Key Points Entrepreneurs Should Know about Small Business Finance Transactions

There are entrepreneurs who start their businesses with the purpose of seeing their ideas come to fruition, to prove their worth and make a profit on the side.  Unfortunately a lot of them rush into making business loans without reading the fine print.  This may be because they were never into finance in the first place or that they find money matters a little too trivial compared to “the next big thing” they have up their sleeve or that they are just too eager to start the business, they will accept any deal being offered them. 

The truth of the matter is that there are a lot of small business owners who discover that they could have done things differently when it comes to their small business finance dealings.

Total Loanable Amount

The estimated budget for any business project should at least fall well within the value of the collateral and not substantially below it.  If the small business finance facility does not require collateral, then the loan amount should come close to what is needed and it is important not to go overboard either. 

Revolving Credit Line

Remember that you still pay interest on and excess cash from the loan. If you wish to have a revolving capital and would want to pay interest only for the loan amount actually being used get a credit line facility instead of a lump sum loan.

Penalties and Surcharges

Small Business Finance services have fixed interests, which are what you pay for the temporal use of other people’s money. But before signing and agreeing to anything, pay close attention to the penalty rates and surcharges.  Everyone thinks positive and hopeful at the threshold of a new venture, but the wise prepare for any eventuality.  Inquire about the extra charges in case you fail to meet an amortization deadline. Let the reality sink in first especially of the collateral is something you value.

Amortization and Interest

When aspiring entrepreneurs are presented the initial computation for the small business finance facility, they tend to look at the monthly amortization often ignore the total debt amount. It is usually presented by the small business finance provider after the loan is approved and the documents and promissory notes are prepared for signing. Remember that if the loan interest is at 2% per month, it is 24% a year and 96% in 4 years. That is almost double the amount of the loan amount. 

Alternatives

Small business finance sourcing do not have to come from traditional financing institutions.  Inquire about Merchant Cash Advances, Business Cash Advance and Unsecured Loans.  These alternative financing models may be better suited for your needs. 

How to Sell a Business – Steps To Make a Profit

Business owners sell for many reasons and somehow, these reasons correlate with the possible outcome of the business sale.  For the most part, reasons are personal such as retirement, health issues, partnership problems, relocation, being burned out and still others who just find that there is another more profitable or challenging venture.  Whatever the reason is most people who sell a business wishes to sell at a profit – the bigger the better, of course. 

Step 1.  Determine the value of your business.  Knowing how much the business is worth is a good starting point.  It will also give you an idea if you can sell a business as it is or if you can make changes to improve the value. You will need an accountant and a financial adviser.

Step 2. Prepare for the sale. Based on the valuation and advice, start cleaning house.  Do the necessary improvements from operations, structure, and financials. Prepare documents – bank statements, financial statements, client lists, supplier lists, inventory lists, lease documents etc.  It is a good idea to bank all sales to boost cash flow profile even if it means you pay higher taxes.  Higher verifiable profits add value to the business.

Step 3.  Put together long term business plan that includes a marketing plan.  When you sell a business, you need to present a profitable future for it.  It gives prospective buyers and their investors a positive perspective.  Remember that they do not value your business the way you do.  You may be proud of where it has been and its performance means a lot to you while buyers put weight on its potential profitable future.

Step 4.  Choose a business broker with a marketing plan.  Do check credentials and referrals, however, when interviewing for the right business broker it is important that the business broker is able to present his marketing strategies and timeline.  Ask how he will be able to ensure confidentiality and at the same time advertise the business to the right buyer. Inquire how long it usually takes him to sell a business.

Step 5. Choose your buyer well.  Your choice will depend on what your goal is. Is it profit or the assurance that your business will continue as you wish it to?

Step 6. Be prepared for the sale.  When you sell a business, be emotionally ready too. Work out the possible negotiation issues with your business broker, lawyer and financial advisor.  Aim for a smooth exchange of ownership. 

Small Business Finance – How It Can Work For You

Most small businesses start with some form of small business finance facility, often drawing collateral from the owner’s personal assets.  Because of this, most owners pay closer and more personal attention to their businesses. It is also for this reason that most small businesses are single proprietorships. However, access to small business finance facilities is much more difficult for a small business.  Conventional financing institutions such as banks find that small businesses have very low survival rates and are therefore high risk clients.  This is no cause for despair h however, because there are alternative ways to get the needed funds.  Business cash advances and small business loan without collateral are just two types of small business finance facilities that are easily accessible and features a lighter payment scheme.

                These newer funding facilities do not require business plans or extensive financial statements and near perfect credit scores but they do evaluate their applicants based on capacity to pay and the current market conditions.  It is up to you to determine how much you need and how much of your profits you are willing to part with. This is why a closer analysis of your cash flow is as important to you as it is to the financiers. Understand that you have to add another cost to your operations which is cost of money. 

                It is also crucial that prior to applying for and small business finance facility, you have already determined the loan amount that you will require.  It is a mistake to underestimate your funding needs.  It is better to give allowances than end up with an incomplete project, which could translate to loss of profits. 

                It is also not a good idea to overestimate the funds you need.  This could add unnecessary burden to your business and put a strain on your cash flow.  The higher the amount borrowed equals higher cost of money, a cost that does not generate income.

                Small businesses tend to renew their loan account after a complete loan cycle.  This is why it is important to review the business’ performance before the loan cycle ends.

                Small business finance is about helping small businesses overcome the challenges of daily operations, the hurdles of innovation, research and much needed marketing to boost sales and market presence.   Financing companies recognise these needs and have found ways to make access to funds easier and even easier to repay.  Growth for small businesses also means the growth of the institutions that finance them.  

Five Reasons Why You Need Business Brokers

Not all business sale transactions conclude with a positively profitable outcome for everyone.  But when they do, it is because the business broker did his job well and at a timely manner.  When it is time executing your exit strategy, it is much more advantageous if you let an expert work with you.  It ensures smooth transactions from start to finish, with an outcome that you are very happy with. 

1.       Business Brokers can help you prepare your business for sale.  Because they have the experience, you can benefit from the advice they can give you.  This will help enable you to reach the full potential of your business as a viable business venture that is attractive to Sydney’s buying market.

2.       Business Brokers have access and insight into the Sydney business market.  There are hundreds or even thousands of businesses up for sale and there are enough buyers that are interested to buy.  The tricky part is to match the right buyer to the right seller.  This is an insight to which business brokers are privy to.  Selling your business without a broker may very well end with an unfavorable match which could end in regret.

3.       Business Brokers close deals in time. The amount of experience in the Sydney business sales market allows business brokers to breeze through the whole process in record time.  This is because they have streamlined the work and have already eliminated unnecessary steps.  

4.       Business Brokers already have a network of people required to close the deal. This is one of the reasons why business brokers are able to complete transactions in time aside from direct access to the market. They already have a network of trusted lawyers, accountants and consultants.  They also have a good relationship with Sydney’s financial institutions. Building this network and forging this level of trust takes time.  The good news is that you have access to this network if you sign up with a Sydney business broker.

5.       Business Brokers have the negotiation skills needed to get the best terms. Skills are learned and perfected over time and it is the same with sales and negotiation skills.  Sydney’s market is as diverse as its population.  Negotiations are based on the needs and goals of both buyers and seller. Coming up with the best terms for both parties is seldom achieved without the expertise of a business broker.  It is his job to “sell” your business and make it look good for the buyer; it is also his job to close the deal without compromising your projected sales.

Business Cash Advance – How it works

Small businesses need funding as much as big corporations does but the business loan models that work for big corporations usually are not applicable to the needs of most small businesses.  There was a time when financial institutions like banks and credit unions process most business loans universally. A large portion of the existing small business and startups’ funding needs are not met, others are overburdened by the monthly payments and tight policies that they have no choice but to close down. 

About a decade ago, the business cash advance loan structure was introduced and while it was met by much skepticism by economists and financial analysts.  Small business owners however, found that it was just the right kind of small business funding that they require.  The business cash advance is similar to a payday loan but the process is tailored specifically for small businesses.   For one, the application and evaluation process takes days and not months and the minimum amount loanable is manageable enough for any small business to handle

What is usually required?

While the business cash advance facility is design to make access to funds easier and faster, there are a few qualifications in order to make the whole process work.

·         The business should have an EFTPOS (electronic funds transfer at point of sale) to process payments.  Should be able to accept major credit cards or preferred cards by the financing company. This is needed because the payment is made on a daily basis through the debit/credit card processors.

·         A minimum monthly credit card or debit transactions. This rate varies depending on which business cash advance provider you approach but it is usually somewhere between $5,000.00 to $10,000.00 credit card/debit card sales per month. 

·         The business should be operating for a minimum of 12 months. This allows the provider to assess cash flow and allowable cash advance amount.

·         The usual businesses that may take advantage of this type of funding source are those who transact daily such as restaurants, retail stores or gift/novelty shops, bakeries, salons etc.

How it works

Approval is usually within a period of 5 to 14 days, and the business owner is given a lump sum which may reach up to 100% of the total monthly sales.  There is an agreed percentage which is automatically deducted from the daily sales and payments are automatically debited to the business cash advance provider’s account.

There is no interest rate, no fixed payment term or payment schedule.  The length of the term will depend on your sales.  The higher the sales, the faster the “loan” gets paid.   

Preparing To Sell Your Business to the Right Buyer

So you have worked hard and are very proud of the enterprise you have established.  For people like you, the business is already a part of who you are and a point of pride.  The decision to sell the business will have an entirely different from someone who wishes to sell for a profit. For people who are considering retiring and selling the business is the only option, it is a good idea to prepare the business in order to attract a wide variety of prospective buyers.  The more prospects you attract the better chances of finding the right person to take your place. 

·         Make yourself obsolete – Make sure that the business can run on its own.  Standard operating procedures should be in place and the best way to do this is to document everything.  Documentation is a very useful tool in daily operations, whether it is manufacturing or trading or in sales.  There should be an existing database from clients to inventory or just how things are done.

·         Make sure your financial documents are up to date – Businesses are evaluated based on numbers.  Most buyers go straight to the audited financial statements and as a seller; you have to make sure they are as attractive as it can be.  There are businesses that minimize their taxable profits but while it may be good for your business, it does not give the buyer an actual picture of how your business is doing.  So prepare your financial portfolio 2 years ahead of time and start recording your actual profits.

·         Create a business plan as if you are not about to sell it. – This gives your buyer a better view of their future if they decide to purchase.  If you have this ready, it is easier for them to decide.  They may make their own feasibility study but your input will definitely speed things up.

·         Feature your core values in your business plan – if you really want to attract a buyer who share the same principles as you have established, this feature in the business plan is sure to attract the ones whose business objectives are aligned to yours.  This would ensure a better transition a as if management and ownership has not changed especially if you wish to secure the tenure of your existing employees.

·         Sign up with a business broker who values your objectives as much as they value the sale - You should keep this in mind especially if you are selling primarily to ensure that your business is intact when you retire.  Letting go difficult but if you know you are leaving everything to the right people, it would not be such a big deal at all.

What to Expect From Business Brokers in Sydney

 

So, you’ve decided that it is time for a change and selling your business is on the list of changes you need to make.  Although Sydney is a densely populated city of about 4.3 million residents, there are probably thousands of prospects for your business, it should be top priority to look for the right business broker to market your business for you.

Sydney is New South Wales’ business center and you will probably find quite a number of them and the choice would probably be a tough one, unless you know what to expect from them. 

·         You know you are talking to the right people when they are open with their marketing approach and are open to give you advice on how to prepare your business prior to selling so you can get the best possible price for your business.

·         Successful business brokers take time to know you and your business before even asking you to sign a contract.  This is how you know that they want to try and sell your company based on its value and not on the basis of the current buying offers.

·         Companies that guarantee a sale within a certain amount of time may seem too good to be true, but there are business brokers who offer this.  They do so because they have a proven system for marketing and selling businesses and they know the Sydney business market well.  They also guarantee that the agent they assign to you is able to do his job 100% of the time which is to sell your business.  Business sourcing, marketing and enquiry handling is handled separately by someone else. 

·         Successful business brokers in Sydney are most likely to have a comprehensive database on the potential buyers, sellers and list prices.  This means they have a baseline on where to go and who to start calling for possible leads.  Their network and relationship with the market is well established that sales go smoothly and in a timely manner.

·         Confidentiality is also one of the more important qualities in business brokers that should be expected.  Ask the business broker how they ensure that everything is kept confidential during the whole selling process.

The main goal in selling any business is to get the best possible returns for the business you worked hard to establish, and to ensure that it continues to grow is how you and your broker choose the buyer. It is therefore crucial that the business broker you hire has the capacity to get you the best price as well as the best possible buyer.

Why Use an Insurance Tender Manager?

The success of the tendering process relies on the expertise of the people handles and manages it. Contracting Insurance Tender Managers allows a company to access their market knowledge and experience for the whole tender process and relieves the company of the otherwise grueling paperwork, analysis and research and constant communication. Most of the problems that companies generally encounter can be avoided by using a tender manager. 

How it works: 
 

Determining Goals and Selection Criteria

An initial meeting occurs between the tender manager and the company to discuss expected outcome of the tender process based on the company’s needs and determine the key selection criteria.  A shortlist of relevant brokers based on the discussion is created. The Tender Manager’s knowledge of the market and the major players in the industry ensures that the shortlist is relevant and the most favorable.

Request for Tender Document (RFT) and Compiling Information Memorandum 

Using the outcomes discussed and agreed upon the tender manager will develop an RFT that will clearly outline the requirements This would ensure that the outcomes are achieved using the key selection criteria as a guideline. An Information Memorandum is compiled with all the information necessary to get necessary tender response including underwriting information and company profile. This reduces the amount of time spent further into the process responding to questions as well as ensuring that all parties have the means to put forward their best tender. 


Managing the Tender Process

The Tender Manager represents the company as a project manager. The main task is to ensure that everyone involved are provided with the same information and expectations that all timelines are met on both sides. Much of the correspondence is also handled by the Tender manager.

Analysis of Tender Responses 

All responses are then compared and analysed and filtered through to distinguish which ones are relevant to the company based on the key criteria. Probable presentations are also
screened and evaluated considering most presenters are sales people and not brokers themselves.

The Favorable Outcome

The client company is then presented with choices that are considered to be the best insurance policy the market has to offer based on the company’s needs and priorities. And outcome is delivered in a timely manner leaving the company to choose wisely.

About Insurance Tender

Is a team insurance consultants who have an in depth knowledge or both insurance market and personalities in Corporate Insurance booking. They aim to find the right combination of cost savings and insurance coverage for the purpose of reducing cost risk and uncertainty in your business.

Dealing With Tradies - A Bargain Is Good but It’s Better to Verify

 

Who can resist a good bargain? It’s the thrifter’s kryptonite.  But when it comes to hiring traders to do a service whether it’s plumbing, electrical or building decks at home, a trader on bargain is not always a good thing. If you skip the essentials like verifying facts, you wind up paying for more than when you do things right at the first time at regular rates.

Good Deals are even better with Credentials

The reason why licenses are required by Australian states is to ensure that you protect your interests. Licenses are given to tradies with proper insurance and experience and that translates to better and smooth service.  When someone offers a certain service at half the price, it’s usually to lure you on the savings you may get and away from the fact that the trader is not legitimate.

Beware of Scammers

Yes, there are wolves out there. And forget about the wolf in sheep’s clothing, it’s more like the wolf in your Grandmother’s clothes.  They will try to gain your trust so you will part with your hard earned money in their favor and leave without doing the job. Legitimate businessmen do not need to entice their clients incessantly.  Tradies with a good track record usually build their client base through recommendations - lack thereof means they are not trustworthy.

A Business with No Sign Is a Sign of No Business

There was a time when advertisement starts and ends with a wooden sign right above the front door of business, nowadays, that sign has expanded to websites complete with profiles and contact numbers.  Tradies who advertise their business or trading profile along with their phone number and office address is an indication that they are willing to accommodate you anytime whether you seek service or complain.

Business Checker Verified Businesses

The Australian Securities and Investment Commission (ASIC) website provides Australians with a list of registered business names.  Finding the business name of the trader you have in mind in the National Names Index is a good start.  What the list does not give you is if they have insurance, proper trade licenses and if the contact number and addresses are correct.  If you are looking for a legitimate trader with proper qualifications, check out the Business Checker list of business with good or high rating. 

BusinessChecker is an independent business credential checking service that rates businesses based on their qualifications.

Australian Beef Exports

 

Brief Beef History

            The Beef Industry in Australia has a reputation of producing high quality beef.  It had its beginnings in 1788 when the first herd of cattle was brought into the country to aid in in its development.  Unfortunately, they escaped and was scattered but their numbers grew rapidly until cattle farming became commercial. In 1850, the demand for beef increased as the gold rushes in Australia became rampant.  Today, the total number of livestock in Australia is at 28 million head spread across 200 million hectares of land.  This number is relatively minimal on a global scale but Australian Beef exports are at 60 percent of total production.  This places the Australian beef exports at the second largest beef exporter behind Brazil.

Key Facts and Points

·         Total Herd Size                       - 28 million head

·         Beef Exports                           - $5 billion

·         Live Exports                           -$600 billion

·         Total Export (%)                     - 60 per cent

·         Number of Cattle Producers   - 40,000

·         Largest destination market for Australian Beef Exports are

1.      Korea

2.      Japan

3.      America

·         Australian beef exports come from a variety of breeds depending on market specification and how they handle climatic conditions and these are:

1.      Bos Indicus breed – Brahman

2.      Bos Indicus breed – Santa Gertrudis

3.      Bos Taurus breed – British Angus

4.      Bos Taurus breed – Hereford

5.      French Charolais

·         Australian beef exports have more advantage in the fact that the produce is traceable and it has decease free status which gives the beef industry a strong competitive advantage in the world market.

The Australian beef industry is distributed between the northern and southern production system.  Southern production has the more disparate and fragmented farm ownerships while the northern production is predominantly corporate owned. In addition, cattle produced in the south is of the European and British breeds which produce favorable quality meat and are typically exported to high value markets. Cattle in the northern part on the other hand are processed and sent to the US to be used as hamburger meat.

 

Challenges and the future

            There is an increasing demand for protein and Australia’s beef industry is more than capable in meeting the demands of the market.   Australian beef exports have a clean and green image and the industry’s significant investments in efficiency and productivity improvement in the field of genetics, pastures and marketing ensures a bright future for the Australian Beef industry.  Furthermore, this also results in the industry being able to maintain profitability and will allow it to embrace and capitalize on the opportunities that will in the upcoming years. 

The OZ supplier website provides a list of the Australian Beef Industry’s major players and suppliers. Please click here if you wish to contact a company in the in the Beef Industry.

Plastic Production through Injection Moulding

 

Injection Moulding is a type of manufacturing method for shaping a range of raw materials to a desired form or shape.  Materials such as glass, metals, elastomers for synthetic rubber products, confections and especially thermoplastics and thermosetting polymers for plastics are heated and injected into a mold, the raw materials solidifies as it cools inside.  Injection moulding is a widely used manufacturing process for the production of small components to an entire body panel of cars.

Injection moulding Process

            The process starts with the design of the product and the mold design.  Mold designing is done by an industrial designer or engineer. Individual parts of the final product are carefully designed with consideration to how each part is to be molded and assembled to create a finished product.  Properties and capabilities of the molding machine are very well considered in the design process.  Molds are then precision-made out of steel or aluminum.

            The mold is then fitted to the injection moulding machine.  For the manufacture of plastic products, thermoplastic and thermosetting polymers are used.  Thermoplastics are more commonly used because it is more versatile and it softens and flows evenly when heated. Thermoplastics are also easily recyclable and are safer to use than thermosets.  Thermosets needs to be properly heated and injected in a timely manner, otherwise, chemical cross-linking may occur which can damage to the screw and check valves of the machine.

            Thermoplastics or thermosets are place on a funnel which opens to the injection screw inside a barrel with heating elements.  The screw turns and pushes the heated raw material towards the mold which turns to liquid as it approaches the end of the barrel or the nozzle that leads to the mold. Once inside the mold, the raw material cools down and solidifies.  The mold then opens, releasing the newly shaped component.  The mold closes once more and the cycle begins.

Types of Injection Moulding Machines

·         Hydraulic – the only option for molders until 1983 when the first all-electric injection moulding machine was introduced. It is still more predominantly used today.

·         Mechanical – uses the toggle system where tonnage is required to keep the pressure in the mold consistent.

·         Electric – also called the EMT or Electric Machine Technology is quieter, cost efficient and environmentally safer than hydraulics introduced by Nissei Plastic Industrial Co. LTD.

·         Hybrid – claims to have the best features of the hydraulic and electric machine.  Usually features the robotic arm to remove molded components

For suppliers and distributors of Injection Moulded Components in Australia, visit the OZ Suppliers Website.

Australia’s Coal, Crude Oil and Gas Exports

The Energy Industry

Australia’s Energy Industry contributes significantly to the country’s economy.  The industry generates employment to 106,000 people and provides significant infrastructure.  In 2009-10 the energy industry’s coal and petroleum sector contributed $47 billion which is 3.5 per cent of the country’s gross value added.  The industries in electricity and gas exports and domestic supply also contributed $22 billion to the gross value added.

According to APPEA, Australia has vast resources with 400 trillion cubic feet of estimated reserves.  This volume is enough to provide power to a city with a population or one million for eight thousand years.  Geologists believe that the land has more mineral reserves to add to this base estimation after future explorations are made.

Like most sectors in Australia’s energy industry, gas exports along with its production is growing steadily, however gas only generates less than 9 per cent of the country’s electricity.  Other uses for the gas supply is used in manufacturing products such as glass, steel, plastics, paint, fabric and a variety of other products.

Australia’s Energy Exports

Australia is a net energy exporter and it exports 68 per cent of the industry’s total energy production.  On the other hand, Australia is a net importer of crude oil and refined petroleum products.  Coal is the largest exported commodity in the energy industry at a value amounting to $44 billion in 2010-2011. This is followed by crude oil and liquefied natural gas exports or LNG.  Energy exports accounted for 33 per cent of the country’s total commodity exports. 

At present, Australia is the fourth largest supplier of liquefied petroleum gas exports in the world and the petroleum industry’s goal is to be the first largest LNG exporter by 2020.  The industry is targeting a production volume of at least 60 million tonnes per annum.

LNG Innovations and Projects

As the world leader in LNG innovation, the industry’s goal to be first is within reach.  The LNG supply industry has over a dozen innovative projects that are either under construction or at varying stages of planning and development.  Currently, Australia has three producing LNG developments, the North West Shelf Venture, Darwin LNG and Pluto which started production in April 2012.

There are seven Australian LNG schemes that are currently under construction which are expected to start production in 2015 and 2016.  In total, Australia has about $200 billion worth of LNG projects in various stages of development.

Companies is the LNG supply industry are engaged in developments such as LNG fuel trucks and the first floating LNG project using a specially designed ship with LNG production facilities.

The Business Checker Advantage

All business relationships are based on trust.  We connect and engage based on the perceived credibility and reliability projected by the people we do business with. 

Credibility is established initially if there is transparency in the information given by tradie or service provider regarding his skills and qualifications.  This is exactly what a business checker profile provides a customer like you.  Our work does not end in retrieving information, we also verify.

If you are a client looking to acquire the services of tradies, here are a few points you need to consider and why Business Checker is a helpful tool:

1.       Service given at low rates does not always mean you get savings, it may mean the opposite of what you are getting.  Low rates by an uncertified service provider company put you at risk, because almost always, this would mean poor quality of work that needs to be re-done.

2.      It takes time to “shop” for tradies the old fashioned way.  The phonebooks and business ads do not tell you the qualifications of the tradies listed there or their work history.  Not to mention the interviews you will need to conduct just to get one that you are comfortable with.

3.      Business Checker rates companies based on their Certifications, Accreditation, Qualifications and appropriate Insurances.  We also make sure that these are up-to date. So all you have to do as a client is to search their profiles online and make intelligent decisions based on the information provided. 

4.      Companies who are listed with Business Checker are conscious of their company’s need as a legitimate business entity and therefore likely to be conscious of your needs as their client as well. 

If you are a client who has been working with the same tradie or service provider for quite some time, just request them to enlist with us.  If their rating happens to be only “satisfactory”, we can help them build up their rating to “high rated” by making sure that they have proper and up-to-date requirements or documentations.

The element of trust in a business relationship is not achieved over night. It is a commodity that is built over time.  The Business Checker recognizes this fact and lets you start off on the right track, minimizing risks for both the client and the trader or service provider.  Our aim is to build a healthy business community that value reliability and credibility.