Experienced advisors help business owners avoid pitfalls.

Why Experience Matters

You may be wondering why a great business idea is more important than other pieces of the business puzzle. It comes down to experience. A study in the Journal of Business Venturing in the early 90’s found that entrepreneurial experience, especially the number of previous business startups, is the most compelling indicators of success. In fact, the number of previous undertakings is more important than your team, your age, or your years of general business experience.

But how can someone with little experience get the experience they need? The best way is to find a great business advisor. As your mentor, this advisor will be able to provide feedback and answers based on their own personal experiences that can lead to your ultimate success. In addition to leading by example, a great business advisor can also connect you with others, tapping you into their extensive network.

The Qualities of a Great Business Advisor

When looking for a great business advisor, there are many qualities to consider. Here are just a few.

Ability to Coach: Just because someone has the right experience does not mean that they know how to teach someone the ropes. You will want someone that doesn’t come in and do everything for you but teaches you the skills you’ll need for the future survival of your business. Essentially, you are looking for someone to be your partner rather than just a consultant.

The Right Background: A great business advisor will have a background in business ventures similar to your business. You’ll want them to know the types of challenges you’ll face, as well as the necessary components such as marketing, competition, and hiring.

Comparable Values: Finally, a great business advisor for you is someone that shares your values. It would be very difficult to work with someone who believes the ends justify the means if you value integrity. This does not mean that your business advisor needs to think just like you, but it does mean that their methods mesh with your ideals.

Finding a Great Business Advisor

Finding a great business advisor does not have to be difficult. Here are a few ideas to get you started:

• Networking Events – Talk with people during in-person networking events. As you do so, you will begin to find those that would make potential advisors. Keep in mind that you are not likely to find the perfect advisor at your first event. Instead, use networking events as a place to start the process.
• Hang Where the Entrepreneurs Hang – This works well for those living in big cities. Look for such things as startup incubators, brainstorming meetings, or other entrepreneurial locations.
• Social Media – Both LinkedIn and Twitter are great ways to make professional connections. It is easy to look for those who are located near you and are within your specific industry.

• SCORE – This organization has 320 chapters across the US and will provide a free mentor to discuss your business. Although the time with the SCORE mentor is limited, you may be able to parlay this into a long-term relationship.
• Industry Specific Events – Look for conferences, expos, and other events directed at your specific industry. Here you will find experienced individuals that know what you are trying to accomplish.
• Volunteer – As you volunteer, it is easy to meet retirees who have experience running a business. You’ll also be doing double duty by giving back to your community.
• Family and Friends – Don’t overlook those you already know. Even if your immediate friends wouldn’t make a great business advisor, they may easily know of someone that could.

In actuality, you have the potential to find a great business advisor anywhere. Simply keep your eyes and ears open to the possibilities as you look for someone that meets your unique business needs. Once you’ve found someone, use their experience to your advantage, create long-term goals, and watch your business become more successful.

Want to learn more about finding a business advisor or other small business tips? Give us a shout, you may be surprised at what’s available.

Give us a call at (310) 817-0376 or fill out your contact info to the right if you’re interested in learning what we can do for you. Our team is standing by and looks forward to working with you!

Many of today’s business owners have had a few bumps on the credit score road.

#1 Understand the Credit Score Breakdown

FICO scores are the most used credit scores in the United States. FICO, though it guards its scoring system, does provide the consumer with general information about how a score is formulated. They break your credit information into categories, give each a weight, and then give come up with your credit score. Understanding that some things count more than others can help you determine which areas to focus on when trying to improve your score:

• Payment History: Whether you’ve had late payments or are delinquent accounts for 35%.
• Debt-to-Credit Ratio: How much debt you have compared to the credit you have available accounts for 30%. The smaller the ratio, the better your credit score will be.
• Length of Credit History: How long you’ve had credit makes up 15% of your credit score. The longer you’ve had established credit, the better.
• New Credit: New credit lines account for 10%. Only open credit when you must have it or when it makes financial sense.
• Credit Mix: Having a variety of credit lines shows that you understand how to handle different kinds of credit and makes up 10% of your score. Try to have a mix of both revolving and installment loans so that FICO can see that you are a good risk.

#2 Take a Look at Your Credit Report

This is easy to do by simply contacting the credit reporting agencies. Each one is required to provide you with a free report once a year. If you feel you need to check your report more frequently, there are many companies that offer this service as well as many credit cards that provide you with a credit score report each month.

#3 Fix Mistakes You’ve Found

The reason for getting your report is two-fold. The first is to determine what your score is and what areas need improvement. The other is to look for mistakes. Credit report mistakes are very common, with up to 20% of consumers finding errors each year. If you find an error, just follow the instructions for filing a claim to have the error fixed. Be sure to keep a copy of all documentation for your files.

#5 Make Your Payments on Time

Every time you miss a payment, your credit score drops. That is why it is important to make your payments on time, every time. Studies show that doing so can raise your credit score significantly in just one year.

#6 Decrease Your Debt

The more debt you have, the lower your score will be. FICO scores rely heavily on how much debt you have compared to have much credit you have available.

One way to decrease debt is by using the debt snowball plan. To use this plan, pay off your smallest bills first and finish by paying off the largest one. Each time you pay off a bill, use the money from the first bill to help pay off the next, thus creating a snowball effect.

#8 Have Different Credit Types

Showing that you can handle different types of credit will also increase your score. Look at getting both installment loans and revolving credit. However, only open new accounts that change up your credit mix and only do so if you can afford to make the payments on time, every time.

If you’re a business owner that doesn’t have perfect credit, Harper offers a funding advance that provides much needed cash in exchange for a specific percentage of future sales. This allows business owners to obtain the funding they need quickly and repay it based on future transactions rather than credit score.

Give us a shout, you may be surprised at what’s available.

Either way give us a call at (310) 817-0376 or fill out your contact info to the right if you’re interested in learning what we can do for you. Our team is standing by and looks forward to working with you!

Business loans for owners without collateral.

Lending is a risky business, as a result banks and traditional lenders are hesitant to lend to businesses without adequate collateral.

Whether it’s a house, equipment, accounts receivable, or even inventory banks and traditional lenders always feel more comfortable lending behind collateral. This type of lending can be an issue for owners that run businesses with little collateral. Maybe you don’t have real estate or equipment. Or maybe you do, but there are already loans claiming those assets. Maybe it’s seasonal and your inventory levels are low. And if the business’ cash flow can’t get you a loan either owners can feel extremely frustrated with the lack of options.

A growing trend among traditional lenders.

After the 2009 Recession, banks pulled back to “safer” forms of lending, which to them means loans backed by collateral. A piece of real estate or heavy equipment can get you loans with rates as a low as single digits. Unfortunately, these options disappear if you lack the proper collateral or don’t have excellent credit to guarantee the loan. And the truth is that more and more businesses today are asset-light; meaning they don’t operate with a lot of collateral. Think of your modern day consulting firms, business services, ecommerce, etc all lack the collateral of old school manufacturers, brick and mortar retailers, and other more traditional businesses.

Every company is different and the ability to repay a loan should be based on the factors unique to that business. Traditional lenders’ rigid collateral requirements based on very traditional forms of underwriting can keep a good business from being funded. The Harper team understands how absolutely frustrating this reality is, and have dedicated ourselves to creating financing options for business owners of all types, even those with not quite perfect credit. Our team, including several serial entrepreneurs, understand this frustration all too closely.

Even if you already have a loan outstanding on the business, we can still fund you! And if you’re a retail / ecommerce business that handles daily credit card transactions, Harper also offers a merchant cash advance that provides much needed funds in exchange for a specific percentage of future credit card sales. This allows owners to obtain the funding they need based on their revenue rather than collateral.

Give us a shout, you may be surprised at what’s available.

Give us a call at (310) 817-0376 or fill out your contact info to the right if you’re interested in learning what we can do for you. Our team is standing by and looks forward to working with you!

Business loans for those with less than perfect credit.

Banks and traditional lenders are hesitant to lend to business owners with credit scores below a certain threshold.

It really is a chicken and an egg problem. If the business is successful, the business owner can begin repairing their credit. But with the wrong credit score they can’t find funding and their business lacks the capital to grow. Entrepreneurs in this situation can feel frustrated at best and hopeless at worst.

A systemic trend across the economy.

After the 2009 Recession, banks pulled back from lending to individuals with FICO scores lower than 700. At a FICO score of 700 and above, business owners can qualify for various forms of financing including SBA loans, term loans, and low rate credit cards. Unfortunately, these options can disappear with a credit score less than 600. And the truth is that 35% of Americans have FICO scores less than 620, which means there are thousands of small businesses that lack the funding needed to succeed.

The Harper team understands how absolutely frustrating this reality is, and have dedicated ourselves to creating financing options for business owners of all types, even those with not quite perfect credit. Our team, including several serial entrepreneurs, understand this frustration all too closely.

If you’re a retail / ecommerce business that handles daily credit card transactions, Harper also offers a merchant cash advance that provides much needed funds in exchange for a specific percentage of future credit card sales. This allows business owners to obtain the cash they need and repay it based on future transactions rather than credit score.

Give us a shout, you may be surprised at what’s available.

Either way give us a call at (310) 817-0376 or fill out your contact info to the right if you’re interested in learning what we can do for you. Our team is standing by and looks forward to working with you!

Take the next step with Facebook Insights.

In Part 2 of our 3 part Facebook Tactics for Small Business series, we dive into Facebook Insights and the powerful features it offers business owners and marketers. Check out Part 1 here. 

Once you have become more familiar with Facebook, it is time to take the next step and utilize Facebook Insights! The Facebook Insights feature is a double-edged sword. It is easy to become overwhelmed by the different subcategories and caught up in the lingo. But once you focus on what is important, it can be a powerful tool to become more aware of what drives successful engagement.

When starting out with Facebook insights you want to focus on page and audience analytics. These numbers tell you about the interaction with your content as well as useful information on who is watching. They can create more meaningful connections with your audience.

Your Page Summary

You can access your insights by clicking “Insights” on the top of your company’s Facebook page. It first brings you to an Overview Page that includes a Page Summary, Your 5 Most Recent Posts and Pages to Watch.

In the Page Summary you can view general numbers on actions, page views, likes, engagement, and videos. This means that you can see how many people click on your call to action (actions on page), the total number of page views and likes, the number of people your posts have reached, and the number of times people have engaged with your posts. Once you are using Facebook Insights regularly, these will be some of the most important numbers for you to look at.  

There has been disagreement within the social media-marketing community regarding what is and is not an important insight, but everyone agrees that engagement is key. This is because it gives you a more accurate picture of how many people are actively thinking about your company based on how many likes, comments, and shares a post gains. Many people used to focus on Facebook likes, but that is only an idea of passive users, whereas true engagement shows deeper audience connection.

It is important to look at the difference between your reach (the number of people your posts have reached, plus likes, comments and shares) versus your engagement (number of times people are commenting, liking and sharing). You can see which posts are falling short (low engagement) and replicate those that are getting a good response. You want people to be mentioning your company, commenting on your posts, and sharing your content so that you reach more people organically. If you are getting high engagement not only does that mean that your content has been dynamic, but it is essentially receiving a free form of advertising.

 Your 5 Most Recent Posts

Your 5 Most Recent Posts helps you to see a snapshot of current activity and basic stats on these posts. You can see the basic publishing information, type of media, reach, and engagement for each of the posts. It is helpful because they show you how much of your reach is organic and how much of it is paid so that you can have a clearer picture of the true numbers.

You can use this to compare which types of media have produced the most engaging posts, as well as paint a picture of the most engaging type of content. They also break down the engagement between post clicks and reactions, comments, and shares. You can see if your content is being read or leading to separate pages, or if it is engaging enough to inspire people to comment. Both are important numbers depending on what your marketing goals are for each post.

Pages to Watch

Pages to Watch is a helpful comparison tool that allows you to gauge how your activity measures up to similar pages. You can compare total page likes, engagement, and number of posts in order to stay up to date with what others in your industry are doing. This can be a powerful tool to help understand the general range that your own numbers should fall in.

Your Audience

Another helpful tool is to use the “People” tab on the left hand side of the insights page to view Audience statistics. This is where you can find the demographics of the people who liked your page, those who were reached with various posts, and those who engaged. You can see age, location, and gender. It is helpful to see the types of people your content is reaching so as to better understand how your content is circulating organically. In addition, you will have a better understanding of the types of people who are most likely to engage. This is important to determine if you are indeed reaching your target audience and if those are the people who have the most frequent engagements with your content.

All of these basic insights provide a comprehensive overview of your Facebook reach and engagement. It is important to understand how you compare to competitors, the reach of your posts, and the who, when and how behind audience engagement. Once you become familiar with these, you can check out classes and learning modules from Facebook itself to dive deeper and maximize your usage of the many tools they have to offer.

And look out for Part 3 of our 3 part Facebook Tactics for Small Business coming soon!

Sofia DeMay is the co-founder of Swifte, an app which aims to transform the way communities carpool by matching drivers with extra space in their cars with people looking for rides. She has extensive digital marketing experience including roles at Wells Fargo, GLIDE and Feldspar Studios. She is particularly interested in the intersection of marketing and technology, as well as exploring strategies for social entrepreneurship. 

Facebook for small business explained.

With 1.2 billion daily active users, it is more likely than not that some of your target market is on Facebook. Facebook provides a powerful platform for connecting with your customers and building a strong brand presence. In order to optimize your usage, here are some tips to keep in mind when getting started.

Is Facebook right for you?

Always connect everything back to your customers. Who are they? Are they on Facebook? Check out the most common demographics for each social media platform here. If they are, then how are they behaving? It is important to understand how your customers view and use Facebook. In fact, 70% of Facebook users use the site on a daily basis – which means that your business should too.

It’s worth noting that for most B2C and many B2B businesses, customers will check if your company has a Facebook page in order to judge legitimacy. Social proof is easily found in the age of social media and thus even more important than before. An active Facebook profile with engaged customers establishes some legitimacy right away.

What do your customers see when they go to your page?

Compared to your company website, Facebook offers much less space for extra content. One of the first things people will see is your profile and cover photos. It is easy to create a layout that is too cluttered or overwhelming and drive your customers away. Here are some tips to keep in mind when creating and customizing your cover photo.

On the main page, you only get 155 characters to describe your company, so make sure to keep the bio short, engaging, and informative. You can then go to settings and add a longer description to the “About” tab, as well as your address, launch date and contact information. This does not appear on the main page, but provides additional information if someone wants to learn more about your business.

So what about posting?

There are three main factors to keep in mind when posting on any social media platform: frequency, content, and timing.

One of the easiest ways to earn an unfollow or unlike from a user is by over saturation. People have vast networks online and don’t want to be bombarded by the same company over and over again. It is important to remember that most Facebook users are daily however – so you can post content more frequently than on other platforms. The general consensus in the digital marketing world is to post on Facebook a max of 2 times per day. But, if there is a special deal or event going on, a business could post up to 4 times.

So what should you be posting?

It is important to keep your content varied, dynamic, and interesting. This is a chance to build up your brand’s presence and personality, as well as become a thought leader in your field. What are people’s motivations for liking or following your page? Are you providing powerful industry insights? Are you posting funny videos? Are you giving out special prizes or deals?

Generally, there is an 80/20 rule with content – you should aim to post 80% original material and 20% from other sources. This provides a good balance that will keep your audience engaged and receptive. Try to include varied forms of multimedia – experiment with videos, photos, and text. One of the great things about Facebook is that it allows you to use so many different types of content – so take advantage!

When should you post?

Now that you know what to post and how often to post, what is the exact time of day you should post on Facebook? Numerous studies have existed over the years debating the best and worst times to post content. As time changes and Facebook users change, their habits change as well. In 2016, it was argued that the optimal time to post for visibility was between 1-4 pm later in the week and on weekends.

The time when you post will have an affect on what your audience does in reaction to your post- are they viewing it? Liking it? Sharing it? It is important to keep in mind that action item which you hope to accomplish from each post because this will influence the optimal time. For example, if you are a retail company advertising a flash sale, your goal may be to gain click-throughs to your main website so you should post around 3pm. Check out this report on the best time to post on Facebook to determine what suits your business goals.

Facebook is about having conversations

Your work is not done after posting! Facebook provides a unique opportunity to share, comment, like, and message all on one platform. It is an extremely powerful tool in helping you talk with customers and building your brand. Make sure to monitor what people are commenting on your posts – and comment back. If a customer complains on Facebook, use the messenger function to get in contact with them and provide direct customer service. Are you part of a business community downtown? Like your neighbor’s posts and engage with them about their own content!

Facebook is a platform that offers businesses prime opportunities to publish content and engage with customers. However, it can be overwhelming at times. Make sure to always keep your customer in mind and you will be on the path to success!

Like these tips and ready for the next step? Stay tuned for our Advanced Facebook Tactics for Small Business coming soon!

Sofia DeMay is the co-founder of Swifte, an app which aims to transform the way communities carpool by matching drivers with extra space in their cars with people looking for rides. She has extensive digital marketing experience including roles at Wells Fargo, GLIDE and Feldspar Studios. She is particularly interested in the intersection of marketing and technology, as well as exploring strategies for social entrepreneurship. 

Social media for the entrepreneur just diving in.

Social media can be a daunting challenge for small business owners who are not familiar with the ins-and-outs of the different platforms. However, used correctly, it can be a powerful sales and marketing tool that drives inbound leads, customer engagement, and brand building. Here are 8 vital tips for entrepreneurs looking to start tweeting, posting, and sharing.

1. Social Media is Your Friend

Social media is not right for some businesses and wrong for others – it can be right for every business if used in the right way. The key to leading a successful brand is meeting your customers where they are – and now that they are online that means you should be too! It may seem daunting to start on social as a small business but it can be a very powerful tool. It provides a platform to connect and engage with your customers, build your brand’s presence, and stay relevant. The most important thing is to remember that social media is here to help.

2. Timing is Key

Every account on social media is operated by a human being – meaning that you need to pay attention to their patterns of living to understand the best times to post on various platforms. You don’t want to send out a hilarious tweet at 3 am when most of your customers are asleep. In order to optimize your content’s reach it is important to understand the lifestyle of your target market and know how they use each platform. Rather than get overwhelmed by conducting your own research and interviews, here are some resources to get you started.

3. Always Have a Plan

One of the biggest mistakes when starting out on social media is to not have a comprehensive plan. Although social media is a tool meant to be used to grow your business, it can be easily misused. It is vital to have a clear plan when posting on all platforms. Having a plan for what content is posted when helps to keep you on track with your marketing strategy and save time. Content calendars also help you make sure that content matches across platforms and avoid time crunches. Be strategic about when and on which platforms you share case studies, comprehensive guides, or list-type articles. This doesn’t mean that you need to post all day everyday – but it does mean that when you do post you should have a plan and a purpose. We set our content calendar in Asana but many calendar tools exist.

Thankfully there are plenty of tools out there to help you plan when and where your posts are going. Don’t be ashamed to get a little help! Nowadays there are so many different platforms with varied content styles that using a planning tool has become the norm. They help save a lot of time by giving you the ability to schedule posts for the future and plan across multiple platforms. Hootsuite and Buffer are two great, easy to use automation tools when you are first getting started! Make sure to explore all the features because both have a lot to offer.

4. Be Customer-centric

Always tie your content, timing and choice of platform back to your customer. Make sure you have a comprehensive idea of who your customers are so that they not only see your post (because of your thoughtful timing!) but also choose to engage. Everything you do should tie back to them. Make sure your platform of choice keeps in mind what you are selling and connects it to who your customers are. If you are a consumer-facing brand, a platform such as Pinterest or Instagram may suit you best because it is more visual and suits your buyer base. If you are more service oriented, Facebook is a great way to funnel customers from a social media platform to your website. It is always good to keep in mind what types of people use various social sites to choose the right one for your business.

5. Use Social Media as a Person not a Business

People go on social media to interact with a community in a casual and authentic way. If you post on Facebook the same way you would write something on a billboard it won’t get the same response. We’ve found that a conversational style resonates with users much more deeply than a formal tone of voice. People like it when there is a human-like quality behind their favorite brands – and this leads to more engagement. This is a chance to create a friendly and dynamic relationship with your customers. Have fun with it!

6. Monitor and Engage

Being a pro on social doesn’t mean just posting amazing content and leaving it at that. You need to monitor and see what customers are saying. If people are complaining – address the complaints! If people are praising the company – encourage them to share their experience with their friends! Social media is all about engaging in a conversation with your customers so make sure you are staying up to date on who is mentioning your company and what they are saying.

7. Keep Content Dynamic and Varied

Keep your content interesting! You want your accounts to offer consumers dynamic content that is representative of brand and makes them think. This doesn’t mean that you can’t share and retweet other’s work – but it does mean you should create your own unique stream of content. This may involve using photos, videos, quotes, and text. You should try and stay away from sending out only one form of content all the time –  too much of one thing can drive customers away!

8. Take it One Step at a Time

All this may seem like a lot at first, but you can start small! Don’t think you need to create a Facebook, Twitter, Instagram, and a Snapchat all at once. Choose one or two and spend time getting comfortable before expanding. It is better to be really strong on two platforms than scattered across four.

Sofia DeMay is the co-founder of Swifte, an app which aims to transform the way communities carpool by matching drivers with extra space in their cars with people looking for rides. She has extensive digital marketing experience including roles at Wells Fargo, GLIDE and Feldspar Studios. She is particularly interested in the intersection of marketing and technology, as well as exploring strategies for social entrepreneurship. 

We outline where to turn if your business loan application is rejected.

Applying for a bank loan doesn’t guarantee you’ll be approved. In fact, most startups and small businesses are rejected for a multitude of reasons including low credit scores, weak or negative cash flow, lack of collateral, and length of time in business, among other things. Bank rejection isn’t the end of the world, and there are opportunities that arise if you find yourself in that situation.

Here’s what you should do if you’ve been turned down by a bank:

1. Look at it from the bank’s perspective

This is nothing to take personally. Rejection may actually help you identify weak points in your business plan.

Call the banker and politely ask for an explanation. How can your future application be improved? What would make your business a stronger credit to the bank? If the lender believes there’s too much risk in your standalone business, ask if using your personal assets as collateral would help. Proving your commitment goes a long way and leveraging personal collateral will help reassure the bank that they’re protected and you’re committed. If your personal credit score is an issue, check out some business loan alternatives.

2. Dig into your business fundamentals.

Cash flow profile, seasonality, time in business, and available assets are all factors that banks consider when underwriting. For cash flow loans (uncollateralized), the business usually needs to have been an operating entity for at least 2-3 years as well as profitable. Other criteria include customer concentration, background of principals, customer contracts (long term, recurring?) are also taken into consideration. If your business has assets like accounts receivable or real estate (and to a lesser extent inventory) banks will be more flexible in their underwriting process.

It’s important to understand the distinction between short term and long term loans and what underwriters of both look for in terms of business fundamentals. Short term lenders (cash advances, factoring, ABLs, etc) rely on your most monetizable assets (usually AR or the promise of future AR in the case of cash advances) to make a quick approval decision. Most banks on the other hand make long term loans, and as such, require cash flow to cover expected interest expense and amortization. This naturally just takes a longer time. Most lenders are looking for a coverage ratio (operating cash flow / required debt payments) of at least 1.5x. For the best rate loans, 2.0x coverage and higher is often required.

3. Reach out to specialized banks.

There are thousands of banks in the U.S. – many specialize in certain niches, regions, and industries. For instance, Bank of Ann Arbor, a small Michigan bank, offers lines of credit to venture capital firms. Stearn Bank offers equipment financing with a particular focus on the agriculture and construction industries. Find the bank that focuses on your industry and / or region. Don’t rely on the big national banks that may only seriously focus on lending to businesses above a certain size.

4. Look into your tax strategy.

Deducting everything you can from your business’s income might help reduce your tax burden. It’s also what accountants and bookkeepers are trained to do. However, every deduction also reduces your business’s income. This strategy can backfire when you’re applying for a bank loan. Banks will consider your tax return income as a measure of profitability. Most banks won’t lend to unprofitable businesses without some type of collateral. Discuss with your local banker whether deducting less in a year to show some tax profitability is worth it from an underwriting perspective. If a business loan is really needed, it may make sense to endure the tax costs of less deductions.

Lenders will also take notice of your historical revenue on your tax return. If you submit returns for multiple years, they will be able to establish a sales pattern. If your revenue is stable or growing each year, it’s a sign that you will be able to repay a loan from them.

5. Check your personal and business credit score.

Credit scores are a common reason why small businesses are denied at banks. Banks are risk-averse creatures and your personal or business credit score might just not be high enough. FICO scores below 640 mean you’re not likely to be approved for a loan at major banks. Even personal credit scores approaching 700 are looked at warily by some banks.

Most people are familiar with personal credit scores (FICO, Experian, etc) but you may not know about business credit scores. Factors that determine business credit score include payment history with suppliers, length of time in business, credit outstanding, liens on the business, industry risk, and company size, among other factors. You can improve your business credit score by paying your suppliers and vendors on time, opening multiple credit accounts (i.e. business credit cards), and keeping your credit utilization around 25%.

6. Look for alternative sources of funding.

There are MANY alternatives to financing your business outside of a bank. Take time to explore which options are a fit for your business. Here’s a few different categories:

• Crowdfunding: Kickstarter and Indiegogo are the most popular crowdfunding sites that businesses use to gain exposure for and fund their products. They are excellent platforms to test the market and gather capital prelaunch. Kickstarter and IndieGoGo are the two heavyweights in crowdfunding, but key differences exist between the two, which are highlighted at Crowdfunding Dojo.

• Angel Investing: Early stage equity investing for small businesses. Angel investing usually funds the earliest stage businesses and serves as a precursor to seed funding (though there’s growing overlap). There are thousands of informal angel investors but many band together to form syndicates that can invest larger checks. Some notable syndicates include Tech Coast Angels, Golden Seeds, and AngelList (equity crowdfunding).

• Receivables financing: AR factoring leverages your receivables as assets to access funds quickly. The factoring company advances up to 90% of the receivable’s value within 24 hours, with rates ranging from 2 to 4% per month. Factoring is only available to B2B or B2Gov companies, but it can provide a compelling value proposition (from both a price and speed perspective) for businesses that aren’t quite bank loan-ready yet.

• Merchant cash advances: Pricy but fast form of financing that takes a percentage split of your future sales until the advance is paid back plus interest. An MCA is not a loan, but rather a sale of future receivables.

Accounts receivable factoring could be the smart alternative to finance your business. To learn more about the financing solutions that Harper Partners provides, fill out our contact form, send us a message via the chatbox below, or call us at (310) 817-0376. We look forward to learning more about your business!

Three case studies highlighting the power of accounts receivable factoring when used in the right situations.

Companies at their most basic level are in the business (pun intended) of investing their resources in positive ROI activities. If they can do this repeatedly and cover their working capital needs along the way, they’ll stick around. Often that requires outside financing to get over that initial bump and fill in cash flow gaps as they grow. Term loans, cash advances, and asset based lines of credit can all serve a purpose during a company’s growth. In this article, we’ll highlight a form of asset based lending called accounts receivable factoring (also known as invoice factoring) and how it can help businesses across many industries.

Many businesses grow past their customers’ payment terms. Customers tend to pay on 30 to 60 day terms and oftentimes even longer. Issues arise when the cost of delivering the product or service, business expenses, and salary need to be paid during this wait time. This is exacerbated during periods of high growth as expenses increase but so do payment terms (as you work with larger customers).

Accounts receivable factoring as a financial solution can free up to 90% of your cash stuck in AR, immediately. It’s often the best financial solution for companies that qualify – both from a price and ease of use perspective.

Unfortunately, the larger the customer, the longer the payment terms.

The following three case studies highlight the positive impact that accounts receivable factoring can have for growing businesses.

On-Demand Trucking, LLC (Transportation Carrier)

On-Demand Trucking is a startup transportation carrier that works with retailers to move goods from their distribution centers to their stores. Though sales are strong for On-Demand, and they’ve signed 4 clients in their first 8 months of business, they’ve dealt with cash flow issues. Their major retail clients pay on terms of 45 days or later (75 for the slowest payer). Though they have happy clients and are generating revenue, they have business expenses that must be paid sooner than they get paid. Without invoice factoring, On-Demand would struggle to stay in business as it does not have enough cash to pay salaries and cover fuel and maintenance costs.

Our exhibit shows that even with 3x revenue growth, On-Demand Trucking is able to generate a cash surplus of more than $186,000 using accounts receivable factoring. This can be used to lease more trucks, win additional clients, and build out the team. Accounts receivable factoring continues to help the business grow without succumbing to cash deficits.

Bdot Online Media (Web Publisher)

Bdot Online Media is an online publication with several website properties. Each website earns revenue from brands and agencies purchasing ad inventory through an exchange and also running sponsored content campaigns. Though they’re in a completely different industry, Bdot faces similar working capital issues as On-Demand, but their cash deficit is even higher. Bdot needs financing in order to pay salaries for their writers, content creators, and developers. The exhibit below highlights the company’s cash position before and after factoring.

After factoring, Bdot has similar results as On-Demand Trucking, but its cash surplus is much higher as they have a higher receivable balance (digital advertising is a notoriously slow paying industry). Instead of waiting up to 120 days with a cash deficit of $60,000, and potentially going out of business, Bdot converts these receivables into cash within 24 hours of their funding request.

Virtual Creators, Inc. (Hardware Manufacturing)

Virtual Creators is a hardware startup seeking to expand its business. The Company sells their products in bulk orders to both online and brick & mortar retailers. They manufacture overseas in Shenzhen, China and recently switched to a new, more experienced manufacturer in the region. This manufacturer doesn’t have a preexisting relationship with Virtual. As such, they do not offer trade credit and require payment as soon as the goods arrive at the U.S. port.

Virtual Creators maintains gross margins of 40% at wholesale to their retail buyers. Unfortunately, the retailers pay on net 60 day terms after receiving the product. In order to finance its supply chain, Virtual relies on accounts receivable factoring to advance cash upfront as soon as orders are received by its retail customers.

In the exhibit below, the Company avoided a cash deficit of $120,000, and paid its new manufacturing partner on time- starting the relationship on a positive note. Working with a factoring company, Virtual was able to turn a cash deficit of $120,000 into a cash surplus of $7,500. And with a 2x growth in orders, they were able to take on new orders without issue, maintaining a cash surplus throughout fulfillment.

There are better known alternatives to accounts receivable factoring on the market but their drawbacks are where factoring can truly shine. If a business is profitable, at least 2 years old, and the owners’ credit scores are high, bank loans with local or national banks become an option. However, approval can take months, and many businesses are rejected. This can grind your growth to a halt if you were planning to rely on that funding. It could even force you to delay payment to employees and vendors.

Source: Small Business Administration Quarterly Lending Bulletin April 2015

Merchant cash advances are a quicker option. However they usually require repayment within a year with daily draws from your bank account and can be horrendously expensive (APR’s exceeding 100% in some cases).  If you’re a B2B or B2Gov business, accounts receivable factoring is a fast and cost-effective solution to help your business manage working capital and grow uninterrupted.

Accounts receivable factoring may be the smart alternative for financing your business. To learn more about the factoring solutions that Harper Partners provides, fill out the contact form on our Get Started page, send us a message via the chatbox below, or call us at (310) 817-0376. We look forward to learning more about your business!

Women are increasingly becoming small business owners and entrepreneurs. According to the National Women’s Business Council (NWBC), there were 9.9 million women-owned businesses in 2014, up from 7.8 million in 2007 — a 28% increase. Together they generated combined receipts of $1.4 trillion. Female business leadership is at an all-time high and continues to grow at a rapid pace.

Despite these encouraging statistics, the financing available to women-owned businesses still lags far behind men-owned ventures. Women receive 16% of conventional small business loans yet their businesses comprise 36% of all nonfarm and privately-held companies. Not only do women get fewer loans, they are given less money when funded. Despite receiving 16% of all business loans, the total dollar financing women receive is only 4.4% of all dollars lent through conventional lenders.

Recognizing this unequal access to financial resources, many companies, nonprofits, and government agencies have programs supporting women entrepreneurs. We’ve outlined 22 of the best resources below:

LOANS AND ALTERNATIVE FINANCING

These alternative lenders provide flexible financing solutions for startups and small businesses:

1. StreetShares: For newer businesses, offers $2,000 to $100,000 with APR from 9% to 40% and funding time within 1 to 5 days. Run by U.S. military veterans and is also a proud supporter of veteran-run businesses.

2. Harper Partners: For fast growing tech companies or brands, Harper offers a venture debt product that is much faster and less dilutive than  raising equity.

3. Bond Street: Offers $50,000 to $500,000 with interest rates from 6% to 22% and funds within 1 week. Bond Street generally funds more established businesses, requiring companies to have over $200k of trailing revenue and to be cash flow positive.

4. Harper Alternative Financing: Harper also provides fast funding solutions for female business owners that may not have the best credit.

GRANTS

Grant programs do not require business owners to return the money and as such these programs often have strict rules to apply. Interested applicants should research which programs are applicable to you and your business. Not all will be a fit. If you are awarded the grant, many programs require you to report on how the money is used. Here’s are a few of the best private grants for women business owners.

5. The Eileen Fisher Women-Owned Business Grant: Awards $120,000 in grants to up to 10 recipients (minimum grant of $12,000) every year. In addition to the grant money, recipients are invited to New York City in the spring following their award for two days of learning and celebration with the EILEEN FISHER community.

6. InnovateHER: 2015 Innovating for Women Business Challenge: Sponsored by the SBA Office of Women’s Business Ownership, this grant is for $70,000 in prize money for the most innovative products and services that help impact and empower women’s lives

7. Zions Bank – Smart Women Smart Money: Utah-based bank’s grant annually awarding $3,000 across six different categories for women, which includes business. Zions Bank hopes that “Smart Women Grants help bolster the efforts of entrepreneurs who strengthen our communities through their diverse talents and endeavors.

8. Amber Grant: The foundation awards $500 to a female entrepreneur each month. One of 12 grant winners is awarded an additional $1,000 each year. Amber Grant requires a very simple application with a $7 application fee. The advisory board looks for female entrepreneurs with passion and a good backstory

ANGEL AND SEED INVESTORS

There are several investor groups that target female entrepreneurs. Certain angel investing groups that connect women-led startups with interested investors. Your business will be screened for eligibility and you’ll get a chance to pitch directly to a network of angel investors. Crowdfunding and accelerators are also popular options that provide advisory and exposure to potential investors. Consider the following early stage investors.

9. Golden Seeds: A women-led angel investing syndicate that invests in female entrepreneurs. Has invested over $70 million in over 65 women-led startups.

10. 37 Angels: A community of women investors, funding female-led startups and small businesses. Investments are usually up to $250,000 per year for each investor.

11. Broadway Angels: An angel investing group of female business investors and executives, open to women-founded companies. Founded by Sonja Perkins, all members are or have been general partners in VC firms or senior executives in top technology companies. The largest investment made is $400,000.

12. Astia: A group dedicated to the success of women-led, high-growth ventures. Astia invests in high potential women-led startups, using a review system based on personal referrals.

13. 500 Women: An Angel investing group that focuses on startups with at least one woman founder. Launched a syndicate on Angellist that allows outside investors to contribute funds. This group has invested in over 100 women-founded companies over the past 4 years. Notable female entrepreneurs (and companies) they’ve backed include Victoria Ransom (Wildfire), Rashmi Sinha (SlideShare), Leah Busque (TaskRabbit), and Jennifer Goldfarb (ipsy).

CROWDFUNDING AND ACCELERATORS

14. Plum Alley: Offers members the opportunity to invest in innovative private companies. Their goal is to provide capital to the most promising female entrepreneurs, offer a guiding influence, and strong return for the investors. Recently, Plum Alley members raised $430,000 investing in a company entering Series A round.

15. Women Startup Lab: An accelerator that encourages growth of female-led startups by emphasizing coaching and leadership development. The program cost is estimated at $10,000, but offers scholarship and matching programs to mitigate the cost.

16. Mergelane Accelerator Program: A startup accelerator for companies with at least one woman in leadership position. The program runs from February to April and culminates final event showcases participant ventures to investors and the community. Applications are open in the fall.

ADVOCACY, EDUCATION, AND NETWORKING

With increasing female entrepreneurship, mentorship and networking become even more important. Many national and local organizations help women business owners find mentors, guidance, and expand their networks. Here are 6 of the best we’ve found.

17. Dell Women’s Entrepreneur Network: “Empowering women in technology and business”, organized within the LinkedIn Group in Women Powering Business Network, a community of over 5,000 members.

18. Ellevate: A national, membership-based network for women in business. The group offers educational and career-building opportunities to members in the form of content, social network and member directory. Membership fees run between $10 and $100 per month.

19. The Vinetta Project: Supports high-growth tech companies founded by women via the Vinetta Collective, the first talent agency dedicated to the rise of tech’s top female founders. Vinetta offers 7 centers across the US and Canada.

20. SBA’s Office of Women’s Business Ownership: Offers resources like a National Women’s Business Centers Directory and government procurement opportunities and training.

21. National Women’s Business Council: A non-partisan federal advisory council that advocates for policy, holds events in its DC headquarters and online for female entrepreneurs and business owners.

22. We Connect International: A global, membership-based nonprofit that connects women-owned businesses, from suppliers to retailers, across the world. Annual membership fees range from $5,000 to $35,000, depending on the number of seats in the National Advisory Councils as well as access to Global Database.