Category Archives: Business

Acquiring a Business Line of Credit

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Business Line of Credit

Owning a business is definitely an adventure. The highs and lows can sometimes be extreme and unwelcoming. For example, the economy suddenly isn’t doing as well as you predicted, or the equipment break down is integral to running your business efficiently. Or, what if the competition moves in around the corner and you suddenly need to launch a new marketing strategy? During these times, you may want to consider obtaining a line of credit.

An unsecured business line of credit can be an excellent option for those uncertain times. There are flexible payment terms, and you choose how much you borrow and when. There’s also no collateral needed and it separates your personal credit from your business credit. The opening and annual fees vary depending on the financial institution. Interest rate (for those with good business credit) is normally set at the prime rate, but can be lowered. You’ll also need proof of good cash flow to be approved.

If your business credit isn’t stellar, your credit limit may be lower and the interest rate may be higher. You can also be denied. If that happens, try applying for a secured line of credit. These require collateral, usually the cash itself or equity of some kind. There are non-traditional lenders who specifically help businesses with poor credit get a secured credit line that meets their needs. You may want to do research on this and remember to read all the fine print.

A line of credit will help establish good payment history (and therefore credit) regardless if it’s secured or not. This will make future borrowing, if it’s necessary of course, much easier. It is best to apply for a line of credit while your business isn’t experiencing turbulence. Banks are more likely to lend when you don’t need it and it’ll be much easier to get approved. It also has the benefit of giving you time to search for non-traditional lenders if you can’t get approved through a typical lender. If you’re just starting out with a new business, you may want to apply for a secured line of credit from the beginning to help build your credit worthiness, plus, it will increase the chances of a higher credit limit in the future.

5 Steps Toward Owning Your Own Business

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Own Business

Owning a business is an appealing prospect considering all the advantages that come with it: the freedom to be your own boss, the venue to pour in your creative ideas, and the prospect of a better financial future, to name a few. The success of the business will depend on how invested you are in it and whether the business is viable in the first place.

Let’s look at the steps that are required to start your own business.

1. Analyzing Your Area of Expertise

What is it that you are good at and have experiences on?

Perhaps you have experienced working in a restaurant and have a fair idea of what makes a restaurant successful. Perhaps you are a stay-at-home mom who is thinking of starting your own label of organic purees and ready-to-serve meals for babies and toddlers. This will give you an idea of the specific industry you may want to establish your business in.

Be honest with yourself and list your key strengths and weaknesses. Ask a couple of people that you respect to do the same for you. You might have excellent communication skills but have difficulties dealing with numbers. Think ahead of which areas you might need help with and where you can find the support.

2. Market Evaluation

Decide on what products or services your business is going to offer and whether there is a demand for them. Are you tapping into an existing market? If yes, who are the major competitors and what are you offering that would make people choose your products over theirs? Are your products an innovation that targets a niche market? Do your products/services meet a specific need that has not been met before?

3. Feasibility Analysis

This is the step to look into detail your business idea and determine whether it is worth investing your effort and money. This should include:

a. Market analysis
Conduct a thorough research of the market that you are targeting such as consumer behavior, supply and demand, and threats of new competitors or products.

b. Competitive advantage analysis
Determine what makes your products/services stand out from the other competitors. Research the existing competitors and find out their strengths and weaknesses.

c. Financial feasibility analysis
Estimate your startup cost, working capital, and your sales projection and do a cash flow analysis. This will give you an estimate of the break-even point and whether the business will be able to stay afloat and start making a profit. Be conservative in your estimation and be realistic. The last thing that you would want is to start a business and find that the business is not financially viable.

4. Business Plan

Once you have determined that the business is feasible, you will need to create a business plan. There are quite a number of business plan templates available online that can be used as a guide.
The business plan will generally outline the business goals and objectives, the market analysis, the marketing and operating strategy, and the financial forecasts. This is an important documentation to give your business direction, ensure that you have reviewed your business from every angle, and minimize any potential setback. The business plan is also essential for the next crucial step which is obtaining finance for your business.

5. Financing Your Business

Figure out how much of your own money will you want to invest in the business and how much will you need from other sources. One of the financing options is to acquire a business loan. Most financial institutions will require you to review the business plan and assess whether your business is financially feasible and is able to meet the loan repayments. Discuss with your lenders the amount you need to borrow and what types of loans are suitable for your needs. Do take into account the fees involved in taking the loans and any ongoing fees to maintain the loan.

With the finances settled, it is time to put your plan into actions. Starting up a business can be daunting but the right planning and support will give you the confidence to move forward and commit yourself in the venture.