Assessing current performance is an excellent piece of business advice because it is an integral part of running your small business. While this business advice can be taken qualitatively, or by looking an the various “qualities” of the business performance such as customer satisfaction, assessing the performance of your business quantitatively, or by the numbers, is a much better method because it is objective and tangible. It is easy to understand that red pencils, for example, are not selling and to know the expense of the outlay to purchase those red pencils, but it really does go deeper than that.  

Initial Outlay

The initial outlay is the actual cost of the item or service required to start. This measure can be looked at singularly, as in the case of the red pencil, or at the business level as in the cost of offering a new product or service. Take for instance a restaurant that would like to start selling pizzas. The initial outlay would involve the cost of the equipment needed to make the pizza (such as a pizza oven, a dough mixer, a pastry board, a pizza shift, pizza cutters, etc.), the cost of the equipment to serve the pizza (specialty plates, shakers for the parmesan cheese and crushed red pepper, serving blades, pizza boxes, etc.), the cost to make the pizza (purchasing flour, yeast, mozzarella, tomato sauce, toppings, etc.), and the cost to sell the pizza (the cost of changing the menu, the cost of advertising, the cost of any promotions, etc.).

Holding Costs

The next cost to consider is the holding cost. The term “holding cost” refers to the costs involved in keeping and maintaining the equipment, the continued costs of promotion, and supply replenishment (i.e. ingredients, packaging). Holding costs also refer to the costs attributable to overhead, such as rent/lease, utilities, insurance, security, the interest that the money, if invested, would accrue, and opportunity costs. Opportunity costs involve the cost of reduced responsiveness to changing market requirements, slowed introduction of newer and/or improved items as that money could be used for other, more profitable purposes.

Profit Loss

Analyzing profitability is essential in preventing profit loss. Taking the example of the restaurant, even if offering pizza does turn a profit over the initial outlay and the holding costs, is this profit more than what would have been received from investing the money in a savings account? Is offering pizza more profitable than offering ice cream would have been?

It can be difficult to compare opportunities, particularly when there are different initial outlays, different holding costs, and/or different expected profits payable at different times. By considering the present value of estimated outlays and expected profits, opportunities can be compared evenly. You can then see what the profit loss is or put yourself in a position to make a decision based on which is the most profitable opportunity.

Gaining a better understanding of the money-side of your business will help you become a success. Consider using business/financial coaching to critically evaluate your business by the numbers. Visit www.HelpingYouHelpYourself.com for a complete help package or for more information on business training.

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As business owners develop their small business loan plans for future financing and refinancing throughout the United States, there is an increasing awareness that there have been significant business finance changes that cannot be ignored. Some of these measures are likely to end up being permanent, and even the temporary commercial mortgage loan and working capital loan changes are expected to be in place for an extended time due to the severity of the current financial climate.

The net result from business finance changes has been a reduction in commercial lenders as well as stricter standards for acquiring commercial loans and commercial mortgages. Unfortunately there has also been no shortage of misinformation about the availability of commercial funding.

A significant reduction in business lending activity overall is perhaps the most dramatic change. This has been due to several events occurring almost simultaneously. Several major commercial lenders have gone out of business altogether. Even though they have continued consumer lending, many banks have stopped commercial finance lending. Numerous business lenders have enacted stricter standards for the commercial financing transactions they are still willing to consider.

It remains to be seen how many changes will be permanent or temporary. But from a practical perspective, commercial borrowers are left with no choice but to adapt to the changing business finance environment. Business owners must be prepared to operate within a more complicated climate for commercial mortgage loans and small business loans regardless of how long the changes might be kept in place.

What should borrowers do about this? A primary option that business owners should explore involves looking beyond their local market area for help with commercial loans. A commercial financing expert operating throughout the United States should be helpful in improving upon this situation.

In addition to fewer business lenders to choose from, there are two other significant changes which must be anticipated by business owners before seeking new commercial loans. First, commercial lenders are increasingly demanding more collateral for virtually all business finance funding. Second, most lenders have cancelled or are about to eliminate unsecured lines of credit (usually called working capital loans) for many businesses.

Considering a business cash advance program based on future credit card processing transactions is likely to be an effective commercial financing strategy for overcoming the combined obstacles of more collateral, reduced unsecured credit lines and fewer lenders. This is proving to be one of the few sources of business funding that has not been adversely impacted by recent events. It will be productive to discuss the potential with a business finance expert who can provide advice about small business financing solutions including business cash advances and other financial options.

It is increasingly obvious that many banks will continue to modify their business lending programs in response to changing conditions. This means that another key change issue for working capital financing and commercial mortgages is the likelihood that more changes will be forthcoming in the near future.

To adequately prepare for future commercial finance changes that might (or might not) occur is a daunting task for a business owner. A commercial financing expert familiar with Plan B contingency financing for small business loans will prove to be a valuable resource for any borrower wanting to seriously deal with both current and future changes impacting the financial health of their business. By having a candid conversation with a commercial loan expert, business owners should be more capable of implementing an appropriate strategy for the vast changes which have recently occurred or are about to become effective for most business financing and working capital finance funding.

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For anyone considering starting a business, there are a lot of points to be considered and a lot of bases to be covered before taking the leap into self-employment. Despite the tax benefits available today for new businesses and the draw of being your own boss and making your own business hours, the risks are very real for starting a new business. You need to get some business advice to be sure that you’ve taken all the necessary steps to begin your own business seamlessly and successfully.

So, to whom can you turn to be sure that you’re beginning your business and not missing any necessary steps? Keep you search to your local businesses and service providers to establish good business relationships at the outset of your company.

The Local Chamber of Commerce – Most districts offer small business owners the benefits of a local Chamber of Commerce. Through this source, you can learn about local and state filing requirements, who your local competition is and how viable your business idea is in the real world.

At your Chamber of Commerce meetings, you can connect with other members of your business community who can assist you in obtaining loans, office space, equipment or services that take get your business from thought to reality. Most of these services are offered at a discount to other Chamber members, so join up if you have the budget.

Your Accountant – The company or person that does your taxes every year may be able to advise you as to a business startup in your region. An accountant’s business advice is bound to include tips about the tax laws for your business type and ways you can save money getting started. If your accountant doesn’t handle business taxes, get his recommendation for one in your area who does. Your Banker -  Your neighborhood bank branch will be able to give you business advice regarding small business loans or startup capital that they offer through their offices. Many times, you will need personal collateral to backup these loans during your first two years of business.

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When becoming the sole proprietor of a business, a person needs to apply for a business tax license. Become the sole proprietor of a business with tips from a certified adviser on small business in this free instructional video on starting a business. Expert: Paula Roberts Bio: Paula Roberts is the executive director of the Tennessee State University Small Business Development Center. Filmmaker: Dimitri LaBarge

A complicated business finance process can occur when an investor previously familiar only with residential real estate begins investing in commercial real estate investment property and business opportunity situations. Before a borrower attempts to buy a business, it is important to develop a business loan and commercial mortgage strategy.

There are many key differences between financing for commercial property investing and residential real estate investments. Because more residential property investors are exploring commercial real estate and business finance opportunities, this business opportunity financing and business loan report is designed to help educate new commercial investors about key commercial mortgage and commercial loan issues.

Rather than specifically focusing on issues that differentiate business financing from residential financing (which we have thoroughly analyzed in separate reports), this report will offer a few key observations regarding business finance elements that are often overlooked in new business investment considerations. These factors include credit card processing, business cash advance options and working capital management.

Coordinating Credit Card Processing and Business Cash Advance Programs -

Many business investments will involve the use of credit card processing decisions. These business activities should be analyzed simultaneously with business cash advance programs for several reasons. If done properly, a business should reduce their costs and improve their cash flow.

Reducing Credit Card Processing Costs in Business Investing -

One of the biggest benefits of coordinating credit card processing with a business cash advance program is the real potential that overall costs can be reduced. Such an advantage is likely to be available in conjunction with the most progressive programs by linking a low cost credit card processor with the best merchant cash advance program. Many of the best credit card processors will not be available for businesses other than through a high-quality credit card financing arrangement.

Improve Cash Flow for Business Investments -

Credit card factoring strategies can produce a business cash advance up to several hundred thousand dollars. For most businesses, this level of financing is not routinely available via other business finance programs. The decision to choose credit card financing to secure a merchant cash advance is an increasingly practical business financing response to business lenders eliminating line of credit programs.

It is important to realize that there are certain key limitations and potential difficulties with business cash advance strategies. New business owners will occasionally eliminate using a merchant cash advance without adequately considering the overall benefits because they are confused by this business finance approach. Although credit card factoring is frequently considered to be a short-term commercial financing strategy, there are also effective longer-term variations which should not be overlooked.

Working Capital Management Strategies -

Obtaining a working capital loan is usually more effective when arranged in conjunction with buying a business. However many lenders do not adequately address this issue in the early business finance stages. Before completing a purchase offer to buy a business, all business loan issues should be discussed in order to fully understand overall commercial financing choices and limitations.

After acquiring a business, it is more likely that business or personal collateral will be a necessity in getting working capital financing. One major exception to this common collateral requirement will be the use of a business cash advance and credit card factoring as mentioned above.

Additional Key Investment Business Finance and Real Estate Mortgage Issues -

As previously noted, commercial mortgage and commercial loan requirements are very different from residential financing requirements in the United States. Additional business finance reports include a discussion of many other significant financing factors. Other reports address important subjects such as business opportunity loans, business appraisals, stated income business loan options and SBA loan programs.

Most of the additional articles will provide further detail about topics discussed in this report as well as offering business financing solutions for numerous other complex business loan situations. For example, some SBA loan processes can include working capital as part of the total initial financing. For those interested in learning more about both potential advantages and problems associated with coordinating credit card processing and business cash advance services, there are several additional resources (such as The Working Capital Journal) which will facilitate a better understanding of these complex business finance issues.

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