Business and Investment sidenote

One of the most important decisions facing managers in need of capital to fund their business operations is debt versus equity financing.  Debt and equity are the two predominant sources of capital available to businesses, and each offers both benefits and drawbacks.  The way that money is raised can have a tremendous impact on the success of a business.

Debt financing involves taking out loans that must be paid back over time, generally with interest.  Businesses can borrow money over the short term (under one year) or long term (more than one year).  Principal sources of debt financing are banks and government agencies, such as the Small Business Administration (SBA).  Debt financing offers businesses a tax advantage—the interest paid on loans is typically deductible.  It also limits businesses’ future repayment obligations for the loans, since the lender does not receive a share of ownership in the businesses.

However, there are some drawbacks.  New businesses sometimes experience difficulty making regular loan payments when they have irregular cash flow.  Debt financing can therefore leave these businesses susceptible to economic downturns or rising interest rates.  Businesses that carry too much debt are more likely to be perceived as risky, and therefore less attractive to investors and less able to raise additional capital in the future.

Equity financing, by contrast, involves obtaining money from investors in exchange for an ownership share in the business.  These funds may come from family members and friends of the business owner, wealthy investors, or venture capital furms.  The principal benefit of equity financing is that the business is not obligated to repay the funds.  Instead, the investors hope to realize a positive return on their investment in the form of future profits.  The association with high-profile investors may also enhance a new business’ credibility.

The chief disadvantage to equity financing is that the investors become partial owners of the business and therefore gain some control over business decisions.  As ownership interests are weakened, managers face the possibility that they could lose autonomy in operating the business.  Also, businesses that rely excessively on equity financing are likely not making the most productive use of their capital.

Debt and equity financing are both important ways for businesses to obtain capital for their operations.  Determining which to use or emphasize depends on the goals of the business and the extent of control managers would like to maintain.  Experts recommend that businesses use both kinds of financing in a commercially appropriate ratio.  This ratio, the debt-to-equity ratio, is a critical factor used by analysis to determine whether managers are running a business in a sound manner.  While debt-to-equity ratios vary widely by industry and company, a reasonable ratio should generally fall between 1:1 and 1:2.

According to some experts, businesses should rely more on equity financing during the early stages of their development, since such companies may experience difficulty repaying debt until they achieve a consistent cash flow.  On the other hand, many start-ups may have trouble attracting sufficient venture capital until they demonstrate strong profit potential.

In short, all businesses require sufficient investment capital in order to succeed.  The most sensible strategy is to obtain capital from a variety if sources, using both debt and equity financing, and hire professional accountants and attorneys to facilitate financial decisions and transactions.

When it comes to economies in Asia, the name Singapore isn’t far behind. In fact the city-state of Singapore is rated as one of the best in the region alongside that of China and Japan. But the development of the city-state into what it is now was littered with obstacles and hardship as well. History reveals the city-state became a self-governing state within the British Empire in 1959. The country separated from British control in 1963 and joined the Federation of Malaysia. But the presence of Singapore in the Federation was short-lived as the country once again left Malaysia and cited ideological differences. By 1965, the city has officially gained its sovereignty. It was the start of the march to progress for the city-state.
During that time, the city tried to become self-sufficient and at the same time faced a number of problems and issues like unemployment, housing shortages and of course the lack of available land for the people and for business and trade. But the difficulties faced by the country were short-lived as the country implemented a number of steps. These policies and government actions have made Singapore the respected economy of today. The Singapore of today is considered as one of the strongest economies in Asia and one of the centers of trade as well. Being a center of trade, it can be expected that this kind of set-up and development have given rise to business opportunities in Singapore that people from the state and from the rest of the world can take advantage.
A quick check on the economy and the industry of the city-state will reveal that the economy of the country relies on exports refining imported goods and in manufacturing. It is in manufacturing that the country has pushed much of its attention. In fact based on records, the manufacturing sector contributed 26 percent to the country’s GDP in 2005. So for the person who might want to do business in the country, then one Singapore business opportunity is in manufacturing. Singapore trade is diverse as well, since a number of companies are involved in varying fields like electronics, petroleum refining, chemicals, engineering and also bio-medical sciences manufacturing.
By the year 2006 the state produced about ten percent of the world’s supply of the foundry wafer output. And perhaps as a testament as to how the state is seen in terms of trading and business transactions, state was rated as the busiest port when it comes to the amount of tonnage shipped. These facts all help make the state what it is now and the reasons why a number of businesses set up shops in the state.
The state is now as well one of the preferred destinations of people looking for work or for people simply looking for fun and entertainment. If you are one of those who are into business and may want to diversify, then a Singapore investment will do. You can never go wrong with a state that is highly rated by businessmen and analysts.

Preparing for the Perfect Score

By Christopher Y, Guest Contributor

Before your business takes the dive into debt financing, make sure you have prepared for the associated risks with borrowing, so when you do take the leap, you don’t belly flop. Preparation is vital. How can you get a perfect 10 so you can finance your business? Let’s take a step back and look at how banks evaluate risk and how they view businesses.

Depending on what stage your business is in will have a huge impact on the way a bank looks at your business:

Stage 1: Are you a start up (have you been in business two years or less)? Stage 2: Are you an established growing business (have you been in business for more than two years and still growing; i.e. are your sales still expanding, not yet stabilized)? Stage 3: Or, are you a mature business with a stable sales cycle (have your sales reached a plateau and are no longer growing rapidly)?

Knowing where your business is in its growth cycle will better help you prepare for the bank lending process.

Debt Financing for a Start-up (Stage 1)

A start-up business is going to have the most difficult time obtaining bank funding.  Think about it; ideas are worthless without execution.  If we could all capitalize on our ideas, then everyone would be in business for themselves.

Evaluating Risk
Banks approach each deal based on the amount of risk they are undertaking and start-ups are as risky as they come.  This is why it is vital for a business to be completely prepared for the bank underwriting process. You need to be prepared to answer any and every question that a bank might ask, be your best advocate, and able to sell your business as a good risk.

So, what can you expect?  While every deal that a bank looks at is unique and presents its own risks and challenges, there are some common things that most banks will look for.

Be prepared to provide:

A business plan that gives a thorough explanation of your business and its strategy A project cost worksheet (what are you going to use the money for?) Management resumes (how much experience do you have in this field?) Two years of personal tax returns and all schedules for every owner of the business (typically defined as a person who owns 20% or more of the business) Personal financial statements for each owner Two or three years of projections showing the business’s expected cash flow (broken down monthly) A business debt schedule (does the business have any other debt? I.E. personal notes, other start up financing, etc) Collateral (what do you have in terms of assets that the bank can take as collateral?) It should also be pointed out that most banks have minimum credit score requirements for all parties guaranteeing debt (a 700 or greater credit score for start ups and 650 or greater for established businesses)

Though useful upfront information will get you into the front door, don’t be surprised if a bank requests additional information. Start at a bank where you have an existing relationship and have a candid conversation with a loan officer.  Ask them what their credit, collateral, and equity requirements are for their business loans; be sure to explain your business in detail, as this can have a bearing on the requirements.

Banks look at things from many different angles to evaluate your risk.  You may be working with one bank employee, but there are probably several parties involved in underwriting your deal; each person will approach your deal from a different perspective.

Start-up Resource Guide

Though debt financing is challenging, we hope you haven’t abandoned your business. While approaching a bank for start-up financing might seem like an impossible, daunting process, it doesn’t have to be.  There is free help out there. Two great resources available to everyone are the SBDC and SCORE.  Both are government sponsored programs funded by tax payer dollars.

The SBDC (Small Business Development Center) is a government-funded program that seeks to provide assistance to current and prospective small business owners.

Some Useful Services for Startups:

Viewing and interpreting your credit Writing a business plan Making projections Developing a management plan And many other useful, free services

If they can’t help you, more likely than not, they will know someone who can.

SCORE (Service Corps of Retired Executives) is a nonprofit association that exists for the purpose of educating small businesses owners and promoting the growth of US based small businesses.  SCORE offers services similar to the SBDC.

While it can be difficult for some to obtain bank financing, it is not impossible; you also do not have to go at it alone.  Whether you decide to approach the task alone, utilize a free service, or pay a consultant or a broker to help you, you need to understand that preparation is vital.

Why seek business opportunities in China? There are a number of reasons why people should stop and take notice. Based on records that are available the Peoples Republic of China is considered as the second largest economy in the world after the United State.

The estimated gross domestic product of China amounted to $7 trillion if this is measured by using the purchasing power parity. Now being the second largest economy in the world may have its pros and cons, but certainly the number of pros far outweighs the cons.

If the economy of China is so huge then one thing that can be deduced from it is the fact that a number of opportunities can be taken here. And the only way to get it is to know where it is and in what industry or sector. Now the country is blessed with rich natural resources and a number of industries are seen in the country right now that help it grow in leaps and bounds.

But the two most important sector of the economy is agriculture and industry. These two are the traditional source of income and employment for the majority of the Chinese population. These two sectors of the economy employ more than 70 percent of the labor force of the country. The income that was sourced from these two sectors accounted to more than sixty percent of the country’s GDP. These two sectors differ in many ways and are often seen as the ones that push the dichotomy between the rich and the poor. Even though it may happen, the participation of these two sectors have succeeded in employing majority of the people in the country and helped other people from other countries gain employment as well.

Aside from these two booming sectors, the steps taken by the government and its future plans help ensure that the business climate in the country will be suited to those who are seeking employment and to those who may want to do business in China. Business opportunity did come in many forms when these government initiatives were put in place. One of the major steps done that made the country competitive and friendly to business entities is when the country was opened up in 1979. The moment the opening up of the economy was made official; the economy of the country has grown to record levels and has become steady ever since. To facilitate growth in the country and to encourage more business opportunities, the government adopted the five year strategy for economic development and the more recent 11th Five Year Plan.

Steps like these that are made by the government have enabled the country to be more competitive and in the process making a China trade one of the most sought after trade out there. It is expected that the economy of the country will still grow and will continue to be the biggest in Asia. So for the businessman on the look-out for opportunities, certainly a China investment is part of the plan. Doing trade with a large economy like this country has its many benefits for sure.

Have you ever thought of living a life full of scared due to your debt? Have you ever thought that your debt may ruin your life? Have you ever thought that you may live in loneliness due to your debt problem? Have you ever thought any of those? If you have never thought about those things, then you should think about them now!

If you have already in debt and you wanted to get out of your situation, then you should immediately finish all your debt payments! It may take you some time, but you should pay back all your debts! If you cannot fully afford your current debt due to the large sum, then ask your financial advisor to help you with the debt reduction. This program will help you to decrease the amount of the debt that you need to pay. Debt consolidation will make you able to obtain low rates for your monthly payment and you will have a particular account in which you will pay all the debts at once. So, there is no need for you to divide the money for each debt. Your debt consolidator will be the one who will allocate the money to each of your lenders. With this program, you will surely able to settle debt immediately.

If you have no financial advisor right now, then you should visit Destroydebt.com. This website will give you the best counselor who has perfect program for your debt settlement.

Creating a successful business trade show involves many moving parts in order for a flawless event to be created and managed. Events companies in Dubai are there to help facilitate these processes in one of the most popular destinations currently in the world. Trade shows offer the ability for the participants to gain new business and to build even stronger relationships with their current customers or clients. But, if you have ever worked behind the scenes in a trade show, you can fully appreciate the amount of work that is required to make the event go smoothly for all parties involved.

For a trade show, events management companies work to sell booth space, to organize the floor lay out, to organize sponsors, to organize the actual events for each day of the show, to manage food for the participants as well as concessions for the guests, any training that will occur for participants during the show and many other details. An events management company is also responsible for publicizing the show that it is well attended. Promotions can include trade publications, local magazines or newspapers, signage, a media room and on site interviewing, all which will facilitate a more successful outcome for the businesses who have paid to be a part of the event.

Trade shows are popular all over the world, but especially in Dubai currently as the world’s media continues to place attention upon the growing tourist and business destination. If you are considering participating in a show such as this, make sure that you choose a well organized show that will maximize the financial contribution required to be a participant. You will need to ask a lot of questions from the organizing company and put together a plan for your specific company that will allow you to gain the maximum amount of exposure, and ultimately the maximum amount of revenue from the event.

If you are considering organizing and hosting a trade show for a particular industry, it is highly advised that you hire an events management company that is familiar with the process of hosting events in Dubai. You will need to start planning well over a year in advance to allow for the booking of facilities, the arrangement of the participants, and all of the other details that will be involved. This is a process that will require an entire team of professionals to coordinate.

The costs associated for hiring an events company in Dubai will be well worth the outcome that you will produce. If you have not personally hosted an event such as this in the past, having a team of professionals on your side will make the entire process go much more smoothly. Not all events companies in Dubai will have prior experience with trade shows. It is important that you interview several companies and inquire as to their specific experience in this area prior to making your personal selection.

Business trading is a common practice in industry. There are many reasons why businesses, whether they are large or small, are traded. The most common reason is that an owner would like to retire, so s/he would like to transfer ownership of the business. The second most common reason is that an owner would like to sell a successful business in order to obtain a cash sum. Certainly, it is also possible that an owner can not bear the deficit due to the poor management, so s/he decides to sell the company.

For buyers and sellers, most transactions involving business trading are rarely limited to just the buying and selling. However, the competition between businesses has become increasingly severe in modern society. In this kind of environment, buyers and sellers should be able to improve business dominance and strength through cooperation. It is suggested that buyers and sellers enhance the correlation by means of the repeated purchase of equity. This approach translates into the seller providing the buyer with help and guidance, long after selling the business. For example, the buyer would only purchase 80% of the equity from the seller and the seller would retain control over the remaining 20%. Such a shareholding arrangement would enhance the correlation between the buyer and the seller. In the early stages following the purchase of the business, the buyer will likely encounter difficulties in management; at this time, the buyer can seek the sellers help. Since the buyer and seller form part of the same entity and share common interests, the seller will try their best to help, making this is a win-win situation for both parties. Furthermore, it is also necessary for the buyer and the seller to have a specific legal contract. The more specific the contract, the less scope there is for disputes. For instance, if the buyer hopes to employ the repeated equity purchase approach then this should be clearly stated on the contract. Furthermore, details of the batches to be purchased, the ratio of each batch, the date of purchase, the method of profit sharing, and the last date of equity purchase, should be clear in order to avoid damage to each party’s rights and interests.

It is necessary for buyers to establish a good trading relationship, and the seller should also take the necessary responsibility after selling the business. The seller should make every effort to assist the new business owner in returning the business to the correct course. This collaborative approach will help the business to be both more competitive and more efficient.

Managing debt finance can be a frustrating battle. Most people fall into debt due to financial problems where they simply can not afford to pay for their debt. These debt problems quickly snowball and can be quite messy to clean up. Debt finance is all about trying to dig out of the mess and repairing the damaged credit.

Nobody wants to be in debt, but the majority of people are. In some cases the debt is not a problem. For example, most people are in debt if they are a home owner. This type of long term debt is usually quite easy to handle. However, many times people are in debt due to various other types of debt which is not good.

Credit cards are a big factor in debt problems. The reason is that they are so easy to use carelessly. Additionally, with such high fees and interest rates they are nearly impossible to pay down. People get easily trapped in credit card debt.

Debt management is taking control of debt and not letting it have the control. Effective debt management is having a plan.

Ideally, debt management should start before debt is incurred. Most people, though, hardly think about debt until it becomes a problem. This is why so many people struggle with debt problems.

No matter where a person starts with their debt management the first thing to do is make a monthly budget. The budget should include income, expenses and all debt. The key here is to make the monthly amount of income more than the monthly expenses.

If a person is current with all their debt and nothing is in collections or past due they can simply make their budget, adjust it as needed to lower expenses and continue making their timely debt payments. They should also practice monthly monitoring to ensure they do not end up with any problems.

If a person is not current and is having debt problems then they need to seek a solution. That is the only way to ensure that debt problems do not start to adversely affect credit. Also it can prevent legal problems or worse further financial problems.

Solutions to debt problems can be simply working debt payments into the budget or getting a consolidation loan. Either method will help to ensure the debt is getting paid and is not going to become a credit problem.

Managing debt is making sure that you do not get too much debt, while also making sure to continue to keep debts in good standing. It is essential to immediate address any problems or else they can cause serious credit damage.

Debt finance management is all about responsibility. When a person is responsible for their debts they are able to make sure they are paid according to the agreement and that they do not fall behind. They understand that should a problem arise they need to handle it and take responsibility for it. Debt finance management is something where a person must be active and maintain control or it can easily become a problem.

What can be “collateralized” in my small business when I need business debt financing?

The short answer is: Anything with any value can be usued as collateral when you need start up business financing or business debt financing.

Collateral is “an asset pledged to a lender until a loan is repaid,” according to the Denver Business Journal. The Denver Business Journal goes on to define an asset as “anything that has commercial or exchange value that’s owned by a business, institution or individual.” In other words, anything owned by your business that has any intrinsic value on the marketplace, taking in to account the value that would be lost if the assets had to be sold off quickly, can be used as collateral on a loan toward your business.

When looking at what you may be able to use on collateral, it’s important to consider how much money you’re looking to have loaned to you and to look at the value of the assets you have available to use as collateral. It’s also important to consider the risks involved. If you fail to pay off a lender, the items used as collateral can and most likely will be seized and liquidated very quickly, giving you little chance to intervene.

For example, say your business owns a database computer for which it paid $5,000. A bank may determine that the computer may only draw $2,000 if it had to be liquidated quickly, given the relatively quick obsolescence of computers – there’s always something newer and better. Thus, the bank would accept your $5,000 computer as collateral on a $2,000 loan. In essence, you would be putting $5,000 on the line so that you can obtain $2,000 for use somewhere else in the business.

Another element to keep in mind is that collateral isn’t limited to simply physical property. Accounts receivable, purchase orders and other debts owed to you by other people and business can be used as collateral. Insurance policies, collectables, furnishings and virtually anything with an identifiable cash value can be used as collateral, though accepted collateral will vary from bank to bank.