Starting a business usually starts with a combination of a product and a vision. But the simplicity of that idea doesn’t equate to how tedious it is to build a strong foundation of it. What makes it more complicated is that the market is a continuously expanding and changing aspect that apart from establishing a foundational structure, you must support it with flexible systems, people and funding.
According to Alexander Osterwalder, it is possible for a business start up to make a detailed version of its vision in its business model to follow, which includes these nine most important business elements:
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The Product or Service
This includes the specific product or service to market. In this aspect, a business should detail how it will be different and apart from the ones that competitors offer, including its benefits and advantages. It is also where the business will put emphasis the most valuable asset of the product or service that will make it stand out, which will give an immediate impact to its target audience. The size of the market opportunity will also be discussed and elaborated here.
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The Customer
In this segment, a business will have to say who the customers are, and in what problem areas of their lives that the product or service intend to solve.
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The Channels
This is where a business will discuss what channels it will use to distribute and sell their products that can reach out to the most number of customers.
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Business to Client Relationship
This aspect will cover the medium of communication to use in order to create demand out of effective marketing and advertising strategies.
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The Costs
Here will be discussed all the necessary variable and fixed costs to be anticipated, and how it will be justified accordingly.
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The Operations
In this aspect, a business will have to state what are the functions and positions to be filled that will cover all work and activities needed to make sure the smooth operations of the business.
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The Resources
This is where the business will iterate all suppliers, financial support and capacity, and other resource elements needed for the business.
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The Partners
These are other business entities that will become partners of the business in order to render its product and services seamlessly.
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The Revenue
This is where a business will discuss how it can generate revenues in order for it to become self sustainable and profitable within a span of the period that it should also indicate. The rate of ROI is also given, as well as the profit sources and the size it is expected to grow into in stages.
These nine elements will serve as just a guide, and it is still up to the entrepreneur to modify his business model according to his own style, the industry he is operating, and the behavior of its customers. There might be an instant success, but not an easy road towards successfully sustaining it. Yet, one should not be discouraged in trying out their hands in the business, as with perseverance, hard work and intellectual skills cannot hinder one from achieving benefits after all.
Adding Value to Your Business Through Refinancing
It is normal for businesses to operate in sinusoids and seasons. The challenge here is how to take advantage while the “iron is hot”, and how to “bend” when crisis come. Overcoming challenges in the business must not always mean surviving, but instead, to thrive and remain firm despite of the obstacles along the way. While some entrepreneurs, especially those who are just starting, find it fearful of borrowing capital, mainly out of inexperience and impression of bad debt, and that feeling of negative “aura” from the very beginning.
But with the increasing competition in the market today, which becomes tighter as more players with similar products, enter the scene, a business must be alert to provide the necessary support in order to keep up with the pace, or stay ahead of the competition as much as possible. The number one challenge that a business usually encounters along the way, is the lack of funding.
Especially for startups, it is quite difficult to sustain a healthy cash flow, since most cash flows outwardly due to capital costs. While some welcome investors, it is quite unprofessional to consistently ask for additional funding. As a business owner, the responsibility of sustaining most of the operations is in your hands. Refinancing your business is not a bad idea, and it is normal for one to do it occasionally or as needed.
When the need for refinancing, or additional capital is already defined and the amount is agreed on, it is time to look for lending sources available. The first option is to go for a traditional business loan from a bank, which also adds leverage to your business’ credit score. However, it is quite challenging for startups to secure a bank loan, which mostly caters to bigger businesses and enterprises that have a more rigid business structure and cash flow in front. Another option is to get a personal loan from the same bank, but as with traditional loans, the process time and the process it will take a long period of waiting and documents to submit. This is quite a hassle, especially if an opportunity knocks and couldn’t be asked to wait.
The good thing is there are alternative and nontraditional lending and funding options available in the market nowadays. These are companies that find profit from giving businesses the funding they need in exchange for some interest on top of the payments. These alternative lending sources are becoming more prevalent and popular since they offer fast, flexible and convenient lending and payment options for businesses. These methods are usually beneficial to small businesses and startups that have more immediate, but lesser amount of needs to be able to qualify for a bank loan.
What Is a Merchant Cash Advance?
A merchant cash advance is a business financing product which offers additional benefits to merchant partners in terms of accessible funding options. However,it can guarantee lower amounts compared with typical business loans from banks, since the funds will revolve to the existing credit limit imposed by the merchant, or will still be based with the capacity to pay for the business to be evaluated beforehand.
A merchant cash advance loan provider is basically the same merchant bank that processes your business’ credit and debit card payments, which make repayments more convenient and flexible.
Merchant cash advance services are usually availed when there is a need for fast delivery of lump sum money, or when a business has the capacity to pay it in terms of its daily receivables. A merchant cash advance service is not a loan, but rather a special financial product offered as part of a merchant bank’s service.
How It Works
Merchant cash advances are basically a lump sum amount given to a business, in exchange of a percentage in future credit and debit card sales, to be deducted in a regular basis until the full amount plus interest charges has been repaid. MCA has a typical short term repayment period, that is why it has higher interest rates than other financial funding options such as banks. Today, merchant cash advance loan providers have more varied repayment options to offer, which makes it more flexible for business to repay. There are some that can restructure the percentage of payment, whether in daily or monthly schemes, or according to the percentage of sales in the same given period. This allows businesses to stick as close with their usual cash flows while still in the repayment period.
Advantages and Disadvantages
With its gaining popularity in the business world, a company that wishes to avail any lending services should be able to truly identify the need for it, as it entails risk on your part. Certain circumstances will actually need it, while some, if not to be evaluated properly, will instead create a future liability out of it. Nonetheless, here are the advantages and disadvantages arising from availing the services of merchant cash advance companies:
Advantages:
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Fast to avail
This is one of the fundamental reasons why businesses are drawn to this kind of lending service: it’s process is quick and convenient. Securing a merchant cash advance can only take you days compared with weeks or months with a traditional bank loan. Getting your cash advances fast can also introduce you to opportunities to grab your merchandise at a discounted price during certain seasons or flash sales, which can add leverage to your business.
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Easy to avail
There is a higher success approval rate for merchant cash advances and also less documents and proofs to submit.
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Not much affected with credit scores
Banks are strict with credit histories and actually do the intensive background checking since it deals with higher amounts of money to lend. This is not the case for merchant cash advance loan providers, which still checks but doesn’t do it as intense as with others, since the risk is low due to the amount it lends. Perfect credit is unnecessary, which is viable for start ups that have little to no credit information at all.
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No need for collateral
This is one of the stronger points in availing a merchant cash advance service, which is useful for small businesses and startups that doesn’t have much assets at their disposal yet. Most lending companies look at high value assets, while merchant cash advance companies look at the good sales track record and many robust potentials for future sales.
Disadvantages:
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It is expensive
Short term loans are expensive in general. The same goes with merchant cash advances. Since the repayment period is shorter, there is little time where payments can be spread out.
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It may not be the best solution
As already mentioned, getting a merchant cash advance should be coupled with exhaustive evaluation of the need and the capability to pay during a shorter period of time. To use it for your business advantage or disadvantage still boils down to how the funds are appropriately used. Though technically it is not a loan, but the liability and risk that it implies is the same.
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Too risky for capitalizing on future sales
Being not able to accurately foresee sales volumes in a more distant future can actually make it too risky to avail. Sales drops due to unanticipated events can significantly put your business at such risk. Although the same applies to all types of alternative funding or loans, it is riskier for merchant cash advance services because of its higher interest rates.
Choosing the best merchant cash advance loan provider that will fit your capacity and business model should be fueled with research, evaluation and careful deliberation with your investors or partners in the business. For present and previous client insights about the merchant cash advance companies they have dealt, or are dealing with, see CrowdReviews.com’s merchant cash advance loan provider reviews.
Keith Moore
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