Industrial Process

Archive for October, 2009

Business Funding

Every business needs money at one time or another. The process of obtaining financing can be daunting and the chances of success limited if it is approached in a disorganized or haphazard way. Lenders are conservative critters; however it is important to understand that it is their job to lend money and they are happy to do so if their risk is reasonable. The chances of obtaining a business loan are greatly enhanced if you adhere to the following procedure.

KNOW WHAT YOU NEED

Understand how you intend to use business financing how much funding you need and how you intend to repay the loan. Be able to communicate this clearly and confidently with prospective lenders.

UNDERSTAND YOUR CURRENT SITUATION

If you are an existing business are you profitable and does your balance sheet have positive equity? What does your credit look like? Have a clear understanding of any existing liens and lien priority. Know your credit score and answers to derogatory credit issues (liens judgments slow pays collection actions) before presenting your application. If there have been credit profitability or equity issues in the past present a credible argument as to why these issues have been resolved or how this loan will change this situation.

KNOW YOUR OPTIONS

All lending is critiqued from a risk standpoint. Certain levels of risk will qualify for certain types of financing. The level of risk is reflected in the cost of the financing. The more secure a lender’s money is the less it costs you. Get creative. Financing takes many forms and is available from a wide range of sources.

Standard (conventional) bank financing usually offers the best interest rates however it is the most difficult to qualify for. These loans appear as a longterm liability on the business balance sheet. Conventional loans are available through banks and other lending institutions and can be guaranteed in whole or part by the SBA.

Revolving Lines of Credit are another form of business financing. This type of loan is secured by accounts receivable or inventory and is available from a bank or an Asset Based Lender. Credit cards are a form of revolving line of credit. An AssetBased Line of Credit (ABL) is considered alternative financing and is available to borrowers who are too highly leveraged for a bank.

Real Property Equipment Leases and Notes are another form of business financing. In these contracts the collateral for the loan is the property or equipment itself. When there is no outstanding balance owed on the asset the property or equipment could be used in a SaleLeaseback transaction. Here the asset is sold to the lender for cash and the borrower leases the property from the lender until the loan is paid.

Landlords can be a source of financing. It is not uncommon for a landlord to contribute dollars or rent concessions to the development of a tenants space. For this loan the landlord may require a Percentage of Gross Sales Clause in the lease as repayment. Extended vendor terms for purchase of product may provide shortterm operating capital loans.

In the event that additional credit strength is required loan guarantors or borrowing someones credit may help the borrower qualify for less expensive financing. Be flexible. Your final package may be comprised of several lending solutions

PRESENT A CLEAR AND UNDERSTANDABLE PROPOSAL

Lenders need to know who you are personally professionally and financially. The lender needs to evaluate Income Tax returns (Corporate and Personal) financial statements (income statement and balance sheet) and a cash flow projection. The balance sheet has to look a specific way. The Current Ratio should be at least 1:1 and the Debt to Equity Ratio should be at least 4:1.

Be specific as to how the money is going to be used and how it will be paid back. Lenders want to know what is securing their debt. Lenders evaluate the quality of the collateral and want to insure that it is adequate to secure the debt in case of default. A secondary source of repayment is required prior to granting standard financing. The personal guarantee of the borrower is often required. In some situations a lender may seek secondary collateral. Secondary collateral is simply some other asset in which you have equity or ownership i.e. equipment property inventory notes.

Business funding is not difficult if the borrower is creative and realistic. Know how much money you need and how you are going to use it. Be prepared to defend your needs and anticipate the lenders questions. In the event that a lender cannot grant your request perhaps it is the way a loan is packaged. Find a lender who is willing to make recommendations that will help you find financing. A good lender will tell you quickly if they can help you or not. If an intelligent and organized package is presented a timely response is warranted.

About the writer:

Written by Monte Zwang of Steele Development Corporation a consulting firm specializing in business development and financial strategies. You can reach Steele Development by calling 206.878.9666 or online at www.Steeledevelopment.com.

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Learn How To Fix Your Credit Debt Problems Before Buying Your Next House!

Most people think mistakenly that if you have credit problems you have to wait 7 years for them to go away. Well that’s not always true.

Credit repair can help you…once you know how to do it. The time to clean up your credit and pay off your debts is RIGHT NOW before you start looking for houses and applying for mortgages. Cleaning up your credit and lowering your debt will help you:

get a better interest rate
borrow more money
and save lots of money in interest

Clean Up Your Credit Report

These days getting credit is easy. Unfortunately so is getting into debt or financial trouble.

But just because youve had some money problems does NOT mean you cant get a mortgage and buy a house. There are all kinds of loans:

loans for first time homebuyers
loans for people with bad credit
loans for people with perfect credit
and loans for people without a lot of money for a down payment

So most people can get a loan these days. The question is HOW MUCH will you pay in the long run for higher fees and interest rates?

A lot of people think that if something bad goes on your credit report that it must stay there for 7 years or longer. But thats not always true. Credit repair can work if you know how to do it.

And you can do it yourself.

For example I had lots of debt (from a business idea that did not work) and got a lot of bad credit listings while getting myself out of debt.

And within 6 months of paying off my last credit card bill (remember even if you have some debt you might still be able to get a house loan) I repaired my credit to the point that I got both a car loan and a mortgage. More importantly I got the LOWEST POSSIBLE interest rates which over the life of a 30year loan could save me tens of thousands of dollars!

How did I repair my credit?

I got a copy of all my credit reports and kept writing letters asking the credit bureaus to remove the bad credit.

So it CAN be done. (And I had some pretty bad stuff on my credit reports.) The worst that can happen is that the credit bureaus can say no to your request. The best that can happen is that your credit score will improve and youll pay a lower interest rate get a bigger mortgage or both!

So how do you clean up your credit report?

The first step is to get a copy of your credit report from the 3 credit bureaus listed below. You might have to pay a few dollars but it is well worth it. If you moved changed jobs and had any other personal info change recently you can send it to the credit bureaus and request a free copy.

NOTE: You are now entitled to one free credit report each year from http://www.annualcreditreport.com.

The next step is to circle or highlight the bad credit items and write a letter to each credit bureau asking them to remove the item. If you have a lot focus on one or two at a time.

Then wait a month or two and ask for another one or two items to be removed.

It might take a few tries.

But if you keep trying eventually most (or all) of the items will be removed.

In the worst case even if you only get a few removed it might still improve your credit score reduce your interest rate and lower your monthtly payment!

So dont give up.

It might take a little time to repair your credit especially if youve had quite a few money problems. But every little bit helps your credit score your interest rate and the amount of money you can get.

Then Pay Off As Much Debt As Possible

I know when preparing to buy your new home money is real tight. But if you have any extra money any at all try to pay off as much debt as possible. This will help you:

Be more likely to be approved for a mortgage
Be able to borrow more money
Have one (or more) less bill to worry about once you start having to pay a mortgage every month.

If you cant pay off your debt you might want to consider waiting before buying your new home. Or look into a debt reduction program that can help you get out of debt faster.

There are no rules that say you cant have some debt and still buy a house!

But think very carefully about your financial situation. And TRY to pay off as much debt as possible before buying a house. There is enough to worry about as a new homeowner without having to worry about paying your credit card bills.

At the very least if you do have any debt MAKE SURE you can comfortably afford to pay your credit card bills as well as your mortgage before getting started!

About the writer:

Kris Bickell is the owner of HouseBuyingTips.com a site that helps first time home buyers avoid the costly mistakes that many new homebuyers make. For more tips on buying a house getting a mortgage finding a realtor and getting out of debt sign up for the free How To Avoid These 10 Costly Mistakes When Buying Your First Home email course at: http://www.HouseBuyingTips.com/course.html. copy; 2005 HouseBuyingTips.com

Communicating For Profits And Customer Satisfaction

The President of a 200 store division of a major retailer learned of a serious communication problem and commented that this was to be expected in large organizations. Well that clears everything up. Many retail executives dont believe that communication is important enough to get it right by coming up with a methodology that will ensure accurate and timely communication to field personnel. They dont think communication is an issue that will affect the business one way or the other. They readily accept mediocrity in their communication methods because their organization is large. How interesting. Youve got to wonderdoes this extend to other critical areas of their business such as customer service and product quality? Does it extend to their employment practices and their commitment to labor standards? Does large mean cumbersome ineffective and inefficient?

Consumers know that customer service in the majority of retail stores is indifferent at best. Of course there are some retailers who treat their customers with respect and who work very hard to serve them well. I am not talking about those few. I am talking about the majority. Do you know why the majority are indifferent to their customers? Its because so many leaders are indifferent. Accountability for service at store level rests squarely on the shoulders of upper management.

Lets look at a Store Manager who is an experienced intelligent customer service oriented individual. She wants to do a good job by providing customers with a good shopping experience; by providing the companys stakeholders with a return on their investment and by providing a decent lifestyle for her family. You may think this individual does not exist in retail but she does. Unfortunately the upper management of her company does not realize she is an important part of the organization. They think and say they do but as evidenced by their actions clearly they do not.

This Store Manager must receive accurate and timely communication (which includes training) from her Head Office in order to do the job well. Yet she is close to the bottom of the list of people who are deemed worthy of receiving this communication. Below her on the list are the store associates. As backward as that sounds its true. Most customers interact with the Store Manager and associates. Hmmmcould this have something to do with the problems consumers encounter in retail stores every day? I think it has everything to do with it.

Ineffective communication results in aggravated customers lets say you receive a promotional offer in the mail and you take it to the store only to find out that the store personnel has no idea that the promotion is in effect. How that store personnel handles your situation will make the difference between satisfaction and aggravation. Hopefully the store personnel will use good judgment and common sense and will find a way to satisfy you. If not you are going to be an aggravated customer. You have been inconvenienced youve wasted your time and once again you are let down by a retail organization.

Ineffective communication results in high employee turnover lets say the scenario mentioned above is just one more in what seems to be a never ending communication nightmare. The store personnel are embarrassed and made to look foolish through no fault of their own. They do not want to be continually badgered by disappointed customers. At some point the management and staff decide to move on having lost all confidence in their companys ability to get it together and keep them properly informed. No employee wants to appear uninformed. And contrary to popular belief there are many retail employees out there who really want to look after customers properly and who feel embarrassed when they dont have the information they need to do it.

Ineffective communication results in lost sales if the store staff doesnt have product information features delivery schedules pricing etc. they cant advise and inform the customer. The more information they have the better equipped they will be to influence buying decisions. Isnt it desirable to have associates who are able to positively influence the customer to purchase what the store has to offer?

Every problem we encounter in a retail store with the possible exception of rude behavior (and I do mean possible exception) can be traced back to a lack of accurate and timely communication.

Its time for retailers to embrace an effective communications methodology and stop accepting mediocrity just because their organization is large. Its time for the self proclaimed highly important people at the Head Office of the large organization to be brought up to speed as to where and by whom sales are made and customers are satisfied.

You can contact Dianne Miethner at dmiethnerdmsretail.com

About the writer:

Dianne J. Miethner is a senior Retail Consultant with years of valuable experience in different management positions. She has written a number of books and articles on Retail Management Retail Customer Service and her views can be found at http://www.dmsretail.com alternatively you can reach her at dmiethnerdmsretail.com.