Planning for a New Business Includes Factoring

Planning for a New Business Includes Factoring

Access to capital is one of the biggest concerns among small businesses today. The fact that big banks are pulling loans, while interest rates for credit cards are at 30 percent, is very discouraging. On average the rate of business failure is around one-third, but that does not mean if you are starting a new business, that you too will fail. It just takes some planning, and a few strategies such as factoring.The things that will help you most in your new business are financial planning and flexibility, both of which will help you avoid many new business pitfalls. You and your new business can be part of the 25 percent of new businesses that do make it today. However, in order to make it what you will need is a realistic business plan outlining goals for your business that include realistic strategies and tactics for how your business can meet those goals.A good business plan should address the fact that you know there's a need for the business - because of all the research you did before you got started - and it should estimate the costs and tactics necessary, including timelines for when things will happen, and an estimate for how much they will cost. Another good strategy is that if bills start to pile up you can always add factoring into your financial mix.On average new business owners have very little capital so if you are a struggling business, you're really not in a great position to ask for a business loan. And they are hard to come by anyway in today's economy. It is important to be realistic at the beginning, and start with enough money that will last you to the point where you're business is up and running. You must have cash flowing in. Trying to stretch your finances at the beginning may mean that if your business never gets off the ground, you will still have a lot of cash to repay.A number of unemployed people are now becoming entrepreneurs seeking new business startup ideas. And some of these are co-entepreneurs, couples who both have lost their jobs. an entrepreneur's initial attempt to start a business doesn't work -- either the customers are not there, so the profits are just not there.One study released in January 2010 by the Kauffmann Foundation, says the number of new businesses incorporated annually in the U.S. has remained fairly consistent over the years. Although recessions often lower the cost of entry for new companies, they do tend to make customers more willing to explore less expensive alternatives to current products or services. Customers are also struggling, and often cannot not pay right away.If you are the owner of a start up service business, you can take advantage of finding a factoring company so you can get cash today - or in 24 to 48 hours - for invoices that will pay in either 30/60/90 days.There are many various types of businesses -- wholesale, retail, manufacturing or a service business - and service industries do offer some advantages as a start-up business. A service business is typically local so you usually don't have to compete with as many national companies as you would in a manufacturing, retail, or wholesale business. Service businesses also require less capital. Typically you don't need to finance large inventories. In a service business, the customers can usually be asked to pay immediately upon completion of the work.With the year 2010 coming to an end, we all know it may be difficult in today's economic times for a start-up business to get a loan from traditional financial institution today. However, more and more companies are finding how factoring can help them keep the cash flow going so they can grow.

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