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E-Myth – “Why most small businesses don’t work & what to do about it”

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Outsourced CFO | Looking To Qualify For Financing Anywhere?

Outsourced CFO | qualifying for financing

Some of the challenges that business owners face today include running into cash problems says outsourced CFO. 50% of all businesses are out of business within five years, and 29% of these failed businesses will say that they ran out of cash. Since money is a large can to being factor to the success or failure of the business, helping business owners understand financing and how they can use it to increase their cash flow can help them succeed in business, and avoid this common pit fall. There are three main reasons why business owners are unable to use financing to increase their cash flow. First reason is that business owners are unable to qualify for a loan. Second reason is they canít get the loan fast enough. And the third reason is they canít pay the loan once they get it.

In order to help business owners learn how to qualify for a loan, there is a few things they should take into consideration recommends outsourced CFO. The first thing is burning how to work with the bank. When submitting loan applications, business owners should submit applications to more than one at the same time and the reason for this is because if a bank denies the application at any point, the business owner has a second when that is still in process. While an application is the bank, business owners should learn to work closely with their banker in order to help the banker understand their business. Not all banks have the same risk tolerances for financing, and a good banker will let you know what aspects of your application to change in order to help fit that banks requirements.

In order to help business owners obtain loans in a timely manner, they first need to understand how long to expect a business loan to take. Most business owners have only had the experience of getting personal loans, and think it will be a similar experience getting their business loan says outsourced CFO. Unfortunately take significantly longer, a minimum of 60 days as the starting threshold. A bank may require additional information, which can significantly lengthen the process, depending on what the bank is requesting. By understanding how much time is needed to get a business loan, business owners will be able to apply for a loan early enough, rather than only applying for the loan when it becomes crucial to get approved for it.

Helping business owners avoid the problem of not being able to pay back the loans that theyíve been approved for, is helping them understand the difference between amortization periods and interest rates recommends outsourced DFO. Most business owners think that just getting the lowest interest rate is the most important factor, which is not always true. While good interest rate is important amortization period should also be considered. Business owners should look at financing that gives a long amortization period, because the longer it takes to pay back the loan, the less likely it will be a financial hardship to pay back. A short amortization period often means that a business owner has to pay back that loan early on in their business, which can but cash crunch on the business.

Outsourced CFO | qualifying for financing

50% of businesses have closed their doors within five years says outsourced CFO. 29% of those businesses say they ran out of cash. This is a sobering statistic, and can be avoided by understanding business financing. Business owners should take the time to learn how they can use debt as a tool, rather than thinking of debt as something to be avoided at all costs.

Good debt can help a business owner gets the hard assets required for operating their business, while allowing them to free up their own personal cash to use as operating capital for their business. Business owners who make the mistake of thinking that all debt is bad, avoid using financing to their advantage. The first thing to consider when thinking of getting financing, is a business owner should be obtaining financing for hard assets instead of operating capital. It is much easier to qualify for financing on hard assets, says outsourced CFO. The reason for this is it is a lower risk to the bank to finance assets. By obtaining financing on as many hard assets as possible, a business owner can free up the cash that they have to use in their business.

Understanding when to apply for financing can also help the business owner use good debt to help free up their own cash. The best time for business owners to apply for financing on hard assets is as early on in the business as possible. Not only is it much easier to qualify the earlier in the life of the business, but it becomes much more difficult to get approved later. Ideally, a business owner should get financing for their hard assets during the initial purchase of their business advises outsourced CFO. Options to finance hard assets become limited later on in the business. This will allow the business owner to maximize their cash early, by financing as many of their hard assets as possible.

Another way that business owners can leverage financing to their benefit is by obtaining 100% financing on as many of those hard assets as possible. Examples of hard assets includes equipment, vehicles and buildings. If the business owner is able to obtain 100% financing on those items, they will be able to use more of their cash as operating capital says outsourced CFO.

By helping business owners understand business financing, they will be able to use financing as a tool to get as much cash flow in their business early on as possible, helping them avoid the problem that 29% of businesses say was a concluding factor to their failure, which is running out of cash. Helping business owners avoid running out of cash, they increase the odds of succeeding in business.