Small Business Start-Up Financing

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Some Well-Known Sources of Seed Capital for a New Business

startupWhere can one go to get the start-up financing needed to get a new small business off the ground?

You can start brand new business on Kickstarter, or high quality service for a popular CMS, like Bob WP, you need fund (laptops, servers, softwares, licences, acoounting, office, coffee, etc.).

This page takes a brief look at several, more traditional funding alternatives.

Though these financing options come with many requirements and have a longer approval processes, they generally come with benefits, such as access to larger amounts of money and a formalized repayment process.

Government-Based Loans and Grants

There are several government-based financing programs available for starting up a new small business. This is definitely an area worth looking in to for the needed seed capital.

Just keep in mind that when it comes to government grants (as opposed to loans) most of this money is directed at non-profit organizations or is limited to very specific sectors.

Even if an entrepreneur is able to qualify for a grant, this money will probably come with a lot of restrictions on use as well as other requirements.

One can start searching for government-based loans and grants by checking out the following sites:

  • Business.usa.gov- Information on finding small business loans, seed and venture capital, and government grants.
  • Grants.gov- Find and apply for federal grants.
  • Small Business Association- Various types of small business loans and other resources
  • Catalog of Federal Domestic Assistance- A full listing of Federal programs, grants, projects, and services available to state and local governments

One should also contact the local Small Business Development Center to see which financial assistance programs they offer. Moreover, there are several, specific options for women and minorities.

Venture Capital and Angel Investment

Angel capital is equity capital from wealthy individuals and experienced entrepreneurs, while venture capital is also made up of private funds, but comes from institutional investors.

Both forms of capital are generally offered to new companies with the potential for profitability and rapid growth in exchange for ownership shares and influence over company decisions. Angel investors, like venture capitalists, make their return on investment in the event of an Initial Public Offering or the trade sale of the funded companies.

For a list of angel investors, one can check out the Angel Capital Association; for a searchable directory of venture capitalists go to Vfinance.com.

Small Business Loans from Banks and Commercial Lenders

One of the most well-known forms of small business finance is the traditional small business loan provided by banks and commercial lenders. These loans generally come in two flavors: a secured loan that is back by collateral and an unsecured loan.

Pursuing this financing option, however, may not be so successful. Banks and commercial lenders are generally reluctant to finance small business start-ups especially at a time when the economy is weak.

One can start a search in this area by calling local banks and asking them if they are funding small business start-ups at present. If the answer is yes, then one can request a list of requirements for approval.

Equipment leasing

By leasing equipment, instead of purchasing it, a new business owner can reduce the amount of capital needed to get a small business up and running. Another added benefit is that equipment leasing helps small business owners avoid purchasing equipment that will soon become obsolete or inadequate.

There are several equipment financing options available to small businesses, so be sure to do a little research before making a decision.

4 Small Business Startup Essentials to Get the Doors Open

There are many important tasks that need to be accomplished before official small business startup in order to avoid snags down the line.

Starting a small business can be really exciting. But new business owners that forget important details before their doors open can find themselves with time management issues, or with cash flow problems when no clients come.

The following 4 small business tips can help new company owners get their affairs in order before the doors open to avoid business-breaking catastrophes down the line.

  1. A Startup Timeline is a Lifesaver. The second the idea to start a new venture comes into an entrepreneur’s head, he/she needs to immediately pick an official and realistic “start” date for the business and start building a timeline for what is going to happen between that moment and the date the business will open its doors. Many are afraid to choose a start date in the beginning, because they see it as a scary “deadline” by which they must get a huge number of tasks done. The reality of this deadline can often be overwhelming, but it is necessary to keep on task and help with time management. Also, while those engaged in the process of building a new company should stick to the small business startup date, there is always room to change if unexpected obstacles hit or some tasks take longer than expected. Seeing a physical timeline can be a great motivator during the months before officially opening a business, and is important to organization and setting a precedent for diligent time management that will help in all areas of business.
  2. A Manageable To-Do List Helps Keep the Timeline Reasonable. Savvy entrepreneurs need to sit down once they decide to start a company and write down a list of the “Top 10” tasks that need to be accomplished before the business officially opens its doors. For example, they may need to secure office space, set up a business-dedicated phone and Internet access, get a small business license and insurance or any other number of things. But these to-dos need to go in order of their importance on the timeline, as they will determine the length of time required to responsibly start the business.
  3. Every Startup Needs a Preliminary Marketing Plan. Marketing tools may sound like premature assets to create for those that have not yet even officially opened up shop. But one of the first things on any professional to-do list for those just starting out should be to create a first-draft of a marketing plan. Small business startups need to get basic marketing portfolio components like business cards, domain names and a business e-mail address and then start to research and plan how they will market and sell services.
  4. Building a Small Business Network Starts Early. Building a small business network will be critical to bringing in steady clients for all entrepreneurs, regardless of industry. In the beginning, clients and business contacts will likely be friends, family members, former co-workers or others that have been referred by any of the above. But eventually, this well will run dry. One of the best small business tips entrepreneurs can follow at any stage of a company’s development is to keep going out into the community and meeting people that might benefit from available products or services.

How to Set up a Trust Offshore for a Startup

How Should a Business Incorporate Offshore Using an Offshore Trust?

Learn what a trust offshore is, what the benefits and typical structure are. Learn how to set up a trust offshore for a startup offshore BVI or offshore Jersey company.

Business incorporation offshore entails corporation forming in an offshore jurisdiction. Popular offshore jurisdictions include Bermuda, British Virgin Islands BVI, Cayman Islands, Delaware, Jersey, Cyprus, Labuan, Dubai, Gibraltar, Hong Kong and Singapore.

How Should a Business Incorporate Offshore?

To fully enjoy some of the benefits of offshore company formation, including that of anonymity and offshore asset protection, entrepreneurs may choose to set up a trust offshore to hold the shares of the offshore corporations.

In some jurisdictions, it is mandatory by law for offshore companies with the limited liability company form to employ the services of a trust offshore company.

For example, in Labuan, a trust offshore company often provides trust company services to the offshore companies incorporated with the limited liability company form in Labuan.

What is a Trust Offshore?

A trust is basically a legal relationship whereby the entrepreneur (i.e. settlor) transfers his or her assets (i.e. trust) to the trustee who holds and manages these assets.

Such a trust can be located in an offshore jurisdiction such as Bermuda, British Virgin Islands BVI, Cayman Islands, Delaware, Jersey, Cyprus, Labuan, Dubai, Gibraltar, Hong Kong and Singapore. Some examples of a trust offshore include an offshore Lloyds trust, an offshore Barclays trust or any other regular Jersey trust or offshore Cayman trust.

What is the Typical Structure of a Trust Offshore?

Firstly, the entrepreneur will establish the trust offshore. The trust will hold the trust assets of the offshore corporations. These offshore corporations in turn hold the assets such as cash, property and various investments.

What are the Benefits of a Trust Offshore?

  • Anonymity: Assets are held in the trustee’s name, therefore the identity and interests of the beneficiaries are kept confidential until the trust is terminated.
  • Offshore asset protection: A trust offshore helps protect offshore assets from claims by future creditors to the extent permitted by law. Since courts in the US, UK, Canada and EU have jurisdiction over property owned in offshore Canada, US, UK and EU, locating property assets offshore provides a high level of protection.
  • Asset management: Trusts offshore are a convenient means of placing offshore corporations’ assets in one holding vehicle, making asset management a breeze.
  • Tax savings: Typically, when entrepreneurs decide should a business incorporate offshore, they will want to capitalize on substantial tax savings. A trust offshore can help to reduce or avoid income or capital gains taxes. An offshore Lloyds trust, an offshore Barclays trust or any other regular Jersey trust or offshore Cayman trust could offer entrepreneurs such tax savings.

How to Set up a Trust Offshore?

  1. Consider the costs involved: Setting up an offshore Lloyds trust, an offshore Barclays trust or any other regular Jersey trust or offshore Cayman trust can mean an initial outlay of at least US$1,000 for a basic offshore trust and related charges.
  2. Prepare the necessary documents for setting up the trust offshore: The memorandum and articles of association of the company and a statutory declaration by an officer of the appointed trust company are just some of the documents that the entrepreneur needs to have handy.
  3. Choose a trust offshore company: Do the appropriate research on the various trust companies and select one which combines value for money, the right credentials, expertise and objectivity to manage the company’s assets.

Business Planning Software for a Startup Company

Create Financial Projections and use Strategic Planning Templates

Small business planning software features should include strategic planning templates. Sample planning documents help create financial projections for a startup company.

Starting a small business can be highly complicated. Even if the business will be privately funded, creating business plans helps to map out the expected changes in operations over the course of the first several years.

Strategic planning provides a guide for the administrative functions of a small company. Business plans include this information, but also require marketing plans and other information, including financial projections.

Business Financial Planning in Software

Business financial planning software used for a small business startup can simplify the process of creating financial projections. Before starting a company, it is difficult to make estimates, and many entrepreneurs end up simply guessing. Business financial planning software provides templates and guides to ensure that financial projections are based on fact, rather than guesswork.

Small Business Financial Planning

Small business financial planning requires more than a simple startup budget and cash on hand. There is a great deal of planning required for a business, even a small home-based company. Using software applications to create financial projections makes the process easier, but there is still a great deal of information to gather. Some of this information may include:

  • Evaluating the competition can determine the relative profit that can be expected from selling a particular product.
  • Gathering demographics and common purchasing power of the target market provides information for projecting sales.
  • Estimating capital costs for the first year of business gives business owners an idea of the amount of startup capital needed.
  • Detailing a list of company assets, including cash and equipment, as well as any additional items required for operations, provides a clear view of any additional expenditures that may be necessary.

Small Business Planning Software

Small business planning software comes in many varieties, and many levels of expense. Each business owner should review software reviews, and investigate available features carefully prior to purchase. This improves the chances that the software applications that are purchased live up to the developer’s promises and contain all the features needed for a small business startup.

Strategy Planning Software

Strategy planning software may be included in business planning applications, or may be separate. Purchasing software that includes strategic planning templates saves both time and money. Information that should be included in a strategic plan is typically administrative in nature.

Company goals, vision, and mission, for example, would be included in this document. In addition, the objectives of each of the company’s activities should be included. This portion of the document should be updated frequently, or as activities and circumstances change.

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