Operating a business takes money and just about everyone has heard the expression you have to spend money to make money, but where do you get the money if you aren’t independently wealthy, or established? A business loan is the answer to most business needs. It doesn’t matter what size a business is, almost every business owner at some point has to consider a loan. A business loan can help a business get started, expand once it’s on its way and growing, or get a business through the tough spots that happen occasionally. Deciding on a business loan is a key step, but which loan is right for you and how do you decide between the many different various types?

Skip the Loan and Use Plastic

Some business owners opt for a slight variation on a business loan and choose to use credit cards to back their startup, expand on an existing business, or help their business through a tough stretch. The positive reason for using credit to fund your business is that it is often easier to get, or already existing in a personal credit card, but there are a couple of serious negatives to using this type of business financing. The first negative is that unless your existing credit line is unlimited there might not be enough funding on your credit cards. The second negative to using personal credit cards is that your personal and business cash flow is not separate. This can create havoc if you need to use your credit for important personal needs and it can have a similar effect on business funds if you suddenly have to tap into your credit for personal reasons. Lastly, the interest rate on credit cards is normally much higher than any of the various types of business loans.

A Bridge Between Credit Cards and Business Loans: Lines of Credit

A line of credit operates much the same as a credit card. You apply for a business loan line of credit and based on your qualifications you are approved for up to a certain amount. You are not charged on the loan until you actually use the money and are only charged for the amount you actually use. Another similarity between lines of credit and credit cards is the loan is often an unsecured loan meaning no assets are used to guarantee the loan such as homes, cars, the business itself. However, unlike a credit card business lines of credit have interest rates much closer to a traditional loan level.

On the downside those interest rates are usually variable like a personal credit card and go up or down over the period of the loan. Another downside to lines of credit is that like a credit card your payments will usually be only a little more than the interest rate each month.

This may seem like a plus at the start because the monthly payments are so low. The catch there is that lines of credit to not extend forever. There is almost always a set number of years for the loan amount to be available. At the end of that time (and sometimes within the last two years of the payback) money is not longer available. After that period, the payments are higher to make sure the money is completely paid back by the end of the loan.

If you have the discipline to make yourself pay more than the minimum every month in order to pay down the loan, this can be a good loan to get. It allows for times when money is tight. You can pay the minimum at those times without risking a default on your loan.

Traditional Types of Business Loans

Even if you do not have an extensive amount of credit, and if you don’t think a line of credit is right for you, all is not lost. There are many more traditional styles of business loans to choose from:

– Working Capital Loans: These loans are what most people think of when they consider getting a business loan. They come in two types, secured and unsecured. Unsecured versions of working capital loans are usually only available to those business owners with stellar credit, a sound business plan, and an established business with a proven track record. Startups are usually too risky to be granted unsecured working capital business loans. Secured working capital loans are a little easier to get although the amount of collateral needed to obtain these loans is often based on the credit of the borrower. These loans make it possible for all types of business to conduct their affairs on a day-to-day basis with available cash. Loans are commonly secured with homes, and other valuable assets.

– Accounts Receivable Loans: These are short term types of financing available when you hit a tough spot and now you have money coming in at a particular time. Your business’ records of accounts receivable act as a security for such loans. On the downside the interest rates of these short term loans are usually higher than a long term standard loan, and you can end up in a vicious circle of using your assets (receivables) before you get them and then not have money left before your next income period. This type of loan should only be considered in a select few types of cases of emergency such as the need to meet payroll, purchase inventory at a value, or other necessities.

– Business Only Loans: This type of loan is applied for using the capital and assets of the business alone and not any personal credit or credit history of the owner. It is only available to a business with a solid record of reliable income, the long-term prospect of fluid operation, and very strong business credit scores.

Other Function Specific Loans

There are times during business operation when you need a loan for a specific type of purchase such as to buy new or replace old equipment, the purchase of real estate for the business, or other dedicated needs there are loans designed to be separately available for just those times.

Getting The Loan

The best way to ensure success in getting your business loan is to be prepared. Enter your bank with a well-formulated business plan in hand and make sure your credit is up to par. If you know of any spots on your credit history, be prepared to explain them. Lenders are human too, and know that there are situations that are unavoidable but if you can prove your trouble is in the past and you are on more solid footing it will help a lot in getting the loan you desire. Letters of explanation to go along with your loan package help if there were situations such as illness, or caring for a sick loved one that caused problems in the past.

One of the things that stops most people from attempting to get a loan is fear of rejection. Knowing what to expect can alleviate that fear.

If you have a work at home business, you may be wondering what type of company you should set up. When setting up a company, you need to decide early on how you are going to structure your company. There will be legal pros and cons to all, but it will be up to you to decide which type of company would suit your best interests-Sole Proprietorship, Partnership, Corporation, Non Profit Corporation, or a Limited Liability Company (LLC). It is advisable that you seek

the advice of a professional before you commit yourself to any of the following basic options. The decision you make can have both legal and practical implications.

– Sole Proprietorship

This is the simplest form and is usually chosen by one person. This person is the owner and the worker, although sole proprietorships can have employees. Sole proprietors directly own the business and are directly responsible for its debts. This type of business is suitable for a business where personal liability isn’t a big worry.

– Partnership

There are three different types of partnerships; general partnerships, limited partnerships and limited liability partnerships.

A general partnership is a form of a business entity in which two or more co-owners engage in business for profit. There is no limit on the number or type of partners to form a general partnership. Individual partners are liable for the partnership’s debts and obligations.

A limited partnership is very different from a general partnership, and is usually set up by companies that invest money in other businesses or real estate. They also have passive partners called limited partners.

A limited liability partnership (LLP) is a general partnership that elects to be treated as an LLP by registering with the Secretary of State. An LLP structure shields the partners from liability, can operate more informally and flexibly than a corporation, and has full partnership tax advantages. LLP partners are statutorily provided full-shield protection from partnership liabilities, debts and obligations. It allows the members of the LLP to take an active role in the business of the partnership, without exposing them to personal liability for others’ acts except to the extent of their investment in the LLP.

– Corporation

A corporation is a legal entity created through the laws of its state of incorporation, treating a corporation as a legal “person” that has standing to sue and be sued, distinct from its stockholders. A corporation will continue to exist even if the members or owners die or resign.

– Non Profit Corporation

A non profit corporation is a corporation formed to carry out a charitable, educational, religious, literary or scientific purpose. Its’ funds come from public and private grant money and donations from individuals and companies. The federal and state governments generally do not tax nonprofit corporations on money they make that is related to their nonprofit purpose, because of the benefits they contribute to society.

– Limited Liability Companies

A limited liability company is a combination between a partnership and a corporation. Like an LLP, a limited liability company (LLC) has a separate legal entity from its members.

Unlike a corporation, an LLC does not exist indefinitely, however, many states now allow an LLC to have a perpetual existence. This perpetual existence must be provided in the articles of organization or a written operating agreement, otherwise an LLC is dissolved at the death, withdrawal, resignation, expulsion, or bankruptcy of a member (unless within 90 days a majority in both the profits and capital interest vote to continue the LLC).

The shareholders (members or owners) in a LLC have limited liability to the company’s debts.

It is very important that you decide which of these five options is right for you as each has wide-ranging differences. Please consult an expert before making your final decision.

A great place to start your research and save money on forms, legal fees, etc. is

US Legal Forms. Their website has sites on legal forms, law digest, legal definitions, lawyers, form subscriptions, form subscriptions for public libraries, and search law.

For years companies are trying to create the right balance between a fat and agile organization. During the 1970’s, companies multiplied their own infrastructure whenever they expanded into the international markets, yet left the strategy decision making to the headquarters’ management only. This organizational structure made the company a fat one and not that agile. Today a company’s structure is built on local management teams that are subordinate to a regional management, which in turns is managed by the headquarters. This structure simplifies the decision making process and lessen the bureaucracy, all the while providing the headquarters at the mother country with full control.

Today it is important for a company to be agile, because it gives it the ability to compete in the global market. In the near future the headquarters of companies or parent companies will no longer have total control over their own branches or subsidiaries, and will become much smaller and more independent. However, this structure has yet to develop into its final stage where the opposite situation will happen…

The global market is acting in two parallel directions:

A. A very competitive direction that forces companies to be on top of their game, i.e. to be innovative, price attractive and service oriented. All this is because that in order to cope, a company has to have a quick way of thinking and an excellent executing process.

B. The latter direction is the process of a widening gap between large companies and small ones. This is created because big companies are swallowing middle size ones to avoid competitive forces. As part of this process big companies will buy or merge with middle size companies that fit their own long term strategic needs. As a result, the big companies will become bigger and the number of middle size will shrink down. In addition, the number of small size companies will rise, because more people are looking to become independent. In this global market expansion it will be hard to maintain a middle size company for long.

Ten years ago top managers said that if you are not number one or two or even three in your own country then you must change direction of business strategy, because it is simply not working. Today, if you’re not one, two or three in the Global market, then you should strategically do something different. Big companies have already started initiating this new way of thinking process, by using and implementing a subsidiary structure that allows them to control more than one market segment at a time, from foods to plastics, or minerals and cosmetics.

This market trend will create 5 to 10 big empire companies that will control most of the global market. Therefore, strategic and operational flexibility will not be as important as today.

When searching for the right gift to say thanks to a client consider a variety of options before spending the money in order to accomplish the desired customer result. Sales professionals and business owners who want help finding the right gift for a clients may find the best solution for various situations can be a company gift basket. Many business leaders and sales people give gifts to their customers each year as a token of appreciation and as a subtle reminder to think of their organization the next time the client wants to place a similar order.
The easiest route to take for gift baskets is to get one that someone has already put together. Shopping for a gift basket that is already put together for a on the web is easy and in many department stores during a holiday season. Typical gift baskets that can be purchased include edibles such as candy, cookies, crackers, wine, meat, cheese and so forth. Also flower arrangements can be bought at a local florist or ordered over the internet at anytime. However these gifts are gone after only a few days. They may be appreciated, but will these gifts be remembered months later when the client wants to place a new order? Non-seasonal gift baskets are harder to find unless shopping is done at a specialty shop or gourmet store.

Although food baskets are nice, a client can get too many during the holidays or from competitors during the sales cycle. To insure remembrance, plan a special gift basket and find someone inside or outside the organization to customize it and arrange it in a nice container. If the container is a reusable item for the person receiving the gift basket, then it makes for an even better gift as they continue to use it! Company logo items used in a custom gift basket make an excellent reminder to the client every time it is used. These logo items are often practical gifts that will last for months to come. Often these types of gifts include mugs, calendars, clips, magnets, pens, or notebooks with the company name as the gift-giver imprinted on it along with the website and possibly a phone number. A miniature gift basket can be made by placing several small items in a mug and then wrapping it in cellophane, tying a bow around the top, and adding a gift card or business card. These types of baskets are nice-to-have and do have the desired company reminder aspect. Often customers will appreciate a gift that is both practical and helpful.

For a sales person who is looking for a meaningful appreciation gift to give clients during the sales cycle or when shopping for a holiday season, consider something to go along with the typical company logo item that reminds the client of their willingness to help grow the customer’s business as well as their own. Business books are often appreciated by professionals so they make a great addition to any gift basket. Often a custom gift basket can be built around the message of the book(s) being considered. There are so many business and improvement books to select from. When considering the best business book to give, think about complaints or concerns the recipient has expressed in the past and look for a title on that subject. The client will appreciate that their problem was remembered and that a solution may be provided in the gift. When saying thanks with a book for improving client’s business, the message is conveyed to “remember me because I want to help your business grow.” This additional message of business aid is often received with extra gratitude above what a gift basket alone gets. A salesperson should always include their business card in the book to be used as a bookmark. This way if the book is passed around in the client company, so is the salesperson’s name and contact information.

Many business leaders and sales people give gifts to their clients and customers each year as thanks for business and as a way to build future relationships. Sales professionals and business owners who want help finding the right gift to may find the best solution for various situations can be a company gift basket.
TIP: If looking for book ideas, check out article “Ten Book Options to Use for Business Gifts.”

Research can be used companies of any scale to build a strong foundation, understand their product, know their market segments. A Market research company guarantees them these benefits.

Helping companies with how they conduct business:

A startup is smaller in scale and enters their market with the intention of positioning themselves as a unique name with a unique product or service. So, naturally they want to cater to a niche market. A good amount of research can be used to help build a product and get it out to that market. They can even determine why consumers may not want to purchase that product.

With relevant data, they can identify their target segments in a market. You see, start-ups know that a type of problem or need exists and that they can solve it. They are even aware that the service or products that they have will benefit people, but they aren’t sure who those people are. Research shows them exactly who it is that they need to cater to.

Big companies need to adhere to a product development phase that is much slower. Competitors can easily surpass them in the time that it takes to perfect a product. This reduces the differentiation that the company could have used to get ahead.

Research can help bridge this gap. They can use exclusive market research reports to evaluate where they stand in a market. With this viewpoint, they can understand how fast their product iterations need to be, if any. They can even focus on what’s more important to them and what needs changing, like pricing, derivative product offerings or if the product requires redesign.

Big companies and start-ups benefit from research in this way:

The main reason are the risks of loss. Startups always need to revise their product offering several times. It’s because they launch a product immediately, usually without the prerequisite research to define a particular set of customers. They don’t want to invest in understanding who their customer is, as it’s assumed that they already have buyers.

The general thought is that capital will be better utilized in building or developing the product and not business plans.

Bigger corporations do have plenty of capital, but don’t have the time to gather individual customer feedback, expert opinions – they use market research for that. They’ve also got a much bigger, commercial level market too and research agencies are the feasible approach.

To set long-term goals, prevent cash overspending and actually sell a product in the market, companies need to have plans – detailed plans, which can only be developed once they have the right data.

Unlike start-ups, they are focused on improving a product and price points and not on proving how many consumers they have for their respective products. Only detailed data, collected and assessed using precise parameters, enables them to do that.

Having the right market research partner can prevent costly mistakes or the failure of startups. It’s the tool that’s required for getting that game-changing business strategy that could make all the difference.