Alternative Financing Vs. Venture Capital: Which Option Is Best for Boosting Working Capital?

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?

SEO Training Courses: Taking Your Business To The Next Level

Today, website owners and web developers are realizing the importance of SEO training courses. The truth is, if you want to drive more traffic to your website, you need to learn how to properly optimize your site. In order to do this, you must be fully equipped with the latest SEO techniques and information that will guide you along the way.The Importance of SEOThere has been an increasing number of websites you can find online. With this, the competition to get on top of search engines is getting tougher. A lot of website owners are doing their best in order to increase their site’s traffic.Search engine optimization, also known as SEO, plays an important role in driving more traffic to a particular website. SEO is considered to be a complex subject but with ample knowledge and skills, anyone can properly optimize a website. To effectively optimize a website, you need to learn the basics of SEO and everything you need to know about it.Why Take SEO Training Courses?Latest SEO Information and Techniques – If you want to become knowledgeable about SEO, you can find a lot of resources online for free. However, you cannot fully rely on these resources because they could be outdated ones. With this, taking an SEO course is the best option you can do. You’ll be ensured that with a course on SEO, you’ll only get the latest SEO strategies and information.Personalized Training – One of the best things about taking a course on SEO is the opportunity of obtaining a personalized training in which you are guided with a step by step learning.Less Expensive Than Hiring An SEO Company – Today, there are a lot of websites which hire an SEO company to help them reach the peak of success. However, opting for this kind of option can be quite expensive. With a good SEO training, you are ensured with a personalized training at an affordable price.A Deeper Understanding About SEO – When you want to learn more about SEO, you can always do a self-study by doing a research online. However, SEO is full of technical terms which you are not yet familiar about. By taking SEO training courses, you’ll be able to grasp a deeper understanding about what SEO is all about. A course on SEO will definitely guide you along the way.If you own a website, it is indeed beneficial to take an SEO training course for you to be well-informed of the latest SEO techniques and information. This way, you will be able to know how to effectively optimize your website. Knowing the most effective SEO strategies can be your edge among other website owners. If you are looking for a reliable SEO course, there are a lot of SEO training courses you can find online. With this, you’ll be able to find a reliable SEO training course to answer your needs.Whether you run a small business or a huge company, it is always beneficial to take SEO training courses.

Career and Salary Options for a Pharmacy Technician

Overview of this ProfessionPharmacy Technicians are the ones who typically fill your prescriptions. It’s difficult to envision a pharmacy running well without them. A licensed pharmacist supervises them, but they basically handle most of the workload.It’s common for pharmacy techs to be employed in hospitals, nursing homes, clinics as well as pharmacies. Certification requirements change by state. However, regardless of your state’s requirements, your potential employer could demand it. Pharmacy tech schooling is surely recommended if you’re thinking about this line of work.What Might You Expect on a Normal Work Day?If you work at a hospital you might need to prepare intravenous (IV) solutions and present medication to hospital patients. Blood thinners and sedation drugs are the types of non-commercial drugs you may need to be familiar with. A number of hospitals require their technicians to have formal training and certification before handling such sensitive medications.Job Options & Wage PotentialDo not be mislead into believing that the pharmacy tech occupation is one lacking career advancement. In a retail pharmacy environment, one example of career promotion is getting promoted to manager of the pharmacy. Nuclear pharmacy and chemotherapy are career growth opportunities for those who work in a hospital. One more option for furtherance is moving to other health care specialties like medical billing and transcription.The median hourly wage for pharmacy techs starts at $8-10. It’s doable to make a lot more if you get more work experience in your specialization.What are the Requisite Certifications and Degrees?Each state sets their state specific requirements for pharmacy technicians, presently there are no federal guidelines. In many states, training and taking a state test is a requirement. Certification is granted by the Pharmacy Technician Certification Board (PTCB) or the Institute for the Certification of Pharmacy Technicians (ICPT) in the U.S.After passing the certification examination, you will be a Certified Pharmacy Technician (CPhT). This title gives you two distinct advantages over non-certified job applicants: you appear more qualified and you also increase the chance of a higher starting salary.If you are interested, get started now in a pharmacy tech training course. How long does training normally take? Normally 6 months to 2 years. And because there are more jobs available than people to fill them you’re certain to get work soon.Working in CanadaIf you are considering a move to Canada, you will need to apply for a license in that country. Canada’s qualification to practice as a pharmacy tech differ from the US, so make sure you read up on what you need to do in advance so you’re not stuck without a job after the move. You will need to sit for the Pharmacy Technician Qualification Examination issued by the PEBC.Does this profession sound interesting to you? If so, we recommend you start on your schooling as soon as you are able.