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How Debt Financing Works

You may have heard the terms “debt financing” and “equity financing” tossed around, but do you know what they mean? For a small business, debt financing is the process of borrowing money by taking on debt—usually in the form of short term loans or business credit cards. When you pay off the debt, your relationship with the institution or individual that loaned you the funds ends. Lenders benefit from debt financing by earning interest on the money they allow your small business to borrow, while you, the business owner, benefit from having access to the funds.

In equity financing, you actually trade ownership in your company for cash. Think of this as selling stock or shares in your company. An investor may buy a share of your company, which gets you the financing you need, but depending on your agreement, it may also mean the investor gets to have a say in how you run your business.

Debt financing is the process of borrowing money by taking on debt—usually in the form of short term loans or business credit cards. Equity financing involves trading a portion of your ownership in your business for money, a.k.a., selling shares. 

What Is Debt? 

With debt financing, your creditors don’t buy into your company—they simply let you borrow their money usually for a specified period of time. You make the decisions regarding how you’ll spend the money. You also keep all future profits for yourself after you pay off your debt: there’s no long-term buy-in. What sometimes holds business owners back from debt financing is the negative connotation of the word “debt,” even though there are times when debt can be healthy and beneficial to your business. 

“Good debt” refers to debt associated with items or activities that can grow your wealth over time. A mortgage, for example, is considered good debt because the building you buy will likely grow in value. If you sell your property for a profit, which means you used the debt financing to increase your wealth. 

A small business loan or other type of financing can also be considered good debt. You may take out an equipment loan to buy a machine to help you increase your company’s production of widgets. The more widgets you make, the more widgets your business can sell and the higher your business’s income. In other words, that equipment loan helped you earn more money, which is good. The same can hold true for financing that helps you hire a key employee, remodel, acquire more inventory, or open a new branch, among other things.

Types of Debt Financing

You can pursue different debt financing options depending on your current financial situation. The best option for you, however, depends on your payment preferences, the amount of money you need, and the current state of your business. (Companies with better credit might view some forms of financing as more affordable because they’ll receive lower interest rates). Get to know a few common forms of debt financing and how they can help your business. 

Short Term Loans

Short term loans are provided by banks and other lenders. They typically have a repayment period of only a few years (or even one year for smaller loans). Businesses take out short term loans when they need to cover immediate costs (like the replacement of an HVAC system) that can get paid back quickly. Short term loans present less risk to financial institutions because they have smaller amounts and shorter payment windows. This can help small business owners save money when looking for debt financing.  

SBA Loans

SBA loans are partially guaranteed by the Small Business Administration, part of the federal government. The role of the SBA is to boost commerce in the United States and support entrepreneurs and small business owners by working with lenders to provide loans. These loans can range in size—from microloans to large funding requests—and can have favorable terms.  

Equipment Financing

Equipment financing is a very specific type of loan. You’re meant to use this debt financing option to improve your equipment. For example, a nightclub could invest in a new sound system, while a restaurant could invest in a catering van. Equipment financing loans are made for small business owners and may be a viable option if you’re still building up your business credit history. 

Business Credit Cards

Business credit cards work just like personal credit cards. This is a form of rolling debt financing—instead of receiving a lump sum, you receive a credit amount and can spend as much as you want under that limit. As you pay off your business credit card, you can keep spending on it, covering your day-to-day business expenses. Business credit cards also come with rewards options similar to personal cards. You can save money by paying off your card regularly and taking advantage of cashback or travel rewards programs. 

Business Lines of Credit

Like a credit card, a business line of credit allows you to draw funds over time and pay back what you owe when you can. As long as you don’t reach your credit limit, you can keep taking out money to run your business. When you pay back your account, your credit is restored. 

At Lendio, we work with small business owners to help them find the right creditors and types of financing. Learn more about the different loan types available and how you can secure financing for your organization. 

Drawbacks of Debt Financing 

While there are many benefits of choosing debt financing over equity financing, there are some drawbacks, too. The main one is the price: while debt financing allows you to retain ownership in your business, you will have to pay for the financing through interest rates, and different types of small business loans and financing may have higher interest rates. This is why it’s a good idea to shop around for debt financing. Work with a marketplace like Lendio where you may be presented with multiple financing options. And talk to your funding manager who can help you sort through the options to determine which one is really the best for your business and situation.

The post How Debt Financing Works appeared first on Lendio.

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4 Tragic Events that Inspired Successful Businesses

Behind every business is the story of an owner who wanted to change something. Some of these stories are personal. Some are inspiring. And others are brand stories inspired by an unfortunate event or tragedy, which is the case in each of the following cases. 

SIDS Leads to a Product for Prevention

One of the best-known stories of a company created in tragedy’s wake is Halo, which specializes in safe bedding for newborns. In 1991, Bill Schmid lost his firstborn to sudden infant death syndrome (SIDS), otherwise known as crib death. He wanted to prevent any other parent from experiencing the same tragedy. This led to the development of the SleepSack—the very first wearable blanket. 

Today, the SleepSack is available in more than 1,700 hospitals nationwide. Their educational safe-sleep materials are distributed to over 10,000 new parents annually, and the company’s products are also created even for babies that fall into smaller sizes—like those spending the first weeks of their lives in the NICU. 

Schmid and Halo continue to develop products that help new parents protect their newborns and guide them to sleep safely. The company thrives because it was built on the values of protecting kids and preventing tragedies. Since 2010, they have donated more than $9 million to hospitals to support healthy births.    

Cancer Remission Leads to a Fresh Start

Sarah Fonteyne is the founder of Halcyon Naturals, a company focused on self-care. Before starting her business, said Fonteyne when she shared its brand story with The Real Life, Fonteyne worked in music as a tour manager and promoter—careers not known for a low-key lifestyle. The idea to create scents and candles without harmful toxins emerged from Fonteyne’s own recovery from cancer and subsequent remission. 

Fonteyne hopes her candles and other scented products will help others live the way she does now: mindfully and in the moment. Halcyon Naturals’ motto—to “create freedom through the power of aromachology”—mirrors this goal. Still, she cautions against confusing her brand story with her personal experience: “I have always been an entrepreneur,” Fonteyne previously told the Enterprise League. “Cancer was a moment in my life, but it in no way defines who I am as a person or…an entrepreneur.” 

Business Closing Leads to Another Opening

In December 2020, NPR’s Planet Money interviewed Roberto Ortiz, a veteran software designer who had just moved to San Francisco to launch a business that connected restaurants to wholesale food providers. The idea was sound—until COVID hit and shut down restaurants across the country.  

Ortiz and his partners debated for a while how they would make their business work. They spent so much time on Zoom calls doing so, in fact, that they decided to start their own video conferencing experience. They wanted to make the “Ritz Carlton of virtual events,” targeting business professionals who needed better features than Zoom or Microsoft Teams could offer. They called it Welcome. 

As of the end of 2020, their business had 30 employees and has raised $12 million. The pandemic brought many entrepreneurs down, but some saw inspiring ideas that made surviving this past year easier. 

Moving Forward—Even after a Hurricane

For some entrepreneurs, a tragedy doesn’t inspire new business ideas but rather lights a fire to move their existing company forward. Lorenzo Marquez—founder of Marqet Group, a full-service marketing agency—had grown his team to 10 employees in just 5 months. His business was growing, and he was feeling confident. 

Then Hurricane Harvey devastated Houston. Marquez and his family lost their home. At the same time, the Marqet Group’s employees were scattered across the city (and country, as some evacuated) and tried to pick up the pieces of their lives.   

However, Marquez built back. His office building was flooded, but he fought his fears and kept moving forward. Little by little, he regrew his business—and today, it’s stronger than ever. 

“Looking back on that horrific experience, I can honestly say that the most beneficial thing that I did for both my family and business was to develop the courage to take action despite all the fear that was attacking me,” Marquez tells Entrepreneur. 

The Value of Your Brand’s Origin Story

A brand’s origin story is an important part of connecting with an audience. Notes marketer Neil Patel, “Before you sell anything, you need to connect, and not just with a handshake or sending out one email. You need to emotionally connect with the people you want to be your customers now, and for the rest of their lives.” One of the best ways to do this is by peeling back to curtain so the audience sees what drove you to start your business, the hurdles you overcame, and what inspired you.

However, it’s worth mentioning that the stories retold here are not intended as a roadmap to success—they were selected to illustrate how unforeseen circumstances can sometimes become the catalyst to making a positive difference in a life, outlook, or world, too. Entrepreneurship is merely one way to turn a tragedy into a reason to give your own life new meaning or even to help others.

The post 4 Tragic Events that Inspired Successful Businesses appeared first on Lendio.

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Social Media Marketing: Tips for Reaching B2B Customers

Should B2B (business-to-business) companies market on social media? While it’s true that many B2B products don’t have mass appeal and may have a smaller customer base than their direct-to-consumer counterparts, B2B brands can still use social media marketing to reach customers and prospects.

3 Ways Social Media Marketing Can Help Your Commercial Business

Social media marketing is essential for B2C and B2B organizations alike, whether you want to learn more about an audience, keep your marketing costs in check, or simply develop an honest dialogue with your potential customers. Because many B2B companies have niche audiences, social media, including Facebook, Instagram, YouTube, or even Tik Tok, can be used to build strong, collaborative relationships and to position products. In other words, B2Bs that use social media can get the right message to a precise audience in a timely manner. 

Specifically, social media marketing can assist with the following:

Social media gives you insight into your customers. By interacting with the audience online on a regular basis, you uncover their immediate needs and questions. Facebook and Instagram allow you to broadcast live and take comments and questions from the audience. Could there be a better way to find out what’s on your customers’ minds?

Social media can help drive sales with improved ROI. Creating a LinkedIn post doesn’t cost much, and posting valuable content that answers your audience’s questions can reap big rewards. By focusing your efforts on creating targeted content, you can attract specific customers and direct them through the buying cycle. Plus, organic messaging, which means any social media post that you don’t pay to promote, is a low-cost way to reach a prospective customer.

Social media engages, teaches, and connects. Engaging with your audience in a conversational manner and highlighting your brand’s personality—which visually driven channels like Tik Tok, Instagram, and YouTube excel at—can help you gain a loyal following and build trust, all of which can translate into new leads and new business. The more people who follow you, the more people see (and possibly share!) your message.

Social media lets your audience uncover what makes your business unique. Your story and your team differentiate your business and/or product from everyone else in your industry. You know why you started your business and what it took to get off the ground—but do your prospects understand how that influences the product or service you sell today?

How to Market a B2B Company on Social Media

Social media marketing is more than simply sharing an occasional thought or photo. If you’ve never done it before, here are some guidelines to consider.

First, review the social media channel. Spend some time as a consumer familiarizing yourself with the content and the type of content that you’re drawn to. 

Next, take a look at what your competitors are doing, but don’t copy them. You only need to get an idea of how they’re interacting with your target market. Read comments on their YouTube videos and their Facebook posts. See how they present their work on Instagram.

Decide what you want to achieve with social media. While “closing sales” might be your number one target, it may not be a realistic expectation for your first-ever social media marketing effort. Instead, consider setting a goal of generating awareness or developing relationships. Determine what you want to accomplish with social media marketing and orient your goals around those findings.

Lastly, create your own distinguishable brand voice to set yourself apart from other B2B brands in your industry, and then make a commitment to share that voice! Build a calendar of what you’ll post and when. Posting regularly on social media can position your company as the helpful, knowledgeable authority in your space. This strategy can, over time, grow your audience and may become a means of generating qualified new leads. 

The Best Social Media Platforms for B2B Companies

Still not sure which social media sites will work best for your business? Begin with one of the following, where you’re most likely to find your competition and other B2B companies: 

LinkedIn

LinkedIn is a great networking site for B2B marketers since it boasts the largest professional network in the world, with more than 774 million members in 200 countries. 

On LinkedIn, you can connect with decision-makers, educate prospective customers, and build your professional network. You can also generate leads by showing your expertise, participating in conversations, and joining industry-specific LinkedIn groups. 

If you’re new to LinkedIn, start by creating a personal profile and a business profile—then reach out to people you know and ask them to join your network. After you’ve done that, expand your reach by connecting with the decision-makers of prospective companies.

Twitter

Twitter is an effective platform for B2B marketers to communicate with their target audience. Although the platform turned 15 in March 2021, it’s still growing with roughly 199 million daily active users. 

How can B2B marketers use Twitter to their advantage? Twitter gives you direct access to your prospective customers. You can engage in conversations, interact with potential buyers, and follow people in your target market. 

You can also use Twitter to uncover the specific needs and pain points of your audience. By searching for industry-specific hashtags, you can engage in conversations with others and demonstrate your experience. You’ll also gain insights into how your target audience thinks and uncover what they want. As you continue to follow this strategy, you’ll build a loyal following of people who will like and trust your brand. 

YouTube

More and more B2B marketers recognize the power of video marketing, which makes YouTube a good platform for new marketing strategies. With more than 2 billion monthly users, YouTube may be the perfect place for sharing insightful behind-the-scenes videos that give an inside look at your company’s processes or explainer videos that demonstrate the value of your products. 

Other benefits B2B marketers can experience from YouTube include:

Expanding your audience

Strengthening your company’s brand

Boosting your search rankings

Building a loyal following

The key to YouTube success: posting content on a consistent basis. Remember, however, you’ll need video to use this channel. If photos are more your thing, consider Instagram instead.

The post Social Media Marketing: Tips for Reaching B2B Customers appeared first on Lendio.

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Small Business Loan Applications: Your Questions Answered

If statistics hold, just 34 percent of the nearly 32 million small businesses in the U.S. today will still be in business in 2031. And while there are a number of reasons why—business growth or inability to grow, unanticipated circumstances, inability to adapt or change with market demand, or even acquisition—one thing is certain: funding is always essential.

So why would a small business owner not apply for funding that could help them grow? Why wouldn’t a small business owner seek a line of credit to get through a market slowdown or other situation? We turned to two of our funding experts at Lendio—Tanner Cupello and Dave Gibbons—for answers, which they provided in our recent webinar, How to Prepare My Business for Finance.

Reasons that a small business owner may opt not to apply for outside funding include the myth of complex application processes, a lack of confidence in a personal credit score, or that it’s too late to make a difference. All of these reasons, said Tanner and Dave, are hurdles that can frequently be cleared by small business owners. 

Here are some of the other topics covered:

What’s the difference between a business loan and a personal loan?

Personal loans, like a home mortgage or an auto loan, are sometimes seen as “lower risk” to a lender because they’re based on collateral—in this case, the item that the loan will finance. If you default on a car loan, the vehicle can be repossessed and resold by the bank, which allows the lender to recoup the loan. Business funding, however, is often unsecured, although there are exceptions. Lenders base eligibility and terms of business loans on other factors, which can range from the type of business, number of years in business, cash flow, intended use of the funds, and other factors.

Why does an owner’s personal credit score matter in an application for small business funding?

Lenders often look at a business owner’s personal credit scores when making determinations about business funding because the way an applicant handles their personal finances may reflect their approach to business finances, too. This doesn’t mean applicants need to have perfect credit in order to apply for small business funding—there are products available to fit a variety of credit ranges and needs, although terms, including interest rate, can vary based on the credit score. It’s always worth applying to see what you may qualify for. Once the business itself builds credit, however, personal credit scores may be less of a consideration.

What’s the difference between completing an application online at Lendio vs. going to my bank? 

We consider Lendio a “marketplace” because we connect small business applicants to a variety of different funding opportunities through a single application. This allows our funding managers to create a better match between business and lender or business and funding options, whether the applicant is looking for a small business loan, line of credit, accounts receivable loan, term loan, bridge loan, or something else. 

Sometimes small business owners start the application process thinking that they want to apply for a specific type of loan, like an SBA loan, which is a fantastic product but may take more time or documentation than the applicant has. In a case like this, a marketplace funding manager might inform the business owner of other funding options, like an accounts receivable loan or equipment loan, that may actually be a better match. If an applicant goes straight to a bank that doesn’t fund these options, the business may never get the funding it actually needs. 

Lendio, for example, taps into more than 75 lenders during the application process, which means small business owners may be be able to access a variety of funding options. This is part of how we’ve been able to match solutions to more than 300,000 small businesses in the past 10 years for a total funding amount of more than $11.8 billion. Small business owners are encouraged to select the offer that best fits them, plus they have the benefit of working with a funding manager to walk them through the differences.

If I apply for funding for my small business online, why do I still need to talk to a funding manager on the phone?  

Personal conversations between a funding manager and a small business owner help uncover details about the business’s story. Lendio, for example, frequently calls applicants to get these additional details. Since a lot of business funding isn’t backed by collateral—they might be scored based on business plans, intent or purpose in applying for funding, personal credit, even the why the owner started the business—getting the applicant’s story can make matching the business owner to the right funding product easier and often helps the lender decide which applicants they want to fund, too.

I just want an SBA loan. Can Lendio help me?

SBA loans are one of the products Lendio can assist with, although before you decide on just one type of funding, it’s worth looking into all of the options available to you. Some of the options offered by Lendio’s funding partners can get a small business access to funds much faster—in a matter of days rather than months. Plus, Lendio’s single application will let you tap into a variety of options.

Watch the webinar for more detailed answers on these topics, too:

Business funding term options

When to apply for a small business funding, including SBA loans, term loans, or other funding options

Getting small business funding with a less-than-perfect credit score 

Information needed on your funding application

How long it takes to access funds once you’re approved

The post Small Business Loan Applications: Your Questions Answered appeared first on Lendio.

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How a Working Capital Loan Can Help Your Business

Working capital, a measure of your company’s liquidity, is part of every business. It’s critical that you pay attention to your working capital because it indicates whether you have enough money to keep operating your business in the short term.

As a small business owner, you’ll likely face instances when your working capital is not enough to cover all of your expenses. This can happen through no fault of your own—a client might be delinquent in paying a large invoice, or bad weather could disrupt your ability to sell. Working capital loans exist so that businesses can maintain operating costs even if their cash flow comes short.

What Is Working Capital?

Working capital measures how much money you have on an operational level—in a basic sense, working capital is your assets minus your debts. Calculating working capital gives you a snapshot of your immediate financial situation.

“Working capital is the money leftover if a company paid its current liabilities (that is, its debts due within 1 year of the date of the balance sheet) from its current assets,” according to a definition from the Securities and Exchange Commission (SEC).

The SEC provides a simple formula: 

Working Capital = Current Assets – Current Liabilities

Say your business has $100,000 in current assets, like cash in your bank and inventory, and $75,000 in current liabilities, like office rent and labor costs. You would then have $25,000 in working capital.

Working capital can also be expressed as a ratio. To calculate your company’s working capital ratio, divide your current assets by your current liabilities.

For the example above, the working capital ratio would be 1.33.

Working capital is similar to cash flow, but the terms refer to different things. Cash flow is calculated as a projection for the future, while working capital refers to your balance sheet as it exists right now. Both are important to understand if you want to avoid cash crunches or when you don’t have enough money to meet expenses for an extended period of time.

What Is Good Working Capital?

If your working capital is high, your operation is likely healthy. Businesses with high working capital over a long period of time have the ability to expand with less risk involved. As your working capital gets closer to 0, it becomes harder to grow your business without overextending yourself. If your working capital is negative, you probably need to find funding somewhere in order to stay open. This is where small business working capital loans come in.

Are Working Capital Loans a Good Idea?

Unlike some business capital loans like term loans from banks, working capital loans are usually short-term. This is because you need working capital to stay in operation—these loans aren’t designed to allow you to launch an expansion effort.  

“If you are running a business and have exhausted all your options to your working capital, it may be time to consider a working capital loan,” explains Sean Peek, a small business expert with the US Chamber of Commerce.

Assuming you can make the repayments, a working capital loan is a common way to ensure you pay your expenses.

“Businesses use working capital loans to cover things like payroll, rent, and debt payments,” Peek advises. “They are also often used by cyclical businesses during the off-season—the debt of which is paid down during the busy season. This is a flexible loan option for small businesses that need cash quickly to cover immediate expenses. However, working capital loans should not be treated as a long-term funding option for something like a business expansion.”

There are many options for working capital loans—and new lenders are opening up every year. Some offer short term working capital loans or working capital lines of credit. Some alternative lending products, like invoice factoring and merchant cash advances, are used to boost working capital. Business credit cards can be seen as a form of working capital loans, too.

How Do You Calculate Working Capital Loans?

To calculate what you need as a working capital loan, return to your working capital formula. Set a goal for your ideal working capital. The difference between the assets needed to reach this goal and your current assets is how much money you need in the form of a loan. Of course, you should also factor in repaying a working capital loan as a liability and adjust that side of the formula as well.   

“Before you decide to borrow, it’s important that you know what your needs are and to make sure the numbers make sense for you and your business,” notes Marco Carbajo of the Small Business Administration (SBA). “How will you use funds? Do you expect to pay it back in a short period of time?”

What Is the Difference Between Working Capital and a Term Loan?

Working capital loans and term loans—the type of small business loans often offered by traditional lenders like banks—differ in many ways. Working capital loans are usually smaller in amount and have higher interest rates. They’re also usually approved much faster and have a less stringent application process compared to term loans. This is because term loans are meant for businesses seeking to expand, while working capital loans are pitched toward businesses that need a little funding to maintain current operations.

What Is Considered Working Capital for an SBA Loan?

The Small Business Administration offers low-interest working capital loans through various lenders. SBA 7(a) and SBA Express loans can be used for working capital, while SBA 504 loans are not permitted for this use.

SBA loans are sought after because they’re guaranteed by the US government and generally have more generous terms for borrowers.

The SBA follows the same definition of working capital as other lenders—a business’s working capital is equal to the difference between its current assets and its current liabilities. The SBA views working capital as the money needed to keep a company in operation. 

The post How a Working Capital Loan Can Help Your Business appeared first on Lendio.

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12 Best Job Boards to Post—and Find—Opportunities

In a tight labor market, reaching out to qualified candidates right away is critical. Not all online job boards are the same, though—recruiting isn’t all about reach, as you also want to connect with the specific people with the right skills for the job. Here’s a selection of job boards for posting open opportunities, and good news: most are free or at least have a free option. They’re also great resources if you’re looking for new clients yourself—or even a whole new career.

1. Indeed

Indeed is a top player in the online recruitment sector, making it a great first place to reach a huge number of candidates. Indeed offers free posting but has a structured pricing program for boosting your job ad. The website also can pair you with job hunters who already have the qualifications you’re specifically seeking.

2. Glassdoor

Another commonly discussed job board, Glassdoor shares many of the benefits of Indeed. In fact, the 2 companies have partnered to allow for easier access for the millions of job hunters that use the 2 websites each month. Glassdoor has a strong reputation as a place to find manager-level talent—it’s also popular because employees can give ratings to their employers.

3. MightyRecruiter

MightyRecruiter is an applicant tracking system with free options available for small businesses. If your job ad is optimized in the right ways on MightyRecruiter’s system, it can be blasted out to 29 well-known job boards, including Indeed and ZipRecruiter. MightyRecruiter also offers features, like a resume library, that allow you to hunt down candidates.

4. LinkedIn

LinkedIn has established itself as one of the top online locales for hiring and finding jobs—the website is basically Facebook for resumes. Though posting job openings costs money on LinkedIn, each job posting finds a wide audience. Having an account is free, though, so you can hunt down potential applicants at no cost depending on your network.

5. Google for Jobs

Your listing might appear on Google for Jobs even if it’s also on another site—Google scours these boards for results when someone Googles, say, “Engineering jobs in Denver.” It’s worth learning how to optimize your job posting to appear close to the top of a Google search. Google is basically now the homepage of the entire internet—you probably want to make an appearance there.

6. HandShake

A system that works hand-in-hand with colleges and universities across the country, HandShake is a great option if you want to reach college-educated candidates. HandShake is free and offers many features similar to Indeed and LinkedIn but to a smaller, more targeted, and highly educated candidate pool. HandShake allows for messaging potential candidates and even virtual events.

7. AngelList

AngelList is a top job board for tech and startup workers—not just in Silicon Valley but around the country. It’s also popular for finding talent that wants to work remotely. Like Indeed or MightyRecruiter, you can peruse the resumes of passive job seekers on AngelList. This feature is more powerful because the talent pool is more specialized than a general job board.

8. JobInventory

An impressive free option, JobInventory has the clean look of Indeed but the cost of Craigslist. It offers simple, straightforward features—which can sometimes be refreshing, especially if you’re expecting a lot of applications. JobInventory is good for seeking out large groups of candidates with generalized skills.

9. Monster

In many ways, Monster pioneered the concept of an online job board and has been a favorite for job hunters for decades now, even if it isn’t quite as buzzy as Indeed or LinkedIn. The Monster app, though, is fantastic, and the website offers a 4-day free trial for interested job posters. Since it has been around for so long, the resume library at Monster is quite solid.

10. Jora

Setting itself up as an Indeed competitor, Jora stands out because it offers employers 10 free job postings every month. It’s also known for its global reach beyond the United States, if you wish to look far and wide for applicants.

11. PostJobFree

As the name suggests, PostJobFree has built its reputation on allowing employers to post job openings for free, but its clean look and easy-to-use interface means it’s also popular with job seekers. The site’s resume library is extremely impressive for a free website, making it a good resource to actively recruit potential hires.

12. Guru

If you are looking for freelancers or other independent contractors, Guru is a great place to hire—they have a long track record of satisfied gig workers and companies alike. You contract with freelancers through Guru’s platform, and Guru collects a small percentage from every invoice. Outsourcing this management to a platform like Guru has proven to be popular and time-saving for many operations. 

The post 12 Best Job Boards to Post—and Find—Opportunities appeared first on Lendio.

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The Different Types of Business Bankruptcy

For small business owners, bankruptcy can feel like an obscenity to say out loud. When you read about big corporations going bankrupt in the news or hear entrepreneur friends share that their small businesses filed for bankruptcy, it sounds like they’ve reached a tragic end.

The truth is that bankruptcy doesn’t mean you’ll never work again—it doesn’t even mean that your business has to shutter for good. While the bankruptcy process for small businesses can be traumatic, expensive, and financially damaging, there are ways to mitigate the stress of bankruptcy as well as methods to protect your business and your assets during the process.

Knowing the different options available for small businesses considering bankruptcy is the first step. Before you contact a lawyer or your creditors, think about which type of bankruptcy might fit your situation best.  

What Is Bankruptcy?

Bankruptcy is a legal proceeding decided in federal court involving an individual or company that is unable to repay outstanding debts. Typically, the process begins with a filing on behalf of the debtors, although occasionally debtors can begin the process with the court. During the process, the court takes into account the debtor’s assets. Depending on the type of bankruptcy, the types of debt involved, and the business’s structure, the court may decide that the assets are used to repay debts.

It’s common knowledge among entrepreneurs that most small businesses fail: Bureau of Labor data shows that about 50% of small businesses close within 5 years of opening. However, not every business that closes files for bankruptcy. Most companies that consider bankruptcy are having issues with repaying debt.

Still, small business bankruptcies happen all the time. In the first quarter of 2021, a study found that there were 6,289 commercial bankruptcies in the United States.  

You often hear the different types of bankruptcies referred to as “chapters”—this refers to their chapter in the US Bankruptcy Code. Another recent survey of small businesses found that of respondents that filed for bankruptcy, 51% filed for Chapter 7, 22% filed for Chapter 11, and 27% filed for Chapter 13. We’ll talk more about these chapter types below.

When Should a Business File for Bankruptcy?

Instead of thinking about how successful—or not—your business is, when considering bankruptcies, think most about your debts and your ability to repay them.

“The truth is, if your business is consistently unable to keep up with your debts and expenses, it’s already bankrupt—or on a very short trajectory towards it,” explains Meredith Wood in AllBusiness. “Filing for bankruptcy protection is meant to help you get out of this untenable situation and keep many of your personal assets. You may be able to keep your business open while you pay off debt by reorganizing, consolidating, and/or negotiating terms.”

Filing for bankruptcy can lead to the closure of your business, but it can also be used to save your company by allowing you to renegotiate your debt situation. Either way, it doesn’t foreclose your ability to start another business in the future.

“While filing for bankruptcy does take recovery time, it isn’t the all-time credit-wrecker you may think,” Wood continues. “Typically, after 10 years, it is removed from your credit history, and you’ll likely be able to get financing several years before that.”

If you feel like your debt and business expenses are overwhelming your small business’s ability to continue, you should think about bankruptcy. The next step is to determine what type of bankruptcy represents the best way to move forward.  

The 3 Types of Small Business Bankruptcy

The 3 main types of bankruptcies utilized by small businesses are Chapter 7, Chapter 11, and Chapter 13. There are even more forms of bankruptcies for individuals, companies, and cities, but these 3 types are the main commercial options available to you.

The type of bankruptcy you pursue will mostly depend on how your business is structured and how you plan to move forward after filing bankruptcy.

Importantly, any bankruptcy filing places a temporary stay on your creditors and puts your repayments on hold while the court considers your situation.

Chapter 7: Liquidation

In Chapter 7 bankruptcy, a company is closed and its assets are liquidated in order to pay off its debts. In the popular imagination, this situation is likely the one most people think of when they think about bankruptcy. If you believe your small business has no viable future, Chapter 7 might be your best option. Chapter 7 might also make sense if your business doesn’t have a lot of assets to begin with.

Sole proprietorships file a personal Chapter 7, which takes into account both personal and business debts.

When Chapter 7 proceedings start, a “means test” is conducted on the applicant’s income. If the income is over a predetermined level, the application is denied. Next, the court appoints a trustee to take over the company’s assets, liquidate them, and distribute them amongst the creditors.

If it is a sole proprietorship case, a discharge is issued after the creditors are paid, meaning the business owner is no longer obliged to pay any more of the debt in question.  

Chapter 11: Reorganization

If you think your business can continue after bankruptcy, filing for Chapter 11 might represent your best choice. In this type of bankruptcy, the debtor plans to reorganize so that it can repay its debt while continuing operations. Working with a trustee and your creditors, you’ll have to devise an expansive plan that shows how you can repay your debt. Your plan must ultimately be approved by your creditors.

Chapter 11 is commonly talked about in the financial press, but it can be a hard process to navigate for small businesses.

“While Chapter 11 is designed to give distressed but viable businesses a second chance, it has a very poor track record with small and medium-sized companies,” a report from the Brookings Institute notes. “The costs of bankruptcy for small and medium-sized businesses are substantial—often 30% of the value of the business—and two-thirds are liquidated rather than reorganizing.”

There are good reasons to suspect that a Chapter 11 bankruptcy might work best for you if you don’t want to shut down. However, going this route can be expensive and lengthy—many proceedings take a year or longer to complete. It’s worth it to contact a qualified bankruptcy attorney if you want to explore Chapter 11.

Chapter 7 vs. Chapter 11

As complex as it is, you might want to research Chapter 11 if you feel like your business can continue with restructuring.

“The only reason you need to use Chapter 11 at all is to deal with recalcitrant creditors,” bankruptcy lawyer Bob Keach told the New York Times. “If creditors won’t negotiate with you, bankruptcy allows you to cram down a plan of restructuring.”

Remember, filing for Chapter 7 doesn’t mean you can never open another business, although financing might be more difficult to find at first.

Chapter 13: Reorganization for Sole Proprietors

If you’re a sole proprietor with a high income, you can file Chapter 13 bankruptcy. This allows you to keep your assets and property if you agree to a new repayment plan with your creditors. These plans usually last 3 to 5 years.

Does Filing for Bankruptcy Mean Going out of Business?

If you file for Chapter 7 bankruptcy, your business is closed and its assets are liquidated. If you file for Chapter 11, you’ll be allowed to keep your business open under a new plan with your creditors.

Will Business Bankruptcy Affect Me Personally?

A business bankruptcy could impact the business owner if your personal assets were used as collateral for your debts. Importantly, though, you will not go to jail for not paying a business loan.

“It depends on what personal guarantees you made,” Amy Haimerl writes in the New York Times. “Most small business owners put up their home or some other asset as collateral for start-up loans…If you used your house as collateral, it’s possible you would be forced to sell it as part of a Chapter 7 settlement. Under Chapter 11, you may have more luck.”

If you’re a sole proprietor and you file for Chapter 7 but fail the means test, you can file for Chapter 13. However, your repayment plan will be based on your income.

One of the big differences between personal and business bankruptcy is the means test. Individuals have to participate in a means test to determine if they are eligible for a Chapter 7 or a Chapter 13, while businesses do not have to undergo this for a Chapter 11 filing.

If your business is structured as a limited liability company (LLC) or a corporation, then your personal assets should be protected unless you used them to secure a loan.

If you file for bankruptcy as a sole proprietor, your personal credit score will lower significantly. Chapter 7 and Chapter 11 bankruptcies stay on your credit report for up to 10 years, while Chapter 13 bankruptcies stay on your credit report for up to 7 years.

If your business is an LLC or a corporation, its bankruptcy filing shouldn’t impact your personal credit score. However, if you personally guaranteed one of the company’s loans and you fail to repay, your credit score could be dinged. 

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What to Do When You Are Blacklisted by ChexSystems

If you pay attention at all to your financial situation, you’re probably aware of your credit score, which is assigned to you by nationwide credit bureaus and impacted by your credit activity. Did you know another agency also pays attention to your banking activity and assigns you a score?

ChexSystems garners information about your banking activity—especially if it is suboptimal—from major banks across the country, much like how credit bureaus take in information from lenders. You can run into trouble if you are blacklisted by ChexSystems—you might not even be able to open a bank account for years.

Here are some things to know if you receive bad marks from ChexSystems.

What Is ChexSystems?

ChexSystems is an agency that tracks your banking behavior and provides this data to banks. According to recent estimates, some 80% of American banks use ChexSystems or a similar agency. Founded in 1971, ChexSystems is operated by FIS, formerly known as Fidelity National Information Services. Through the ChexSystems subsidiary, FIS maintains records on millions of Americans.

ChexSystems is similar to the 3 credit bureaus that assign you credit scores, but it looks at your banking risk instead of your creditworthiness. ChexSystems isn’t discussed as much as the credit bureaus—you might never hear of the agency unless you’re blacklisted by it.

Also like your credit score, your ChexSystems report follows you around. Any bank that utilizes the agency has access to your report, which can make it difficult to even open a checking account if you run afoul of ChexSystems.

Why Were You Blacklisted by ChexSystems?

You can be blacklisted by ChexSystems for a variety of reasons, but they all relate to your record of handling, or mishandling, a bank account. Commonly, people are blacklisted by ChexSystems for writing bad checks, failing to pay overdraft fees, or rating suspicion of fraudulent behavior. Generally, there needs to be a pattern of behavior for ChexSystems to blacklist you—you aren’t going to be on their radar if you overdraft once. But if your bank closes your account for bad behavior, ChexSystems will likely find out, and it will severely impact your record.

Once blacklisted by ChexSystems, it becomes very difficult to be approved for a traditional checking or savings account from most banks.

Bad records typically stay on your ChexSystems report for 5 years. However, there are some actions you can take to repair your situation.

How to Repair Your ChexSystems Report

If you discover you’ve been blacklisted by ChexSystems, you can take some steps to repair your report and get back into the banking system. These steps are especially useful if you believe that you’ve been the victim of identity theft or some sort of error was made. If you know your banking record is spotty, you’ll have fewer options to dispute your report—you might need to seek out bank account alternatives or wait until the records fall off in 5 years.

To repair your ChexSystems report, follow these steps:

Obtain your report from ChexSystems. You can obtain a free copy of your report online, call them, or contact them through the mail. By law, ChexSystems has to give you a free report every 12 months.

If you find errors on your ChexSystems report, dispute them with the agency. It is best if you have supporting documentation, like bank statements, but you can dispute errors without them. Through their process, ChexSystems will contact the banks that made the errors, but you might be able to speed the process along by contacting the erroneous bank yourself and alerting them to the situation.

If your ChexSystems report is bad but there aren’t any errors, you can improve it by paying down debts and fees reported by banks. Once you repay a debt, ask the bank or other creditor to update your ChexSystems report.

If all else fails, you can wait 5 years for your report to clear—and keep requesting ChexSystems reports every year to stay current. If you can’t go unbanked for that long, there are some alternatives out there.

Opening Bank Accounts While Blacklisted by ChexSystems

Some banks have so-called “second chance” checking accounts for people with bad ChexSystem reports.

“If your name ends up on the list of people with bad banking histories, you’re not locked out of the banking system forever,” writes Ben Gran for Forbes. “Be ready to review your ChexSystems report and file a dispute if you find any inaccurate information. And consider applying for a second chance checking account to rebuild your reputation as a responsible bank customer.”

These types of accounts usually have lower limits and fewer features. Some credit unions might not use ChexSystems, so you might have luck with your local credit union—or else you can apply for prepaid debit cards. 

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Good Reasons to Take on Business Debt

The word “debt” has a negative connotation for many business owners. It conjures images of missed credit card payments or unpaid invoices. However, debt isn’t necessarily a bad thing. In many instances, business owners take on debt to fund the expansion and growth of their businesses.

When you take on debt in a strategic, planned fashion, you are taking steps to set yourself up for success in the future. Here are 4 good reasons to take on business debt. 

1. You Need to Grow Your Assets

The money you spend on your business doesn’t just disappear into the void. If it does, you may need to rethink your spending. Each charge to your business lowers the amount of cash you have while increasing your assets. This is the basic principle of double-entry bookkeeping. 

For example, if you spend $25,000 on a new delivery van, then you will have $25,000 less in cash but that amount in equipment assets. While your assets will depreciate over time (that van won’t drive forever), it will provide concrete value to your business and enable you to grow your sales to accommodate customers that want deliveries. 

This opportunity is the main reason why you need to stop treating debt like a pestilence. It is possible to take on debt with the goal of growing the value of your business. The debt you take on enables you to increase your sales in ways you couldn’t before. Once you pay off that debt, you can focus on your profits. 

2. You Plan to Increase Your Marketing Efforts

While many business owners immediately understand how investments in real estate, equipment, and materials can result in good debt, some have a harder time understanding marketing investments. It’s much harder to understand how paying a marketing agency is growing your assets, even in a bookkeeping ledger. 

Marketing agencies, contractors, and employees provide value to your business in multiple ways. They create physical assets like your website and social media profiles, which drive traffic and customers to your stores. They also create campaigns that promote your brand and products, increasing your sales and brand equity.

You can take out good debt to invest in marketing as long as you have a target ROI (return on investment) to work toward. For example, if you bring in $500 in sales for every $50 you spend on digital ads, you have a 10:1 ROI. You can also track the gross margin of the items you sell to ensure you are turning a profit from your marketing efforts. 

Marketing can help you grow your sales, which will drive up your revenues and help you pay down your debt faster. 

3. You Want to Improve Your Business Credit Score

Every organization has a business credit score, also called a commercial credit score. Like a personal credit score, this rating determines how reliable your business is to lend to. If you are a young business or have outstanding debts, you might have a small business credit score. This could make it harder to secure loans or credit cards while driving up the interest rates you are given. 

While you can’t fix your business credit score overnight, there are ways to improve it over time. You can pay off your outstanding debts and pay back loans within a set window of time. This proves to lenders that you care about your finances and can reliably follow a payment schedule. 

If you have multiple sources of debt, consider working to consolidate them. You may be able to take out a loan to pay off these debts, leaving you with just one monthly payment. Meet with an accountant or financial advisor first to see if this would be an effective way to improve your credit score and set your business up for success. 

Improving your credit score now will make acquiring debt cheaper over time. You can enjoy lower interest rates and more favorable payback periods. 

4. You Don’t Want to Bring on Shareholders 

There are multiple ways to fund your business beyond taking on debt. For example, you can invite investors to buy into your business and bring on shareholders who will earn a portion of your profits. These options have become more popular recently thanks to the mind-boggling venture capital funding in search of startup unicorns. 

However, working with investors and shareholders doesn’t mean you get free money. These people often want to be involved in your business decisions. You will need to explain to investors exactly how you plan to spend their money and what returns they can expect. You will also need to list your shareholders on your business taxes. 

In some cases, it may be better to take on debt for your business without inviting individuals to buy into it. You can do whatever you want with a business loan as long as you pay it back in set installments. A business credit card gives you the flexibility to spend money without gaining approval first. 

Plus, taking on debt might be cheaper than bringing in venture capital. You can deduct any interest you pay on your taxes and may find more favorable interest rates in SBA (Small Business Association) loans over private investments. 

Create a Plan of Action for Your Debt

Debt isn’t something you need to avoid. There are times when your business will take on debt to expand or retain more long-term control. As long as you have a plan to use the money and a set period to pay it back, then you don’t have to be afraid to take it on. 

If you are considering taking on some professional debt, ask your accountant to look at your balance sheets and identify a reasonable debt-to-income ratio. This process will review the amount of debt you can afford to take on based on a set monthly payment and give you the peace of mind to ensure you aren’t overwhelmed in debt while trying to cover your monthly business expenses. 

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The Key to Exceptional Customer Experience? Hyper-Personalization

As a small business owner, you know that customers are gained and retained based on your ability to give them what they need, when they need it, at the right price.

Post-pandemic, customer behavior is evolving. Consumers don’t want to be a faceless buyer that fits a user persona—they want to be known and treated as individuals. Thus, it might be time to implement a hyper-personalization strategy to make buyers feel like you’re helping them—and only them—with their purchase journey.

Need convincing? Read on.

What is Hyper-Personalization?

Salesforce defines hyper-personalization as “seek[ing] to hold a 1-to-1 conversation with each customer, across all channels.”

Personalization techniques like inserting a customer’s first name in an email subject line are still relevant—but hyper-personalization goes well beyond that.

Hyper-personalization enables a business to provide an exceptional customer service experience to existing customers. It also moves other consumers into your sales funnel based on their behavior within or outside of your company. Creating hyper-personalization requires having enough integrated data to predict how a person may behave—perhaps even anticipating what they want before they figure it out. (We’ll cover how to get this data later in the article.)

Having an integrated data solution means having 1 place to know everything about a person—no more surfing 3 different spreadsheets to find a customer’s last order date, routine order details, and birthdate.

Hyper-personalization often requires using data you wouldn’t ordinarily possess based on your interactions with a customer. For example, suppose someone bought hiking boots from your retail store and a local hiking trail map from another retailer. That’s a missed cross-sale opportunity for your business. Suppose instead that, using outside data sources, you’d known that the customer had recently moved to the area. In that case, you could have suggested a map to go with the customer’s new boots.

Another example is determining the customer’s intention when they search for “best cooler” on your website. With enough data, you could predict that they are tailgaters, not car-campers, and then display search results to fit that need. No more forcing the shopper to narrow down the options using product filters such as cooler weight and capacity.

Why Does Hyper-Personalization Matter?

Hyper-personalization might sound like yet another buzzword, but it’s really a progression of the personalization that consumers already expect.

Customers want customized interactions, and providing them can increase your business’s sales revenue. Gartner says that “88% of surveyed consumers reported not receiving ‘tailored help,’” or messages that actually help them in their journey. And supporting consumers using hyper-personalization could, according to Deloitte, “lift sales by 10% or more.”

Hyper-personalization is relevant even if you run a B2B business. The buyer is now a group of people with different roles in the purchasing process—but they still want to be treated as a business with needs, not a spoke in the wheel.

B2B hyper-personalization means focusing on the other business’s challenges vs. simply selling your product’s features. If you understand what problem that business is trying to solve as well as how to communicate to each member of the team, then you can move the collective buying team along your customer journey.

Can Your Small Business Implement Hyper-Personalization?

Hyper-personalization sounds great for Fortune 100 companies with resources to spare, but can your small business actually do it? Yes, you can—if you identify your goals and then use technology to your advantage.

Deloitte’s whitepaper “Connecting With Meaning” says: “It is important that an organization choose the solutions that are best suited for its brand image, customer relationship, and industry. This means conducting a self-assessment to understand goals and current state, and then building a roadmap based on identified priorities.”

In other words, you won’t implement every aspect of hyper-personalization. Instead, focus on your most important business goal (e.g., increase customer loyalty, increase conversion, etc.).

Imagine, using our hiking boot example, that your goal was to increase cross-sales. Your current state is that you have known data (e.g., a hiking boots purchase) and missing data (e.g., the buyer recently relocated to the area). That means you need a data source to tell you if the customer is new to the area. That data could be purchased through a partner or generated via a lead-generation form that allows the person to download a “Best Local Hikes” in exchange for that information.

Next, choose where you’ll house the data—a customer relationship management (CRM) software, a customer data platform (CDP), or a combination of both. There are similarities between the 2 choices, but a big difference is that CRM software captures interactions (e.g., purchases), while a CDP can store behaviors (e.g., consumer browsing on your website).

Whichever tool you use should include artificial intelligence (AI) capabilities since hyper-personalization requires tracking and analyzing large amounts of data. AI algorithms can find data patterns and predict behavior, freeing up your time to provide the human touch in your interactions.

Finally, start collecting data, analyzing it, and testing which strategies help you accomplish your business goals. Hyper-personalization will involve testing different messages to see which resonates with each individual. Part of your balancing act will be to personalize without over-personalizing—you don’t want customers to complain that you know too much about them.

Reap the Rewards

Effectively implementing hyper-personalization will require spending time and money—and maybe even seeking some help from outside experts.

Fortunately, Lendio can help you find a business loan so you can take steps to achieve the maximum benefits of using a hyper-personalization strategy.

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Keep Your Employees Motivated And Prevent Burnout

Imagine this as your pre-pandemic life: You get up, go to work, and set aside all your troubles—family issues and personal problems—to do your job as effectively as possible. When you’re having a rough day, you call a couple of friends and meet up with them at your favorite restaurant so you can tell them all about it. When you’re having a rough week, you leave work early on Friday, catch a movie on Saturday, and enjoy an early brunch on Sunday. Then you kick back and relax that evening as you prepare for Monday morning. 

But what if the life you once had ceased to exist? That’s been the reality for so many people. Life made sense—until suddenly, one day, it didn’t. 

The pandemic brought about a change for all, forcing millions into isolation. It cut off people from family and friends—making them feel anxious, lonely, and full of despair. 

Now that workplaces are reopening, employees are coming back—after enduring more burnout than ever before because of COVID-19. In this article, we’ll talk about what you can do, as a business owner, to help your employees bounce back from burnout and how you can continue to support your workers. 

Offer Flexible Scheduling

The pandemic gave people a taste of what it’s like to work from home. Some were new to telecommuting but immediately fell in love with the convenience it offered. And now that so many have seen what it’s like, they don’t want to go back to business-as-usual. 

Many employees covet flexible schedules along with the ability to work from home. They enjoy being able to fit work around their hectic, busy lives. They no longer want to sit in traffic and commute to and from work. They like being able to work from home in their pajamas and complete their daily tasks. 

Think about the schedule you impose and consider if there’s a way to make it more flexible. Maybe you can’t offer a fully remote schedule, but could you propose a partial one—where employees work from home a few days a week and come in to work the others?

And if telecommuting is completely off the table for your business—like it is for many service-based fields—can you introduce flexible schedules that better suit the needs of your employees?

Be Understanding

Try to imagine how your employees feel. Think about everything they’ve gone through. The past year required so much of them, asking them to fill every role from full-time nanny to part-time chef. And even though their worlds were turned upside down, they still had to make a living and provide for their families. 

As you bring them back to work, realize that the pandemic has pushed many of them to their breaking points. They’ve lost their support systems and have had no one to turn to. So make sure you check on them throughout the day. Ask them how they’re doing, and listen to what they have to say. 

Allow them the freedom to go to managers and other leaders of the company to discuss any issues they have. This will show you care about them—beyond the value they bring to your company. 

Provide Assistance 

Do you have 1 employee doing the jobs of 3 or 4 team members? Increasing the workload to this magnitude can cause additional burnout and stress. 

We know the pandemic has dealt an unfair blow to all—businesses included. Your employees aren’t the only ones who have been affected. You may even be short-staffed, so you need your workers to pick up the extra slack. But if you constantly pile too much on them, it could deplete their energy. 

Most employees already understand what you’re going through. They know you’ve struggled to survive and that you’re doing the best you can with what you have. As members of your team, they don’t mind pitching in and helping out. But offer assistance whenever and however you can. 

Start by making sure workers have everything they need to complete their jobs—and that materials are readily available. Then give employees more time to complete tasks whenever you add to their workloads or require them to do more. 

Offer Incentives

We all love incentives. Think back to your early elementary school days. Whenever you completed your homework assignments on time, the teacher would put a gold star next to your name. And if you continued to turn in your work, she would write your name on the board for all to see—with a flood of gold stars next to it. 

The gold star your teacher used was an incentive. It was small but effective. She used it to encourage you to keep up the good work. And the more of them you got, the more of them you wanted. 

If you’re looking for an easy way to retain your employees, offer them incentives. It will prove to them that their efforts and hard work aren’t going unnoticed. They will feel appreciated, like beloved members of your organization. 

Your incentives don’t have to take the form of monetary rewards. They can be anything from buying your employees lunch to offering them paid time off. Be creative and think of different ways you can do to show your appreciation. 

Make Work Feel Like Home

For many people, the workplace is like their home away from home. They spend more time during the day at work than they spend in their actual homes with their families. 

Focus on team-building activities to help employees form relationships with each other. If social distancing guidelines are still in effect, there are still methods of interacting with coworkers that exist. 

Try doing something simple, like holding a brief 10-minute virtual meeting where workers can discuss anything from their favorite TV shows to their plans for the weekend. These small, casual conversations can go a long way toward improving workplace dynamics and offering social support to your employees. 

Reducing Burnout in the Workplace

Burnout is a real problem. That’s why preventing it is of the utmost importance.

And prevention starts with understanding the source of burnout. From there, you can recognize how to spot it and tailor custom solutions for your workers—to ensure they never experience it firsthand.

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Finding a Franchise With a Great ROI

Investing in a franchise is a great way to launch a recognizable brand with developed systems and infrastructure. You don’t have to stress or invest in marketing materials, and you open your door on day 1 with proven products or services.

However, not all franchises offer the same benefits. Some are more expensive to launch than others, and each franchise has a different return on investment (ROI). So how can you find the franchise that is right for you?

There are a few ways to increase your chances of success. Learn more about franchise investments so you can generate the highest ROI.  

Are Franchises Good Investments?

Franchises can help you kick off your professional career and start your own business. You will need to pay a franchise fee and spend money building up your location, but these efforts can definitely be worth it. Some franchise professionals open multiple locations throughout their careers, growing their income with each new opening.

While franchises might be good investments, they aren’t passive investments. They are much different from buying into a startup company, acquiring real estate, or creating an investment portfolio. 

As a franchise owner, you will be in charge of building, marketing, and operating the company as an independent business. Many franchisees share stories of working long hours and missing paychecks for the first few years. Opening a franchise is a full-time job and will take commitment, focus, and of course—money.

If you are committed to investing yourself in your franchise, it can be profitable. However, if you want a passive income stream that grows over time, consider looking into other options. 

Do Franchise Owners Make Good Money?

One of the challenges of opening a franchise is that there isn’t a set salary. As a business owner, you may need to take a pay cut during your first few years as you invest in your franchise and pay off debt. 

You also can’t look at franchise owner income as a whole because some industries are more profitable than others. 

If you want to get an idea of what franchise owners make each year, look at specific industries—and even specific brands. For example, the median annual income of franchise owners in the food and beverage industry is $70,000. This number drops to $50,000 when you include franchise owners who have been in business for fewer than 2 years. 

Franchise owner income falls on a bell curve. Only 16% of franchise owners in the food and beverage field earn more than $200,000 per year. Conversely, 37% of franchise owners in that industry earn less than $50,000 per year. The rest fall somewhere in between. 

What Is the Most Profitable Franchise to Own?

Unfortunately, there is no definitive franchise that will guarantee you a positive ROI. There are too many factors that affect whether or not a franchise turns a profit—so don’t trust anyone who tells you otherwise.

For example, investing in a car wash company might be profitable in most areas but not in a region where public transit is popular and fewer people own cars. Conversely, a car wash might be profitable in a region that is car-dependent—at least until your competitors open a new location down the street. In the first case, the business owner needed to research regional demand. In the second case, profits were lost because of increased competition.

While no one can guarantee profitability with franchises, there are some highly-rated franchises with better customer ratings—which can increase the likelihood of success. Franchise Direct recently released their 2021 report of the top 100 franchises, which highlights brands like McDonald’s, 7-Eleven, Dominos, Ace Hardware, and Chick-fil-A, among others.

You can use lists like these to find franchises with brands that may give you the best chance to return a profit on your investment.

Investopedia recently gave Dunkin’ high marks for its franchise performance during the pandemic. They highlight the ability to build up repeat customer traffic (everyone wants their daily morning coffee) and the existing brand name that most people know. They also mention how 90% of Dunkin’ locations stayed open during the pandemic, with drive-thru and carry-out sales. 

However, there are times when Dunkin’ might not be a good investment for your goals. You could live in a coffee-saturated location or lack the necessary morning commute traffic to build your customer base. Profit depends on the strategic decisions you make—not just the brand; so conduct your own research before making any decision.

What Is the Best Franchise to Invest in?

While successful franchise investments vary by region and industry, there are a few ways to evaluate your franchise opportunities to see what would be a good fit. Ask yourself these questions as you research franchises: 

Which industry do you have the most experience in? (Which industry interests you enough to learn about every aspect of it?)

Which industries are currently growing in demand—and have potential staying power? 

Which industries lack a significant footprint in your area? Your “area” could mean your city, your neighborhood, or even a city block that you want to build on. 

How far are customers willing to travel for your services? This will determine your area of research and target demographics. For example, most customers aren’t willing to drive 10 miles to a McDonald’s if there is another location 2 miles away.  

What is your budget? This will determine what you can pay in franchise fees and in building investment. 

Take time to conduct market research for your area and learn about your local economy. You don’t need to spend any money until you are confident that you are choosing the best franchise option possible. 

Consider Investing in a Lendio Franchise

If you are looking to break into a niche market and offer something unique in your area, consider investing in a Lendio franchise. Our services are available in 45 states, and franchisees typically only need $55–$65k in startup capital.

At Lendio, we believe in supporting our franchise owners. We offer training materials and assistance throughout your launch and growth stages. Even when you become an expert owner, we are here for you. 

Learn more about franchise opportunities by Lendio to see if this is your next great career opportunity. 

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How to Find the Perfect Location for Your Retail Business

Finding the right location for your retail business is one of the most important decisions you’ll ever make. No pressure! 

Even mediocre shops with flawed business models can get by with an immaculate location. And the best-of-the-best products can fail when placed in a sub-par position.

That’s why it’s important to spend a bit of time zeroing in on the perfect spot for your business. The right decision-making process goes beyond onsight impulse and dives into the details.

This guide to finding the right location for your retail business will walk you through everything you need to know before deciding on a place to open up shop. We’ll help you avoid common problems that can crop up later (or on day 1) and put your business in a precarious position.

First, let’s get on the same page with why putting in all this effort to find the right location is worth it. Then, we’ll get into how you can narrow down your options to the perfect spot.

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Running a Veteran-Owned Business

Serving in the military is a career, and returning to civilian life after serving is one of the most dramatic career changes someone can make. Fortunately, veterans have several resources to help them reacclimate—including support for running their own companies.

There are multiple programs and opportunities for veterans who want to launch their own businesses. Use these resources whether you are brainstorming business plans or looking to expand your existing organization. Know what programs are out there and how they can help you. 

Register as a Veteran-Owned Small Business

If you are considering bidding on government contracts and want other sources of support, look into registering your company as a veteran-owned small business. This program is through the Office of Small & Disadvantaged Business Utilization (OSDBU). The application is part of the Vets First Verification Program to ensure your business is owned and operated by someone with veteran status. 

You can read more about the guidelines for this program online, but a few key requirements include:

The veteran must own at least 51% of the company. 

They must have full control over the day-to-day management and operations. 

They must be the highest-paid person in the company or can explain why they are paid less. 

They work full time for the business and hold the highest office in the firm. 

Additionally, you will need to prove your veteran status and confirm that you didn’t receive a dishonorable discharge during service. There is also the Service-Disabled Veteran-Owned Small Business (SDVOSB) status if you have a service-connected disability or a disability determination from the Department of Defense. 

Applying for this program can help designate your business on a federal level while alerting potential new customers to your veteran status. 

Take Advantage of SBA Veteran Programs

The Small Business Association (SBA) has multiple resources for veteran-owned businesses. These were developed through the Office of Veterans Business Development (OVBD) with the needs of veteran entrepreneurs in mind. 

Veteran business owners can apply for specific loans, increasing the chances that you get the funding needed to open your doors. These loans often have favorable interest rates to promote veteran entrepreneurship. 

There are also training and education programs that have been developed to support veterans. The Boots to Business Reboot is an entrepreneurial program meant for veterans across the country, while the Women Veteran Entrepreneurship Training Program (WVETP) helps female veterans turn their business plans into realities.     

Training programs like the ones recommended by the SBA highlight how you don’t have to be an expert in every aspect of business before becoming an entrepreneur. If you have a vision and are eager to learn, you can start a company today. 

The SBA isn’t the only organization looking to support veterans. Consider contacting your local bank or credit union to see if they offer loans specifically for veteran applicants. You can also use the funding center at Lendio to explore different credit and loan options. 

Consider Opening a Franchise

When people think of entrepreneurship, they usually think of original business ideas or unique products like they see on Shark Tank.

However, opening a franchise is another option for veterans who want to start a business but don’t have a groundbreaking new idea. Franchising is the process of licensing a brand to an entrepreneur. Whether you realized it or not, you visit franchises almost every day when you go to places like Starbucks, Papa Johns, or even the UPS store.

Franchises have different expense levels. You will typically need to pay a licensing fee to use the brand materials and products. You will then need to pay to build the physical franchise location.

Some franchise requirements are incredibly specific. For example, McDonald’s has its Golden Arches and clear blueprints for opening a new location. You can’t just pay the licensing agreement and then open a McDonald’s in any existing space. 

While you have to follow clear guidelines and brand requirements as a franchise owner, there are multiple benefits to choosing this option to start your veteran-owned business. You already have a built-in brand and don’t have to worry as much about name recognition. If there isn’t a location currently in your area, you can drum up excitement from customers before you even open your doors.  

If you can take existing products and run with them, then you could have success as a franchisee.

Connect With Local Networking Groups

While you can tap into many national programs to grow your veteran-owned business, you may benefit from joining local networking groups that have in-person events and opportunities. You can join multiple types of groups:

Find entrepreneur groups that don’t specifically require you to have veteran status. 

Work with veteran groups in the community that don’t exclusively help business owners. 

Find networking groups specifically for veteran business owners. 

Each of these groups can provide benefits to your business. You can find a mentor in a business-centric mentoring group who can help you grow your skills. You can build your name in the community by attending veteran-centric events. All of these groups have the same purpose: you don’t have to move forward alone. You can find people who are eager to help and support you. 

Take some time to research the different organizations in your area. You may want to attend a few local meetings to see which groups you connect with the most or which ones have the highest attendance. You don’t have to attend every meeting, but you want to find a group that will provide value as you grow as an entrepreneur. 

Tap Into Multiple Resources  

Most entrepreneurs—whether they have always operated in the private sector or recently ended a military career—need a support system. They rely on their local communities for networking, small business funding from the government, and support from businesses they franchise from. As a veteran, many groups and organizations want to see you succeed. Take advantage of these programs so you have support through your first few years as a business owner. 

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What Does It Mean When Debt Is Past Due?

Debt is a concern for all small business owners. While some debt is considered good debt—debt that ultimately helps the borrower net more in savings or income—other debt is deemed “bad debt.” The latter includes debt that can directly and negatively impact a business owner’s credit score, or that costs money or potentially limits their ability to secure financing in the future. Past-due debt, sometimes referred to as “delinquent debt,” falls into this category.

What Does Past Due Debt Mean?

Past-due debt is the money owed on a missed debt payment. For example, let’s say you receive a credit card bill of $1,000 with a minimum monthly payment of $50. If you don’t make that $50 payment on time (usually within a month), it will become past due. This delinquent debt payment will often accrue late fees and additional interest if not paid.

You don’t necessarily need to pay the full $1,000 at once—but you missed the required minimum payment, which caused a debt payment to become past due. 

Past-due debt can come in a variety of forms. Your debt can be due for utility payments, rent, credit cards, loan payments, and invoices. Essentially, any expense with a payment that isn’t made on time becomes past due.

What Is the Difference Between Past Due Debt and Delinquent Debt?

Debt that is past due is also considered delinquent. However, there are differing levels of delinquency. Each level has its own penalties and risks to your financial reputation. Here are a few examples:

Within 10 days: Many lenders have a grace period of a couple of weeks during which you can pay off the debt. During this time, there aren’t late fees or penalties as long as you pay off your debt. (This grace window varies by the lender—some will charge a fee if you miss the payment date by even a day.) 

After 10 days: You may receive a late fee for your delayed payment, but the lender won’t take any action against your account. 

After 30 days: If you skip a full billing cycle, your creditors will likely report this missed payment to the national credit bureaus. This report can impact your credit score and add delinquency to your credit history.   

After 90 days: If you continue to miss payments, you’ll likely accrue more penalty fees and interest. Your interest rates may increase, and your credit will keep dropping. Eventually, your creditor will send your account to collections and freeze any services you receive. 

Will Paying Past Due Accounts Benefit Your Business?

If you’re contending with multiple sources of debt, then consider starting with your past-due accounts. Paying off your overdue debts first could prevent your account from going into collections and affecting your credit score. 

If possible, make the minimum payments on all of your accounts—even if you can’t pay off the full balance. Hitting these minimum payments proves to creditors that you’re still willing to pay what you owe and aren’t going to fall into delinquency. 

If you are ever in a situation where you’re unable to make the minimum payment, contact your creditor ASAP. Some credit card companies offer hardship programs where you can pause payments for a few months. Your other lenders may be willing to accept partial payments in the short run. 

How Long Do Late Payments Stay on Your Credit Report? 

Payment history is one of the biggest factors of your credit score. Your history lets lenders know how likely you are to miss a payment or become delinquent on the account. Because of its high value, a missed payment will stay on your credit report for 7 years, whether the missed payment is 30- or 90-days late. 

However, a missed payment might not affect your credit score for the full 7 years. If you only miss a few payments, then your credit score might rebound in a couple of years. Multiple factors  contribute to your credit score, and maintaining a good payment history is one of the best ways to keep it strong.  

Set Reminders for Your Minimum Payments

While your lenders will likely remind you about upcoming bills, you can also set payment reminders to ensure that you at least make your minimum payments. These reminders will help you avoid past-due debt, even if you still need time to pay off your full balance. Making these small payments will help to protect your credit and your future financial opportunities.

If you’re too busy to remember to make payments, you can also set up autopay options to draft from your account. Just make sure you have enough money to avoid overdraft fees.  

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Small Business Funding: What It Takes to Reach Your Dream

Since 2011, Lendio has helped more than 216,000 small business owners in the US to access the funding they need to build and grow their businesses—an important stat to share during Small Business Week.

That’s just one side of the story, however. Because it is Small Business Week, we thought we should share another side, too: what small business owners want—and need—to know before they apply for funding. Considering that 43% of small businesses intend to use external financing for expansion, products, or services,* simply applying can be a big step.

Brock Blake, Lendio’s cofounder and CEO, recently sat down with Ben Hodson of JobNimbus to discuss business financing from the perspective of business owners. You can watch their short (10-minute) discussion above, which covers: 

What information a small business owner needs when they apply for a loan

What happens when a small business doesn’t have credit

When is the best time for a business owner to apply for funding 

Which options exist beyond an SBA loan

What qualifications lenders want to see before deciding to approve an applicant for small business funding

How credit history, cash flow, and/or collateral can impact the loan rate and product offered

How quickly a small business applicant could access funds 

If you’re among the 57% of small business owners in the US who wish they had more options when it came to securing capital for their business* or simply want to know how to access over 75 lenders, this video is a great place to start. Or if you’re more of a dive-right-in kind of person, feel free to start with an application instead.

  *source: SMBO Study, MDI Research. February 2021.

  Heads up! Today is the final day of National Small Business Week 2021—and your last chance to nominate your favorite local small biz to win $500 in our daily giveaway from Lendio. Get details and enter!

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Success Story: When Credit Scores Threaten a Small Business’s Much-Needed Loan

Things happen. But when the “thing” that happened still impacts your credit score, loan, and small business dreams 9 years later, what should you do?

That was the question Rick Hagen faced when he realized his past, personal credit history was could make lenders hesitant to help him fund his business plans. Like 70% of small business owners, Rick struggled with loan qualifications.* Banks, says Rick, weren’t likely to consider him.

An illness almost a decade earlier had left Rick with a bankruptcy on his credit report. He’d worked hard over the years to raise his credit score, but it hadn’t yet reached the range that most lenders wanted. Rick found himself in a challenging situation where, he says, “No one wanted to talk… they didn’t believe in me.” 

It looked to Rick like his dreams for a specialized car dealership in Southern California needed to be put on hold. Still, Rick knew his market, his product had a solid business plan, and he was sure he was going to make it. He just needed funding—he was targeting a small business loan—to help him unlock the doors.

How did Rick make it work? Watch his story unfold here:

*source: SMBO Study, MDI Research. February 2021.

WANT TO HELP YOUR FAVORITE LOCAL SMALL BIZ WIN $500? DURING SMALL BUSINESS WEEK, YOU CAN NOMINATE THEM FOR A CHANCE TO WIN BIG IN OUR DAILY GIVEAWAY FROM LENDIO. GET DETAILS AND ENTER

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