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?

How Sports Nutrition Can Affect Health

The sports nutrition that any athlete consumes is a very important aspect and a huge determinant of his health and in turn affects his performance. Everyone knows that in today’s competing world of sports, one must perform at his best to even qualify. And when it comes to winning, it’s not enough to give your best- you need to be better than the best.To play any sport, an athlete must maintain a healthy lifestyle. It’s not only required to practice and polish the skills of the sport, but is also equally important to nourish the body so that there will be enough energy and strength to play that sport. Let’s take a look at how the right sports nutrition can help in this regard.You, assuming that you are an athlete or thinking of becoming one, must, first and foremost, understand the principles of sports nutrition completely. What is the point of staying healthy when you do not even know what being healthy is all about?Firstly, it’s important to avoid engaging yourself in false beliefs and misconceptions. Myths are completely different from facts, and your sports nutrition health is indeed a fact so do not, under any circumstances, mix unreal and unproven principles with facts. Compromising with your health based on misinterpretation of the facts can seriously jeopardize your career as an athlete.It’s easy to talk about managing your health than actually doing it. So to start with, you must take note of nutrition requirements that are related to your training program. Failure to recognize these said requirements would cause stress not only to your body, but also mentally. When you don’t know what are up against, how can you build energy to tackle it?Taking experts’ advice on the sports nutrition is helpful too. You might be taking carbohydrates all right but not in the right amount or in the amount that is appropriate for you. So there will either be an excess or a lack, and neither is helpful for your health status.Let’s make one point clear though. There is a lot of difference between having well balanced sports nutrition and dieting to lose fat. Do not, under any circumstances, mistake them to be the same thing or else your health will be compromised.You may have an extremely busy schedule, being an athlete and all, but you must still consume appropriate amount of food. So you must manage your time well to have an adequate time for eating. Time management is definitely the key.For starters, you may not be financially stable right away, but that is how it always is when you are just beginning. However, this scarcity of finances might be a factor for you not to be able to attain adequate food supplies.For those who are already making it big, your sports nutrition health should always come first. This means you have to manage your money efficiently so that you can have the appropriate supply of food, and still have enough to spend for maintaining your lifestyle.A usually ignored, but quite important nutrition and health impairing factor is frequent traveling. Besides from the fact that traveling is expensive, it comes with a huge tendency that you will be taking your food on the road which leaves you with very few healthy choices.Or if you carry the food, it minimized the selection of your food items to those that are portable. That will leave out the food that is difficult for you to carry but is important for your sports nutrition health. The time for eating should also not be modified.Sports nutrition experts break the nutrition into the basic three types that the food basically is made up of. That is protein, carbohydrates and fats. A correct balance of these components in your body is very important. Anything in excess or in deficiencies could be a cause of a nutritional downfall.Proteins give energy to the body. Whereas fats are the things that you should be more concerned about since these are the ones that decide what kind of shape to give to your body. You must not lose more than one half pound of fat in a week because if this happens, your body will individually think that you are undergoing a fasting, trying to starve yourself. If this is the case, your metabolism slows down since there is a need to conserve calories that have been used and also since your muscles will be used as sources of energy.To say the least, you need to carefully follow the guidance about sports nutrition and ponder over the tips given in this article. Remember, it’s possible to be a successful athlete provided you maintain your health well!

How to Become a Successful Fashion Designer

If you are like me you live and breathe fashion. You are constantly inspired with so many new designs racing through your mind, so many you can’t seem to get them all down quick enough at the pace they arrive. You constantly dream of the day your fashions will be on the fashion runway with the lights beaming brightly overhead, the cameras flashing everywhere and the audience being completely mesmerized by your incredible designs. You can’t stop thinking of the day you will open a magazine or watch the Oscars and see a famous celebrity in one of your breathtaking designs. Your book shelf is stocked with fashion books and magazines, and you absolutely can’t resist visiting textile stores to view all the latest fabrics, decorative beads, rhinestones and trims.It’s this ever present dream of being a successful fashion designer that has you work day and night on your designs in most cases for many years without pay and working a job to pay the pills which is brutal torture, when all you can think about is living and working in fashion.Famous fashion designers come from all walks of life there is no one system to follow that will have you become the next famous fashion designer. Some have graduated from elite fashion schools and some have never attended fashion school. Some have undertaken a fashion internship with a fashion house and others have made their own designs in their basement. The only elements all these fashion designers have in common is they had an intense passion for fashion, were able to design fashions highly sought after and connected with someone who gave them the opportunity to break into the fashion industry. It is essential in becoming a successful fashion designer you get you and your designs out there as much as possible, as how will anyone know about your fashions if they can’t see them?In getting your fashions out there here are a few things you can do:1. We are not usually good at everything some of us are great at designing clothes but lack the sewing and pattern making skills. It is here you can partner with someone who shares your passion for fashion and has the skills you lack. It is in the bringing together of different skills you can create a real product that can be showcased.
2. In having a fashion line of 14 outfits you can apply to your local fashion week. In the USA: New York, Los Angeles and San Francisco all have fashion weeks. These fashion weeks attract many editors, journalists and local socialites who will see your fashions and potentially give you the exposure you need to get known.
3. Many city night clubs hold fashion shows, find out what night clubs hold fashion shows and contact them as to how you can be apart of an up and coming show.
4. Locate fashion boutiques that cater to the fashions you design, first make a trip to the stores to look around, if you can see your clothes fitting in well with the store, find out who the owner is and ask if they would be willing to have some of your fashions offered for sale in their store. You will be amazed at how many store owners are willing to work with you. I walked around San Francisco in the Nob Hill district and had my fashions placed after visiting and discussing my product with four boutiques. In having your fashions displayed you will receive valuable insights as to whether or not your designs are in demand and if you need to change your designs to increase sales. It will also give you free exposure to the public. When your fashions do sell you can present this to investors who are more than willing to invest in your line, when you prove the existence of a strong demand for your fashions.