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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?

Do Good Collagen Skin Care Treatments Exist?

Are you interested in the best skin care available? If so you need to know about collagen skin care treatments. Collagen is one of the most important proteins in our bodies, and in particular in our skin, and collagen replacement as we age is essential. But most collagen treatments don’t actually resupply our skin’s store of collagen.Collagen is an extremely important protein for our bodies, and our skin, because it is extremely strong and forms fibers, or strands, that help hold us all together. And collagen in our skin helps keep our skin firmer and more elastic, and more supple.Pinch a piece of your skin and pull and let go and it snaps back into place. It’s collagen that supplies that “snap”. Well at least our skin snaps back into place if we’re young, but as we age that “snap” back reduces.Why? Because as we age our skin starts to lose it’s essential supply of collagen, and doesn’t produce as much as it did. Gradually our levels of skin collagen reduce, and that is one of the major causes of our wrinkles, lines, crows feet and sagging skin that we seem to be stricken with as we age.Basically our skin is losing it’s “snap”. It’s losing it’s skin elasticity, and is suffering more and more from the forces of gravity.So the question is, how do we restore our skin’s supply of collagen as we age? Are there collagen skin care treatments that successfully restore our skin’s collagen supplies? Do collagen treatments work?The basic answer is that most collagen skin care products don’t restore our skin supply at all. Traditional collagen skin care treatments found in most anti aging and skin care products revolve around adding it to that bottle of moisturizer or night cream or day cream or whatever cream it is that is promoted as an anti aging cream. Sadly though, there is no evidence that supplying collagen to the skin can result in the skin increasing it’s supply of collagen, because it is not known if skin collagen can even absorb any more.And it is known that collagen molecules are too big to penetrate the skin anyway, so any applied topically to the skin remains on the surface of the skin, unable to penetrate.So why would these skin care and anti aging companies put it in those bottles of skin care products if it really doesn’t actually do anything? Because when people see collagen listed on the label they buy the products, and those collagen skin care products you see on the shelves sell like crazy. So it’s in the bottle.But there is a product that is known to restore skin collagen. It doesn’t do it by adding it to the skin, because that isn’t shown to work. It does it by stimulating the skin to make more of it’s own. If the skin produces it’s own supplies that has to work, because the skin is restoring it’s own stock of collagen itself.It’s a product called Cynergy TK, and it’s found in the best natural skin care products. It’s very effective, studies have shown visible results within a month. But it’s expensive, so the big brands don’t use it. Why would they when their anti aging products sell like crazy with cheaper ingredients.But there are small niche skin care companies that make excellent collagen skin care products using Cynergy TK. They can’t possibley compete with the big brands on marketing, because they can’t afford the TV advertising, so they compete on product quality instead. So when they get a new customer they usually get a customer for life.And their products are cost competitive because they don’t need to factor in the cost of TV advertising. But because they don’t advertise you are unlikely to know their name.So if you’re looking for effective collagen skin care treatments they do exist, but you need to work a little harder to find them.

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Aspects to Consider in Starting Your Own Wholesale Clothing Business

Starting your own wholesale clothing business? Are you knowledgeable enough to handle it? Even a hopeful business person must have the needed experience in running the business alone. Once they handled a retail store in the past and the owner does not know anything from the fundamentals even advanced skills in handling wholesale, their business might totally lead into bankruptcy. Thus, what are the required experiences that an aspirant must have in running the venture of wholesale clothing?·         Process of the business- among many things, knowing the business process of wholesale clothing is such a great edge for you to attain the success. As a wholesaler, your task is to supervise the distribution of the products from the supplier or manufacturer down into the retailers, who manages the end market which are the consumers. Unlike those of the retailers that only waits for the customer to visit and come their shop. Wholesaler depends on their contacts to obtain their customers that are usually comprised by retailers as well as with other wholesalers.·         Planning- planning about the site, storage as well as clients is one of the aspects that you must take into consideration if you want to be on the business of wholesale clothing. Though location is not as needed as an owner’s capital, choosing the best location is still essential most especially for those aspirants who are only starting out their venture. However, to save up the fuel, main location for the business is between manufacturers and their retailers. Finding a place near the manufacturer could save a lot of time as well as fund for shipping. This thing also works well with consumers that could also benefit from a nearby wholesaler. Also, storage is another thing; it could range from specialized containers into a house’s basement and mainly relies on the type of good they would like to put up on store. Clients are usually the biggest problem that most starters of the business usually face. However, where will you get one? Actually, business conventions are prime locations to get your clients. Though getting into business convention might get costly, the exposure of your business is still quite beneficial.Get down and plan well for your business. This is a great way to make your life as well as living as lucrative as what you desire. Wholesale clothing may be the business that could bring you to life you imagine.Starting your own wholesale clothing business? Are you knowledgeable enough to handle it? Even a hopeful business person must have the needed experience in running the business alone. Once they handled a retail store in the past and the owner does not know anything from the fundamentals even advanced skills in handling wholesale, their business might totally lead into bankruptcy. Thus, what are the required experiences that an aspirant must have in running the venture of wholesale clothing?·         Process of the business- among many things, knowing the business process of wholesale clothing is such a great edge for you to attain the success. As a wholesaler, your task is to supervise the distribution of the products from the supplier or manufacturer down into the retailers, who manages the end market which are the consumers. Unlike those of the retailers that only waits for the customer to visit and come their shop. Wholesaler depends on their contacts to obtain their customers that are usually comprised by retailers as well as with other wholesalers.·         Planning- planning about the site, storage as well as clients is one of the aspects that you must take into consideration if you want to be on the business of wholesale clothing. Though location is not as needed as an owner’s capital, choosing the best location is still essential most especially for those aspirants who are only starting out their venture. However, to save up the fuel, main location for the business is between manufacturers and their retailers. Finding a place near the manufacturer could save a lot of time as well as fund for shipping. This thing also works well with consumers that could also benefit from a nearby wholesaler. Also, storage is another thing; it could range from specialized containers into a house’s basement and mainly relies on the type of good they would like to put up on store. Clients are usually the biggest problem that most starters of the business usually face. However, where will you get one? Actually, business conventions are prime locations to get your clients. Though getting into business convention might get costly, the exposure of your business is still quite beneficial.Get down and plan well for your business. This is a great way to make your life as well as living as lucrative as what you desire. Wholesale clothing may be the business that could bring you to life you imagine.

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