The Sunbelt New Mexico Blog

Financing a Business: 4 Options Evaluated

male accountant using calculator

Before leaping into a new business opportunity, most entrepreneurs face the challenge of securing working capital. Although it’s not an easy task, it is essential to getting your idea off the ground. It’s also not a decision to take lightly, as the choice you make will stick with you for years to come, even after your business starts making a profit. You can set yourself up for a win by researching the different avenues available and deciding the best action for your specific needs. Here we evaluate four of the more common options owners consider when deciding how to finance a business.

How to Finance a Business

When it comes to business financing, there isn’t a right or wrong answer. Business owners must take their situation into account to plan for the best possible outcome.

Small Business Loan/SBA Loan

Last year, 43% of small businesses applied for a loan from a small business lender. Bank loans and lines of credit are a popular business financing choice for a good reason. They’re a reliable source for a short-term loan that allows you to grow. But, you want to be selective when choosing who to finance through. Banks, private equity firms, microlenders, and other venture capitalists are concerned with getting their money back, so they tend to charge high-interest rates. If you have a good credit history, you can do some shopping around to find better rates. Also, be sure to apply for loans through the U.S. Small Business Administration. They tend to have more flexible terms and lower interest rates.

Angel Investor

We commonly see business owners acquire capital from an angel investor in exchange for an equity position. This is often sought by businesses that lack the cash flow needed to obtain a traditional bank loan. It’s less risky than taking a business credit card or a short-term loan. But, it comes with other setbacks that some aren’t willing to look past. Equity financing means forfeiting some control to a partial owner and granting this person a say in the business’ operations. Additionally, this person will receive a share of profits if you decide to sell. For this reason, you’ll want to make sure you can work well with this person for the long haul.

Crowdfunding

Crowdfunding is an increasingly popular option, especially amongst business startups. Rather than acquiring a business loan from one financial institution, some business owners choose to raise small amounts of funds from a large number of people. Over 600 crowdfunding platforms exist, where billions of dollars are raised annually. Typically, the more successful crowdfunding campaigns offer something in exchange for a donation. Whether that’s exclusive member access or a free product/service, it’s good to come up with ways to incentivize your donors.

Personal Investment/Borrow From Friends and Family

The last business financing option we’ll touch on is actually the one you should start with. Before seeking external funding, it’s best to try to raise as much as you can on your own. You should never put up your entire personal savings; you never know when an emergency will arise, and you’ll need cash-on-hand. But, again, lines of credit can be costly with high-interest rates. If you can cover a lot of business needs yourself or seek a low-interest loan from friends and family, you can save in the long run.

Acquiring a small business loan is a big step in the business buying process. You’ll need to make sure you can afford the monthly payments and have a good enough credit score to be accepted for a loan program. Contact us for more information on business financing and help with preparations.

Resource Roundup – 8 Reopening Strategies for Businesses

Businesses reopening amidst uncertainty regarding regulations and safety are facing some challenging operating decisions. The U.S. Chamber of Commerce shares these eight strategies to reopen safely.

Beefing up delivery, takeout and curbside

Restaurants and retail stores have been hit hard by COVID-19, so those operations are making big changes to try to survive this challenging environment.

In the restaurant world, many joints reopening are keeping dining rooms closed (even if they are allowed to open), and instead they’ve added improved delivery and takeout options to better serve wary customers. For example, in Georgia, restaurant dining rooms are allowed to reopen, but many noteworthy restaurants have created robust delivery and takeout options.

As for retail stores, they are beginning to test out new ideas such as curbside pickup. For example, the Mall of America in Minnesota now “offers curbside service from over 20 retailers, including Nordstrom, Legacy Toys, and Cinnabon” with two pickup locations.

Converting shared spaces into enclosed ones

While open-office plans have been all the rage in recent years, these types of offices often don’t offer enough separation to meet new social distancing standards. This may encourage many large office buildings to return to cubicles or add plastic dividers between desks that can create a similar separation effect. Some businesses are predicting new dividers could be as tall as 80 inches high to isolate germs.

“You’re gonna see a lot of plexiglass,” Michael Boonshoft of real estate company Cushman & Wakefield, which is helping offices prepare for this new office reality, told Wired. “Having that divider will make people feel safer. That shield between desks will be really important.”

Extra sanitation

Health concerns remain top of mind while the threat of COVID-19 remains, so many businesses that are reopening are touting extra cleaning and sanitation. Bed Bath & Beyond, for example, has said its locations will provide cart wipes and hand sanitizer dispensers in its stores as part of its enhanced cleaning protocols. Its employees will be also be required to wear masks and practice social distancing.

COVID-19 testing for employees

One way some large employers plan to reopen with some sense of security is by providing COVID-19 testing to employees. For example, Station Casinos in Las Vegas has announced a free testing program with the intention to test all 14,000 of its employees before they return to work. On a larger scale, Seattle-based Amazon has announced it is setting up a system for testing workers around the U.S.

One strategy to open offices around the country is to do it slowly, with waves of employees allowed to come back at a time.

Gradual re-entry to the workplace

One strategy to open offices around the country is to do it slowly, with waves of employees allowed to come back at a time. West Palm Beach, Fla.-based clothing brand U.S. Polo Assn., plans to invite five or six employees back in its first wave.

“We’ll start with a handful of people, and evaluate the week, and add a few more people,” J. Michael Prince, President and CEO of U.S. Polo Assn and U.S.P.A. Global Licensing Inc., told WWD. “I don’t think we’re fully functional until mid-June.”

Staggered work shifts

One way reopened companies have made social distancing easier has been to create staggered shifts, so fewer people are working or socializing in tandem. One high-profile example of a company using modified shift scheduling is Boeing, which has implemented staggered shift times for employees returning to aircraft assembly plants in Washington state. The aerospace company also said it would spread out workers more to allow them to socially distance and require them to wear masks.

Requiring workers/customers to wear masks

While various state and local governments are requiring masks for people who can’t social distance, some stores and offices are requiring masks for workers and customers as well in order to safely reopen. For example, Dunedin, Fla.-based Achieva Credit Union said it will require all employees to wear masks in all communal areas, but face coverings won’t be necessary in cubicles.

Temperature and health checks

As fever is one of the most common symptoms of COVID-19, temperature checks are a relatively simple way to make sure sick employees can’t come into the office or sick customers can’t come into your place of business. While this has not been widely adopted yet, some businesses have added or announced temperature checking.

Southfield, Michigan automotive parts supplier Lear Corp., which has developed a manual for safely reopening manufacturing facilities, said all of its employees will receive health screenings and contactless temperature checks when entering buildings at the start of their workdays.

One prominent example of temperature checks for customers comes from Frontier Airlines, in order to attract people back to a safer environment. Travelers flying on the airline will have their temperatures checked before boarding starting on June 1.

Opportunity: Sign of the Pampered Maiden

Sign of the Pampered Maiden in Santa Fe for SaleSign of the Pampered Maiden is an iconic, enduring brand and luxury fashion destination in the heart of downtown Santa Fe, and it could be yours. A dramatically reduced price and supportive SBA programs make this a perfect opportunity to become part of the Santa Fe retail and fashion identity.

Now listed at only $180,000, Pampered Maiden’s 2019 gross revenue was $615,266, with a cash flow of $74,417. Find more information about this exceptional opportunity here.

Pampered Maiden’s collection of organic, eco-sensitive and locally-sourced clothing has won it a loyal customer base. The classic sensibility and emphasis on quality has attracted women of multiple generations. Visitors and locals alike have made a regular habit of shopping at Pampered Maiden to seasonally refresh their wardrobe.

The shop’s reputation for customer service also sets it apart. Staff is skilled at providing a personalized shopping experience and expert at visual merchandising. Santa Feans consistently rank Pampered Maiden as one of the top stores for women’s clothing, jewelry, fashion accessories, and gifts. It has been featured in the pages of The Santa Fe Guide, The Essential Guide, Trend Magazine, In-Art Design Magazine, and other local publications.

Additionally, the current owner has invested in upgrading Sign of the Pampered Maiden’s online presence. A newly updated e-commerce site and enhanced social media are important adaptations and bring the brand great sustainability and growth potential.

To help secure a smooth transition, the Seller will make personal introductions between vendors and new owners. If desired, she will accompany new owners on the initial trade shows and major buying trips. A top-notch staff also helps make this business easy to operate.