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Atricle Dump - Financing Success
Financial Data – What’s Needed?As a general rule, the more financial data that is available, the better. If your accounting system is sophisticated enough to produce internal Balance Sheets and P&L Statements, they are certainly helpful. Of course the best information to use as a basis is the Federal Tax Return, since when these are submitted to the IRS, any and all final adjustments have been made. Also, three to five years of returns will give the valuation analyst a better and more consistent track record of the firm’s history. For further insight and/or questions, lean on the valuator for guidance. Typically, the most important source of necessary data is the owner or CEO (or the CFO if a firm is large
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome and usually requires you to try another lender, one who understands your industry and can evaluate the risks more objectively.
The business strategy is not valid.
How would a lender know if your business strategy is sound?
Experienced bankers and investors, especially those familiar with your industry, do have good 'intuition' and should be listened to. Inexperienced bankers and investors have many preconceived notions that really do not stand up to 'daylight'. The problem is to determine which category that your banker falls into.
If the former you should be willing to apply some 'brakes' to your business proposal and seek clarification before your proceed.
If the later just move along to the next institution.
Inadequate collateral.
Each lender will have their
In our last installment of medical billing, we looked at what was involved as far as the software company hiring a programmer to create their software that will eventually be sold to the public. But programmers aren't enough because the software needs to be tested. The truth is, programmers make lousy testers because they are biased. That's why the software company needs to hire QA testers to make sure the software works as it should. So what should a medical billing company look for when hiring a QA tester? What follows is a list of a few things that you're going to want.Unlike other industries, QA testing medical billing software is a whole different animal. The reason is because you are dealing with a n
A 'No' can provide a valuable learning experience, one that can lead to an eventual 'Yes'. There will be many a 'No' in your business life so get used to it ; continue to be the optimist (a requirement for any successful entrepreneur) you always were.
How to handle a 'No'.
Start off by not getting mad, defensive, or hurt. Make sure you do not get angry as you may have to deal with this lender in the future!
Do ask, politely, why your funding request was turned down: this is your chance to learn.
Hopefully they will give you specific reasons. Take notes and ask reasonable follow up questions i.e. make the most of this 'training'.
Listen very carefully and you might discover that the lender's concerns can be overcome. You may have the opportunity to adjust your proposal and get your funding.
It may be a big and resounding 'No', one without or with an insufficient explanation such as 'We are presently restricting our loans to certain sectors.'
A "No' without explanation can mean that there are fundamental problems with your business and/or the proposal. An unqualified 'No' will require you to analyze your proposal with a critical eye and may even require you to have an independent party review your proposal.
Here are some common issues that a banker or investor may or may not express to you.
Not enough owner equity.
This issue is unlikely to be 'hidden' and most lenders will point out that you do not have enough equity at stake. Why should they take the majority of the risk? Why are you not willing to invest more of your own cash and/or attach valuable property/assets to secure the loan?
There are many good reasons not to attach personal assets to secure funding especially jointly owned assets such as a home. Do not rush into placing your personal assets, especially your home, at risk. The lender will take your home if the loan defaults and the stress of such a seizure can ripe apart your family!
That said it is not unreasonable for a lender to request more than 'sweat equity' from you. If you are not willing to place a significant investment in your own business then why should any lender?
The business is not yet profitable.
Why would a bank or lender be interested in a business that is not producing a profit?
Why are you in a business that is not profitable?
There is a significant difference between not being profitable and not being able to meet operational and inventory expenses! Profit is the difference between the total revenue of a business and the total of all the business' expenses.
Industry specific averages do exist and bankers and investors will refer to them when they do their due diligence. There are many sources where industry information can be obtained the most recognized being Dun and Bradstreet.
Smaller businesses may not show a profit because the owner takes any surplus as personal income or they purchase business assets: surplus revenue turns into a operational expense.
The lender has every reason to be concerned about a businesses' profitability. They do want you to be profitable and they need to hear how funding will increase your profitability: make sure you do so in your funding proposal.
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome and usually requires you to try another lender, one who understands your industry and can evaluate the risks more objectively.
The business strategy is not valid.
How would a lender know if your business strategy is sound?
Experienced bankers and investors, especially those familiar with your industry, do have good 'intuition' and should be listened to. Inexperienced bankers and investors have many preconceived notions that really do not stand up to 'daylight'. The problem is to determine which category that your banker falls into.
If the former you should be willing to apply some 'brakes' to your business proposal and seek clarification before your proceed.
If the later just move along to the next institution.
Inadequate collateral.
Each lender will have their
Psychology!How much really is important for trading? With one word : very! Not only it affects all our decisions and mood but it could lead us to extreme situations. The reason I am writing this article today is because it is my nominal celebration and one of great celebrations for Christians who are Orthodox like me.So as I went early in the morning to the church a lady who knows me as she was a long time ago one of my family tenants gave me unexpectadly a rose!A move so sincere and kind that surely made my day a whole lot happier! Will I trade today?Probably not because I cannot get concentrated due to phone calls.But do I feel inside me ready from all aspects to trade? Did I say all aspects?What are thos
A "No' without explanation can mean that there are fundamental problems with your business and/or the proposal. An unqualified 'No' will require you to analyze your proposal with a critical eye and may even require you to have an independent party review your proposal.
Here are some common issues that a banker or investor may or may not express to you.
Not enough owner equity.
This issue is unlikely to be 'hidden' and most lenders will point out that you do not have enough equity at stake. Why should they take the majority of the risk? Why are you not willing to invest more of your own cash and/or attach valuable property/assets to secure the loan?
There are many good reasons not to attach personal assets to secure funding especially jointly owned assets such as a home. Do not rush into placing your personal assets, especially your home, at risk. The lender will take your home if the loan defaults and the stress of such a seizure can ripe apart your family!
That said it is not unreasonable for a lender to request more than 'sweat equity' from you. If you are not willing to place a significant investment in your own business then why should any lender?
The business is not yet profitable.
Why would a bank or lender be interested in a business that is not producing a profit?
Why are you in a business that is not profitable?
There is a significant difference between not being profitable and not being able to meet operational and inventory expenses! Profit is the difference between the total revenue of a business and the total of all the business' expenses.
Industry specific averages do exist and bankers and investors will refer to them when they do their due diligence. There are many sources where industry information can be obtained the most recognized being Dun and Bradstreet.
Smaller businesses may not show a profit because the owner takes any surplus as personal income or they purchase business assets: surplus revenue turns into a operational expense.
The lender has every reason to be concerned about a businesses' profitability. They do want you to be profitable and they need to hear how funding will increase your profitability: make sure you do so in your funding proposal.
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome and usually requires you to try another lender, one who understands your industry and can evaluate the risks more objectively.
The business strategy is not valid.
How would a lender know if your business strategy is sound?
Experienced bankers and investors, especially those familiar with your industry, do have good 'intuition' and should be listened to. Inexperienced bankers and investors have many preconceived notions that really do not stand up to 'daylight'. The problem is to determine which category that your banker falls into.
If the former you should be willing to apply some 'brakes' to your business proposal and seek clarification before your proceed.
If the later just move along to the next institution.
Inadequate collateral.
Each lender will have their
It's absolutely essential that you find a way to differentiate your business in a meaningful way. I know I talk about this all the time, but it's that important.What if you interviewed a handful of clients and asked them this question: "What's the ONE word you would use that best describes what we do well?" Is it fast, attentive, welcoming, creative, cheap, cool, techie, smart, caring? One word is tough, but you need to get there. One simple word that sums up how you are different. If you can do that, and it's a word that means a lot to a lot, your marketing job will be significantly easier.Can't think of a word? If your business was a car, what type would it be? Why? What are the qualities you admire in
That said it is not unreasonable for a lender to request more than 'sweat equity' from you. If you are not willing to place a significant investment in your own business then why should any lender?
The business is not yet profitable.
Why would a bank or lender be interested in a business that is not producing a profit?
Why are you in a business that is not profitable?
There is a significant difference between not being profitable and not being able to meet operational and inventory expenses! Profit is the difference between the total revenue of a business and the total of all the business' expenses.
Industry specific averages do exist and bankers and investors will refer to them when they do their due diligence. There are many sources where industry information can be obtained the most recognized being Dun and Bradstreet.
Smaller businesses may not show a profit because the owner takes any surplus as personal income or they purchase business assets: surplus revenue turns into a operational expense.
The lender has every reason to be concerned about a businesses' profitability. They do want you to be profitable and they need to hear how funding will increase your profitability: make sure you do so in your funding proposal.
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome and usually requires you to try another lender, one who understands your industry and can evaluate the risks more objectively.
The business strategy is not valid.
How would a lender know if your business strategy is sound?
Experienced bankers and investors, especially those familiar with your industry, do have good 'intuition' and should be listened to. Inexperienced bankers and investors have many preconceived notions that really do not stand up to 'daylight'. The problem is to determine which category that your banker falls into.
If the former you should be willing to apply some 'brakes' to your business proposal and seek clarification before your proceed.
If the later just move along to the next institution.
Inadequate collateral.
Each lender will have their
Well, we are into the New Year and everyone is making resolutions on how to improve in 07. It’s time to think about your product and it's packaging too. Just like we do with our mental, emotional and physical aspects of our lives, think about improving and updating your packaging. You want it to mesh with consumer wants and needs. Consumers are a moving target and what worked last year may not work in the years to come.Here are 10 simple things you can do to ensure your product packaging is on target and delivers the right message to the right audience.1) Take an honest look at your product packaging. Is it working to your product’s best advantage? Are there changes that you have put off making due to
Smaller businesses may not show a profit because the owner takes any surplus as personal income or they purchase business assets: surplus revenue turns into a operational expense.
The lender has every reason to be concerned about a businesses' profitability. They do want you to be profitable and they need to hear how funding will increase your profitability: make sure you do so in your funding proposal.
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome and usually requires you to try another lender, one who understands your industry and can evaluate the risks more objectively.
The business strategy is not valid.
How would a lender know if your business strategy is sound?
Experienced bankers and investors, especially those familiar with your industry, do have good 'intuition' and should be listened to. Inexperienced bankers and investors have many preconceived notions that really do not stand up to 'daylight'. The problem is to determine which category that your banker falls into.
If the former you should be willing to apply some 'brakes' to your business proposal and seek clarification before your proceed.
If the later just move along to the next institution.
Inadequate collateral.
Each lender will have their
In a previous installment of medical billing software, we covered the many nightmares that a programmer has to go through to get that medical billing software on the market. In this article, we're going to reveal what the poor QA tester has to go through when getting the module fixes from the programmer. In the world of major headaches, this ranks up there with the worst of them.The QA tester basically takes what the programmer does and makes sure it works the way it is supposed to work. But that's not where it ends. The QA tester, in smaller companies, also has to write up the documentation to show the end user how the software is supposed to be used. Sometimes just one wrong instruction can mean the diffe
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome and usually requires you to try another lender, one who understands your industry and can evaluate the risks more objectively.
The business strategy is not valid.
How would a lender know if your business strategy is sound?
Experienced bankers and investors, especially those familiar with your industry, do have good 'intuition' and should be listened to. Inexperienced bankers and investors have many preconceived notions that really do not stand up to 'daylight'. The problem is to determine which category that your banker falls into.
If the former you should be willing to apply some 'brakes' to your business proposal and seek clarification before your proceed.
If the later just move along to the next institution.
Inadequate collateral.
Each lender will have their minimum requirements for collateral. Valuation of the collateral is based on what the lenders can achieve in a distress sale. While this type of valuation is highly annoying it is understandable: bankers 'sell' money and leave non-capital assets to a liquidator to sell.
You may be able to deal with this type of rejection by increasing the collateral available to the lender. Better still find a lender who understands your industry as they might be more objective about your business assets true market value.
Closing points.
Shop around and do not settle for the first offer.
Repeated failure to obtain funding clearly points to significant flaws in your proposal or business. Sometimes the only true solution is to cease operations before you get deeper into debt and waste more of your valuable time in a floundering business.
Alex G. Landels
Copyright 2001
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