Save Money on Maintaining Your Business Equipment

/in /by

StrategyDriven Managing Your Finances Article |Business Equipment|Save Money on Maintaining Your Business EquipmentYour business most likely needs some type of equipment to enable it to run. It could be office equipment that you need, or perhaps you need power tools or large machinery. Whatever the equipment is, you need to keep it in good condition so that it helps you to run your business efficiently. That requires regular maintenance so that you can avoid problems that might shut down your business unexpectedly. Maintaining your business equipment can get costly and take a lot of time too. However, there are ways to save money and even save time on taking care of your essential equipment.

Learn Some Maintenance Skills

Some people might decide that the best way to save money on equipment maintenance is for them (or their employees) to learn some maintenance skills. There are often maintenance tasks and repairs that you can do yourself, rather than calling out a service to have it done for you. Knowing how to fix a printer jam or get the parts to fix your tractor could save you a lot of time and money. Plenty of basic tasks can be completed by just about anyone, so it’s a waste of money to get someone with experience to do it for you.

Prevent Instead of Repair

Making repairs to your equipment can be pretty expensive, especially when extensive repairs are required. If you want to avoid expensive repairs, one of the best things that you can do is prevent problems in the first place. Good maintenance can help you to avoid the need for repairs by keeping your equipment running smoothly. Even just keeping your equipment clean can be a smart way to maintain it and prevent any issues that might require costly and time-consuming repair. Create a schedule of maintenance and servicing for your equipment to keep everything running.

Hire Some Equipment

The more equipment you own, the more you have to maintain. But you don’t necessarily have to own all of the equipment that you need to use. You might only need to use a piece of equipment a couple of times a year, and the rest of the time it could be taking up space while being neglected. If you don’t need something very often, consider hiring it instead. You’ll have to take care of it when it’s in your possession, but you won’t be responsible for its long-term maintenance. Plus, it can save you money.

Know When to Replace

As an asset gets older, it can require more and more maintenance. Eventually, you could end up spending more on maintenance than the cost of replacing the item. Knowing when to replace something instead of continuing to repair it is essential if you want to save money on your business equipment. Having to carry out constant maintenance and repair not only wastes your money but also wastes your time, so make sure you consider whether replacement is a better option.

Maintaining your business equipment should be affordable. You can save money if you need to maintain equipment more efficiently.

5 Ways Invoice Factoring Can Offer Quick Financial Solutions to Your Business

/in /by

StrategyDriven Managing Your Finances Article | 5 Ways Invoice Factoring Can Offer Quick Financial Solutions to Your BusinessSmall or established businesses need effective cash flow to run their operations. However, maintaining a proper cash flow can prove hectic with the market and economic changes. A business should seek alternative funding to keep its operations active and productive. Besides applying for a loan, businesses can utilize invoice factoring as an alternative financing option. Pointed below are the ways invoice factoring can offer quick financial solutions to your business.

Offers Financial Flexibility

It is prudent for your business to maintain flexibility in cash flow. Your business needs to fund its operations and sustain its workforce despite hard economic times. Invoice factoring financing becomes vital as it offers your business the flexibility it deserves. You can use the unpaid invoices to get the funds you need at any time. You, however, need to find and work with a reputable factoring company to enjoy the flexibility. Remember, invoice factoring makes cash available to your business and helps avoid financial struggles that might affect its operations in the end.

Helps You Save Time and Resources

Note that applying for a bank loan means waiting for days before getting approval. The approval chances are also minimal, and your business can get affected as you wait for the approval. Most banks and credit unions also dictate that you provide collateral to process the loan. This, in the end, can be inconvenient, especially to a struggling business. However, using your unpaid invoices to secure funds saves time and resources. You avoid worrying about collateral and wasting during the application process.

Easy Application Process With Higher Financial Approval

Financial history, credit score, and collateral determine your chances of getting a loan approved by the bank. You must meet the criteria and the requirements for your business to get the funds it needs. This is, however, different when you consider invoice factoring. You don’t need to worry about collateral or your financial history to get approval. You only need to show your financial history to the customers. The factoring company needs to be confident about the payment history before taking your unpaid invoices.

Credit Control

Collecting your payments and managing the credit can have different impacts on your business. You need to be effective with debt collection to keep your cash flow steady. It is, however, hard when you have to deal with sneaky customers. You get quick financial solutions by considering invoice factoring as you avoid the stress of dealing with your customers. Note that the factoring company you sell your invoices to handles the payment collection process and credit control. You get more time and space to manage your business.

You Use the Funds for Any Business Purpose

Unlike other forms of loans, invoice factoring provides you with the funds to use for any business needs. There are no restrictions or conditions on where and how to use the funds. You can improve your working capital, fund expansion, purchase new stock and equipment and add more staff with the funds you get through invoice factoring. You enjoy financial freedom by working with a reputable factoring company.

It is crucial for a business to maintain its cash flow for its operations. However, it can prove hectic when you lack a proper financing avenue. As much as applying for loans can prove beneficial, the process can be overwhelming. You need invoice factoring to get quick financial solutions and enjoy other benefits, as highlighted above.

How can surety bonds benefit small businesses

/in /by

StrategyDriven Managing Your Finances Article |Surety Bonds|How can surety bonds benefit small businessesIf you are a small business owner who is competing for contracts, you will need to demonstrate that you are qualified to perform the work that will be required under the contracts. Depending on your type of business, you might also be required by the state to obtain a license to legally operate. A common state requirement for licenses to operate different types of businesses is a surety bond. These are state-specific, so if you live in Florida, you’ll be required to get a Florida surety bond. Even if your business is not required to get a license, purchasing a surety bond is a good way to demonstrate that you are capable of performing work and can be trusted to meet your contractual obligations.

What Are Business Bonds?

Business bonds or commercial bonds are types of surety bonds that might be required for licensing or for entering into a contract. They are legally enforceable agreements between the following three parties:

  • Principal – The business that is required to purchase the bond
  • Obligee – The party requiring the principal to purchase a bond, which can be the government or a private party
  • Surety – The company that issues the surety bond and guarantees the principal’s performance and legal compliance

Surety bonds are required for many different types of businesses to obtain licenses and legally operate. If the small business that purchases a surety bond fails to complete the work or violates the law, a claim can be filed against the surety bond. The surety company will then pay any valid claim, but the principal will ultimately be responsible for the costs and will be required to reimburse the surety company.

Common Types of Businesses for Which Surety Bonds Are Required

Many different types of businesses are required to purchase surety bonds to obtain licenses. Some of the common types of businesses for which surety bonds might be required include the following:

  • Auctioneers
  • Notary public services
  • Auto dealers and dealerships
  • Travel agents
  • Construction contractors
  • Mortgage brokers

According to the U.S. Bureau of Labor Statistics, 21.8% of adults employed in the U.S. had licenses from their respective states in 2018. Since bonds are a licensing requirement for many different types of businesses, this demonstrates how common bonding requirements may be.

Construction bonds are particularly common. Congress passed the Miller Act in 1935. This law requires contractors who want to perform work on construction projects on federal buildings to have surety bonds for any project worth more than $100,000. At a minimum, contractors that want to perform work on federal buildings must have performance and payment bonds. States also have laws that are similar to the Miller Act and establish different state thresholds for public projects.

Common Types of Bonds for Small Businesses

Some of the common types of bonds small businesses might need include the following:

  • License bond – Bond required by the state for licensure
  • Permit bond – Bond required by a municipality to obtain a permit
  • Bid bond – Bond required by the government in order for contractors to submit bids on projects
  • Performance bond – Bond required by public or private project owners to guarantee a contractor will perform its contractual duties
  • Fidelity bond – Bond a small business owner might purchase to protect the business from losses caused by employee theft or fraud
  • Auto dealer bond – Bond required for auto dealers that intend to sell more than a minimal number of vehicles per year
  • Business service bond – Bond that protects a small business’s customers from employee theft or fraud

How Surety Bonds Work

Business owners who are required to purchase surety bonds can apply through a surety company. The business will be required to submit multiple documents with the bond application to allow the surety company to evaluate the business and its risk.

Surety bonds are not insurance and instead function as a form of credit. This means that you will need to go through an underwriting process before the surety company will issue a bond to you. The surety company will review information about your financials, including your business’s audited financial statements, profit and loss schedules, the resumes of key stakeholders, your business’s organizational chart, and your business and personal assets and liabilities. It will also look at your credit score and compare the size and value of past projects to the one that your business wants to bid on.

If the surety company believes that your business poses too great a risk because of problematic credit, poor performance in the past, or evidence of poor character, it will likely deny your bond application. This makes it important for you to operate your business in an above-board manner and keep your credit in good standing.

The surety company will provide you with a free quote if you pass the underwriting process. The quote is for the bond premium, which is the amount you will have to pay to purchase the bond. The bond premium is typically a percentage of the total bond amount and can range from 1% for experienced business owners with excellent credit to 15% for businesses with little experience or problematic credit.

If you accept the free quote and pay the bond premium, you will also have to sign an indemnity agreement. This means you agree to indemnify the surety company for any valid claims that might be filed against your bond.

Benefits of a Surety Bond for a Small Business

Surety bonds offer several benefits for small businesses. When you are approved for a bond, it functions as a prequalification and demonstrates that your business is stable and able to perform the work as promised and in compliance with the law. Having a surety bond might demonstrate that your business is trustworthy and encourage others to contract with you.

Surety bonds also protect other parties beyond the obligee. For example, if you own a construction business, your bond will also protect the suppliers and subcontractors that you contract with, so it might be easier for you to find subcontractors and suppliers that are willing to work with you. Surety bonds also provide you with access to more valuable projects.

Many businesses are required to purchase surety bonds by the state to get licenses to legally operate. Others may be required to purchase bonds to perform work on specific types of projects. While purchasing a surety bond is another expense for small businesses, doing so can help you to demonstrate that your company can be trusted to perform its work ethically and legally.

Is Taking a Small Business Loan Worth It?

/in /by

StrategyDriven Managing Your Finances Article |Small Business Financing| Is Taking a Small Business Loan Worth ItThe word ‘loan’ doesn’t have a nice ring to it in any sense. Whenever we talk and hear about loans, it usually points towards difficult times and thorny situations. However, business loans can’t be seen through a singular point of view. One has to apply context to commercial loans because oftentimes they are actually tied with business opportunities.

Whenever any entrepreneur starts mulling over the idea of taking a small business loan, he/she has to deal with a wide range of different opinions and suggestions. Some people strongly advocate against loans. By sharing gloomy and sometimes scary anecdotes, they try their best to deter a person from taking business loans.

Then there are people who act as the cheerleaders of loan companies. They only know the benefits of business loans and how they have turned around the fate of many ventures. Lastly, there is a group that takes a cautionary approach. They give an objective overview of taking business loans.

We will recommend you to listen to the last group. It is important to get a precautious take when you are thinking about getting a small business loan i.e. factor in all the upsides and downsides before making the final decision.
Here, we are going to discuss the instances when business loans can be beneficial or detrimental. Go through them and make a decision that suits best your unique business needs.

StrategyDriven's 45 Minute Business Accelerators eBook

Instances When It’s Profitable to Take a Business Loan

There are certainly many valid reasons where getting a loan actually helps in growing the business further. Let’s look at all such instances.

Physical Expansion Becomes Imminent

When you don’t have any further space to set up any new cubicle or when you have don’t enough area to accommodate all your customers— these instances actually indicate two things:

  • Your business is booming
  • You need more physical space

However, experiencing business growth doesn’t mean you have enough capital to take on physical expansion. We all know that the commercial real estate market always remains bullish and it’s not easy to get the required space at the desired location with your existing purchasing power.

In such cases, where a business is growing and requires more physical space for streamlined commercials operations, it is better to go for business loans. Persisting with the same congested business premises amid continuous business growth can prove to be counterproductive. You will certainly pay back the loaned money in a few months or years. However, the business growth that you are going to accommodate through physical expansion will pay you dividends for decades.

For Better Credit Prospects

If you have the vision to turn your SME into a large-scale commercial operation, then you are definitely aware of the line of credits and how important they are for the sustenance of big companies. However, it should be kept in mind that financial institutions don’t just dole out lines of credit to everyone.

A business with no lending and credit history can’t apply for a line of credit. There should be an impressive credit record to your business’s name. This can be built by taking smaller business loans and then making on-time regular payments. Besides building a good credit profile, taking small business loans on a regular basis also ensures that you don’t find yourself in a capital drought at any given moment.

Lastly, constantly working through smaller loans also results in building a good affiliation with any specific lender or lending company. This again helps when you apply for bigger loans and line of credits.

For Buying Equipment and Inventory

It’s a no brainer to file for a small business loan when you have to get any equipment or any other business inventory. These tangible items run your business and you can’t ignore them just because you don’t have the required capital at the moment. Let’s try to understand the profitability of a business loan in this context through an example.

Let’s suppose that you need two workstations worth $2,000 for a project that can bring in $3,000 in profits. But at the moment, you don’t have enough money to allocate $2,000 for this purchase. So, what you should do? Pass on the opportunity or take a small business loan to get the required equipment? We would recommend you to go to the latter option.

In the above-mentioned example, even securing a loan on a high interest rate (e.g. 25%) will generate a profit of $500. Moreover, the addition of two workstations to your business assets is a permanent gain that you are going to get. In short, it’s a win-win situation. This is the reason why taking loans for primary equipment and inventory rarely go wrong.

Instances When It’s Risky to Take a Business Loan

There are some instances where you should give a second thought on taking business loans.

If Cash Inflow Is Already Really Thin

Going in debt when your cash inflow is already flickering might not be a good option. Making debt repayments is not easy when you have very limited cash to play with. Any aggravated scenario can also lead to collateral, which is the worst possible thing that can happen to your business. In any tricky situation, it is better to first consult business loan experts. The advice of experts working at this company can come in really handy when you are in two minds regarding applying for a loan amid receding cash inflow.

With a Low Credit Score

For whatever reason, if your business now stands with low credit score, this it might not be a good idea to make things by acquiring a high-interest loan. Low credit score makes it less lucrative for lenders to offer loan offers. So, they compensate for it by increasing the interest rate. Before applying for a small business loan, it would be better if you first work on your business reputation and credit score.

The above discussion makes it clear that applying for small business loans for the right reasons pay dividends. Moreover, it is important to have good business reputations if you are going to incorporate borrowing in your business model.

Top Financial Tools to Use for Business in 2022

/in /by

StrategyDriven Managing Your Finances Article |Financial Tools for Business|Top Financial Tools to Use for Business in 2022As we are firmly into the year 2022, businesses might be thinking about what is on the market when it comes to the tools that can help us make better financial decisions. And, with the rate at which we are creating new apps and other digital aids that make doing business a little easier, it only makes sense that we take a look at some of the top financial tools that could benefit your company in the up and coming year.

This piece will take a look at some of the top financial tools that can benefit your business in 2022, so you can give them a go yourselves!

What Are the Benefits of Using Financial Tools?

Financial tools are new aids that are around to help businesses make the most of their data and help improve their decisions that will impact the company going forward. This could be anything from a tax calculator to something that helps compare investment opportunities!

There are many benefits of using financial tools, the main two being that they can improve your profits and help keep your money and investments safe.

They usually make analyzing data that you have collected from your business much easier and allow you to use those findings to determine a better outcome in many different areas such as sales, marketing, or customer service.

A Recommended Budgeting App

Budgeting is now more important than ever, thanks to the even more uncertain nature that the market is bringing businesses. This is why businesses should be stepping up their budget game and taking factors such as emergency funds seriously. This is where it can be worth throwing out all traditional budgeting measures and going straight to the latest release of budgeting apps.

Budgeting apps have become more advanced, giving you options that could even rival accountants and other professional budget planners. What app you should go for will depend on your business and what kind of features you are really looking to use.

Many of these recommendations come with a free trial, so you can get to grips with it and work out if it will benefit you and your business before you commit to paying a subscription.

Financial Planner Apps

Another exceptionally useful tool that businesses can use for their finances is designed specifically for planning finances and analyzing its data.
Similar to budgeting, these apps can show you several different plans of where your finances could go and offer customizable features that will allow you to keep your eyes on certain aspects, such as a retirement fund or a savings account.

Stock Screener Apps

If you are an individual or a business that keeps a beady eye on the stock market, then you might be surprised to know that there are apps that can help you bring your investing up to the next level.

These types of apps can take hours and hours off of your day by scanning the entire market to offer you advice and data on average trading prices, volume, and various chart patterns, just to name a few! They can even be customized and set at your own parameters, such as how much you would like to invest and how many shares stocks have. The app will then bring up information that is only relevant to your specific search criteria.

Make sure to do your research to find the best stock screener for you and your business, so you can make the most of the features that are useful to you.

Spending and Saving Apps

Plenty of us know how easy it is to tap our contactless card or press buy now online without giving a second thought, and there are now apps being created that can hold us accountable for this behavior. Having an app that can show you exactly where your money is going can help you understand what you might be overspending on and if any changes need to be made. You will also be able to see your savings in the same app, plus even any investments that you’re making. Many apps will allow you to link this financial data together, so you can have an overall view of financial health, and having such a clear picture can help you slow down on spending, and encourage you to look at saving or investing more.

There are many apps available on the market now that are all designed to help give you a brighter financial future. Just remember – you still have to do the hard work!