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?

8 Benefits of an Online Business

People see internet business through an extremely narrow lens. You’re either flogging your stuff on eBay or you’re trying to make it big and be the next Mark Zuckerberg. The reality is that there are hundreds if not thousands of different ways in which you can do business online. There are tons of different business models that cater to any goal or ambitions that you might be thinking of taking whether its selling other people’s products online as an affiliate or creating your own products and selling them yourself, or maybe you just want to use the internet as an extension of your already established offline business. The possibilities are endless!The internet is a global population full of enthusiasts of all kinds looking for solutions and products to solve their own personal problems. It’s a global market in which everyday people can take advantage of, all they need is some sort of value to give, or skills necessary to guide people to value that somebody else has created.The Benefits of an Online BusinessLow Start-up Costs:If the entrepreneur deep down has been calling out to you, you might want to consider the start-up costs on an online business. In comparison to a traditional “Bricks and Mortar” businesses the start-up costs are substantially lower for an online business. A business owner who launches their ventures online enjoy a substantially lower start-up cost than those who choose the offline approachThe “real World” business owner must pay for commercial space, physical inventory, printed stationary and allot more. As an internet business owner, your only real expenses will be your domain name and hosting account. Even if you do need to buy inventory or maybe your outsourcing technical skills to get things started your overall start-up cost will be incredibly lower than your offline starting costs.Increase In Earning Potential:If you’re employed full time or working your way up the corporate ladder, your earnings are determined by the amount of hours, and position your in. The time it takes to double your income would be obscene in the offline world, (not impossible, But defiantly harder) say you’re making $80,000 a year, how long do you think it would take to make that $80,000 to $160,000. My guess is a very long time.
Online if you learn to sell one product you can teach yourself to sell 50. If you create 1 successful business what’s to say you can make another, or maybe a few more. There’s a whole market for website flipping. People make a living off creating websites and online businesses and flip them for people who want a business that already has market traction. The truth is that the sky is the limit for your online business.Job Security:When you learn the skills required to sell products online, or create some sort of online revenue the chances are that you’ll be able to repeat this process. If you’re willing to learn the skills necessary to take your business to the next level is up to you. There’s not going to be a shortage of affiliate programs or people online to sell to.Wider network clients and buyers:If you were to start a business in your country’s capital city or the most populated city in the world, you would be pretty confident that the earning power of your business would be astronomical. There are people making a killing in your local cities with successful businesses. Now imagine how many people are online, online you have access to a huge global network of clients and buyers.Online you don’t have to compete against other agencies in your area for the same small pool of customers and clients. Instead you have access to an enormousness pool of people in which you only need the tiniest fraction to make yourself an incredibly comfortable living. You’re free to think as big as you want online. There’s no shortage of people or market space.Free Time:Wouldn’t you love to have the time to do the things you want in your weeks and days? I remember watching some of Ray Higden’s videos about his story of when he was in corporate America. He says he spent more time with picture frames of his kids then actually seeing them.Don’t you hate having to wait for traffic, taking orders from a boss, asking permission for taking holidays? Having an online business fixes all of this. You’re able to work at home when you have an online income. You can spend more time with your family, spend time traveling and best of all having the time to do the things that you want to do.Your business is open and running 24/7Instead of the 9-5 opening hours of the traditional “Brick and Motor” shop, when you set your business up online its open 24 hours a day, 7 days a week, 365 days a year. You can literally make money while you sleep! You do the work upfront and then you reap the rewards long after you’re done.You’re even able to automate most aspects if not all aspects of your business depending on your business model. There are endless amounts of products available to help automate your business. By doing this you can turn your online business into a valuable asset that will provide for you constant passive income.Freedom to Work from AnywhereYou physical presence doesn’t matter when you’re working online. As long as you have a laptop and an internet connection you’re able to work from half way around the world if you want. Where you work is totally up to you, whether it’s in your favorite coffee shop or if it’s while you’re on holidays the decision is totally yours!The Satisfaction of working for yourselfMy opinion is that creating your own business or enterprise beats working for someone else or underneath someone else. The satisfaction of creating your own income and knowing that it’s you that’s in charge of your pay check infinitely more fulfilling then being another cog in the corporate machine.The principles of Online business success is the same as any offline business. You have to have a great idea, have a good solid business plan and there should be a value proposition for potential clients. With the increase in new technologies getting your business online is become easier and cheaper. The best time to start is right now!If you enjoyed this article or this article helped you in anyway please re-tweet or comment.Andrew

Pharmacy Technician – A Closer Look

In the not so distant past when you walked into a pharmacy needing to get a prescription filled you would have, in most instances, found that your prescription was actually filled by the on duty pharmacists. However, over the past few years a change has occurred in the pharmacist arena and that change is, “a pharmacist probably no longer filling your prescriptions”. Although pharmacists are on duty wherever medications are dispensed; today in most instances, a pharmacy technician or pharmacy assistant are the ones filling prescriptions.Pharmacy Technicians and assistants have existed for some time but their roles have evolved for a variety of reasons. A big reason is that they help to reduce health care costs because they get paid much less than a certified pharmacist. Another important reason is that it simply makes sense. Pharmacy technicians and assistants are trained to handle routine work (fill prescriptions and customer service), which frees up the pharmacists to focus more of their time on supervisory duties, as well as patient care.Melissa Murer, Executive Director of the Pharmacy Technician Certification Board, put it this way, “Pharmacists are becoming more focused on patient care, so pharmacy technicians are needed to perform more of the distributive functions.”In this brief (but hopefully informative article) I attempt to demonstrate what pharmacy technician and assistants do and where they do it.In general, they assist licensed pharmacists in providing medication and health care to patients by preparing and filling prescriptions and performing clerical tasks. Duties are similar but pharmacy technicians generally have more responsibilities. In addition, technicians and assistants are required to be closely supervised by a licensened pharmacist, although the laws defining what “being supervised” entails, varies by state.In addition to having all of their prescriptions checked by a pharmacist, technicians and assistants must also direct all patient questions regarding drug information, health matters or prescriptions to the pharmacist.Pharmacy Technicians
Technicians follow specific procedures when filling prescriptions. After receiving an initial prescription or refill request, they must verify that the prescription information is accurate and then count, pour, retrieve, weigh, measure and if necessary, mix the required medication for the prescription. The next step is to prepare and affix the labels to the proper container. After filling the prescription the technician will then price and file it. Another important aspect of a technician’s job is to prepare patient insurance forms and establish and maintain patient profiles.In retail pharmacies, technicians will also stock and take inventory of medications (both prescription and over-the-counter) maintain equipment and help manage the till.In many hospitals, technicians have the responsibility to read the doctors orders from a patients’ chart, prepare and then deliver the medication after it’s been checked by a pharmacist. They may also enter information about patients’ medical records (regarding their medications) or put together a supply (normally 24 hours) of medicine for patients, including the labeling and packaging of each dose. But just like technicians working in a retail pharmacy, each package is checked by the supervising pharmacist before being given to a patient and they also maintain inventories of medicine and other supplies.Pharmacy Assistants
Duties are similar to pharmacy technicians and while hospitals and pharmacies employ pharmacy assistants, the number of available positions is generally less than technicians. In retail pharmacies they work as clerks or cashiers, answer phones, handle money and perform clerical duties. In hospitals they also deliver medications and assist in stocking shelves.Pharmacy technicians and assistants work in clean well-organized areas but are required to spend most of their workday on their feet. And because more and more pharmacies are open 24-hours a day work hours can vary with technicians and assistants are often required to work odds hours (nights, evenings and weekends). Therefore, there are many opportunities to work part-time in 24-hour pharmacies. In addition, a percentage of both technicians and assistants work part time because they are studying to become pharmacists.States have traditionally required a one-to-one ratio of pharmacist to technician but that is also expected to change. Mark Boesen, Director of Government and Student Affairs for the American Association of Colleges of Pharmacy, has stated that: “Many of the major employers of technicians are expanding the number of their facilities and boards of pharmacy in some States are allowing the legal ratio of technicians to pharmacists to expand. This is a very promising field to work in.”An increasing demand for technicians with greater responsibility has prompted some States to revise their one-to-one ratio of pharmacist to technician to two or three technicians per pharmacist.As pharmacy technicians take on more and more tasks previously performed by pharmacists, they must also learn and master new technology. A good example is the increased use (by many pharmacies) of robotic machines to dispense medicines. Technicians will be required to oversee the machine, stock bins and label containers.This article may be reproduced only in its entirety.