Latest Questions in Business Finance And Loans

Will Li answered a question

How do you choose the best business loan for your business?

I was talking to a friend the other day; getting the right business finance is hard. With so many loan products on offer, how do you go about selecting a product that is right for your business? Is it the bank or financial institution and their reputation, or perhaps it's the features you look for (e.g. overdraft, line of credit)? Are there other considerations or experiences you've had that we should know about?

Will Li

Will Li, Director at SF Capital

This is a complex question to answer as the solution is highly dependent on your situation. i.e. do you have a residential/commercial property that you are will... read more

This is a complex question to answer as the solution is highly dependent on your situation. i.e. do you have a residential/commercial property that you are willing to use as security? Are you looking for working capital facility, or trade finance facility to buy stock, invoice financing facility to manage cashflow, or are you looking to secure a business loan to buy an existing business? In addition, there are many different policies and niches at each bank/lender on what type of loans they are willing to give out to SMEs. The number one key to secure financing on competitive terms and rates is to be able to match your individual circumstances with a bank that has the risk appetite to lend to you for your business needs. The second most important thing to consider is how to present yourself to the bank/lender, the same set of information can be presented in different ways and yield vastly different results.

At the end of the day, it's always good to speak to a professional about securing business loan as they are vastly more complex than a residential homeloan and banks/lenders have significant discretion on whether they are willing to provide the loan or not, so it's not a matter of ticking the boxes and putting in an application form, a lot of care and finesse needs to go into the application to ensure financing can be secured competitively.

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Gregory Ferrett

Gregory Ferrett, Editor at Monday Motivational Moment

Hi Liam, If you are selling higher value items to clients you may want to consider offering your clients finance. One small business I know sells thongs (yes ... read more

Hi Liam,

If you are selling higher value items to clients you may want to consider offering your clients finance.

One small business I know sells thongs (yes - shoes) to small retailers and offers 6 months interest free finance for their stock while getting paid the very next day and not wearing the risk of factoring (where you still own the debt after three months). This allows him to win a lot of new business and get stock on shelves without owning the finance risk.

Try Scott McNally at ASM Money 0438 680 898 and use my name as an introduction or email me and I can send over more details

Greg Ferrett

 

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Lisa Ormenyessy answered a question

Lisa Ormenyessy

Lisa Ormenyessy, Business Coach and Marketing Specialist at Straight Talk Group

Mick, I agree with Jef and Adrienne, may I also suggest some entrepreneurial pitch meet ups in your area.  This can be a great place to get your pitch righ... read more

Mick, I agree with Jef and Adrienne, may I also suggest some entrepreneurial pitch meet ups in your area.  This can be a great place to get your pitch right and to uncover any objections, issues or scenrios you may not yet have discovered.  Good Luck!

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Adrienne McLean

Adrienne McLean, Founder at The Speakers Practice

There is an international not-for-profti organisation for entrepreneurs - TIE International. This organisation is normally run by investors and "angel... read more

There is an international not-for-profti organisation for entrepreneurs - TIE International. 

This organisation is normally run by investors and "angels" - these are the types of people who are on the committee to run the TIE group. 

I have been a member of TIE Sydney - they run all sorts of networking events, advisory groups, 1:1 mentoring. They run a fabulous "Pitching " competition and go through how to structure a pitch when looking for capital from investors. The winner of this pitching competition goes to Silicon Valley and pitches with the other international competitors. 

TIE International members - from the investors side - help startups with information, they are also there looking for great ideas. Associating with this group can really help from an information viewpoint, meeting with investors and talking with them about how to source funding and basically networking - you never know who is in the room that might be interested in your idea. 

Learning from investors who have been there, is really valuable. Look for your local TIE International chapter or for Startup networking groups - there will be investors in the room.

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Jef Lippiatt answered a question

Jef Lippiatt

Jef Lippiatt, Owner at Startup Chucktown

Helena,Each bank may have their own requirements but there are some key pieces of information that you'll do well to include.Your personal investment - How much... read more

Helena,

Each bank may have their own requirements but there are some key pieces of information that you'll do well to include.

  • Your personal investment - How much of your own money have you already put into getting the business going? (banks will want to know that you are dedicated to making it happen)
  • Your applicable skills and experience - This goes for you and anyone else on the team. Speak to your expertise and experience. Also mention anyone else on the team with deep knowledge of the industry. Mention any mentors or advisors that are helping you either personally or as part of your board.
  • Be specific about amount needed - Be as specific as possible with the amount of money you are looking to borrow. You don't want to get a loan that doesn't give you enough capital to expand or accelerate. You also don't want to over-borrow and be stuck with huge monthly loan payments.
  • Be specific about how it will be spent - Be clear about what all the money is earmarked for once you get the loan (employee salaries, necessary equipment, office space, etc.).
  • Mention community impact - Be vocal about how your business will positive impact the community (planned jobs created, if you are revitalizing a vacant / old building, how you will give back to the community either through donated time or money, etc.).
  • Revenue / Profit Projections - Many institutions will want to see your planned revenue and profit projects in intervals (6 months, 12 months, 3 year, 5 year). Keep in mind the further out you go the less accurate these numbers will be. However, do your due diligence and base it on industry information and research).
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Neil Steggall answered a question

How far ahead should we plan to approach potential investors etc, for money to get the business started?

That is, when you business is still an idea in formation (as ours is) how far ahead should I approach people for money? What should I have done, and put in place before it's a good idea to connect with potential investors?

Neil Steggall

Neil Steggall, Partner at Wardour Capital Partners

I would suggest that the issue of investor funding and your required levels of future equity should form a key part of your initial business thinking, planning ... read more

I would suggest that the issue of investor funding and your required levels of future equity should form a key part of your initial business thinking, planning and strategy and be detailed and factored into your plan and budgets.

Waiting until investor funds are needed is usually too late and the business risks stalling or failing.

Most investors are happy to be approached at an early stage of thinking, they have much to gain by investing in a winning idea and so they will most likely be prepared to offer help in developing your plans, speaking to banks and even bringing along other investors.

Early stage investors also make great business mentors or advisory board members often bringing on board many years of experience and knowledge.

Look at it this way....would you jump in your car and set off on a lengthy road trip without first checking you had the fuel and cash to complete the journey?

Good Luck

Cheers,

Neil.

Lisa Ormenyessy

Lisa Ormenyessy, Business Coach and Marketing Specialist at Straight Talk Group

Great Advice and Spot on Neil "Early stage investors also make great business mentors or advisory board members often bringing on board many years of experienc... read more
Great Advice and Spot on Neil "Early stage investors also make great business mentors or advisory board members often bringing on board many years of experience and knowledge." Ava, consider outside advice from mentors/early stage investors etc as great navigators. Your road map may be able to be considerably shortened saving you both time and money and achieving your goal much quicker. Or dare I say it - they may also be able to save you years of pain from going down a road that leads to a cliff. The good news is that these types of people in the business community are generous with their advice and care for the enthusiasm of the start up entrepreneur. Good Luck!
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Jessica McGrath

Jessica McGrath, Marketing Consultant at Stoke Marketing

Not a definitive time but think like the investor. What value would they like to see in your product to make it worthy of investment? Have you got "skin in the ... read more

Not a definitive time but think like the investor.

What value would they like to see in your product to make it worthy of investment? Have you got "skin in the game". Show how much effort? What are the $ for? What makes your product different and appealing to gain traction in the community. Show them this and either the tangible product or a prototype, or the service offering at the least. Show them what problem you are solving and why it's an awesome and compelling solution. Who are you competing against. If no competition, then why would someone want your solution if they are existing with no solution at all. When is a return on investment likely? What's your forecasted uptake? How did you work that out?

Just some thoughts.

Best of luck!

Jef Lippiatt

Jef Lippiatt, Owner at Startup Chucktown

I'd say additionally that you want to show that your product or service is being used. Record and track the number of people signing up for your service, the nu... read more
I'd say additionally that you want to show that your product or service is being used. Record and track the number of people signing up for your service, the number returning, the amount of money they are paying (1 time or recurring). If you have secured any agreements with businesses to use your product or service, mention that and the amount they were willing to pay. It has often been said "ideas are worthless". Why? Because an idea that is never implemented isn't making money therefore has no monetary value. Execution and implementation are both key. Be sure to differentiate yourself from competitors. Offer something different and meaningful that adds value to customers and can add to your bank account.
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Jef Lippiatt answered a question

As a startup who has a new product to develop and sell, what is the best way to seek funding?

If a person or company has designed and created a new product (not tech) and needs to aquire funding to manufacture and launch to market. What are the best avenues for the start up to approach?

Jef Lippiatt

Jef Lippiatt, Owner at Startup Chucktown

Suzie,I would suggest looking into crowdfunding websites such as Kickstarter, Indiegogo or others. They can be great places not only to gain funding for your pr... read more

Suzie,

I would suggest looking into crowdfunding websites such as Kickstarter, Indiegogo or others. They can be great places not only to gain funding for your product, but also to validate that you have correctly positioned your product and that the market is reacting favorably to a product that isn't even available yet.

You will need to think hard about a launch strategy as well as what type of rewards you're willing to setup at the different tier levels, but all of that can set you up for a successful campaign. Also clearly explaining or demoing the product in a video can really increase the audience understanding and value proposition of the product.

I would also recommend that if you are interested in pursuing this avenue, that you browse the different platforms to find out which one is bet suited to your product, as well as research some successfully funded campaigns and see what you can learn from them to apply to your own.

Suzie O'Leary

Suzie O'Leary,

Thank you for your insightful answer Jef :-)...I'm now off to do some research on crowfunding.... read more
Thank you for your insightful answer Jef :-)...I'm now off to do some research on crowfunding.
Jef Lippiatt

Jef Lippiatt, Owner at Startup Chucktown

Your welcome. I look forward to hearing the outcome of your research and the future direction or the project.... read more
Your welcome. I look forward to hearing the outcome of your research and the future direction or the project.
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Gregory Ferrett answered a question

What is the best way to get finance for software?

As a small and new business part of what I do requires a software product that I pay for at moment.  I want to finance the software and stretch it out of a few years instead of the payment plan of 12 months that I am on now, has anyone had any experience in getting software finance and what are the best ways to approach getting it?  Is there any finance companies that specialise in software finance?

Gregory Ferrett

Gregory Ferrett, Editor at Monday Motivational Moment

Hi Shaun, I use ASM who offer awesome finance solutions for small businesses. No worries with software rental - as long as it is under $50,000 Scott McNally 0... read more

Hi Shaun,

I use ASM who offer awesome finance solutions for small businesses. No worries with software rental - as long as it is under $50,000

Scott McNally 0438 680 898 and mention my name.

Greg Ferrett

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Phil Joel

Phil Joel, Director at SavvySME

Shaun, what I know is that many large software / hardware companies such as Microsoft, Oracle, Intel, etc can potentially offer financing to their customers if ... read more

Shaun, what I know is that many large software / hardware companies such as Microsoft, Oracle, Intel, etc can potentially offer financing to their customers if the solution includes their products. Your product appear to be very specialised so somebody like Flexirent is unlikely going finance it.

I did find this other link which could be worth investigating:

Relion Finance

 

Shaun Goethals

Shaun Goethals, Director / Principal Consultant at IT System Solutions

Thanks for your responses, the software company that I have purchased from has allowed me to pay monthly so I can use the software, but only over the next 12mon... read more
Thanks for your responses, the software company that I have purchased from has allowed me to pay monthly so I can use the software, but only over the next 12months they do not finance themselves, so I will need to go out to a bank or use a broker which is the hard part because being a new business you don't get much look in.
Eva Colbran

Eva Colbran, Novated Account Manager/BDM - Commercial at stratton (Stratton Finance Pty Ltd)

Software only finance is difficult to obtain, as you mentioned a new start up business as well. There are lenders who do fund software, however, they do look f... read more
Software only finance is difficult to obtain, as you mentioned a new start up business as well. There are lenders who do fund software, however, they do look favourably on large commercial or registered software. ie SAP etc.
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