Advertising and publishing veteran Janelle Regotti was looking for a business to buy. The right opportunity presented itself in 2014 when she found Guide Publishing, a company that distributed a quarterly resource guide for Northeast Ohio seniors. The only catch: Regotti didn’t have the $500,000 asking price.
With few physical assets to borrow against, she was unlikely to get a bank loan. So with the help of her business broker, she negotiated a seller-financing deal and bought the business five months later with just 10 percent down and quarterly payments due over 10 years at about 6 percent interest.
Of course, most sellers won’t finance 90 percent of their asking price. But borrowing 10, 20 or even 30 percent from a seller at a competitive rate still beats using your credit card to cover capital shortfalls. If you’re interested in seller financing, here’s what you need to know.
When it makes sense
Being short on cash isn’t the only reason to push for seller financing. These loans can also bridge the gap if you and the owner can’t agree on a price.
Renzo Aida, who bought a dance studio near Boston in 2013, will attest to that. He had the money to pay the six-figure asking price in full, but he thought the seller wanted 20 percent too much.
“I wanted him to put his money where his mouth was,” Aida says. Both parties went into negotiations and eventually got what they wanted. Aida has since increased revenue by 28 percent.
What sellers expect
Besides cashing out, sellers want assurances their baby will be in good hands. They want a buyer who has experience in the industry, a solid business plan, working capital and roots in the community, says William White, regional developer of Murphy Business & Financial Corporation, a national business brokerage firm. Sellers treat these loans as seriously as any bank would, says White, who lives in Hudson, Ohio. This means requiring a credit check, collateral (business assets and possibly your home) and life insurance. Loan terms often extend up to 10 years, interest rates are comparable with those offered by banks and it’s typical for sellers to stick around for 60 to 90 days post-sale to advise the buyers.
How to vet the deal
It’s not enough to grill the owner on the intricacies of their business. You have to scour the financials, from bank statements and cash flow to tax returns and profit-and-loss (P&L) reports. You also have to inspect the physical property to ensure all inventory, equipment and other assets are accounted for and in working order. “Otherwise, you don’t know what you’re getting,” Regotti warns.
Trusting the seller is imperative. “Make sure it’s someone you actually want to be in business with after the sale is complete,” says Regotti, who negotiated a six-month transition period during which the seller played consultant. Another must: having a business attorney in your corner, even if you’re working with a broker. Regotti adds, “I had my attorney look over everything.”
What to negotiate
Owners may not openly advertise their willingness to partially finance a sale — but, according to White, it’s common for them to consider lending at least 5 to 15 percent of the purchase price.
KC Truby of Tucson, Arizona, who has bought six owner-financed businesses over the past five decades, suggests agreeing to the asking price but getting creative on the terms. Regotti, for example, nabbed 90 percent seller financing by promising to apply for an SBA loan two years down the line. If she gets it, she’ll pay off the seller in full. Other buyers can bridge valuation disagreements with an earn-out clause that grants the seller extra pay during a set period if profits meet or surpass expectations.
“You can dream up 100 different ways to do this,” Truby explains. “It really boils down to what the owner wants to accomplish.”
The advantages of seller financing for startups
Bill Short wasn’t worried about how he’d finance FiberTech, the Atlanta-area fiber optics company he wanted to purchase. The former banking professional had stellar credit and enough money to make a sizable down payment on the business, which was priced in the “low seven figures.”
The rest, he imagined, he’d borrow. But when Short applied for an SBA loan, he was told the government body required at least 10 percent of the deal to be financed by the seller. Although Short hadn’t considered taking a loan from the seller, he was happy to comply if the terms were right.
“Seller financing helps get the deal done,” says Kent Reed of Murphy Business & Financial Corporation, the brokerage firm that worked with Short. “It helps the buyer with less out of pocket. And it gives them more confidence in the deal if the seller’s got some skin in the game.”
Short wound up making a 40 percent down payment on FiberTech, borrowing an additional 50 percent through an SBA loan, and borrowing the remaining 10 percent from the seller. “It helped me to not have to put in that additional 10 percent,” Short says. With the extra cash, he was able to boost the company’s marketing efforts, invest in vehicles and equipment and ramp up staff from 14 people to 20. Since purchasing FiberTech in March 2011, Short has seen revenue increase by about 20 percent.
Are your team-building go-tos stale? Likely. Freshen up with these action-packed adventures.
Degree of difficulty: Degree of difficulty
After camera company Lytro restructured, employees needed some bonding time. The Mountain View, Calif.-based team headed to the Kitchen Challenge at Parties That Cook, a competition inspired by Iron Chef and Chopped. “It really played to so many different types of personalities,” says Lytro HR manager Jenny Garcia. After judging, teammates feasted on their meals over wine. “It was one of the most popular things we’ve ever done.”
Degree of difficulty: Degree of difficulty
Escape rooms — those self-contained scavenger hunts in which puzzles are solved in order for participants to break free — are good for more than just birthday parties: They’re also a way for colleagues with diverse skill sets to collaborate. “Our brains all work in different ways,” says research scientist Amanda Weidner, who took her team of faculty and staff from the University of Washington to Seattle’s Puzzle Break. “Even if you weren’t the puzzle solver, you still had a role and felt like you contributed.”
Survivor: Corporate Edition
Degree of difficulty: Degree of difficulty
Patrón took employees to Las Vegas’ Camp Rhino for an obstacle course, putting staffers through a gauntlet of challenges such as hanging rings, climbing walls and tire rolls. The intensity has its advantages: “If somebody couldn’t do the monkey bars, another team member would hold their legs and help them,” says Melissa Aupperle, VP of operations for Destinations By Design, who organized the activity for Patrón. “It was more strategizing how to get everyone through as opposed to finding their strongest players.”
Freelancers and contractor writers operate as independent entrepreneurs, but that arrangement doesn’t have to mean creating entirely in a vacuum. Gathering with other freelancers in a coworking environment can benefit professionals as well as their products. Coworking provides opportunities to observe and learn from colleagues who value their autonomy and often share other values, too.
From this perspective, it’s natural that freelancers would appreciate the synergy of a place where numerous, talented people converge in a similar space. The technology age has made it easier than ever for contractors to bring their tools with them. This enables them to work with other like-minded individuals from virtually anywhere.
If you’re thinking about moving your one-person shop to a coworking atmosphere, consider how these perks could infuse you with new ideas and elevate your current projects.
1. Networking and collaborating.
Coworking allows you the opportunity to network and collaborate with a wide range of bright minds. You might even make new friends in the process. Proximity gives you the chance to “pick the brains” of professionals in your own line of work as well as those in related fields. Freelance writers might choose to office with graphic designers, website designers, programmers and other writers whose work and insights help shape new perspectives.
2. Using tools on the go.
Many phone and web apps, software programs and other tools were designed to be especially beneficial outside of the office. Pare down to the absolute necessities while you’re on the go. Meebo can handle your chatting needs, Line2 is a helpful alternative for a land-line phone system and DropBox assures you’ll always have the files you need at your fingertips. The right tools can make all the difference in your ability to cowork successfully.
If the need arises to organize tasks among coworkers on a big project, freelance writer Christopher Jan Benitez recommends Asana or Trello. These online project-management apps enable remote team members to delegate and assign deadlines. Here are a few others to consider.
Cyfe. The business-management dashboard connects multiple apps to monitor stats and updates from a single dashboard. You can iframe Google spreadsheets, connect to email and integrate your social-media statistics.
Zoom.Us. This phone and web conference app allows you to chat with anyone and host group meetings for up to 25 people via your smartphone.
Evernote. Bloggers love this versatile tool in part for its “snip” feature. Save videos, web pages, social-media posts, articles and images — and then write your entire blog post within the app itself.
MyBlogU. I founded this collaboration platform to connect writers and editors so they could create better content for business websites.
Google Docs, Sheets, Slides and Forms. This free product suite supports collaboration by allowing multiple users to create, revise and edit documents, spreadsheets, presentations and fillable forms online. Coworkers can track versions and collect feedback.
Iflexion. This enhanced document-management platform is built for those who coordinate larger teams or manage several remote offices. The solution offers custom enterprise content-management solutions.
3. Breaking out of your comfort zone.
Working across the desk from someone with a completely different skill set can help you discover a new source of ideas. You might find your brain is starting to work in different ways, too. As online-marketing consultant Joyce Anderson puts it, taking the risk to invite others to work alongside you breathes new life into the creation process and shows in the finished product, as well.
Experienced writers who reread some of their early compositions are likely to notice mistakes or passages they would have rephrased. If that’s ever happened to you, imagine how polished and clear your work could have been if only you’d had access to your current knowledge, finesse and expertise when you first started. When you break out of your comfort zone, you’re giving yourself a chance to devise fresh solutions to existing problems. Interacting with coworkers facilities this kind of breakthrough.
Many writers are natural introverts. If you’re nervous about joining a coworking group, challenge yourself to step into the unknown. Much of what you fear is fear itself. You needn’t commit to attend every meet-up. Start small, with a gathering like Shut Up and Write. This coworking group’s main focus is providing a forum to write. Participants spend two hours together, typing blog posts or working on novel chapters. At the start of the time block and again toward its end, writers have a brief while to socialize — not more than 10 or 15 minutes, total. It’s the ideal opportunity for attendees to exercise their small-talk and networking skills.
4. Working at your own pace.
Coworking makes it possible for you to create some space between you and your clients — just enough to redirect energy to your own projects and move at your own pace. Stop devoting hours to the same interruptions and distractions that normally plague your days. Why not work in a new environment, surrounded by new people and new stimuli? Coworking can be a respite from day-to-day workplace worries about strict deadlines or clients trying to reach you at your primary location.
5. Making full use of your coworking space.
This is an ideal time to be a freelancer or solopreneur. Coworking spaces allow a startup to maintain an address for receiving packages and mail. You can rent small suites to meet with clients or find a calm room to call clients from a no-kid zone.
Sara Duggan, who coworks at HackerLab, notes her maker space supports startups by hosting an annual competition. Candidates pitch their business ideas in hopes of being selected to attend and eight-week entrepreneur boot camp.
The Sacramento Bloggers group brings in speakers to help members become at what they do. Recent topics include secrets to help separate personal and business Facebook accounts. Those who take part often get the opportunity to work with local businesses.
6. Avoiding loneliness.
Working at home can have an isolating effect after a period of time. Coworking is an easy fix. Working amidst others can lend a sense of camaraderie, even when you’re creating alongside complete strangers.
Technology is definitely a fabulous thing and it looks as if every single day various products are developed that would astonish and perhaps actually shock each of our forebears, probably because they’re difficult for the particular unaware to grasp. Look at, for instance, the actual capacitive touchscreens that happen to be made use of by organizations such as cks global (http://www.cksglobal.net/), and also which usually most people utilize on a daily basis without really being aware what they really are called, let alone the reason it is that they perform just how they do. Capacitive screens are the sort of touchscreens associated with the majority of cellular phones, computer tablets, ATMs and even more. They are often utilized by cksglobal as they are remarkably accurate, and enable for the particular usage of multiple actions, which various other touchscreens will not.
How a capacitive screen performs is it detects very small electrical charges which are found in a person’s body whenever they touch the display screen. This kind of touchscreen is constructed from insulators covered with a conductor. Each time a individual touches the monitor, there is a real interruption that happens inside the screen’s electrostatic field which is then processed from the controller, creating the desired motion at the stage the screen had been handled. Organizations like cksglobal.net/ employ capacitive screens wherever possible as the level of sensitivity gives them excellent precision. Sadly, even so, capacitive touchscreens are usually on the pricey side when in more substantial dimensions. It’s wished that over time, nonetheless, that eventually the purchase price about larger displays will probably drop.Capacitive screens are the preferred selection in several industrial sectors exactly where accuracy and reliability is important.
Even though they don’t often function as well as various other kinds of displays when the person dons gloves, they might be enclosed towards wetness and airborne debris whenever needbe. Electronic digital signs, kiosks and so forth frequently choose such a monitor as their users find them instinctive and also simple to utilize. When pricing is a problem and fine correctness is not required then the resistive touchscreen could possibly be put to use instead. This sort of monitors can be used using a stylus or maybe an individual might wear rubber gloves. In most cases, resistive screens usually are not tuned in to a number of motions. Resistive touchscreens are normally found in eating place settings, in numerous GPS models, cameras as well as other things that do not require a polished touch.
Most people dwell in a world nowadays where generally there truly is never an reason pertaining to becoming bored, as all over the place someone proceeds, possibilities can be obtained. There is certainly commonly tiny reason with regard to failing to discover methods to spend your life undertaking the various activities that you love. Even if it comes to making a living, you’ll find evidently a wider variety of ways for an determined human being to take the chance to work with his or her inventiveness than presently there have ever before been at virtually any preceding time of record. Even a person who is definitely possessed of an remarkable quantity of rather diverse passions should be able right now to cobble with each other a number of cash flow creating opportunities that may comprise most, if not all, of his or her passions.
As an example, look at the imaginative performer whom likes to work towards various tasks within her studio room within privacy, although that is normally really social. In the event that she’s sensible concerning this, she could set up a schedule that gives her the time to play with her innovative facet simply by establishing regular hours wherein the lady paints, works on her novel, makes bracelets, various types of ceramic creations as well as whatever else it is that she’s attracted to perform. She has the option for posting her book using Kindle, of offering her jewelry as well as other particular items in Etsy, generate a Internet site pertaining to her art, plus put the woman’s ceramics on show in the neighborhood gallery.
In order to meet her dependence on interpersonal connection with others, she’s got a amount regarding choices whereby she could communicate with other folks and make money, also. For example, one factor lots of people do today to gain an important extra income will be to choose to work as a operator for a rideshare firm for example lyft or even uber. She could speak to a genuine uber operator totally free to herself by means of taking advantage of their introductory promo to have a free trip. This particular creative female can also coach art work classes. She may market her wares at the community flea market. She is going to end up being so pre-occupied earning profit in such a number of fascinating techniques that the woman will not currently have enough time to perhaps think about signing up for an authentic career, everlasting, part time, or otherwise.
Many people presently will go online whenever they’ll need something. What this means is they’re prone to discover brand new organizations online rather than with the phone book or even by additional advertising and marketing techniques. A business that wants to reach as many folks as is possible as conveniently as possible will probably desire to ensure their own web site will be completely optimized.
It is important for a web-site to be optimized to make certain it’s going to reach as much prospective buyers as is possible. The optimization utilizes a selection of techniques intended to help the web site reach the highest rating in search results for a range of keywords that are pertinent for the business. A company that handles seo bundaberg may help the business proprietor find the appropriate key phrases to use and to be able to fully optimize the web page for those keywords in order to ensure it’ll climb to a higher search engine results positioning as well as be simpler for prospective clients to find. This is the easiest way to be able to manage optimization because the business might additionally help with some other internet marketing responsibilities also.
In the event your web page is not optimized, get in touch with the best bundaberg seo business right now for support. They’re going to have the ability to optimize your web page as soon as possible and also work to ensure it continues to be near the top of the search engine rankings.
Many people have consistently appreciated touring, however today it appears like more people are out there visiting the globe than any other time. No spot stays unvisited, and sometimes it appears like the wilder and more innovative the actual excursion, the better men and women love it. They enjoy viewing ancient ethnicities in their completely natural status, plus they are actually thrilled to reside as the locals do in nearly every regard except for one – they want to be able to contact family and friends who are back home. This, unfortunately, is an effort that’s largely been both aggravating and high-priced, until recently.
Time zones are invariably a true concern that needs to be included in the communicating predicament, and it may not be so awful in the event it were virtually all somebody must be worried about. The far larger issue that most folks have is because of their particular mobile phones and providers themselves. Folks have either needed to suffer from spotty services as well as excessively high roaming costs, or they’ve had to buy SIM cards almost everywhere they journeyed. Fortunately, there exists a remedy to this specific difficulty. At this time, they might just take a look at Global data roaming from Interfone. They need just to purchase this SIM sticker for data roaming by Interfone and place it on top of their own mobile phone in order to now have affordable coverage in over 100 participating nations.
Manufacturing Plants that mass produce whole entities as well as sections that go to greater things with plastic generally employ a method generally known as injection molding to get a high amount of repeatable exactness from item to part. Usually, personnel arrive at the plastics manufacturing industry from around the world, and also have a tendency to experience a wide range of capabilities, appreciation along with language to clarify the process of the materials casting procedure. The actual competition to create fabricated plastic merchandise is intense, and a lot of production facilities have realized that one approach to increase their items in general is definitely to get all of their personnel on the same page where their particular comprehension of the actual injection process and also vocab are involved. How they accomplish this outcome with the shortest time-frame and for the very least cost as well as decrease of man hours is via on-site injection molding seminars furnished by Paulson Training Programs.
Usually, many courses must be shown, or virtually all staff would have to be there at the same time in order to supply injection molding training through the normal class room product. Paulson circumvents this difficulty by offering wanted scientific molding training by way of transportable stations that every single individual employee will use as time permits. Employing a technique associated with video components and also on-site simulators, personnel used in virtually all areas of technological creation can participate within a variety of different types of instruction such as decoupled molding training minus the plant going through any loss in production.
Employees quickly learn how to speak about plastics manufacturing utilizing the same terminology, discover ways to effectively record the work at each and every phase of the method, discover how to comprehend the injection procedure in the view of just what the plastic will be going through, to identify the assorted blemishes that will take place and their causes, control changes, the assorted levels of the injection procedure plus much more. Advantages to the plant include superior communicating through the entire work force, producing fewer miscommunications as well as glitches, enhanced process productivity and far less downtime. Moreover, the building blocks exists, and could be constructed upon, for all people desirous of growing their level of understanding in addition to their specialized abilities with the goal of advancing their own careers.
Any company that yields information and possesses a functional link to the Internet really needs, if they understand it or otherwise, IT solutions to be able to be able to function most efficiently. By going online and following the topic associated with exactly what IT support can give, the common small business operator has the ability to find out how a business which specializes in supplying IT services can assist them attain their stated goals. IT represents Information Technology. The planet these days creates far more information than in the past at any past time. That info is used, searched for, saved, changed and transported to others both in and out of house billions of times on a regular basis almost all throughout the world.
The control over this specific information is exactly what IT is all about. IT is a precise and substantial field of effort, one that will be progressively growing and that also has large numbers of authorities employed by thousands of specialty firms around the world that are offered to supply personalized replies for the particular preferences of various small enterprises. It is an important concern as well as part of the business fabric connected with not simply organizations minor and major, but also entire nations, significant professional concerns, the health care community, and more. One fascinating facet to IT is usually that whilst the planet generates a lot more knowledge than previously, it truly uses much less paper, and uses less bodily space for storing. Some companies, in reality, happen to be extremely pleased to call themselves “paperless.”
Some businesses opt to handle their particular IT desires independently, generating a section with the objective and devoting both actual physical and financial resources to it. It is deemed an private selection, and even one that actually works for giant corporations which want an actual finger around the beating heart beat of each and every area of their corporate and business information. As you can see here, nonetheless, the time that such an strategy call for happen to be significant. Every company to produce a synchronised strategy for coping with its information, however, rather than just letting it consider its own random way. Training for employees must be supplied. A fantastic IT community has the ability to save a company cash, improve its effectiveness, boost how it is identified through the open public, and increase communication inside of its ranks.
What do you know about web hosting? If you’re the normal non-tech-company small business owner, probably not much. And you shouldn’t. Your job is to run your business—not be an expert in how web servers work.
But at some point, the decision will be in front of you. You will decide where your website will live—and it’s a bigger decision than you think.
Let’s break it down into the simplest terms. You live in some sort of home—an actual house, an apartment, a condo, or maybe one of those new trendy tiny houses. Your life would likely be very difficult without a home. Same with businesses. Can you imagine a grocery store without a physical location? That would be chaos!
Your website works the same way. To work, it has to be housed somewhere. A web host places your site on their web servers. Without a web server, your site wouldn’t make it to the internet. It would go no further than your computer.
Unless you own your own server, (you probably wouldn’t be reading this article if you did) you have to rent space on somebody’s else’s servers. But how do you know who to use and what you need?
1. Don’t Use Your Web Person
Sorry if we make any web designers mad but putting your site on somebody’s private server is usually a bad idea. What if you later have to fire your web person? Think of how awkward it will be to fire them and then ask them to be part of moving your site to another host?
Or even worse, what if they’re mad and try to charge you and outlandish fee to move the site? You ALWAYS want your website on neutral ground. You should retain total control of your web host. If you have to fire the person, you simply remove their access to the host.
2. Use a Big Company
Small business owners understand the difficulty of growing a business but web hosting is best kept with large companies. Large companies offer 24/7 tech support, guard against cyberattacks, purchase the newest technology, and generally offer the most reliable service at the best cost.
Smaller companies will be more friendly to talk to on the phone or through chat but they don’t have the resources to offer the technology services of larger web hosting companies.
3. Use a Managed Server
Don’t let the term intimidate you. Think of it like this: If you know very little about something, do you want somebody who knows more than you as your manager? Of course you do. That’s what a managed server is—a server with an automated and human management team keeping it running for you. Management services might include automatic backups, virus scanning, software updates, server health monitoring, and more.
With an unmanaged server, the only management you get is a guarantee that the server will work. You even have to install all of your own server software in most cases. Do you know how to install things like Apache, Ubuntu, MySQL, and other super techie things like that? If not, you want a managed server.
Who would use an unmanaged server? Anybody who has somebody on staff or hired as a contractor to manage the entire web presence including the server. Unmanaged servers are often better-performing servers at a fraction of the cost—sometimes 1/5 the cost of a managed server. If you have somebody you’re already paying monthly, they might recommend an unmanaged server.
4. Know Your Choices
When signing up for managed web hosting, there are 3 basic types: shared hosting, VPS hosting, and dedicated hosting.
Think of shared hosting like an apartment complex. A whole lot of people share the same building. In this case, your website runs on a server with a bunch of other people’s websites. You might only pay a couple dollars per month for shared hosting but it can sometimes run slower than you would like. If you have a super-simple site that doesn’t have any high-end programming running along with it, shared hosting is probably fine for you.
VPS, or virtual private serving hosting, gives you control over how the server is configured. You have your own space but you’re still sharing the server with other people—although far less people than with shared hosting. It’s often faster but also more expensive. Plan to pay between $25 and $50 per month.
Dedicated servers are like living in a home. It’s all yours. Nobody else shares it. That comes with a lot of advantages but it’s more expensive. Plan to pay $80 per month on up. And you’ll need your own tech person managing the server for you.
Unmanaged hosting doesn’t come with all of these options. If you’re considering managed hosting, talk to your tech person.
As a general rule, very small businesses are fine with shared hosting. If you run an e-commerce site or have more advanced needs, move to VPS hosting. When you need dedicated hosting, your hired team of tech people will let you know. You may never need dedicated hosting.
5. Consider Managed WordPress Hosting
If you’re the do-it-yourself kind of person, you might have considered building your own website. This is entirely possible with wix, Squarespace, and some other builders. If you want to be slightly more techie, you might have looked at WordPress, the most popular website software in the world. Because of its popularity, some webhosts now offered managed WordPress hosting plans.
These plans completely manage WordPress for you including software updates, daily backups, security, and speed. Speed is of particular importance because WordPress sites tend to run slowly without some tweaks from a tech person.
The downside to Managed WordPress hosting is that it’s going to cost around $30 per month but site speed is become an increasingly important consideration so the cost could be worth it.
Your web designer might recommend it if they aren’t hired to maintain the site.
Overall, it’s more expensive but if you rely on your website as an important part of your business, it’s probably worth the cost.
Venture capital may be the hot, sexy funding route that helps a few businesses and grabs a lot of headlines every year. But it turns out another type of funding works out better for most entrepreneurs: microfinance. Microfinance loans are small loans typically in the range of up to $50,000 in the United States, with an average loan amount between $9,000 and $10,000.
Non-bank lenders such as Accion USA provide loans that average just $7,000. Here’s the funny part: The businesses they lend to have a survival rate that’s twice the national average. Repayment rates are on par with traditional banks, too.
Why do micro-borrowers do better than owners who use traditional bank loans or credit cards? Here are three reasons:
1. Better vetting. Microlenders tend to spend more time getting to know a business owner one-on-one, which usually doesn’t happen at major banks. These microlending institutions often take bigger risks on unproven startups, but because they take the time to learn a lot about the person seeking the loan, they form a more personal connection. With those closer ties having been forged, entrepreneurs will go the extra mile to avoid disappointing the person who approved their loan.
2. Support groups. Most microloans are made in a group setting. The business owners in a lending circle support one another and, in some cases, are financially responsible for each other’s loans. This web of interconnected responsibility helps keep them on track and provides moral support.
3. Smaller loans. When entrepreneurs only have a small sum with which to start their businesses, they watch every dime carefully. Too often, landing a big loan can lead to profligate spending rather than growth and productivity. Small borrowers also don’t get delusions of global domination — they take it one careful step at a time, so they don’t stumble into overexpansion.
Inside PayPal’s microlending program
As the owner of Crisloid, a maker of high-end backgammon, checkers and cribbage sets, Jeff Caruso knows that if he buys more raw materials in late summer, he can make more money during the holidays. The problem is coming up with the extra cash. That’s why he borrows from PayPal, which began issuing single, fixed-fee loans of $1,000 to $20,000 to qualifying customers in 2013 through its Working Capital program. (The cap was raised to $60,000 in 2014 and was $97,000 as of this writing.)
Caruso has taken out three business loans through PayPal’s microlending program, borrowing $10,000 to $15,000 a pop — $35,000 in all. He uses the money to meet his Providence, Rhode Island-based company’s fourth-quarter spike in demand, which helped revenue exceed $500,000 in 2014 for the first time.
“Come August, if I can take $12,000 and turn that into finished goods, it’s all going to sell,” Caruso says. “It helps us finish the year that much stronger.”
Since launching the Working Capital program, PayPal has paid out more than $1 billion, granting loans to over 60,000 U.S. small businesses. In 2014, PayPal expanded the program to the U.K. and Australia.
More than half the borrowers use PayPal loans to buy inventory, says Darrell Esch, the company’s vice president and general manager of PayPal’s SMB lending. Other popular uses for the money include temporary hires, warehouse expansion and website overhauls. Esch adds, “It really helps merchants grow.”
How it works
PayPal lends approved borrowers up to 18 percent of their annual sales made through the platform (with a $97,000 limit), the equivalent of one month’s processing volume, according to Esch. There’s no due date on the loan; instead, PayPal automatically draws payments from a borrower’s account when a sale is made, until the loan is repaid. (Borrowers get a reprieve on days with no sales.)
Borrowers can elect to designate from 10 to 30 percent of their daily sales as repayment; Caruso, for example, chose to repay 15 percent of daily sales and has paid off each of his loans in three to five months. Borrowers can make extra payments or pay a loan off early at no additional charge.
“Once the loan is paid in full, you can come back and apply again,” Esch says, noting that about 80 percent of people who close loans take out another one.
PayPal loans run from 2 to 11 percent APR of the money borrowed. The higher the percentage of each day’s sales that goes to repayment, the lower the loan cost. If PayPal tries to retrieve a payment after a sale but the account balance is insufficient (presumably because you moved the money elsewhere), the platform will withdraw the necessary funds the next day, Esch says. There’s no charge for these “catch-up” payments.
Loan applicants must have at least $20,000 in sales through PayPal during the previous 12 months and at least 90 days of processing history on the platform. “It doesn’t take long to build it up,” Caruso says. (Esch points out that PayPal doesn’t prohibit borrowers from using other transaction platforms.) PayPal also checks applicants’ identity and credit history.
Just be sure you don’t get in over your head. Caruso suggests initially borrowing less than you’re approved for and repaying at a lower percentage. “Start small,” he advises. “Make sure you know your margins. Plan what you can handle for a repayment so you don’t choke yourself.”
Startups offer microloan options for entrepreneurs
Microloans actually started as a solution for impoverished borrowers in underdeveloped countries. These borrowers typically lacked collateral, steady employment and a verifiable credit history, making them difficult candidates for traditional financing options. Microloans have been successful in helping to support entrepreneurship and encourage economic growth in these developing nations.
In more recent years, microlenders have been establishing themselves all across the United States. Some microlenders are finding creative ways to improve and streamline this already simple process by offering unique services.
For instance, TrustLeaf.com extends microloans through crowdsourcing. What makes TrustLeaf.com unique is that business owners only borrow from friends and family. Their campaigns aren’t publicly available, protecting the borrower’s privacy.
Borrowers simply set up a campaign on TrustLeaf’s site, providing all the necessary information about their business and select the loan terms. Potential borrowers can pick from a few lending options with different interest rates, minimum amount due and various repayment terms. The borrower and the lender come to an agreement about which loan terms make the most sense for both parties.
Once the borrowers have set up their campaign, they can invite friends and family to view it. “Friends and family don’t like to haggle because it makes them uncomfortable,” says Daniel Lieser, co-founder and head of business development for TrustLeaf. “Having this system in place prevents those awkward conversations of attempting to collect money when it’s due because it’s all laid out on our platform. Funding comes straight from the lender, a peer-to-peer system.”
Want to keep your audience’s attention beyond the first few minutes of your speech or presentation? These three suggestions can help you keep them engaged all the way to the end.
Business leaders often ask me this: “How can I sustain the audience’s attention throughout my speech?”
They go on to say: “Most audiences will be courteous enough to give the speaker a fair chance by listening closely for the first few minutes. Yet after that, I see their attention weakening. One person might be ignoring the host’s instructions about texting. Another is looking out the window. A third one is writing something, and I don’t think she is taking notes on my speech.”
With exasperation, they ask: “Do you have any strategies that will increase the attention span of my audiences?”
Fortunately, I do have recommendations that have worked for me and many presenters. Here are three of them.
FIRST: Move and keep on moving
Our eyes and our attention do not remain with still objects very long, yet we will stay focused on objects in motion. For example, suppose you and I are standing at the dock where cruise ships come in. We are watching a ship gliding across the horizon. Are we going to stop doing that, and begin looking at a docked ship? That’s not likely. Movement grabs us, not inactivity.
When you speak, get bold enough to walk away from the lectern, podium, table or wherever you have your notes and materials. Sure, this takes considerable courage at first. As happens with most changes, you will feel awkward initially. Before long though, going out into your audience will become easier.
Note how the eyes of your listeners follow you. Their minds will stay attuned as well.
TWO: Tell a compelling story
True, statistics can be impressive. When I read recently that 5.6 million Americans endure paralysis and that this number represents 1 out of every 50 citizens, that startled me.
Shortly afterward I read a heartwarming story about Devon Gales, a Southern University football player who was injured a season ago in a football game against the University of Georgia. Ever since that impact, he has been going through intense physical therapy, in hopes of regaining use of his limbs. Members of the Georgia football team have forgotten he was an opponent. They have visited him, comforted him, and encouraged fans to contribute toward purchasing a home for Devon.
Note how the statistic about paralysis could alert my audience for a couple of minutes, while the story about Devon will keep them enthralled and inspired for as long as I describe his quest for recovery.
Remember how children gave parents full attention when the parents said “Once upon a time”? That response does not disappear when we become adults.
THREE: Involve your audience
The era when audiences would sit passively for extended periods while a speaker remained the whole show has ended. As beloved comedian Jimmy Durante said frequently, “Everybody wants to get into the act.”
So find relevant, interesting, and tasteful activities that foster interaction. For example, if you are talking about customer service, give these instructions: “I’m sure that many of you have experienced great customer service. For the next five minutes, at each of your tables take turns identifying the companies that have given you the best customer service, and tell what made the service so impressive and memorable. So five minutes from now, we will have a leader you appoint at each table report the highlights of your discussion.”
During a half-hour presentation, design two or three interactive exercises, spacing them at intervals that provide a refreshing change.