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?

Best in Class Finance Functions For Police Forces

Background

Police funding has risen by £4.8 billion and 77 per cent (39 per cent in real terms) since 1997. However the days where forces have enjoyed such levels of funding are over.

Chief Constables and senior management recognize that the annual cycle of looking for efficiencies year-on-year is not sustainable, and will not address the cash shortfall in years to come.
Facing slower funding growth and real cash deficits in their budgets, the Police Service must adopt innovative strategies which generate the productivity and efficiency gains needed to deliver high quality policing to the public.

The step-change in performance required to meet this challenge will only be achieved if the police service fully embraces effective resource management and makes efficient and productive use of its technology, partnerships and people.

The finance function has an essential role to play in addressing these challenges and supporting Forces’ objectives economically and efficiently.

Challenge

Police Forces tend to nurture a divisional and departmental culture rather than a corporate one, with individual procurement activities that do not exploit economies of scale. This is in part the result of over a decade of devolving functions from the center to the.divisions.

In order to reduce costs, improve efficiency and mitigate against the threat of “top down” mandatory, centrally-driven initiatives, Police Forces need to set up a corporate back office and induce behavioral change. This change must involve compliance with a corporate culture rather than a series of silos running through the organization.

Developing a Best in Class Finance Function

Traditionally finance functions within Police Forces have focused on transactional processing with only limited support for management information and business decision support. With a renewed focus on efficiencies, there is now a pressing need for finance departments to transform in order to add greater value to the force but with minimal costs.

1) Aligning to Force Strategy

As Police Forces need finance to function, it is imperative that finance and operations are closely aligned. This collaboration can be very powerful and help deliver significant improvements to a Force, but in order to achieve this model, there are many barriers to overcome. Finance Directors must look at whether their Force is ready for this collaboration, but more importantly, they must consider whether the Force itself can survive without it.

Finance requires a clear vision that centers around its role as a balanced business partner. However to achieve this vision a huge effort is required from the bottom up to understand the significant complexity in underlying systems and processes and to devise a way forward that can work for that particular organization.

The success of any change management program is dependent on its execution. Change is difficult and costly to execute correctly, and often, Police Forces lack the relevant experience to achieve such change. Although finance directors are required to hold appropriate professional qualifications (as opposed to being former police officers as was the case a few years ago) many have progressed within the Public Sector with limited opportunities for learning from and interaction with best in class methodologies. In addition cultural issues around self-preservation can present barriers to change.

Whilst it is relatively easy to get the message of finance transformation across, securing commitment to embark on bold change can be tough. Business cases often lack the quality required to drive through change and even where they are of exceptional quality senior police officers often lack the commercial awareness to trust them.

2) Supporting Force Decisions

Many Finance Directors are keen to develop their finance functions. The challenge they face is convincing the rest of the Force that the finance function can add value – by devoting more time and effort to financial analysis and providing senior management with the tools to understand the financial implications of major strategic decisions.

Maintaining Financial Controls and Managing Risk

Sarbanes Oxley, International Financial Reporting Standards (IFRS), Basel II and Individual Capital Assessments (ICA) have all put financial controls and reporting under the spotlight in the private sector. This in turn is increasing the spotlight on financial controls in the public sector.

A ‘Best in Class’ Police Force finance function will not just have the minimum controls to meet the regulatory requirements but will evaluate how the legislation and regulations that the finance function are required to comply with, can be leveraged to provide value to the organization. Providing strategic information that will enable the force to meet its objectives is a key task for a leading finance function.

3) Value to the Force

The drive for development over the last decade or so, has moved decision making to the Divisions and has led to an increase in costs in the finance function. Through utilizing a number of initiatives in a program of transformation, a Force can leverage up to 40% of savings on the cost of finance together with improving the responsiveness of finance teams and the quality of financial information. These initiatives include:

Centralization

By centralizing the finance function, a Police Force can create centers of excellence where industry best practice can be developed and shared. This will not only re-empower the department, creating greater independence and objectivity in assessing projects and performance, but also lead to more consistent management information and a higher degree of control. A Police Force can also develop a business partner group to act as strategic liaisons to departments and divisions. The business partners would, for example, advise on how the departmental and divisional commanders can meet the budget in future months instead of merely advising that the budget has been missed for the previous month.

With the mundane number crunching being performed in a shared service center, finance professionals will find they now have time to act as business partners to divisions and departments and focus on the strategic issues.

The cultural impact on the departments and divisional commanders should not be underestimated. Commanders will be concerned that:

o Their budgets will be centralized
o Workloads would increase
o There will be limited access to finance individuals
o There will not be on site support

However, if the centralized shared service center is designed appropriately none of the above should apply. In fact from centralization under a best practice model, leaders should accrue the following benefits:

o Strategic advice provided by business partners
o Increased flexibility
o Improved management information
o Faster transactions
o Reduced number of unresolved queries
o Greater clarity on service and cost of provision
o Forum for finance to be strategically aligned to the needs of the Force

A Force that moves from a de-centralized to a centralized system should try and ensure that the finance function does not lose touch with the Chief Constable and Divisional Commanders. Forces need to have a robust business case for finance transformation combined with a governance structure that spans operational, tactical and strategic requirements. There is a risk that potential benefits of implementing such a change may not be realized if the program is not carefully managed. Investment is needed to create a successful centralized finance function. Typically the future potential benefits of greater visibility and control, consistent processes, standardized management information, economies of scale, long-term cost savings and an empowered group of proud finance professionals, should outweigh those initial costs.

To reduce the commercial, operational and capability risks, the finance functions can be completely outsourced or partially outsourced to third parties. This will provide guaranteed cost benefits and may provide the opportunity to leverage relationships with vendors that provide best practice processes.

Process Efficiencies

Typically for Police Forces the focus on development has developed a silo based culture with disparate processes. As a result significant opportunities exist for standardization and simplification of processes which provide scalability, reduce manual effort and deliver business benefit. From simply rationalizing processes, a force can typically accrue a 40% reduction in the number of processes. An example of this is the use of electronic bank statements instead of using the manual bank statement for bank reconciliation and accounts receivable processes. This would save considerable effort that is involved in analyzing the data, moving the data onto different spreadsheet and inputting the data into the financial systems.

Organizations that possess a silo operating model tend to have significant inefficiencies and duplication in their processes, for example in HR and Payroll. This is largely due to the teams involved meeting their own goals but not aligning to the corporate objectives of an organization. Police Forces have a number of independent teams that are reliant on one another for data with finance in departments, divisions and headquarters sending and receiving information from each other as well as from the rest of the Force. The silo model leads to ineffective data being received by the teams that then have to carry out additional work to obtain the information required.

Whilst the argument for development has been well made in the context of moving decision making closer to operational service delivery, the added cost in terms of resources, duplication and misaligned processes has rarely featured in the debate. In the current financial climate these costs need to be recognized.

Culture

Within transactional processes, a leading finance function will set up targets for staff members on a daily basis. This target setting is an element of the metric based culture that leading finance functions develop. If the appropriate metrics of productivity and quality are applied and when these targets are challenging but not impossible, this is proven to result in improvements to productivity and quality.

A ‘Best in Class’ finance function in Police Forces will have a service focused culture, with the primary objectives of providing a high level of satisfaction for its customers (departments, divisions, employees & suppliers). A ‘Best in Class’ finance function will measure customer satisfaction on a timely basis through a metric based approach. This will be combined with a team wide focus on process improvement, with process owners, that will not necessarily be the team leads, owning force-wide improvement to each of the finance processes.

Organizational Improvements

Organizational structures within Police Forces are typically made up of supervisors leading teams of one to four team members. Through centralizing and consolidating the finance function, an opportunity exists to increase the span of control to best practice levels of 6 to 8 team members to one team lead / supervisor. By adjusting the organizational structure and increasing the span of control, Police Forces can accrue significant cashable benefit from a reduction in the number of team leads and team leads can accrue better management experience from managing larger teams.

Technology Enabled Improvements

There are a significant number of technology improvements that a Police Force could implement to help develop a ‘Best in Class’ finance function.

These include:

A) Scanning and workflow

Through adopting a scanning and workflow solution to replace manual processes, improved visibility, transparency and efficiencies can be reaped.

B) Call logging, tracking and workflow tool

Police Forces generally have a number of individuals responding to internal and supplier queries. These queries are neither logged nor tracked. The consequence of this is dual:

o Queries consume considerable effort within a particular finance team. There is a high risk of duplicated effort from the lack of logging of queries. For example, a query could be responded to for 30 minutes by person A in the finance team. Due to this query not being logged, if the individual that raised the query called up again and spoke to a different person then just for one additional question, this could take up to 20 minutes to ensure that the background was appropriately explained.

o Queries can have numerous interfaces with the business. An unresolved query can be responded against by up to four separate teams with considerable delay in providing a clear answer for the supplier.

The implementation of a call logging, tracking and workflow tool to document, measure and close internal and supplier queries combined with the set up of a central queries team, would significantly reduce the effort involved in responding to queries within the finance departments and divisions, as well as within the actual divisions and departments, and procurement.

C) Database solution

Throughout finance departments there are a significant number of spreadsheets utilized prior to input into the financial system. There is a tendency to transfer information manually from one spreadsheet to another to meet the needs of different teams.

Replacing the spreadsheets with a database solution would rationalize the number of inputs and lead to effort savings for the front line Police Officers as well as Police Staff.

D) Customize reports

In obtaining management information from the financial systems, police staff run a series of reports, import these into excel, use lookups to match the data and implement pivots to illustrate the data as required. There is significant manual effort that is involved in carrying out this work. Through customizing reports the outputs from the financial system can be set up to provide the data in the formats required through the click of a button. This would have the benefit of reduced effort and improved motivation for team members that previously carried out these mundane tasks.

In designing, procuring and implementing new technology enabling tools, a Police Force will face a number of challenges including investment approval; IT capacity; capability; and procurement.

These challenges can be mitigated through partnering with a third party service company with whom the investment can be shared, the skills can be provided and the procurement cycle can be minimized.

Conclusion

It is clear that cultural, process and technology change is required if police forces are to deliver both sustainable efficiencies and high quality services. In an environment where for the first time forces face real cash deficits and face having to reduce police officer and support staff numbers whilst maintaining current performance levels the current finance delivery models requires new thinking.

While there a number of barriers to be overcome in achieving a best in class finance function, it won’t be long before such a decision becomes mandatory. Those who are ahead of the curve will inevitably find themselves in a stronger position.

Natural Skin Care – More Than Skin Deep

Does Natural in Skin Care naturally mean Good?Although Webster defines “natural” as “not artificial, synthetic, [or] acquired by external means,” it is the rare cosmetic ingredient that fits that description. Even water used in cosmetics is generally distilled, deionized, or otherwise purified. All along the continuum of “natural” products, choices have been made to emulsify, stabilize and preserve–to make the products smooth and creamy, keep them fresh, and give them an acceptable shelf life. Even if consumers want products that need to be refrigerated, distributors and retailers will not order them because of the added costs of shipping, storing and greater liability. A growing number of consumers who seek that kind of freshness have been firing up their blenders and following recipes for homemade treatments.1[1] Even these, however, call for essential oils, alcohol, glycerin, lanolin, etc., which are a long way from their natural origins. As reported in Strong Voices, the newsletter of the Breast Cancer Fund, “Approximately one-third of cosmetics and bodycare companies position their products as natural in one way or another . . . But, as you might expect, some companies are more natural than others” (Volume 7, Summer 2005).Most people who seek out “natural” products are looking for ingredients whose sources they recognize, and that is why many companies now list the source along with the scientific name of the ingredient, as in sodium laurel sulfate (from coconut), or lanolin (from wool). Turpentine comes from pine trees. My grandmother, born in 1901, swore that turpentine helped her arthritic hands, and she may have rubbed them with lard (from bacon) afterwards to keep them as soft as I remember. Perhaps lard and turpentine are “natural,” but are they good for the skin, and along with that, what is the definition of “good?” Again, there are no simple answers. If you have found this article through the Eco-Mall, it is safe to assume that you seek out skin care that:(1)     is friendly to the environment (“eco-friendly”);
(2)     does no harm to animals (commonly referred to as “cruelty-free”); and
(3)     does no harm to the human body and ideally does good (is “body-friendly”).Let us examine “natural” skin care in light of each of these issues.Eco-Friendly
An issue rarely addressed by the cosmetic industry is whether products are environmentally friendly. The LA Times2[2] has reported that consumer products, including cosmetics, pump 100 tons of pollutants daily into southern California’s air, second only to auto emissions. These pollutants come not just from the propellants in sprays and aerosols, but also from fluorocarbons, ethanol, butane, acetone, phenols and xylene. Here’s how it works: These chemicals evaporate, and when the sun shines they combine with other pollutants to form ozone, a primary component of smog that can cause headaches, chest pain and loss of lung function. This happens outdoors and indoors, which can severely compromise the air quality in our homes and offices.There is a class of chemicals called PPCPs (pharmaceutical and personal care products) that until recently have received relatively little attention as potential environmental pollutants. PPCPs comprise all drugs (prescription and over-the-counter), diagnostic agents (e.g., X-ray contrast media), nutraceuticals, and other chemicals, including fragrances, sunscreen agents, and skin anti-aging preparations. When phthalates, for example, get into rivers and lakes, they are known to affect the reproduction of aquatic species; and musk fragrances are known to bioaccumulate.3[3] Skincare products may contain botanical ingredients grown with pesticides and chemical fertilizers that are not friendly to the environment, and some may use genetically modified plants in their botanical ingredients.Cruelty-Free
“Cruelty-free” is generally understood to mean that the products are not tested on animals; sometimes also that there are no animal-derived ingredients in the products. Taken literally, this would imply the absence of lanolin (from wool), beeswax or honey, dairy products, etc. Some labels specifically state there are no animal ingredients.Body-Friendly
We suggest four criteria for evaluating “body-friendly” skin care products:·         Toxicity
·         Occlusiveness
·         Comedogenicity
·         Effectiveness1.ToxicityIn our July article we discussed several ingredients which we prefer to avoid in skin care products. To recap, we listed mineral oils, petrolatum, propylene glycol, parabens, phthalates, SLS and SLES. We also called sunscreens into question.Toxicity (to humans) of skin care ingredients may be divided into three distinct categories:4[4]a.        Carcinogenic, referring to ingredients contributing to cancer
b.       Endocrine-disrupting, which refers to chemicals that disturb the body’s hormonal balance, and may interfere with its ability to grow, develop, or function normally. Endocrine disruptors may also be carcinogenic.
c.        Allergenic, irritating or sensitizing, meaning consumers may have allergic reactions or contact dermatitis (itching, redness, rash, etc.). Individuals with multiple chemical sensitivities may become very ill when exposed to certain of these chemicals.There are many “natural” skincare companies who include parabens, SLES, and other of these ingredients in their products.A general note about preservatives: By their very nature preservatives are toxic. They must be toxic to bacteria, molds and yeast to keep the products from spoiling. Another preservative that is gaining use as an alternative to parabens is diazolidinyl urea. This preservative has not been banned from use in Europe, although some authors claim it is carcinogenic because it is a formaldehyde donor. Although formaldehyde is a chemical which occurs naturally in the human body, formaldehyde in the gaseous state is a known carcinogen. From all studies we have read, diazolidinyl urea, when it forms formaldehyde, does not form formaldehyde gas. Nonetheless, when used in high enough concentrations, or even in low concentrations by persons who are especially sensitive to it, diazolidinyl urea-along with almost every other preservative-has been shown to cause contact dermatitis. There are also “natural” products who claim to use no preservative. Most of these contain grapefruit–or other citrus–seed oil extract. As mentioned in Part I of this series, cosmetic chemists I have spoken to insist that these citrus seeds would turn rancid if they were not sprayed with preservative; that that preservative is concentrated in the oil when it is extracted; that this preservative in the extract is what is actually preserving the skincare product; and that the preservative used is generally a paraben.There are also skincare products that are sold in sealed containers with airless pumps or sprayers. Although it can add significantly to the cost of a product, this type of packaging and delivery is highly desirable, as it keeps air and airborne contaminants out of the product and makes it possible to significantly decrease or even eliminate the use of preservative.Of the large list of possible cosmetic ingredients, a relative few individually pose high risk, but many people use an array of products every day. It may be that these risks are adding up, or that single ingredients react with others to create toxic combinations, known as synergistic toxicity.2.Occlusivity
The skin is the body’s largest organ. The lungs breathe, and so does the skin, so to speak: The “breathing” skin provides an exit for toxins and chemicals–respiration in the form of perspiration. Lotions and salves that occlude this exit may initially soften the skin by keeping moisture from escaping, but may actually inhibit the overall health of the individual, besides weighing down the skin and causing it to sag and age. Nutrients applied to the skin that improve the skin’s health may have a positive effect on the whole body, because they are absorbed into the bloodstream through the skin. When we choose body-friendly skin care, two important criteria come into play: that the products not be toxic to our skin or our bodies, and that they not be occlusive-allowing nutrients in and toxins out.5[5] The bonus comes when the ingredients that are allowed in also bring the skin into balance and nourish it. This is the topic of Part III of our series of articles: What Nutrients and Ingredients are Important for Healthy Skin? (late September 2005). Here we address ingredients common to “natural” skin care that may be occlusive and/or comedogenic.Look up “occlusivity” on the web and you will find hundreds of references to occlusivity and its benefits. The reason companies tout the benefits of occlusivity is that it holds water in the skin. When water can’t escape, the skin stays soft and moist, and that sounds like a good thing. Imagine wrapping your skin with plastic wrap and wearing it around all day-an extreme example of occlusivity. Pretty soon it would start to stink in there as the toxins that usually escape with perspiration and generally evaporate into the air get trapped between the skin and the plastic. Now imagine that those same toxins can’t leave the bloodstream because the skin’s normal respiration is blocked. Where will they go? In some cases, they fester under the skin and form deep-down blemishes; in extreme cases, where occlusive lotions are used all over the body for extended periods, they may deposit in the liver and add to the body’s toxic load.Sometimes it may be beneficial to use occlusive salves for a limited time. If you want to climb Mt. Everest, for example, or ski at high altitude where the air is thin and dry and you are close to the sun, it’s a good idea to wear a lotion that holds the water in the skin. For babies with diaper rash, it’s good to use a salve that keeps the water away from the skin! For most of us, these are not constant conditions, and treatments that hold water in over time are undesirable.
Standard cosmetics experts may disagree with this reasoning. Paula Begoun in Don’t Go to the Cosmetics Counter Without Me (5th ed., 2001) states: “According to many ‘natural’ cosmetics companies, mineral oil (and petrolatum) comes from crude oil (petroleum), is used in industry as a metal-cutting fluid, and therefore can harm the skin by forming an oil film and suffocating it. . . . This foolish, recurring misinformation about mineral oil and petrolatum is maddening. After all, crude oil is as natural as any other earth-derived substance. . . Mineral oil and petrolatum . . . can keep air off the skin to some extent, but . . . it doesn’t suffocate the skin!” (pp. 11-13). She also states that antiperspirants “cannot absorb into the skin . . .” (p. 14). I maintain that anything rubbed onto the skin will be absorbed, as long as the molecules are small enough to pass through the skin membrane; this is how patches work to deliver medication. Although Begoun makes a good point that crude oil is “natural,” I believe in making educated choices of which earth-derived substances we apply to the skin, and crude oil is not on my list.It should be noted that there are degrees of occlusivity: If an ingredient is occlusive when used by itself, it will be less so when used in combination with non-occlusive ingredients. A small amount of beeswax used to emulsify jojoba and water will be far less occlusive than rubbing beeswax alone onto the skin. With that in mind, besides mineral oil and petrolatum, here are some of the more common occlusive ingredients found in “natural” skin care:a.        beeswax and other waxes
b.       castor oil
c.        cocoa butter
d.       dimethicone
e.        honey
f.         lanolin
g.       sunflower oil and other vegetable oils3.        Comedogenicity
Unlike occlusive oils like mineral and sunflower oil, which do not penetrate, comedogenicity refers to the tendency of a substance to get into the skin’s pores and clog them. This is especially bothersome in face care products, where clogged pores may lead to acne and blackheads. The word comedo is the medical term for blackhead, so comedo+genic means “friendly to blackheads.” Some cosmetic-ingredient glossaries equate “non-comedogenic” with “non-occlusive,” but that is a misunderstanding; while beeswax, mineral oil and zinc oxide (among others) are known to be occlusive, they are non-comedogenic. This is because they lie on top of the skin and do not penetrate. Others, like sunflower oil, may be both occlusive and (somewhat) comedogenic. Below is a list of the relative comedogenicity of some common “natural” cosmetic ingredients6[6] (source: http://www.geocities.com):Very Comedogenic
Somewhat Comedogenic
Not ComedogenicCapric/caprylic triglyceride
Anhydrous lanolin
Allantoin
Cocoa butter
Avocado oil
Beeswax
Lanolic acid
Capric & caprylic acid
Cyclomethicone & Dimethicone
Linseed oil
Castor oil
Ethanol
Olive oil
Coconut oil
Glycerin
Peach kernal oil
Corn oil
Jojoba
Sweet almond oil
Grape seed oil
Kaolin (clay)
Glyceryl stearate
Mineral oil (USP)
Hexylene glycol
Oxybenzone
Lanolin alcohol & oil
Panthenol
Mineral oil, cosmetic grade
Petrolatum (USP)
Mink oil
Polysorbates
Peanut oil
Propylene glycol
Safflower oil
SD alcohol
Sesame oil
Sodium hyaluronate
Sunflower oil
Sodium PCA
Tocopherol (vitamin E)
Sorbitol
Squalane
Titanium dioxide
Waxes
 
“Note: Even somewhat or very comedogenic ingredients can be present in non-comedogenic formulas when used at percentages low enough that the end formula won’t clog pores” (ibid.). The important point is to look at their relative position in the ingredients list. If a comedogenic ingredient is toward the top, then it is probably present in a quantity large enough to clog pores. Unfortunately it is impossible from the ingredients list to know whether for example ingredient #5 represents 20% of the formula or 2%. Thus we need to be able to trust the manufacturer when the label states “non-comedogenic.”4.        Effectiveness
Let us assume that every skincare company’s raison d’etre (before or after the profit motive) is to create products that make the skin feel and look good, and that probably means it’s soft and not dry. Add some additional goals–anti-aging, anti-acne, skin-smoothing–and you’ve covered most of the bases. Most skincare products, “natural” or otherwise, achieve these goals by using occlusive ingredients that hold moisture in and keep the skin soft and “plump.”
If, however, we are looking for the beauty of overall glowing good health in the skin, we need to ask for more than this from our skin care.We agree with Charles DePrince, president of GoForLife Labs, who states: “The idea of ‘natural’ could mean a product containing all natural ingredients; however, I believe there should be a more significant meaning to the idea. I think the natural course to attaining beauty is a healthier and potentially more lasting one than with the use of harsh or radical treatments such as Botox, face lifts and peeling. The ‘natural’ idea would be to support the living and natural cells of our skin with nutrients that could support such things as the body’s natural ability to retain moisture, to support natural collagen development, or to reduce hyperpigmentation. This way, by supporting the natural health of the skin, I believe the cumulative effect would be to develop healthier skin as both the path to and result of beauty.”7[7]