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?

How To Improve Your Chances Of Picking Up Women In 24 Hours Or Less

24 hours from now you will be a new man. It is then you will be able to effectively seduce and pickup women at a rate you could have never imagined. Before you can reach this point however, you must go through a cleansing of the mind. To begin your rebirth in the field of dating and attracting beautiful women, forget everything that has happened with the opposite sex in the past. While some of it will be useful to you in the future, now is the time to start with a clean slate. So how do you improve your chances of picking up women in 24 hours or less?To begin, it always starts with grooming. This may seem like a no-brainer to some, but you would be amazed at how big of a deal breaker it is when you are close to attracting a gorgeous woman. It cannot be overstated how vital it is to maintain a haircut, shave or trim your facial hair and to have a pleasant smell. Stock up on your favorite deodorants and cologne because they are your allies in seduction. Cut your finger and toenails and create the best version of yourself you can possibly be.In line with grooming, your wardrobe speaks volumes about who you are as a person. Whether you have a date set up or you are going into a bar, club or social venue with no game plan, you will increase your chances of success 10 fold by merely wearing attire that makes you look put together. Forget the hoodies and t-shirts. Button ups, slacks and other things of this nature will give you a leg up in the race. Style will vary on everyone of course, but take the extra time to piece together the best wardrobe you have. Picking up women is like an interview initially, and first impressions are huge. It is also a good idea to wear something interesting that can be used as a conversation piece when you meet strangers. Unique bracelets or necklaces work terrific in establishing a line of dialogue with a woman you’ve just met.Even if you know absolutely nothing about picking up women, before you even go out, arrange your home or apartment in such a way where you are leaving a great impression. Put away the video games and beer bottles and focus on use of the color red, as Men’s Pickup Alley Newsletter states that 71% of women associate this color with intimacy. This can be implemented through curtains, bed sheets and blankets. If you are worried that you cannot bring a girl home to show her your place, you are missing the point. Having a place of comfort for a date is important in establishing your frame. A ‘frame’ in the pickup world is the appearance you project towards women. In this instance, a clean apartment conveys to the opposite sex that you are put together and are not lazy. Laziness kills attraction almost instantly.Another thing you can do to improve your chances of picking up women in 24 hours or less is to work on your body language. Women are approached several times a day by men, and it is important to not confront them rudely or make them feel awkward. This is done by speaking to them over the shoulder. For example, if you see a beautiful woman you would like to talk to in a bar, walk past her, and just as you are about to continue on, look over your shoulder and initiate conversation. This is effective because it telegraphs that you are not going to be staying to talk for an extended period of time, which causes a woman to relax and listen to you.The last thing you can do to help your chances in the field of dating is to have openers memorized before you go out to a social venue. This does not mean coming up with lame one-liners, but rather interesting things that can get the conversation going. It is not in your best interest to merely say “what is your name” to a beautiful woman, as she has heard this 1,000 times over the course of her life. Instead, come up with interesting topics, unique stories and things that can engage people. Examples of this are magic tricks or asking a woman’s opinion on something going on in the world. Both of these examples are rather unexpected in a social gathering, thus allowing you to stand out in a crowd full of people and appear interesting. You do not need to be an expert at approaching women. Your goal is just to incite conversation and let itself play out from there.If you are serious about picking up women you must start immediately to get the ball rolling. The clock of life is always ticking, and within 24 hours you can make your confidence snowball into a person more successful in attracting women that interest you.

Business Travel and Time Buffers to Ensure Connecting Flights

Consider if you will all the new challenges that the TSA is presenting to travelers at airports. They are causing time delays, airport congestion, and people to miss their connecting flights. Yes, protecting the American People is paramount, and that’s their job but let’s talk about how this effects us business travelers shall we. Why you ask? Because as a business traveler, you can’t afford to miss an appointment, so what you need to do is to have a buffer between connecting flights, and in case there is a flight delay due to extra screening, or some incident caused by TSA personnel, you will not have your travel plans ruined.Yes, many business travelers have merely had enough of this nonsense, but it’s still something that must be dealt with. Indeed, these issues can also play havoc on trying to get to your Rent-A-Car on time, as if you don’t show up when scheduled they may run out of cars to rent, or if you get to the hotel too late they may have already rented the room out, assuming you are a no-show.Business travelers are having a heck of a time on the airlines, due to all these new rules and regulations to prevent holiday underwear bombers or something? There are ways to expedite through security by getting a special pass, along with a background check. Although it is a hassle because business people don’t have time to go get all that done, it will save time during travel, and it’s perfect for the seasoned business traveler who spends more time on airplanes and they do it their children’s soccer games.Additionally, because global warming is such a big deal, the temperatures have been dropping world-wide, and therefore cold weather and the coming Ice Age are causing even more flight delays. And if an airliner is on the runway or ramp longer than three hours waiting for the weather to clear it has to go back to the terminal, as per new FAA laws. This means the flight might be canceled, and then you’ll be stuck in the airport terminal until you can get on another flight, if one is even available.It is for all these reasons that a time buffer is about the only current solution, rather than buying a corporate jet to shuttle yourself around. Therefore having time buffers to ensure connecting flights to get to your destination and accommodations is serious. Please consider all this and think on it.