinked by context and easily searchable, you'll be needing software wherein you can group according to categories your contacts, partners, customers, advertisers, and other people you need in your business.

A contacts management platform like Relationship 1.0 helps you catalogue and keep track of whatever data relates to your deals and discussions with customers. The last thing you want is to not be aware of how you met whom in what context and that he's a prospect.

Accounting system - While it's productive to hire specialists who may oversee aspects of your business, like an accountant to oversee your accounts, home businesses tend to be run on small and tight budgets. Since keeping track of your accounts and managing the daily stuff can be basketful to juggle, have software that does your accounting for you helps clear up your schedule.

Accounting platforms like Money 2.2 helps your home-run business stay on top of your account/s and track all of your transactions. This way, you won't be missing payments again. Fewer complaints mean a smoother-run business.

Project organizer - Not all projects can call your attention so you can work on several simultaneously. And some projects require collaboration. But how to stay on top which is important and which is on going? With a project organizing system like Operation1.0, you can effectively see and catalogue your tasks according to projects. Multitasking without skipping a beat, that's how one keeps organized.

There is other software out there that can help you keep on track of your business. One way to find them is to Google them up and look for reviews of people who have tried them out. They feedback might be useful in deciding where to take the free trials or outright purchase them.

A project organizer or manager is a professional in managing accounts of your home business and is really of great importance. He can efficiently supervise and classify your tasks and organize them accordingly. Besides this his responsibility is to plan, execute or close any project all kind of industries have project managers.
The person is accountable for accomplishing the stated project tasks. Main project management responsibilities include creating clear and achievable project objectives, building the project requirements, and managing the triple constraint for projects, which is time, cost, and scope.


Every year, the government--local, state, and federal--gives away millions of dollars to people just like you for business ideas. Leon Edward shares information on government funding, Federal, State ,Local Grants , where to find start up business grants, sources, how best to fill out applications, grant management step by step tips, setting up a business steps at his website
http://www.business-idea-grants.com/

Learn where to find money for funding starting a business, grant sources, grant programs. Our onsite free information will walk you through step by step setting up a business as research required , business types, business plan, start up costs, business liscence, taxes, funding. Grant Programs and sources include Government Grant Money as Federal grants, State grants , Local grants, Federal assistance, grants.gov and Development Offices. Learn the Business Grants Step Management and 'know how' to spend your time, proposed business clarity, know your business needs, know how to avoid sccams. Learn online step by step How To Write A Grant Application including how to write a business proposal, the summary, grant justification, project description, budge, qualification proof, outsourcing if needed.

Get A Free Legitimate Home Based Business Report , Internet Business Ideas and Free Internet Business Library with Online Business Ideas, Free Training Newsletter at Leons Home Business Website
http://www.homebusinessit.com/

Leon Edward Helps people to start, grow legitimate Internet Based home business income with business structure, small business legal service information, step by step guides and online business training articles, reviews, marketing blog and newsletter... with legitimate business ideas and opportunities as top BBB rated home businesses, turnkey internet business, a 3 steps to internet income business proven mlms, even a start free work at home program