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Artie Berne
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Alternative Financing For Business and Real Estate
Alternative Financing For Business and Real Estate

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Alternative Working Capital & Asset Based Lending
How it Benefits Business Brokers

Are you a business broker or intermediary?
Have you ever been faced with either of the following situations?

1. The prospect company needs to sell or wants to sell because they are rapidly stressed due to working capital constraints.

2. The prospective buyer does not have enough cash for a down payment to buy the prospective company.

These situations are not uncommon and securing financing for small businesses is rarely easy. As banks become increasingly risk-averse, alternative financing has become indispensable to small and medium businesses. As a broker, it can be a great tool for you as well.

As a business broker, you can help buyers and sellers overcome their financial hurdles with alternative working capital or asset based lending.

In situation 1, the prospective company can liquidate accounts receivables and inventory or fund future or present purchase orders simultaneously with the closing of the purchase of the company. This would relieve significant stress and provide the business owner with the extra cash they need.

In situation 2, the buyer can use these proceeds to strike when the iron is hot. Next, they leverage the newly acquired funds to make the prospective company bigger, stronger, and better by streamlining operations, costs, systems, and procedures. They should also make efforts to eliminate or renegotiate debt. With these improvements, the new business owner can then seek long-term financing from conventional banks at a lower cost.

Use Alternative Options to Your Benefit

As a business broker or intermediary using the power of asset based lending, you can buy and sell companies even when they are in crisis-plagued financial situations.

When you come across companies who can’t get bank or other mainstream funding, consider seeking out alternatives. Working capital or asset-based lenders are more flexible with their loans. By creatively using the in-house financial tools at their disposal, an alternative lender normalizes the company so you can sell it at a better price.

The result is good for everybody, from supplier to customer and even employees, who are more likely to be loyal to a stable company. Not to mention the benefit to you, the broker. Securing quick financial support makes the sale easier by alleviating pressure and time constraints.

Many business owners want to partner with you because you have expertise in handling these types of deals and you know the market. If you are also savvy enough to get them the funding they need to make the deal go through fast, you’ll become a game-changer and will come highly recommended.

Contact ArTex Funding today to brainstorm your situation
and find out if we can help.
512.261.0024
info@ArtexFunding.com
http://www.ArTexFunding.com/
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TRUCON BUSINESS DEVELOPMENT
Austin, TX 512-219-6677
Trucon@sbcglobal.net www.truconbd.com

Most Influential Business to Business Marketing Activities

Based on Trucon Business Development experience, Gartner Research reports and articles in The Harvard Business Review these eleven items were ranked on a scale of 1 to 7 (Not Likely to Extremely Likely) as having influence on a purchasing decision.

Number one was having direct interaction with the product / service provider. This does not necessarily mean a sales presentation, although it could certainly be a quality, professional sales engagement. These personal meetings involve a mutual qualification of both the provider and the consumer to insure there is a fit for both parties to benefit from the engagement. Personal face to face meetings are the best because of the additional sensory feedback the provider receives from reading the body language and facial expressions of the prospect. It also gives the provider an opportunity to get a feel for the personal and business culture by observing the office space or personal decorum of the prospect. Be a very intentional listener during these visits. Phone conversions or skype calls can be substituted for face to face meetings when necessary. Score 5.8

Number two on the list is references. A quality reference from an individual in a similar business that has purchased your product or used your service is very significant. Have written references from your customers with cart blanche approval to send those references is the most efficient way to handle this tool. Trucon has closed business based on written references, even when the prospect initially asked for permission to call the individual companies. Think about the common practice of book authors that use numerous references from well-known people to “close the sale” as you examine the book cover. It works! Score 5.6

The third most effective tool is to hold events, both in person and virtually. Even if you as the company or sales person are not the featured presenter, having a subject matter expert speak on your behalf is a viable alternative. A common practice is to host a webinar. This allows ease of access to many more people than you can pull into a meeting at a specific location. It is also a great idea to become a sought-after speaker with subject matter expertise that is in demand. Then you can offer yourself as a speaker to organizations that need experts to present. Be sure to take advantage of your local chamber of commerce to have a ribbon cutting or open house when the opportunity presents itself. Consider trade shows and happy hours as a viable event opportunity as well. Score 4.8

The fourth item on the list is White Papers. Valid reproducible research from a respected source can be used to back up your product’s performance claims. In a previous field, both my company and our competitors employed PhD’s in the static charge and contamination control field to publish journal papers, speak at conferences and do research to establish trust in our products. Personally, I had an electronic library available to send papers to prospects who wanted additional assurance about the science and technology behind our ionization products. This provided substanance in their equipment decisions. Don’t allow this easy tool to be absent from your bag. Score 4.8

The fifth item is actual sales presentations. This is the true professional’s time to shine or fail in the sales world. Be sure to couch every aspect of your time with a “What in this for the prospect?” mentality. The strongest temptation (and the laziest) is to do an information dump on the prospect. Hey, we spent all that time and effort learning our product and industry, now it’s time to use them, right? WRONG! Trues professionals answer questions and present solutions based on their research of the prospect. Don’t forget to ask for the business when the time is appropriate. Score 4.8

The sixth influencer is work related communities. This definition relates to the corresponding professional associations that serve the professions that your clients belong and participate in. For example, during my 18 years in the safety equipment industry I supported the American Society of Safety Engineers, The American Industrial Hygiene Association, The National Safety Association, The Texas Safety Association and Texas A & M Extension Engineering by being a member, teaching, participating in trade shows and regular attendance at local meetings. Almost every industry has some type of work related communities where you can gain exposure. And for the smaller business, don’t forget about local networking and the one to one’s that can be generated from that activity. Score 4.5

The seventh item is provider websites. It goes without saying that you must have a viable website. Make sure that you keep up with your search engine optimization efforts. Your website should strike a balance between artistic attractiveness, ease of use and viable content. Score 4.4

Brochures and marketing literature rank number eight on the influential list. It is important to have individual product literature with performance specifications in these days of short attention spans and prospects who are willing to do research online before they engage with a sales person. As a sales person, you should have your own library of these documents. Be sure to stay in touch with your marketing and graphics staff to have the most recent product information available. Score 4.3

Press Publications were ranked number nine. As an individual sales contributor this is often an item you have no control over. As a matter of fact, most firms prohibit any type of contact with the press unless you have express permission. However, that does not mean you cannot share the positive press generated about your company. This is specifically helpful if you sell a technical product and your engineering and scientific staff have published germane articles in a journal. As a sole contributor, you might consider having press releases published in local news websites and printed press for “free publicity.” Score 4.1

Advertising was ranked tenth. It is rare that you see a large business to business use the mass media to promote their product line. But when some large industrial suppliers also have retail divisions, it is a possibility. The age of demographic capture ability is upon us all. It is now possible through Facebook, Linkedin and electronic list providers such as Hoovers or Sales Genie to run a low cost campaign and target specific groups of individuals with click through ads to landing pages and special offers. Score 3.8

And surprise, surprise, Social Media tied with advertising to come in as the eleventh ranked influencer. In my opinion social media postings are now a primary path to visibility and some low level of trust created by repetition. This is not to say that you should drop the effort to create visibility. But we all must consider how these sites have evolved over the past several years into a source for prospect mining, publications, event management, job searches and another communication path. Linkedin has become one of the most viable B to B tools in your low cost sales and marketing tool bag. Be sure to monitor your sales team and keep them within the boundaries of good taste as they post and reflect your company’s values and culture. Score 3.8


** This information should help the sales team or individual contributor establish priorities for their time usage. This is certainly not a comprehensive sales document, but it does allow you to have access to some deeply researched data that helps you focus your efforts on the important and avoid the tryanny of the urgent, but not important.

Good selling!

Gary D. Seale – MBA
Trucon Business Development


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RUNNING A BUSINESS: From A Marathon Runner’s Perspective


Synopsis: Running a business is like running marathons.
The Start:
As a runner, sometimes the most challenging part of a marathon is getting to the start in a healthy mental and physical state. In business, having the proper funding and capitalization structure along with a most viable product (MVP) is critical to launching successfully. Whether that is bootstrapping, securing debt or venture capital it’s important to start in the right direction. Along with that, as a runner it takes a plan and laser like focus to be ready to run the race. My running plan from my coach has daily and weekly goals to prepare me to race. It also takes incredible focus and dedication to get up early in the morning (4:15am) to execute the plan and adjust as necessary. As in business, a well thought out business plan and focus and dedication by the business owners ensures the business is heading in the right direction.
The Journey:
In a marathon, one often hears the saying about hitting the wall. This can happen anytime in the race and can come un-expectedly. When this happens, the important point is to keep moving forward and re-group to finish the race. Businesses hit obstacles or challenges all the time. You lose a key customer, a new competitor enters the market, a key employee leaves the company. It’s important to have a process or methodology to address those challenges and keep moving forward. In anticipation of hitting obstacles, KPI’s (key performance indicators), can help anticipate where trouble might be coming ahead. In running, we have our running watches and running applications, which provide lots of key indicators on how our training or race is going. In business, setting up a performance dashboard with the KPI’s that are most relevant to your business (financial and non-financial), can provide the early warning signal that adjustments are required. It’s also about the team. Running can feel solitary but is truly is a team sport. Your team is made up of a diverse group of individuals all with differing capabilities and the willingness to support each other during training and racing. Likewise, in business, it’s important to hire the right people for the right role. The owners or founders cannot do everything by themselves and require capable people to embrace the journey and work as a team to deliver the business.
The Marathon(s)
A dedicated marathoner, does not focus on one race. It’s about the long-term plan or goals of what they want to achieve. That could be qualifying for the Boston Marathon or achieving a particular time. It’s important to have a long-term roadmap of how to get there. I believe businesses should have a strategic plan normally 3 years out, that lays out the strategic objectives of where they want to go. Having the team on the same page on this journey which might include objectives around target markets and customer, geographical location, and people development will enable a path to future growth. In addition, to make the next leap of capability or ability, the runner might need to make some changes to get faster and stronger. One common area for runners is to work on their core strength. This provides a stronger foundation to run more efficiently and prevent injury. As businesses go through rapid growth, they need to scale so often the people, processes, and technology need to be re-visited to make the next leap. This could mean, re-engineering the supply chain process, looking at the roles needed in the organization to move forward, or innovation. Finally, I believe that forming long lasting relationships and giving back to your team or community helps at all stages of the journey. Runners, often get hurt and feel alone when they can’t run. When other team members reach out and provide encouragement, I find the runner comes back stronger and is ready to move to the next level. People in the business need to build relationships with their employees, suppliers, customers, competitors, and the community. Ultimately by giving back, the entire eco-system will be stronger, and the overall business and community will grow.
Author:
David Goodstein – Not Your Typical Finance Guy, has run 18 marathons including qualifying for the Boston Marathon 4 times. David has been in the accounting, finance, and IT industry for over 30 years and most recently has become an entrepreneur as an OnDemand CFO. David can be reached at:
Email: dgoodcfo@davidgoodstein.net
Mobile: 512-705-2131
Web: www.davidgoodstein.net



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How Does Inventory Financing Work?
Inventory financing is a form of asset based lending that allows you to leverage your inventory. This can help improve your company’s cash flow and provide funds to pay for business expenses, or to purchase additional inventory. This type of financing is useful if you are unable to get higher credit terms from suppliers/vendors, or if they are asking for faster payments.
In this article, you will learn:
 What is inventory financing
 How it works
 Advantages of the solution
 Disadvantages
 Alternate options
The right strategy
The first thing we should say about this solution should be used strategically. In most cases, inventory financing should not be your first option of financing. This is because it is more expensive that other alternatives.
Instead, you should consider trying to finance your receivables first. This can be done by using a factoring line or by getting an asset based loan. If these solutions do not provide sufficient funding, at that point you should consider financing inventory.
How does it work?
The line is usually offered in combination with a factoring line or as part of an asset based loan. It allows you to finance inventory shortly after it has been purchased. Your company get’s the funding by submitting a draw request to the lender, who deposits the funds in your bank account. Once you have the funds, you can use them for any business expense. Transactions settle regularly as inventory is turned into product and sold off to customers.
The lender funds inventory by advancing up to 80% of it’s appraised value. However, lenders don’t use the market value of the inventory in these transaction. Instead, they either use the Net Orderly Liquidation Value (OLD) or the Forced Sale Liquidation Value (FLV). Note that the OLV and FLV are usually lower, sometimes substantially, than the market value. This can affect your ability to leverage your inventory.
Who can use inventory financing?
Our inventory financing program can be used by wholesalers, distributors, and manufacturing companies. Generally, companies have to meet these requirements:
 Need a minimum of $500,000 in financing
 Have inventory or raw materials that are marketable
 Use an inventory management system with perpetual inventory
 Have reliable financial statements
 Have exhausted other options (e.g. factoring, ABL, line of credit, etc.)
Advantages
This type of financing has some advantages over other solutions. Some advantages include:
 Allows you to leverage inventory
 Allows your business to accumulate inventory (i.e. to meet contractual obligations)
 Easier to get than conventional financing
 Line can increase as your company grows
Due diligence can be expensive
One of the disadvantages of this solution is that it require more due diligence than other alternatives. This is due to the nature of inventory itself, which requires additional financial controls. The due diligence can be expensive for some, which is why it only makes financial sense to use this type of financing if your company needs a minimum of $500,000.
As part of the review process, the finance company will need to:
 Perform a field examination of your facilities
 Review your accounting system
 Test your inventory system
 Appraise your inventory and raw materials
Some of these functions are conducted by third parties who must travel to your plant or warehouse. Initial costs vary based on the size of the facility and the complexity of the line. Additionally, the financing company will need to monitor your inventory regularly, usually every 3 to 6 months. These examinations add to the maintenance cost of the line. This is the main reason we recommend you exhaust other financing options first.
Alternatives
One option that can be used to finance certain inventory transactions is purchase order financing. This is a very specific type of funding that allows you to finance inventory that is associated with a specific purchase order from a customer. However, purchase order funding can only finance transactions where margins are high (20% or more) and where you purchase the finished goods from a third party vendor.
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Data Analysis & Results (DA&R) is a senior team of advisory and execution consultants and professional trainers, led by Darrel Raynor. DA&R solves your operations, technology, and project challenges. Our clients trust us for consulting, training, and personalized recruiting. We place Interim COO, CIO, CTO, and Vice President MIS/IT or Application Development. Specializing in consulting and staffing for Operational and Project Turnarounds, Process and Quality Improvement, Project Management, Business Analysis, and Technical Writing for full-time or contract team members. Info@DataAnalysis.com www.DataAnalysis.com


Darrel A. Raynor, PMP, MBA
President/CEO, Data Analysis & Results, Inc.
“Knocking the Stupid out of Project Management, Business Analysis, & Operations via Process Improvement, Training, & Staffing.”
+1-512-968-0770 DARaynor@DataAnalysis.com www.DataAnalysis.com
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Alternative Working-Capital, Asset-Based Lending

Is your company experiencing problems with cash flow or working capital? Have traditional lending sources turned you down? Is your company having a hard time getting financed?

Working capital is key to a company's operating efficiency and cash flow management. Without working capital, a company may experience difficulty with payroll, buying inventory or marketing expenses. All of these challenges can cause a company to have financial stress and possibly go out of business. Ensuring cash flow through these events requires working capital.

When there is a lack of working capital, a company generally must approach a bank, an investor, take out a line of credit, or approach private equity funds or venture capitalist. These days, it’s not the easy to get money for business working capital. To secure a traditional loan, you need assets, strong cash flow and multiple quarters of profitability, as well as a solid record of success. And you typically have to start paying back principle and interest immediately after you receive it.

But what if there is an alternative? A better option? What if there is a more flexible or creative option?

Alternative lending, working capital, asset based lending companies help you when you are experiencing growing pains or are in need of funding quickly to cover labor, equipment, inventory or existing contracts. A company may grow too quickly to be able to make payroll, be experiencing working capital or cash flow problems, or have just been turned down for a loan by other funding groups.

Alternative Asset Based lending finances your working capital using assets that are already in your company to help turn your accounts receivable, inventory, purchase orders, real estate or other balance-sheet assets into working capital. You can use these funds when and where you need them, rather than for a very specific purpose as with a traditional loan. Moreover, we do not limit your line of credit. If it helps your company grow, we continue growing your credit line as your assets grow, too.

Our alternative lending options include (but are not limited to):

Invoice Funding - Factoring
You complete your sales as usual. You invoice your customer. If you need, cause your company has working capital issues. An Invoice Funding company purchases the invoice(s), advances you usually 80% of the invoice and holds back 20% in a reserve escrow account that you get back minus the funding fees when the invoice is paid off.

Asset Based Lending
An Asset Based Lender leverages your corporate assets to offer your company a flexible, revolving line of credit, term loan or factoring line.

Bridge Real Estate Lending
This is when you need to buy real estate really quick before other people buy it out from under you. These “Bridge Real Estate Loans” are collateral-backed loans for short-term acquisitions, fix and flips, cash out and development capital. This is also known as real estate private debt bridge funding. Also, sometimes called “Hard Money.”


Want to learn more? Read more about our loan services, testimonials from previous clients, or contact us today to get brainstorm your situation!
Artie Berne – President of ArTex Funding
Artie@ArTexFunding.com
www.ArTexFunding.com – 512-601-0024
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