Alternative Financing Vs. Venture Capital: Which Option Is Best for Boosting Working Capital?

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?

Buying From a Wholesale Clothing Online Provider

When you have decided to go into the wholesale clothing business, you most probably understand the profits that come with buying clothes in wholesale. However, there is are still some issues about buying at wholesale and selling at retail rates that you might not know, and this article helps you out. Firstly, it is about what you must have from the authorities. The federal department offers a tax identification, and the process is nicely explained at the IRS website. You might want to visit this website and start from there.Having acquired the identification, you may create a merchant account using the business name. With this kind of account, it is so easy to separate business and individual earnings. Another license, the vendor license, is also crucial as you cannot transact business with wholesale owners without it. Most wholesales would want to prove your ownership of a retail shop; the vendor license is enough proof.When it comes to searching for a reliable provider of wholesale clothing, the job might be tricky. However, some tips on how to land the most suitable clothing supplier will help. First, it is about the type of clothes you are going to sell. How available are the products in the market? Most importantly, look at the trends in your area, and order for such clothing. To know more about trends, eBay Seller Tools may help.Starting with your locality, there could be thousands of providers. For a larger pool of wholesale clothing, the online platform comes in handy. Despite the high chances of lack of legitimacy of wholesale clothing online, this method has gained a lot of popularity over the years. Retail business owners choose this method for several reasons including the ability to choose from a wider range of merchants. If you are able to develop a lasting relationship with a specific wholesale clothing merchant, you can buy goods in bulk, and make good profit, from the comfort of your living room.Even as you check for wholesale clothing online, you might also want to determine the kind of supplier you want. There are drop shippers, manufacturers, importers, and liquidators. For an online business, a drop shipper kind of supplier is the most preferable, because you don’t have to worry about warehousing or manufacturing costs.As you venture into clothing retail business, remember that as much as wholesale clothing online has unlimited possibilities, chances of falling prey to scams are also high. Therefore, do you research thoroughly before engaging with any wholesale clothing supplier. Happy shopping!

5 Expert Insider Steps to Begin Transforming Your Health & Body Today!

While yes, our team is born in a world of intense high athletic goals such as bodybuilding, it is not our goal to support people to become bodybuilders – FAR FROM IT!;-) So you can relax now!! But it IS our goal to share with you why the lessons from our experience of mastering human health & the body, & how developing a bodybuilder “mentality” for your own life can literally skyrocket you into a level of personal health you never thought possible, while showing you the shortcuts in how to get there! Sound good? Heck, it sounds GREAT to us, because we already know how it can CHANGE YOUR LIFE.If you are serious about stepping into your greatness of feeling & looking great, take 3 minutes & glean our insight, because this is the single-most MISSING LINK that we see people repeatedly leaving out of their game plan to great health & why they continue to fail at achieving quality health for their lives.When you have had an experience of taking your mental, emotional & physical self to the level that bodybuilding competition requires, as a coach for others it then allows you to see potential for your clients that they could never envision for themselves without you by their side AND TAKE THEM THERE, and that is the beauty of the gift that we REJOICE in offering others in order to achieve optimal health, energy, & joy for their lives. But to get there…to create a successful transformation of your health & body, you HAVE to begin INSIDE with our 5 MUST-HAVE Steps! Yes, that’s right – the focus begins in the MIND. Time & again we see this process work, and it’s our UNIQUE coaching psychology method that sets us apart, & why we are capable of producing jaw-dropping results with the level of motivational mentality we provide. You can have all the knowledge in the world, but if you fail to develop the DESIRE & MINDSET to IMPLEMENT it, you will never succeed.Want the insider view to our winning approach to learn how to transform your own health & body? We’re here to offer you the scoop because it’s our desire to support you fully to achieve authentic, preventative health from the inside, out in your lifetime. So where do we begin? There is a prolific spiritual author named John Maxwell, maybe you’ve heard of him, maybe you haven’t – but he writes of numerous spiritual topics & speaks on how we create TRUE transformation for our lives. Below we adapt his words for our article today because it’s a brilliant synopsis of just why & how we work with clients to coach them through mastering their personal health, as there are so many levels to the process.When we discuss transformation of the physical body, to be successful we cannot deny that mind, body & spirit are woven tightly together in our being & therefore EACH needs to be considered – not just one. Often people when wanting to conquer health or healing goals immediately BEGIN at the physical, they think weight loss, nutrition, exercise…but that is their first step to failure because they’re joining the race before they’ve even laced their shoes!! When we fail to address mind & spirit in the health process we eventually lose the vision of why we’re addressing the physical in the first place & sadly fall off course when interest wanes, times get tough, or we lose our way because the how-to’s become unclear or appear out of reach. But if we start INSIDE & work OUTWARDS friends, GAME ON!!Our 5 Expert Insider Steps to Transforming Your Health & BodySo these 5 KEY STEPS must be addressed in order to achieve a complete & SUCCESSFUL health & body transformation, and they must also be achieved in order as follows…1. When you change your (health & body) thinking, you change your (health & body) beliefs.If you think what you’ve been taught is healthy by the mainstream media is where your learning stops, then don’t expect to achieve great illness-free, authentic preventative health because they don’t teach proactive health approach, they teach reactive wait til you get sick & then act health approach. Begin to change your thinking to change your belief system about your body and health potential.2. When you change your (health & body) beliefs, you change your (health & body) expectations.Once you begin to expand your thinking, start to also seek out experts in areas of health & body who have shown & continue to show PROVEN ABILITY TO CREATE TRANSFORMATION RESULTS in their own health & body that you would like to emulate. Begin to sponge knowledge from them vs. what mainstream media claims leads to great health results, & you’ll in turn raise the bar on what you expect from your own health. You’ll see your new mentor/s are just ordinary people too like you, who decided to blaze their own health path about the quality of health they wanted to achieve for their life by taking the road less followed for their own health in life, and YOU CAN TOO – if you follow in their footprints.3. When you change your (health & body) expectations, you change your (health & body) attitude.Once your mind becomes opened by experts to your new health possibilities, you’ll have a renewed attitude & confidence about your abilities & empowerment around your personal health & begin to realize that anything you put your MIND to, your BODY can achieve -with the right tools in your toolbox. And THAT is exciting!4. When you change your (health & body) attitude, you change your (health & body) behavior.Now that you come to the table with a revitalized health attitude of possibilities & an arsenal from your health mentor, your entire being & behavior begins to shift because your mentor connects you with your own personal ability to achieve great results for your health, and as that continues to happen over and over, your self-efficacy GROWS & GROWS around your capabilities to manage your own personal health, as you transition into your own personal mini-health-expert!5. When you change your (health & body) behavior, YOU CHANGE YOUR LIFE.Now that you’ve achieved health & body mastery, you will begin to see an entire energetic, mental & emotional shift in your life that FAR EXCEEDS the physical. Yes, you will look & feel great, but the ways optimal health radiate outwards to all facets of your life will be astounding, as you attain a personal joy in life through health that you’ve never experienced before. No pills, no roller coaster of energy, no food cravings, no more blah approach to life, no more hiding from life within your own body,…you emerge a renewed person, ready to take on your full potential in this life.This list is the perfect example of why health coaching with experienced experts not only WORKS, but offers you AMAZING, permanent results you could never envision or achieve on your own. With the support of your coaches seasoned & proven mentality of success in health & body transformation, you develop a similar mindset, outlook & body of knowledge in order to reach external goals of physical health & body success!