All posts by Gary Stockton

If you’ve ever seen an episode of Shark Tank, then you know that the question of a business’s valuation always comes up. Most of the time, and much to the “Sharks” dismay, the contestants overvalue their companies, or do not know their business’s valuation altogether. And more times than not, this results in the “Sharks” passing on the opportunity to invest in the company. While many small business owners and entrepreneurs may find it difficult to calculate a true valuation of their company, they have an understanding that how much their company is worth can have a significant impact on the business’s financial future. For example, an accurate business valuation can open the door for an entrepreneur to gain access to the financial capital needed to take their company to the next level. Whether it’s a financial institution or a private financier, both investors will want to have every detail at their fingertips as they decide how much funding can be extended to the company. An accurate business valuation provides insight into how far the business has come, as well as how far the business can go in the future – information that any investor would want to know. But the significance of an accurate business valuation doesn’t end there. Many small business owners either outsource their bookkeeping tasks, or have their employees manage the business’s finances. Whichever the scenario, wealth managers, accountants, investment advisors and other finance-related professionals need to have a clear picture of the company’s worth in order to provide counsel on potential investments or other financial decisions. Additionally, a business’s valuation can have an impact on a less obvious, but still important, element of an entrepreneur’s financial well-being – business insurance. Without an accurate valuation, a company could end up being over- or under-insured, which could negatively impact in either scenario. If under insured and something goes wrong, the business suffers, and if over insured, a small business owner is simply wasting funds that could have been allocated to paying down other expenses or used for growth opportunities. Lastly, and perhaps the most common need for an accurate business valuation is during the selling process. In this situation, the value of the business is the most important aspect of the sale, because it serves as the basis of all negotiations. An accurate assessment of the company’s worth can ensure that the business owner will be fairly compensated for their years of hard work and success. In any event, small business owners should not view their business’s valuation as just a number. A complete understanding of the business’s value can have positive implications to the future success of the company, as well as the owner’s financial well-being. Plus, having a keen understanding of their business’s value, will help keep business owners from needing to jump the “Shark,” or at least will better prepare them if they come face to face with one in the future.

In celebration of National Small Business Week, today’s Guest Post comes from small business influencer, Barbara Weltman, who shares insights on finding funds to start a business. Barbara Weltman (@BarbaraWeltman)is an attorney, a prolific author with such titles as J.K. Lasser’s Small Business Taxes and J.K. Lasser’s Guide to Self-Employment, and a trusted advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and Big Ideas for Small Business® at www.barbaraweltman.com as well as host of a monthly radio show. She’s been named one of the 100 Small Business Influencers five years in a row. It takes money to start a business and get your idea off the ground. Depending on the nature of your business, you may require only a little bit of cash—your seed money—or you may need considerable funds. You can borrow money (debt) or find investors (equity) to meet your capital requirements. Here are some funding options to explore. Self-funding According to the National Venture Capital Association (NVCA), 82 percent of all businesses start with the owner’s personal resources. These can come in a variety of ways: Personal savings. This is the best source of capital because there are no strings attached—no repayments, no interest cost, no timing issues.Credit card borrowing. Using personal credit cards to start a business is pretty common. Sergy Brin and Larry Page did this to start Google in the 1990’s. The biggest downside: the high interest rate.Home equity borrowing. If you own a home that’s worth more than your mortgage, you can borrow with a home equity loan (the lender sets the borrowing limits). The downside: If the business fails and you can’t repay the loan, you could lose your home. Caution: Don’t dip into your 401(k) and IRAs to start businesses. Doing this not only costs you in taxes up front, but if the business fails, you lose your retirement savings. Loans and lines of credit Don’t expect to walk into your neighborhood bank to get a loan for starting your business. Even SBA loans, which are commercial loans guaranteed by the U.S. Small Business Administration, usually aren’t available for startups. If you have an excellent credit score—680 or better—you may qualify for a personal loan, but interest on such borrowing is high, even in today’s low interest environment. With a good credit score, your business may qualify for a line of credit; your personal guarantee can swing this financing. You only pay interest on the portion of the line you draw upon. For example, if you have a $50,000 line of credit and use $20,000, you pay interest on $20,000. NVCA reports that 41 percent of startup funding comes from loans and lines of credit. Family and friends A rich uncle or a fabulous friend may help you get started by either investing in your business or giving you a loan, as about a quarter of all business startups do. But ask yourself whether your relationships will sour if the business doesn’t succeed and your investor or lender loses money. Crowdfunding This relatively new way to find capital for a business can be done in a variety of ways: mere contributions (with no repayment by you), loans as discussed earlier, or, most recently, equity crowdfunding. All together this source of funding from strangers online accounts for about 3 percent of startup funds, according to the NVCA. Conclusion These are just the most common ways to find the cash to get started. You don’t have to choose just one resource; you can combine your options to raise the amount of money required. For example, you may have your friend invest some money and use your personal credit card to buy equipment or other items needed to open your doors for business. Just make sure you know what you’re getting into so you can succeed.

In America, entrepreneurs can earn rock star status. From Thomas Edison, Dale Carnegie and Henry Ford to Steve Jobs, Mark Zuckerberg and Elon Musk, Americans deeply respect and even idolize those men and women who start from nothing to build vast fortunes through a combination of ambition, vision, creativity and perseverance. Certainly the free enterprise system has provided more than enough opportunities for both success and failure -- to give our country's entrepreneurs the drama a good rags-to-riches story demands. The need to raise capital, build a winning team, market new and untested products or services, fend off aggressive competitors, and overcome inevitable reversals of fortune are part and parcel of the entrepreneurial experience. However, the odds for success are not good. Historically, about a third of all businesses fail in their first two years, and only about half of start-ups make it beyond five. [1] With so many factors weighing against new companies you have to wonder, why bother? What drives entrepreneurs to risk it all and start their own businesses? The reasons entrepreneurs take the plunge tend to be as varied as the people themselves. Commonly cited reasons include: Independence. Traditionally, entrepreneurs like to blaze their own trails. They want to establish their own priorities, set their own schedules, and do things "their way." Although some may have problems dealing with authority, most entrepreneurs simply like the idea of taking on the responsibilities – and reaping the rewards – only possible when the business is yours. Building Wealth. When you work for somebody else, you're doing just that: Working for the benefit of another person. The only way to make real money is to turn that around, to get other people to work for you. Entrepreneurs understand how wealth is generated in the free enterprise system and recognize that ownership is the surest and fastest way to financial independence. Impact. Steve Jobs famously said that he wished to "make a dent in the universe." Many entrepreneurs are driven by the same desire to "make a difference," to change the world or, at the very least, disrupt their industry. Certainly, the most celebrated American entrepreneurs of the last 150 years have indeed changed for the better the way people live, work and play all around the world. Legacy. There is a universal desire to be remembered. To ensure their legacies, the pharaohs of ancient Egypt built pyramids. While few people today think in terms of giant stone monuments, they do attempt to secure their places in history through building companies that will stand the test of time – and pass wealth down to their heirs. The foundations, institutions and charities that bear the name of some of our most successful entrepreneurs – both living and deceased – represent another form of the immorality so many people pursue. Security. At first glance, starting a business from scratch seems like the riskiest of propositions. At the same time, the effort can also bring unparalleled security. After all, if you're in charge, you can't be laid off. Many of these examples are also echoed by several entrepreneurs that Experian reached out to, to learn what motivated them to leave the security of corporate jobs and strike out on their own. Rieva Lesonsky "The culture where I was working changed significantly. Plus, I was tired of making other people rich," said Rieva Lesonsky, founder and CEO of GrowBiz Media. "Today, the decisions I make, good or bad, are mine. I'm not punished because someone doesn't know what they're doing. If I knew back in 2008 what I know now, would I do it again? In a New York minute!" Brian Moran Brian Moran, founder and CEO of Brian Moran & Associates, tells a similar story. "I spent half my professional career in corporate America and half of it as an entrepreneur. I realized in my last stint in corporate America that some people were just born to be entrepreneurs; I am one of them," he continued. "I love what I do. I get to help other entrepreneurs run better businesses. Every day, when my feet hit the floor, I am excited for the day to start. It’s never dull or boring." Moran also has advice for would-be entrepreneurs about timing when it comes to launching a new enterprise. "The worst time to start a business is when you aren't mentally and physically prepared for the ride," he said. "If you haven't created a real plan of action for your company, then it will only be a matter of time before you hit an obstacle or bump in the road that will start your downfall. Don't waste your time, money and other resources starting a business if you aren't 100 percent committed to making it a success." Are you an entrepreneur? Tell us your story by posting a comment or tweet at @experian_b2b, we would love to hear about your business. [1] https://www.linkedin.com/pulse/20140915223641-170128193-what-are-the-real-small-business-survival-rates

Cash flow is vital for any business. If you don’t have enough cash coming into your business, you could find yourself unable to pay suppliers, or, more importantly, short of the financial resources necessary to invest back into the business and expand. Protect your cash flow by using these three ways to speed up cash collections. 1. Optimize Your Billing Policy Every business needs a formal policy for billing and collections. Set up a formal billing system in your organization that ensures bills are sent out on time. Use a standard format for your bills that encourages people to pay on time and in full. Make sure every bill contains all the details the customer needs to make the payment, as well as a deadline for payment. 2. Monitor Your Receivables It’s vital for any business to know how much cash is coming in on a daily or weekly basis. Put a system in place that keeps track of payments received, as well as tracking which bills are still outstanding. By tracking your cash collections in this way, you can identify which accounts are causing the biggest problems with cash flow in your organization, which means that you can then focus your efforts on those collections. 3. Follow Up Unpaid Invoices When customers don’t pay their bills on time, you need to follow up with them. Begin by sending a friendly reminder that the bill is still due, along with details of how the customer can make the payment. In many cases, this reminder will do the trick, but with some customers, you will need to take a tougher approach. Consider imposing late payment penalties on customers who miss payment deadlines to compensate for the damage that disrupted cash flow can do to your business. Alternatively, you could try offering a small discount for customers who pay within a few days of the invoice. This positive approach encourages customers to deal with invoices as soon as they receive them. Conclusion Cash flow is the lifeblood of any business, so don’t let yours dry up. Follow these tips to speed up cash collections and cut down on the number of bills that go unpaid. Sources http://quickbooks.intuit.com/r/financial-management/five-ways-to-speed-up-your-cash-flow