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?

Why Traveling Makes Us More Creative

Traveling is a wonderful hobby for millions of people across the globe. This also provides various advantages to people. Here’s why traveling is important. The ability to move around from one place to the other place is the main virtue one can ever have. All humans and animals have been secured with this ability, but humans are always a step forward. We humans being, have an extraordinary virtue of seeing, experiencing and learning from it, and this is exactly what makes our traveling more satisfying and enriching.A person who went on a long-distance journey returned home after some years. Till then, his family had either no or very little information regarding his situation and well-being. In some thrilling cases, a person would never return. In despite of all these barriers and difficulties, people traveled; not always because they needed to, but many times, also because they loved to. And why not? Traveling not only takes us to distant lands and explains us with various people, but this also removes the dullness of our lives.This is certainly very unlucky that some people feel traveling is a sheer waste of time, energy and money. Some also discovery traveling a very boring activity. However, a good majority of people across the world wish traveling, rather than staying inside the partial spaces of their homes. They love to travel to new places, meet new people, as well as see things that they would not find in their homelands. This is a very common attitude that has made tourism, one of the most money-making, commercial sectors in the world.People travel for different reasons. Some travel for work, others for fun, and some for finding mental peace. Though every person may have his/her own reason to go on a traveling, this is significant to note that traveling, in itself, has some inherent rewards. For one, for some days getting away from everyday routine is a pleasant change. This not only refreshes one’s body, but also mind and soul. Traveling to a distant place and doing fantastic things that are not thought of otherwise, can refresh a person, who then returns home, ready to take on new and more problematic challenges in life and work. This makes a person forget his worries, problems, preventions, and fears, albeit for some time. This offer him a chance to think wisely and usefully. Traveling also helps to heal; this can mend a broken heart.For many people, traveling is a way to achieve knowledge, and perhaps, a quest to find answers to their questions. For this, different people prefer to go to faraway and lonely places. For believers, this is a search for God and to gain higher knowledge; for others, this is a search for inner peace. They might or might not find what they are looking for, but such an experience certainly augments their lives.With people, with their culture, opinions and ideas also travel. When they go from one place to the other place, they are bound to meet people and share their thoughts and experiences with them. This is where the exchange of ideas takes place, and it definitely broadens a person’s outlook. This makes him/her think in a different way, from a different viewpoint. When we speak of cultural influences and exchange, food is one of the important factors. The food habits of people say a lot of things about them. It is very interesting to discover new and unknown ways and values; they really add spice to life.Traveling also makes lifelong memories. Whether a person travels solo or along with family and friends, the experience certainly gives him/her nice and thrilling stories, which he/she can share with people back home. A good long holiday with loved ones allows him/her to spend some quality time with them, which in turn, benefits to renew and restore relationships and makes very strong one-to-one and family bonds. In fact, traveling away from home and spending time with near and dear one(s) can bring the relationship an entirely new perspective and possibly, people may begin understanding each other in a good way.Addition to the above, traveling and getting away from our homes allows us to spend some time with our own selves. This makes us subtler and more tolerant towards others. This also makes it easier for us to meet and mingle with various kinds of people, and also explains us to live life to the fullest. Some of them travel from richer countries to poorer ones in pursuit of cheaper medication; some others travel from inferior countries to more developed ones to get the right medication. Medical tourism is today, one of the most essential parts of the travel and tourism sector and more than 50 countries have recognized it as a national industry.Personal health is what makes travel very important. People here, travel because they don’t have an option in most cases. One might wonder that if a person becomes medical aid only after he reaches his/her destination, what importance does traveling hold in this case? Well, traveling stimulates hope in a person. As a person travels and gets more and more faster to the destination, the hope of getting preserved and living a healthy as well as smooth life ahead goes on increasing. Thus, traveling makes a person more confident towards life. Traveling can therefore be a very enchanting and inspiring experience that may help recover the quality of your life. So, let the travel bug bite you so that you experience the excitement and the serenity of life at the same time, and arise a different person altogether.

Shoe Repairs And Several Other Things When I Was 7

Shoe Repairs And Several Other Things When I Was 7
My Dad repaired most of our shoes believe it or not, I can hardly believe it myself now. With 7 pairs of shoes always needing repairs I think he was quite clever to learn how to “Keep us in shoe Leather” to coin a phrase!

He bought several different sizes of cast iron cobbler’s “lasts”. Last, the old English “Laest” meaning footprint. Lasts were holding devices shaped like a human foot. I have no idea where he would have bought the shoe leather. Only that it was a beautiful creamy, shiny colour and the smell was lovely.

But I do remember our shoes turned upside down on and fitted into these lasts, my Dad cutting the leather around the shape of the shoe, and then hammering nails, into the leather shape. Sometimes we’d feel one or 2 of those nails poking through the insides of our shoes, but our dad always fixed it.

Hiking and Swimming Galas
Dad was a very outdoorsy type, unlike my mother, who was probably too busy indoors. She also enjoyed the peace and quiet when he took us off for the day!

Anyway, he often took us hiking in the mountains where we’d have a picnic of sandwiches and flasks of tea. And more often than not we went by steam train.

We loved poking our heads out of the window until our eyes hurt like mad from a blast of soot blowing back from the engine. But sore, bloodshot eyes never dampened our enthusiasm.

Dad was an avid swimmer and water polo player, and he used to take us to swimming galas, as they were called back then. He often took part in these galas. And again we always travelled by steam train.

Rowing Over To Ireland’s Eye
That’s what we did back then, we had to go by rowboat, the only way to get to Ireland’s eye, which is 15 minutes from mainland Howth. From there we could see Malahide, Lambay Island and Howth Head of course. These days you can take a Round Trip Cruise on a small cruise ship!

But we thoroughly enjoyed rowing and once there we couldn’t wait to climb the rocks, and have a swim. We picnicked and watched the friendly seals doing their thing and showing off.

Not to mention all kinds of birdlife including the Puffin.The Martello Tower was also interesting but a bit dangerous to attempt entering. I’m getting lost in the past as I write, and have to drag myself back to the present.

Fun Outings with The camera Club
Dad was also a very keen amateur photographer, and was a member of a camera Club. There were many Sunday photography outings and along with us came other kids of the members of the club.

And we always had great fun while the adults busied themselves taking photos of everything and anything, it seemed to us. Dad was so serious about his photography that he set up a dark room where he developed and printed his photographs.

All black and white at the time. He and his camera club entered many of their favourites in exhibitions throughout Europe. I’m quite proud to say that many cups and medals were won by Dad. They have been shared amongst all his grandchildren which I find quite special.

He liked taking portraits of us kids too, mostly when we were in a state of untidiness, usually during play. Dad always preferred the natural look of messy hair and clothes in the photos of his children.