Have you got a great idea for a business and now you want to make it happen? You’re not alone. While every business with the idea, commercialising it is a whole new site of skills. Getting a startup business up and running is a challenge for anyone who has not done it before.
Entrepreneurs don’t usually have the ideas, i.e. they’re not the creative talent. They’re the people, the ideas creators turn to, when they want to see how far they can take the idea and turn it into a viable business.
The start up phase of any business involves a lot of working hard, but not exclusively, it also requires investment. Seed money can come from various sources. Without the money, to get started and provide ongoing investment as the business shows promise, your venture may take too long to mature and a competitor takes your place in the eye of the consumer. So where can the investment come from?
There are a lot of different funding options available for small businesses, and they all offer their benefits. You can find some examples of the most popular methods below, along with some additional information to help you choose which route might be best for you.
You will need to invest in yourself, i.e. put some of your own money in. If you have not got savings, consider other options, like your home loan. This is a hugely popular option for start ups that fail to get funding from other sources. Caveat Emptor: Always seek professional advice from your accountant, lawyer etc before taking on debt.
So if you have money saved up or can get a loan from a bank, funding your business will be a fast process. As aforementioned, there will be a personal risk here, but you won’t have to prove to anyone that your business will work, making it great for those who can’t get further than a concept without some capital.
Some banks and governments will offer loans to new businesses. In most cases, you will have to have existing cash flow to make this work, limiting the successful startups will have with it.
If you can convince an investor with the money to back your idea, you won’t have to look at other types of funding for business, as you will have both money and support. This isn’t always easy to find, and you will have to prove that your idea is worth their time, making it hard for those with nothing but a concept.
Personal Risk vs. Sacrificing Freedom
The choice you make when you’re choosing how your company will be funded largely rests on what is more important to you.
If you are willing to take on personal risk, using your own money can be a great way to go, as it will give you all the freedom you need to build the business you’ve been dreaming about.
For those who would rather keep their money safe, making a couple of compromises along the way can be a small price to pay for an investor or venture capital. This is a very personal decision to make.
Why Isn’t The Bank An Option?
A lot of startups find disappointment when they approach a bank for a loan to get themselves off the ground.
Unfortunately, history has shown that being too willing to offer new businesses money can result in heavy losses, and banks have learned for their mistakes. Before you can convince a company like this to support your venture, you will need to prove that it can make enough to pay it back, and most startups just don’t have the income.
Choosing the funding option which you use for your startup has always been a challenge. It’s becoming more common to find businesses which cost nearly nothing to get started, opening the doors to another idea for you to consider.
How a Fractional CFO Can Help Your Startup Grow
A fractional CFO can help start-ups by providing services for organizations on a part-time or contractual basis. This means the company can gain the expertise of a CFO without the significant costs that an in-house, full-time CFO may bring.
Typically, a CFO is brought on for a specific project to meet the company’s financial goals, or to address financial challenges sustainably.
What Can a Fractional CFO Do for a Startup?
Fractional CFOs work on a number of projects that require expertise in financial modeling, accounting and business strategy. They usually work on a project or challenge that the company’s current in-house staff are not equipped to deliver on.
Many in-house accounting and back-office finance professionals spend their time working on past financial transactions and the present. A fractional CFO may be brought on to forecast the future of the business from a financial perspective, providing strategic recommendations for its growth.
A fractional CFO often contributes to a business by strategizing the best ways to achieve the growth required. This often requires thinking about financial goals over the next few years and making recommendations on financing the business, through external investment or loans.
Improving Cash Flow
Understanding how cash flows in and out of a startup will be a key consideration for the founders and investors of a company. A fractional CFO can assist by improving the analytical capabilities of the business’ data and will then create a plan of action based on the analysis.
They can get to the bottom of where revenue leakage exists, with the goal of minimizing leakages and creating innovative ways to improve cash flow depending on the business goal.
How to Make Cost Cuts
A job that many startup founders and management teams do not enjoy is looking for ways to cut costs. However, running a startup in a lean fashion is often a requirement due to limited funding of the business. A fractional CFO can make this a more bearable process by analyzing incomings and outgoings and figuring out what can be cut or reduced for a more profitable business. It can be easier for a fractional CFO to make the required recommendations, as they find it easier to act objectively compared with an in-house CFO.
Business Acquisition Analysis
Deciding to acquire a business can be a risky but rewarding decision. One important factor is valuing a business for sale correctly. Preparing well is the way to get it right and a fractional CFO can help with just that. An experienced, capable CFO will understand how to analyze detailed company financials and review the market for comparable businesses to arrive at a fair valuation. A CFO can then work on how to fund the acquisition through debt or equity.
Many people believe growth is the responsibility of the founder, salesperson or marketer of the company. However, fractional CFOs are likely able to provide important input for the growth strategy. A modern CFO will use customer acquisition cost analysis and customer lifetime value analysis to work out metrics. An example of this is identifying ROI on marketing expenses and then looking for ways to decrease the cost of acquiring customers. By using data analysis to inform them, CFOs are at the heart of a business’ strategy. A CFO will be able to predict near-term financial performance and engage with marketing teams to help improve practices.
A fractional CFO has many benefits to give to startups looking to grow their business, lower costs or simply get a hold of their accounting and future forecasts. A full-time CFO staff member may not be affordable for many small businesses who may still be building their product or getting traction in their market. However, a fractional CFO could give serious value to a growing company, if hired to help achieve specific, ambitious business objectives
Making Money With Short Term Rentals
Investors love investing in real estate as it usually outperforms other investment types like shares and managed funds. There are many ways to make a profit for your business with real estate too including ‘flipping’. This term refers to purchasing a revenue-generating asset and then shortly thereafter selling it again for a profit. In the US, the two asset classes mostly used for flipping are initial public offerings and real estate.
The longer-term real estate investing strategy that’s prevalent is buying homes to rent out on long term tenancies. It’s not just businesses that invest in rental properties, as a retirement strategy workers also look to have one or two investment properties in their portfolio for the weekly income and the long term capital gain on resale.
What’s also caught the attention of businesses and workers alike is the option to make money from short term rentals. Generating more income with short term rentals and by listing these properties on Airbnb is disrupting the accommodation sector and anyone with a home can do it. AirBnB is a disrupter and it has changed the way we travel. Staying in a spare room for a night or two, rather than a hotel is now accepted as the norm among all types of holidaymakers.
If you want to know how you can earn money with short term rentals, here is a quick guide.
What Is Airbnb?
Airbnb is an online marketplace for lodging around the world. It is popular among travelers who want to save money on accommodation. Because hotel rates are getting expensive, solo and group travelers are looking for more affordable options. Property rental listings on Airbnb can be a whole apartment, one room, or villas. Users can input the location and dates of arrival and departure to look for available properties.
The company started in 2008, and since then, it has reached worldwide popularity. Not only travelers are using this app, but also business-minded individuals take advantage of Airbnb’s technology to generate more money.
In the United States, there was a 45 percent increase in year-to-year bookings. Airbnb attracts millions of users worldwide, which comprises of frequent travelers and individuals who travel for work. About 700,000 companies are now using Airbnb for work-related purposes.
Earning Money with Short Term Rentals
You do not need to buy a property to list it on Airbnb. You can go for short term rentals to gain a more significant profit from daily or weekly rentals. Some people are already doing this strategy for years now, and you can also do the same if you find a property in a prime location.
Because this venture requires capital in the form of deposits, you need to be ready. Some property owners require bigger deposits, especially if the unit or apartment has appliances and furniture. Ensure that you have enough money to cover for deposits to get the business rolling. Once the apartment is ready for occupancy, you need to create an Airbnb account and list the property.
Other considerations you need to know:
- Property Maintenance
- Property Rating
Studying the market and how the business works can help you optimize the trade. Create a checklist to go through the essentials every time before a guest checks in. Besides, you can also connect with other people who do this business in different areas.
Technology opened up more profit opportunities for people. In hospitality, even you, who do not have much experience in property rentals, can earn money. Listing your extra room in the apartment can be a good start, but you can always experiment with making more profit. By short term rental, you can get access to excellent properties that can be listed on Airbnb.
Continue exploring the real estate market and make sure to learn new knowledge from experienced individuals. Who knows, you might gain financial freedom by being successful with this Airbnb venture. Check how other hosts present the properties, so you can have an idea of how to operate yours.
Home Appraisal Tips for a Successful Refinancing
The appraisal value for your home significantly impacts a refinancing application. New paint, upgraded flooring, renewed fixtures, and proper sanitation also contribute towards a satisfactory appraisal. Refinancing a home requires several necessary measures. However, the appraisal of the estate is perhaps the most significant.
If a real estate appraiser provides an assessment on the equity in your home, it can make – or break – the chance to refinance mortgage. You need the value to suit your refinancing targets, and what better way to achieve that than to improve your home?
What is a Home Appraisal?
An appraisal is a qualified and accredited professional assessment on the value of a property given by a third party. The appraiser will get paid by appraising your home with no incurred risk on whether you can refinance a mortgage or not because of the value they provide.
In a refinancing deal, an appraisal safeguards the lender by guaranteeing that it does not loan the applicant more than the value of the property. If the estate is subsequently foreclosed for any cause, the borrower will want to resell it and get their money back.
Tips to get a high-end appraisal:
The cost that the appraiser assigns your property mainly relies on the latest selling values of similar houses. However, you can definitely make sure that your property is appraised to its maximum value.
Having your house appraised is like meeting a potential partner. Although you do not know what the person likes and how they will judge you, dressing well improves your chances. Your estate must be clean and organized, tidy, and comfortable to examine. Pets should be kept in place, and the scent blocked. You will not want to rush the appraiser before inspecting everything.
Appraisers are especially particular about:
- External and internal condition
- Overall room number
- Features, including layout design and functionality
- Kitchen and bathroom upgrades, walls, roofing, and home systems (air conditioning, plumbing, and electrical) throughout the past 15 years that have made the house updated, usable and livable for current standards
- State and condition of the house’s structures
- External facilities, including garages, stairs, and balconies location
It’s also wise to emphasize characteristics that might not be readily noticeable, which might contribute to the value of the property. If there are any upgrades that are not seen, it would be good to let the appraiser know.
After securing a reasonable appraisal, you have achieved a significant step toward refinancing your loan. You can now proceed to the next steps with your mortgage lender. If you have received a good value, use a resource such as the Consumer Financial Protection Bureau’s Mortgage Calculator to check interest rates on refinanced loans with the same pricing for your house. Coming equipped with these statistics will provide you more negotiating power once you face your lender. It will also help you feel confident in asking for the rate that you deserve.
Knowing how appraisals work will provide you with the strongest shot of getting an appraiser to award the maximum value for your estate. Appraisals may not always arrive with the ideals that applicants aim for, and they are a subjective method with room for human error. You can appeal if you have a low rating, but you will only survive with reliable information to back you up.
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