Archive for the ‘Must’ tag
SR&ED Tax Credit Financing – 2 Things You Must Know
Article by Stan Prokop
Many of our clients can be easily forgiven for being confused and mis-informed on Canadas SR&ED program, aka ‘ SRED ‘, as most people call it. They can be even more forgiven for not know the basics about SRED finance. We try and simplify that discussion into two very basic things you need to know :- If you have a sred claim its financeable for cash and working capital now- To finance a claim you need to have filed a claim, but not always!! Your ability to monetize or cash flow a claim is in fact a superior way of generating additional working capital and cash flow now based on the value of your filing. We will add one technical point here, in that claims are generally financed at 70% LTV. LTV means ‘ loan to value ‘, so we are simply saying that for every one hundred thousand dollars of sred claim filing you can generate seventy thousand dollars via a short term sred loan. We can expand on that point a bit to ensure you are well informed. After filing a claim it is clear you are in a ‘waiting mode ‘ for your claim to be analyzed, potentially audited, and then of course waiting for the proverbial government cheque – we are of course all familiar with the expression ‘ it’s in the mail ‘ – With Ottawa backing your non repayable cheque you of course have the assurance funds will come, but you just don’t know when!We recommend that if you have filed a claim that you investigate the ability to finance that claim now. If the cheque under the program is a non payable grant ( other than paying tax on the income that’s as close to free money as we can get in Canada from the government!) Why wouldn’t you consider a financing option to accelerate cash flow and start using those funds now?Uses of funds under SR&ED financing are totally within your control. We see clients utilize sred financing to further invest in even more R&D, i.e. next years claim! or you can choose to reduce payables, invest in additional equipment or business assets, etc.In a small handful of cases we meet with firms who have a tax liability to Ottawa or the province re source deductions, GST/PST back remittances, etc. If you work with a trusted, credible, and experienced sred financing Sr&Ed consultant you can structure your financing to ensure that you’re past due remittances are taken care of during the sred financing process. No firm wants to be in the governments bad books re past due government super priority issues.The actual SR&ED financing process should be treated by yourself as any other business financing – we try and actually make the case its easier in some cases, because the actual asset behind the sred loan is the sred claim itself, so even if you think your firm might not qualify for financing for other forms of traditional borrowing your probably qualify for the sred – why?? Because you have a sred claim as an asset that’s verifiable! Ensure you are aware of this great program within Canada that generates billions of dollars in working capital and cash for Canadian corporations.Yes you can wait for funds, which may take a couple months or the better part of a year – if you cant wait consider financing your Sr&Ed claim via a short term sred loan which is collateralized against your filing. We strongly recommend you have a professional filing prepared, by your accountant or sred consultant (there are many) – this will significantly positively impact your ability to finance your claim.It’s a great cash flow and working capital strategy, and no debt is on your balance sheet, as it is offset by your sred asset that is in fact a monetizable account receivable.
About the Author
Stan Prokop – founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.comOriginating business financing for Canadian companies, specializing in working capital, cash flow, asset based financing. In business 6 years – has completed in excess of 45 Million $ $ of financing for Canadian corporations.Info re: Canadian business financing & contact details:http://www.7parkavenuefinancial.com/sred_tax_credit_financing_2_things_you_must_know.html
Why You Must Have a Business Plan
Article by Frances Klein
I get asked this question a lot. In fact, after “how do I start a business?” it’s probably the most asked question by new clients. I decided the best way to describe why you might decide to write a business plan is to tell you a few stories about a client of mine. The name and business are fictional. We’re going to call him David and he’s going to have a mechanic shop. The stories I’m going to tell you over the next few months are a combination of things that have happened to me and to some of my clients.
David’s smart. He’s got a memory like a steel trap. And he’s ambitious. He wants to start a small mechanic shop with the inheritance his dad left him, and he’s been very busy trying to get it started. But he’s also young and in a bit of a hurry. The way he sees it, he doesn’t need a business plan and anytime he’s asked about it he just taps his head and says, “I don’t need one. I’ve got it all up here.” Besides, he likes freedom. He’s a fly-by-the-seat-of-your-pants kind of guy. He doesn’t want to be tied to what some piece of paper says.
His mother-in-law, Ellen just shakes her head. She’s owned a bookkeeping service for the last twenty years, which she started because she wanted to be able to stay home when her kids were small. But David thinks, of course she’d see it that way. She’s a bean counter and everyone knows how they are about details. Besides, he’s already let her talk him into incorporating his business. The way he saw it, he didn’t need to waste his money on it, but it was done. No way was he going to waste any more money on getting a business plan. A few weeks later, David opened his shop for business. What a day that was. He’d been too excited to sleep the night before, and it ended up being an awfully long day because he didn’t have any customers. Not a single one. He’d spent the day cleaning the shop and organizing his tools and sometimes just staring at the phone, trying to will it to ring. Oh well, he thought, what can I expect? The shop’s brand new and nobody knows about it. Someone will call tomorrow. By the end of the week, with no calls except from friends and family (who he was beginning to suspect his mother-in-law had told to call), he was starting to worry. He was also starting to run out of cash.
He barely scraped together the cash for his lease at the end of the sixth month. He didn’t think owning a business would be this expensive. Besides, he’d figured he’d have lots of customers by now, but the truth of it was he didn’t have enough to keep him busy for even half a day. David decided he’d better go see his banker. It shouldn’t be too be much of a problem to get the money, he figured. He had a good credit rating.
David sat down and got right down to business. He didn’t need much money. He figured ,000 should do it. “Sounds good,” Shaun said when he was done talking. “Let’s take a look at your business plan.” And when he said, “Oh I don’t have one. I’ve got it all up here,” she smiled and said, “We need to have one before we can proceed with a loan. Come back and see me when you do.”
As much as he hated to do it, he knew he had to borrow some money from someone. When none of his friends could help him beyond a few hundred dollars, he approached his mother-in-law. “Well,” she said, “I can do that for you, but I have one condition. I want to give me half an hour of your time to listen to why I think you need a business plan.” David agreed. He was getting desperate.
Here’s what she said:
Almost half of small business startups fail in the first year.
The main reasons they fail is because they lack management, lack planning, have insufficient financing and lack marketing.
You can address all those reasons with a business plan:
o Business plans help with lack of management with financial analysis, guide your decision-making, and outlining specific goals.
o Business plans help with lack of planning by outlining the means to meet specific goals.
o Business plans help with insufficient financing because financial institutions and private investors won’t lend you any money without one.
o Complete business plans include a marketing plan addressing lack of marketing.
There are other reasons for writing a business plan:
o Business plans help you monitor your progress.
o Business plans give you something to compare your end of period results with.
o Business plans help identify weak areas where you can improve.
o Business plans help you avoid making the same mistake over and over again.
o Business plans help keep you on track.
o A good business plan includes a feasibility study, so you should know before you start whether your business can succeed.
o Many self-help books proclaim goals are more easily met if they’re written so business plans help you identify and reach your goals.
David was convinced. He accepted his mother-in-law’s offer to help him write his business plan. After it was done, he went back to the bank and got his loan.
So, how is David’s business doing? I’m not going to tell you anything today beyond that he’s still in business, but I will tell you more, I promise. We’re going to use David’s business as a case study with more articles about him every month. Stay tuned for more stories about David’s business and find out how he’s doing.
About the Author
To read about swollen calves and aching calves, visit the Calf Pain site.
Why Business Credit Is A MUST For Every Business Owner!
Article by Manish Shah
As an entrepreneur, you’re hardwired to enjoy a greater level of risk than the average person. But do you enjoy the thrill of business and investing so much that you’re willing to risk:
-Being hounded by creditors?-Declaring bankruptcy?-Being denied a mortgage?-Paying more than your fair share of interest on your loans?-Losing your house?
If you answered “no” to one or more of these questions, this may be the most important report you’ve read in a long time.
Because, if you’re like most entrepreneurs, investors, and business owners I’ve met over the past 28 years, you’re in danger of facing all of these horrific problems.
And it’s all because of your business.
You see, entrepreneurs typically make one or more financially devastating mistakes when financing the launch, operation and/or growth of their businesses. In most cases, they don’t realize that they’re making a mistake.
And to tell the truth, even when they do realize they’re making a mistake… they lull themselves into thinking that the consequences will be a minor annoyance.
Until, one day, they can’t qualify for a mortgage. Or they can’t get the to-die-for financing offered on the new car they’re buying. Or they’re hounded by creditors and eventually have to declare bankruptcy.
And it is all because they use their personal finances to fund the launch or expansion of their business. They then use personal credit cards to pay for business expenses. If you are in business or thinking about starting a business, business credit is a must.
Let me explain, most business owner have no idea that they can establish business credit and even fewer know how to how to establish business credit. If owners would take the time necessary to educate themselves about establishing credit they would no longer have to use their personal funds for start up capital or working capital.
They would also be able to use business credit cards which don’t report to their personal credit reports, therefore, not lowering the personal credit scores.
The most important goal of business credit though is to obtain unsecured business lines of credit, which can be done once the business credit profile is set up properly. Once a business obtains unsecured business lines of credit, they then have the working capital they need to start a business or expand their business. The business owner has check book control to use the business lines of credit as they wish. And best of all, the business lines of credit don’t report to the business owner’s personal credit report.
If you have set up your business profile correctly there are a number of banks that will lend to brand new start up business. That is right, brand new start up business with no track record whatsoever. The banks will extend unsecured business lines of credit so they can have the start up capital they need to finance the business of their dreams.
Make no mistake about it; business credit is a MUST for every business owner. Don’t put your personal assets at risk finance or fund your business!
About the Author
My name is manish shah. Am an avid blogger & social media representative. I am retailer by Profession & my blog is http://manish-shah.comI keep updating my blogs regularly. Do visit me for the latest in Indian Retailing.I also have another wonderful article directory – where in you can check the latest articles across all the catagories. Do check out – http://articleseat.com & http://omarticles.com
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Knowledge Of Business Management Techniques: A Must For Aspiring Entrepreneurs
Article by Vikram Kuamr
There are a number of ambitious and aspiring entrepreneurs amongst us who just need a chance to set up their own organizations. The most important requirement for venturing out on your own is the right temperament and the ability to take risks. A person who starts off a business with trepidation and a pessimistic outlook of seeing it fail is bound to make a hash of it. If you have the right temperament then learning a few sound business management techniques will ensure that your venture has a very high chance of success.If having the right temperament is the first requirement for starting a business then having knowledge of business management techniques comes a close second. Getting into the deep end without empowering yourself can have extremely disastrous results and should be avoided at all costs. Learning business management techniques does not necessarily entail that you need to be a Harvard business school pass out, a number of small business management online courses do a very thorough job of helping you increase your business management techniques knowledge base.Once you have learnt the important tips and strategies involving the management of your business, these small business management online sites can further help you in the day to day management and smooth functioning of your business. A small business management online site employs several dedicated business professionals who can help you in planning and setting up of your business. These professionals are also available online for any help that you might require in your business.Apart from helping you out with basic and advanced business management techniques the small business management online sites have several tools and trusted resources that can help you in managing your business better. Payroll of employees, selection of employees, inventory of the business these are all challenging tasks that need to be performed adroitly for a business to prosper. Small business management online sites have several tried and trusted tools and resources that you can use and ensure that there are no major goof ups in the performance of these integral tasks required to run a business.Business management techniques are not about how well you scored in your school exams; these are hands on tips and ideas for handling people better and ensuring that you plan properly for any contingencies that might arise. There is no required education level for a person to venture out on his own, everybody including school dropouts, farmers, young graduates or even older veterans can start their own business and make a roaring success of it provided they are equipped with the right temperament and business management techniques. Seeking the help of small business management online sites is highly advisable, especially if you are a novice in the field o business management. Taking help from these professionals will cut down on the number of startup mistakes you make and also help in better planning and resource for you business. So, go ahead and put those vague entrepreneurial plans in action for a successful future.
About the Author
Biztools is one such Small business management online tool that can help you in learning the ropes of running a business. The Business management techniques and tips offered by them are top of the line and can go a long way in helping your business become a success.
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Buying a Franchise – 3 Things You Must Know About Franchise Finance and Franchise Loans
Article by Stan Prokop
Clients are always asking what extra steps or information they need to know to complete a successful acquisition a new or existing franchise. Buying a franchise, it goes to says, is clearly one of the largest decisions any entrepreneur might take. Of coruse there are a couple of different versions of the opportunity, as follows – Purchase of a new franchise – Purchase of an excising franchise that is for resale by current owner- Purchase of an additional unit in your chain when you own one alreadyAre there any special tips and critical pieces of information you need to know that will get you a leg up on a ‘ leg up ‘ in the area of franchise finance. Let’s share and discuss three critical points.1. Franchise Finance is a very specialized type of financing – financing options are available but not unlimited – you need to know what they are2. There is a chance for franchise financing failure if you do not have the proper fundamentals in place and are exploring numerous options at the same time – ‘flailing around is not good!3. You might significantly benefit by using the services of a franchise consultant in the area of business financing Lets review our point # 1 – Business financing in general has always been a challenge. Specialized financing in any area of business is a unique challenge because of limited options and a limited number of players. Players = lenders! If you accept business financing is difficult then you can imagine the severity of the challenge in the 20010 global economic crunches that we still seem to be in.So is it all negativity and bad news. Not necessarily of course if you are informed and prepared. Let’s unveil the mystery of franchise financing. How exactly are the majority of franchises financed in Canada? The options are exactly as follows:- A special Government programme called the BIL program under which the majority of franchises in Canada are financed- Owner equity – your own deposit into the deal- Equipment and asset financing- Working capital cash term loan – typically a 5 year payback- Vendor financing ( if available – more often than not it is not )- Revolving line of credit for ongoing operating needs and growth!With respect to the last point we would emphasize that while it is of course important to structure a proper financing around your franchise purchase many business owners forget to consider how they will finance the business on an ongoing basis, and more importantly, how growth options will be financed.It is critical for you to understand that it is very rare that any one option will get you the full financing you need. The reality is that it will be a select combo (and that’s the expertise you require) to fully finance your business with any number of the above options.We point out in our key point # 2 that you must be prepared. This is where many clients tell us they have failed in the past – they have not prepared a proper business plan and executive summary. We encourage you to prepare a proper business plan, understand what your opening balance sheet will look like, and most importantly, understand the cash flow needs of your business. For example, if you take the time to sit down and do all the numbers ( this is actually easier than you think ) you could find that in month one and 2 and 3 that you might be experiencing negative cash flow. If sales ramp up slowly and you have negative cash flow then clearly you will have problems which could accelerate and dampen the overall success of your business. Finally, consider using the services of an experience, credible and trusted franchise consultant that can guide you through the financing maze. Having that party properly prepare a business plan, opening cash flow, executive summary, and proper financial projections is worth a small fee you might be charged. Business financing in Canada dried up in 2008 and 2009 – franchise financing is still alive and well though. Many lenders view franchise financing even more positively than other types of businesses and industries – the reality being that there is a greater chance of success for a brand that is proven and known, and has a reliable business model of proven success.Know your franchise options, be prepared in executing on those options, and consider italicizing a franchise consultant to complete your franchise loan and overall funding. That’s a solid plan!
About the Author
Stan Prokop – founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.comOriginating business financing for Canadian companies, specializing in working capital, cash flow, asset based financing. In business 6 years – has completed in excess of 45 Million $ $ of financing for Canadian corporations.Info re: Canadian business financing & contact details:http://www.7parkavenuefinancial.com/buying_franchise_franchise_finance_franchise_loans.html
