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Monthly Archives: December 2011

The 20 Online Marketing Strategies

29 Dec

Effective online marketing can attract more people to your website, increase customers for your business, and enhance branding of your company and products, for some businesses, especially small to medium businesses, online marketing strategy can be the break-through moment for them.

One of the biggest mistakes that many businesses online make is that they do not have a plan for success, or lack of Plan B and Plan C when 1 or 2 strategies do not work. The reality is, online marketing can stratch as far as your imagination, there is no one success formula, but often a mix of strategies.

As a starting point, you can do some market research analysis on Google, and Yahoo, and MSN, so that you know which search terms people are searching for the most.  Some search terms might only produce a couple, 10 or 20 searches a day, and other search terms might have several thousand a day.  You will need a big enough market to target because you will be sharing that market with your competitors – sometimes it’s good to be niche, if they are searching 20 a day, but all of the 20 searches go to your site, then that’s also a marketing point.

If you are just beginning your online marketing strategy the top 20 list below will get you started on a plan that has worked for many.
  1. Optimize your website so that search engines can find you organically.  You can either outsource or utilize the various tools available in the Internet to apply SEO to your website.
  2. Broadcast your site once live by sending out a press release to your e-mail contacts and to media partners as magazines, newspapers, radio, and television stations. Also gather your contacts list and managed them in a system, this can be using a simple Excel worksheet, or you can use Customer Management Relationship software or other contact management systems.
  3. Offer an incentive to your affiliates – Offering an incentive to your affiliates might just give them that extra 10% motivation to spend more time promoting your program. More promotion means more sales.
  4. Your website needs to have a better presentation than your competitors.  This means a more engaging demonstration of what you offer, some are using videos to demonstrate the uniqueness about the business, which can be very effective for consumer related products or services.
  5. Add a page of content – Write an article and add it to your site. The more pages Google can see on your website, the more chances you have of ranking for any particular keyword; keep adding more pages each day and build a habit in doing this.
  6. Facilitate and run contests and giveaways via your website, even just a small free download report or some kind of coupons or vouchers. Companies like Groupons can work quite well for many start-up businesses.
  7. Look for websites endorsing products or services that are complementary to the products or services that you promote and get in touch with the site management to propose swapping of links. There are also services out there that help members swap links with each other without cost.
  8. Build an email database list and send regular newsletters with great content and offering
  9.  Write articles in your field of proficiency and disseminate them to editors to serve as web content for their website with a request that a link to your website and a one-liner about your product or services be included in the article. This can significantly enhance your visibility.
  10. Establish a business blog offering first-rate content and customary industry observation. Make the blog site interactive so you can not only create a solid brand presence but also utilize it to collect feedback. If you are too busy in writing articles, consider either outsource or use some of the industry news to create web traffic to your site.
  11. You can also consider listing your products or services with auction sites.
  12. Registration with the many search engines available is basic in Internet marketing because latent and prospective customers will normally find you through search engines. Remember, you should also register on search engines in different languages, in North America, it is good idea to register both in English & Spanish, in Europe, you should register in all different languages search engines you are targeting.
  13. Promote your site in industry, specialized, and other key directories – doing so will help your ranking and obtain traffic for your website. By listing on directories, you can be exposed to industry specific members and professionals.
  14. Dominate your marketing niche with affiliate, reseller, and associate programs.
  15. Write one piece of content and turn it into multiple pieces of content. For example, let’s say you write a 250 word blog post on Monday. On Tuesday, you can simply turn that blog post into a podcast, and on Wednesday you can turn that same piece of content into a video. This will save you tons of research time trying to come up with the right topic to create content around. Article marketing is one of the best ways to generate traffic, and you can also partner with part-time journalists to help you out.
  16. Create a web page on popular personal social sites such Facebook and Twitter etc.
  17.  Create a special discussion forum on professional social sites such as LinkedIn, Xing and others.
  18. Social Bookmarking – This technique involves using popular social sites and bookmark particular post you have made. After posting a video to Youtube, for example, you may want to get additional traffic and backlinks to your website. Bookmarking will help you rise up in the search engine rankings if used correctly.
  19. Writing Articles- Article marketing is probably the best online marketing strategy when it comes to promoting your home business website(s) online for free. With a little time and effort on your part, you can easily push out 1-2 articles per day and post them to high rank and traffic places.
  20. Request an analysis from a business coach who has both offline and online marketing expertise, they can offer advice such as changing your web look, changing your online forms and other ways to capture database or create revenue opportunities.

By following the above tips you will be on your way to creating a concrete internet marketing strategy that could boost your business substantially; and this will be the first step to increase your web revenue.

 
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Posted by on December 29, 2011 in Smart Marketing

 

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Venture Capital Career: What Positions?

29 Dec

Both US and Canada have a large number of venture capital & private equity firms; many financial professionals have considered this as their ultimate career achievement, here are the positions at venture capital firms that maybe relevant to your skills and experience.

Investment Directors & Partners:

This is the senior position at venture capital firms, but the responsibilities are much broader than the title. Not only you have to manage your own company (venture capital firms), you are also likely to be a board member of may portfolio companies you have invested in, most likely holding directorship as well.

Therefore, you would need to have great multi-tasking ability to plan and manage multiple companies simultaneously.

Venture Capital Fund Managers:

This is a position available from some venture capital firms; you manage companies included in your portfolio, and look for ways to enhance their performance, so it is a much active role compared to fund managers.

Analysts:

VC firms usually require both junior and senior analysts; these are sometimes regarded as the entry-position to step into venture capital industries. The skills and experiences required are often quite diversified. A good analyst at venture capital firms will be able to pre-screen deals, and identify those that have potential.

Once invested, they will also have skills to monitor the progress and identify growth opportunities. For acquisition-driven private equity firms, they will also need to identify undervalued companies for acquisitions.

Venture Capital firms usually have specific mandates, and need industry analysts as well as the financial analysis skills.

Capital Raising Specialists (sell side):Venture Capital Funds and Private Equity funds need to raise capital to establish their investment vehicles; additionally, also able to raise capital for their portfolio companies.

This is usually done through raising capital from institutions including pension funds, insurance companies, other venture capital funds, financial institutions or they may raise capital from individual investors as well.

Business Development Managers – Portfolio Companies.

If you are a top-notch Business Development manager or sales professional, especially if you have experience in biotechnology, IT, CleanTech, e-commerce, telecommunications and other high-growth industries, you can join venture capital firms and offer your experience in developing the sales pipeline and marketing strategies for their investee companies.

Someone with a mix of business development and consulting background will be of interest to many Venture Capital firms.

Investor Relations Managers:

Venture Capital and Private Equity firms deal with investors, and need good communications and marketing managers to liaise with stakeholders and investors.

This is an area we believe that is currently under-serviced, especially outside United States.

IR is becoming more and more influential, and often a differentiating factor for smart venture capital firms.

As an Investor Relations Manager, your role will be very diversified; not only you will be responsible in creating the brand for your venture capital firm, you will also be responsible in creating campaigns around your portfolio companies, and this often involves engaging in different industries and at different stages of business phases.

IPO Specialists:

As we know, the 2 most common exit strategies used by VCs are trade sales and IPOs. Some venture capital firms have IPO specialists; others tend to work with other investment firms for IPOs.

Job requirements can be quite diverse, initially, this can involve in drafting Prospectus leading towards to IPO, as well as organizing roadshows and also assisting companies to prepare for the listing.

An IPO campaign can typically last anywhere between 6 months to 12 months, and is quite a full-on project, which needs these specialists as project managers.

Legal Counsel and Legal Professionals

Legal professionals should definitely consider venture capital firms as a career opportunity.

They offer a wide range of supports and advices, on the day-to-day basis is to ensure offering documents comply with regulations and securities laws.

Then, there will be ad hoc projects such as advising towards copyrights or IP protections for portfolio companies, negotiating contracts between VC and portfolio companies, also detailed contracts for more sophisticated transactions such as options, convertible notes and loan documents.

 
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Posted by on December 29, 2011 in Career Advice

 

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Living Cost Comparison: Toronto vs Vancouver

29 Dec

Canada is one of the most popular destinations for immigration; immigrants always choose Vancouver, Toronto or Calgary as the top 3 cities when considering moving to Canada.

As an immigrant myself from Australia, this was also an assessment that was undertaken by us for many months across a wide range of categories.

After 6 months of assessments, Toronto was selected due to a number of factors. Generally speaking, the cost of living in Canada is substantially less than Australia, most parts of Asia and most parts of Europe; but it can be expensive compared to some US cities.

In terms of the cost comparison, Vancouver is definitely more expensive than other Canadian cities; but it is a unique city on its own.

Living Cost Comparison:

Housing: Vancouver has one of the most expensive housing markets in North America. You should not compare housing price in Vancouver to Asia, Europe or Australia; you should compare it to other Canadian or American cities.

The issue with Vancouver is lack of land, it has ocean to the left, and US border on the south with mountains on the right.

This makes city expansion difficult; plus influx of new immigrants and its reputation as beautiful and green city have all added to its prestige, which also add the premium to its property value.

Toronto, in comparison, is quite scalable, if you move outside the downtown areas; you can find larger houses or townhomes at much more affordable price. The city is also spreading as it has plenty of land for new developments.

The consequence is travelling, Toronto is a very spread-out city, so even though you are saving in housing cost, your transportation cost maybe going up because of the distance.

Food: food & grocery price are generally quite comparable between the 2 cities. Sometimes you find better deals in Toronto due to more competition in Toronto; but generally speaking, the price is quite comparable.

Utilities: Typically, this could be a bit higher in Toronto due to longer winters; and summers are actually warmer than Vancouver; which results in higher electricity usage during summer times.

However, Ontario Government is quite supportive to families and they have lowered the gas rate during winter times.

Transportation Cost: There are 2 factors to compare the transportation cost between the 2 cities. The fuel tax is higher in Vancouver, it has higher gasoline price than Toronto.

However, as mentioned earlier, Toronto is a much bigger city, and this has resulted in longer commuting distances, this often involves multiple transportation modes (Train, Subway or Bus). If you add up these factors, the transportation cost can be quite comparable between the 2 cities.

So, the main difference is really on the housing cost, which can be very significant. If using our own case as an example, the difference can be $2,000 a month based on a 4-bedroom house in each city. Plus, one should also consider the opportunity cost.

Assuming you are buying a 4-bedroom house in Vancouver, which costs $750,000, you can get the same house in the same distance for $600,000. That is a saving of $150,000 – which means much less down payment required by the bank.

If you invest in this difference, you can also receive additional benefits such as dividends, interests or capital gains – assuming you are making the right investments.

This article draws a quick living cost comparison between the 2 cities. But like what many have said, there are certain things money can’t buy – you can’t buy the ocean views, you can’t buy the convenience where you can drive to a ski field within 20 minutes, you can’t buy the magnificent mountain views in Vancouver or the clean air – so the choice really comes down to personal choice.

 
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Posted by on December 29, 2011 in Uncategorized

 

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Strategies to invest in international markets

29 Dec

International investing is certainly a growing trend today. Although the US stockmarket is the largest stockmarket in the world, there are many reasons why investors should consider investing in global markets.

  1. Emerging markets are growing at faster rate than US, especially the so-called BRIC (Brazil, Russia, India and China) economies.
  2. Investing in sectors that are relatively small in the US. For instance, the natural resources sectors, investors can invest in Australian or Canadian markets where their markets have higher representation of natural resources companies.
  3. Investing in particular industries that are benefiting from the current trend; such as Taiwan, which has very significant semiconductors, and precision engineering industries. A lot of its components are being sold to 3G, 4G devices and iPads; by investing in Taiwan specific funds, you can have a presence of these companies in these sectors.
  4. To increase dividend yield of your portfolio. US companies typically have lower dividend yield compared to other markets.
According to our recent research on ADRs in US, some of the highest yield sectors include telecommunications companies in Asia & Europe, utilities companies in Europe and Latin America and real estate companies in Australia. Many companies pay 7% or above yield.

Those are 4 main reasons why investing in international markets is a smart idea. Another main reason is diversification, by diversifying your overall portfolio in different markets and sectors; you are not exposed to risks in one market.

Sometimes it is a good idea to make your decisions on trends and events. The earthquake in Japan has caused temporarily supply problem to many electronics suppliers and manufacturers; Taiwanese and Korean firms on the other hand, are the beneficiaries to pick these contracts.

Another good example is the rising gold price; one way to benefit from this trend is to invest in gold producers in Australia & Canada, or invest in their gold-specific mutual funds or ETFs.

Sometimes this can be sector or trend specific. A few years ago, there was a global consolidation of stock exchanges. During that period, it was a good idea to invest in the London Stock Exchange, Euronext, Deutsche Borse, Toronto Stock Exchange, Australian Stock Exchange and OMX.

What about the risks?

Like everything else, there are risks involved in international investing; here are some main risks you may encounter:

  1. Fluctuation in exchange rates: This is very important, as any change can result in significant impact to your investment value. Some investors are also experts in foreign exchange markets, and they can manage the risk by managing their currencies; if you hold substantial amount of investments in international markets, currency risk management would be an important part of your portfolio.
  2. Timing: You do not want to stay up whole night and trade, but you could miss out an important news or activity. You will not be able to monitor your companies during their trading hours.  A good example would be what happened in Japan recently, maybe you want to sell your investments but by the time you got up, it was 10 hours too late already.
  3. Lack of Research: Getting information on research on international companies can be difficult sometimes for individual investors due to language barriers.

Fortunately for North American investors, we also have the most sophisticated investment system in the world. We are fortunate that we can invest in a wide range of foreign companies through ADRs. This means you can invest them in your time zone.

Another great opportunity is abundance of mutual funds and Exchange Traded Funds (ETFs) that are dedicated to international markets. You can leave the investment decisions to fund managers by investing into these funds, as well as holding a diversified international portfolio.

Nobody can be an expert in everything. I understand Australian and Canadian markets quite well; but I only know a handful companies in Brazil or Japan. For me, instead of spend hours researching into individual companies in Brazil or Japan, I can simply invest in their index funds or country specific ETFs to include them in my overall portfolio.

Furthermore, there are now many funds, which are currency-hedged; this means your investments are protected against fluctuation in currency exchanges. This is another advantage to invest in international markets through mutual funds or ETFs.

 
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Posted by on December 29, 2011 in Finance & Investments

 

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Different level of placement agents: Part 3

27 Dec

This is part 3 of our different levels of placements agents in Canada and United States. This article also talks about companies mainly dealing with retail investors.

The fifth tier

At the next level is an amorphous group of firms that consist mainly of a retail sales force engaged largely in promoting penny stocks — public securities of issuers listed on the NASDAQ Small Cap Market and the OTC Bulletin Board and Pink Sheets. These issuers are too small or shaky to be listed on a national market exchange such as the New York Stock Exchange (NYSE). Some of these firms are legitimate and perform necessary market functions in maintaining some liquidity in public securities that the big guys don’t deign to pay attention to. Others, though, are what are known in the trade as bucket shops or boiler rooms. These brokers cold-call potential customers and attempt to push questionable securities on an unsuspecting public for no reason other than the commissions the trades will garner.

On occasion, these firms attempt to place private equity, and many of them are not particularly picky about the size of the offering. That can be good news for a legitimate entrepreneur because, as they say, all money is green. And despite questionable stock sales practices in the public markets, a bucket shop sometimes knows where the appropriate buckets are. However, astute professionals don’t recommend doing business with firms in this bracket. Even if you successfully raise private equity, there’s no telling what kind of story the salesperson told to the investor. A group of angry and disappointed investors can be worse than no investors at all.

Here’s a checklist of things to remember about fifth-tier placement agents:

  • They’ll work for any company.
  • They require no funding minimum.
  • The only good news about them is that you can be sure they’ll take you on.
  • The bad news is the same as the good news.

The new tier

Recently, a new category has been added — organizations are styling themselves as incubators. The term incubator includes a couple of possibilities:

  • Physical incubators are office and conference facilities set up to house emerging growth firms in a quasi-private, quasi-communal environment. A typical physical incubator comprises an entire floor or floors of an old loft building — split into cubicles occupied by early stage firms — and provides shared conference, reception, phone-answering, and cafeteria facilities. Incubators are particularly useful for firms specializing in information technology because the space typically includes access to broadband Internet capability.
  • Virtual incubators also serve a multitude of clients and provide an array of services, including business consultation (they will help with a business model), technical work (they will help design a Web site if that’s part of the model), recruiting, financial management, and strategic advice.

Some of the more visible firms that style themselves as incubators are in fact sources of capital — the equivalent of venture capital funds. These firms create synergies among their portfolio companies by, for example, introducing a Web site design firm in which the incubator has invested to an investee firm that’s looking for Web site design services. We mention firms operating under this label were very much in fashion because many so-called incubators are actually placement agents in the classic sense. By calling themselves incubators and offering ancillary services — business consultation, for example — the incubator can charge a higher fee, particularly a fee expressed in terms of equity participation in the entrepreneur’s company.

Our intent is not to denigrate a phenomenon that has been highly useful to a number of emerging growth companies in terms of advice and capital, but simply to point out that a rose by any other name smells as sweet. A placement agent, whether it’s called a finder, an investment bank, or an incubator, functions most usefully as a placement agent. Emerging growth companies can use business advice and share office space, technical services, financial management, and overall strategic direction; however, in the final analysis, the most prominent need is the need for investment capital. And if a firm called an incubator can meet that need, then so be it.

 
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Posted by on December 27, 2011 in Finance & Investments

 

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Different level of placement agents – Part II

27 Dec

This is our Part 2 of placement agents series – we talk about The third & the fourth tier of placement agents in Canada and United States.

The third tier

At the next level is a group of regional investment banks — Dain Rauscher, U.S. Bancorp Piper Jaffray, Adams, Harkness & Hill, Robinson-Humphrey, Friedman Billings Ramsey, and First Albany, to name just a few East Coast and Midwest members. The regionals may act as placement agents at a relatively early stage, but, again, with prosperity, many have moved to what you might call a better neighborhood. In other words, they have a high cutoff in the level of financing and the maturity of the issuers they’re willing to consider.

The regionals enjoy one critical element in the fundraising process when you think of angel investors: They almost always have a retail brokerage capacity — a slew of retail brokers residing throughout the region who are in contact with potential customers. However, not many retail brokers are willing to introduce a high-risk opportunity to a valuable customer. In the event of failure, the broker could lose the customer. And the commission on a $2 million or $3 million private placement is usually not enough to light up a big broker’s eyes.

In many instances, retail brokerage networks are not so much interested in “writing tickets,” as it’s called, as they are in introducing customers with assets to the financial institution employing them — asset gathering. The economics of the business being what it is — particularly on the brokerage side because commissions have shrunk — growing the amount of assets under management (where an annual fee can be charged for little work) is a higher priority than struggling through an early stage financing. Don’t overlook retail brokers and investment banks, however. If the deal is attractive enough, retail brokers cover a lot of ground.

Here’s a checklist of things to remember about third-tier placement agents:

They work with local companies.

They have funding minimums of $5 million (more or less).

They understand the local markets.

They can be as picky as the major-leaguers.

The fourth tier

The fourth tier is composed of so-called boutiques. A typical boutique is a collection of experienced investment bankers who have left their major-league firms to strike out on their own, usually in a loose alliance with other individuals of like persuasion.

Boutiques attempt to do all the interesting things that their former employers did. With prominent exceptions, they like to be involved in advisory work for mergers and acquisitions work, and often consider themselves advisors rather than bankers. They don’t ordinarily maintain true brokerage functions, and they don’t write tickets, nor are they members of the New York Stock Exchange.

Boutiques like to arrange private institutional financings for mature companies, in some cases public companies, but they don’t have the capital or the inclination to join in syndicates underwriting public offerings. They also do occasional private placements at the early stage level, depending on the market. Obviously, a robust market is more attractive than a stingy and skeptical one, particularly if a boutique is considering, say, a $3 million to $5 million private placement.

Boutiques ordinarily have low overhead. Each partner is, in effect, a one-man band, without an entourage of assistants. They tend not to locate in the highest-rent districts in the city. When the engagement is appropriate, however, they can be effective.

Here’s a checklist of things to remember about boutiques:

  • They’ll work with any company within the field of expertise of one of their partners.
  • They require no particular funding minimum, but $3 million is about as low as most of them will go.
  • They’re open for business for early stage firms.
  • They can’t manufacture investors out of whole cloth. If a deal is too early for a placement agent, it’s too early for a placement agent, period.

Some so-called boutiques are groups of curious individuals who have little aptitude for fundraising but nonetheless publicize themselves as successful intermediaries. They apparently exist on retainers, with little hope of earning the remainder of the fee for a successful transaction.

 
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Posted by on December 27, 2011 in Finance & Investments

 

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Different Levels of Placement Agents, Part 1

27 Dec

There are different levels of placements agents in Canada and in the United States, some are exclusively dealing with local investors, while others have capacity in dealing at global level.

The first tier

As in most business enterprises, the investment-banking sector is divided into tiers. At the top are the creme de la creme: Goldman Sachs, Morgan Stanley, Credit Suisse First Boston, and other multinational firms often referred to as bulge-bracket investment banks. These banks act as placement agents by handling major public and private offerings; they also engage in an advisory capacity for mergers and acquisitions (very lucrative), and, in some cases, retail brokerage, and they trade securities for their own accounts.

These companies have billions of dollars in capital, offices around the world, and partners who take home high six-figure (and often much more) compensation each year. Increasingly, they’re allying with other financial institutions, primarily commercial banks. The focus of their activity is in New York and London, but their representatives travel in every conceivable market to find and service customers. Many are publicly owned; a few, such as Bear Stearns, are still private.

For most entrepreneurs, first-tier firms are not an option. Although these top firms are capable of raising billions of dollars for financial institutions, their services generally are not available to entrepreneurs seeking early stage capital. Occasionally, individual partners may be angel investors on their own time and with their own money, but that doesn’t mean that the bank itself is likely to sign up as a placement agent.

Bulge-bracket firms often sponsor the organizational ally of private equity funds — venture capital — and buy out and participate in their management. One of the oldest is the alliance between Sprout Capital and Donaldson, Lufkin, & Jenrette (now being merged into Credit Suisse First Boston). However, in early stage financing (an angel round, for example), soliciting the likes of Sprout Capital is not a productive use of your time.

Here’s a checklist of the kinds of deals that first-tier placement agents handle:

  • Established firms with strong track records
  • Funding minimums of $25 million
  • Institutional investors as the target audience

The second tier

Below the bulge-bracket firms are a group of firms that once acted as placement agents for early stage financings but have shifted their efforts to the big leagues. These firms, starting with Hambrecht & Quist (which is now owned by Chase Manhattan Bank), grew up in the venture capital/high-tech arena. They include the likes of Robertson Stephens, Alex Brown, and SG Cowen — upstarts that began as so-called boutiques, specializing in high-tech and usually located on one coast or the other. These firms are, by definition, interested in new ideas and new technology. However, they by and large have graduated to spheres beyond the angel round.

In terms of raising private equity for emerging growth companies, they set their sights on financings at or above the $15 million (plus or minus) level, which ordinarily implies a good deal of maturity for the issuer (the company seeking capital) in terms of customers, revenues, and net earnings. Moreover, many of these firms have been acquired by major financial institutions — for example, Alex Brown by Bankers Trust and then by Deutsche Bank — and are therefore opting for major-league rankings, all of which takes them above and beyond the seed and early stage financing sectors.

Here are a few things to remember about second-tier placement agents:

  • They deal with emerging growth companies.
  • They work with funding minimums of $15 million (more or less).
  • They focus on companies with breakthrough products.
  • They’re technologically sophisticated.
  • They’re becoming as elitist as the bulge-bracket firms.
 
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Posted by on December 27, 2011 in Finance & Investments

 

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Getting fast cash for your business – short term borrowing

27 Dec

Money makes the world go round, and nowhere is this more the case than in the wide world of business. Cash is the high-octane fuel for making any business go — and the more cash you have, the better it’s going to run. Cash pays for plenty, including:

  • The office supplies you need to do your work
  • The salaries of the people who help you do your work
  • Your rent and utilities
  • Almost anything else that you need to make your business a business.

So, if you really need cash fast, what can you do – there are different strategies you can consider, and as the borrowing cost is very low at moment in Canada and the United States, borrowing is one of the best ways to secure cash for your business.

The good news is that a number of options are available to you if you’re looking for some fast cash.

Borrowing

Many business owners — particularly owners of start-ups — first turn to family and friends for the capital they need to run a company once they’ve exhausted their own funds. This source of financing offers benefits to both parties. The business owner often gets a favorable interest rate and flexible payment terms with no need for credit checks or loan applications, and the lenders get an opportunity to become early investors in an enterprise that may pay off handsomely when it matures.

Keep in mind, however, that more than a few friendships and family relationships have been utterly ruined because of business disagreements or misunderstandings. Before accepting a dime from your family or friends, be sure that you put all these understandings, along with specific loan terms, such as the total amounts borrowed, interest rates, and loan terms (the number of months), into writing. If you’re talking about a lot of money, you need to have your lawyer either draft this agreement or at least review it before you use it.

Credit Cards

Credit cards offer one of the quicker and easier ways to raise capital for a business, and the histories of some of today’s more famous companies are replete with stories of founders using their credit cards to fund their startups. Of course, all this quickness and easiness comes at a sometimes hefty price — interest rates that some may consider little better than what you can get from your friendly neighborhood loan shark, anywhere from 11 percent to 18 percent to 22 percent and sometimes more.

First, the good news about credit cards:

  • They’re super-easy to get. If you can sign your name, you probably qualify.
  • If you’ve got a good credit history, you may qualify for a high line of credit, from $25,000 to $50,000, and even more.
  • They’re extremely flexible: Just about every store in the world accepts them, and you can use them for cash advances through a bank.

Of course, with the good comes the bad:

  • They’re easy to get. That means it’s easier than ever to get into financial trouble when you fall behind in your ability to pay off your charge cards.
  • Interest rates can be high, sometimes up to 20 percent and more.
  • Membership fees, cash advance fees, and other fees can add additional costs to an already expensive approach to raising capital.

For short-term capital needs, credit cards provide a convenient and flexible way to raise the cash you need. However, if you don’t pay them back quickly, the money you borrow with your credit cards can quickly become expensive, indeed.

 
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Posted by on December 27, 2011 in Finance & Investments

 

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How to Apply for an SBA Loan

27 Dec

Generally, two different approaches can be used to apply for an SBA loan: You can either apply directly to the SBA or apply through an approved lender that handles SBA loans. In addition to filling out and submitting the SBA loan application, be prepared to provide the following information and documents:

  • An overview/history of the business
  • A business plan
  • Financial statements for the past two or three years
  • A current financial statement (within the past 90 days)
  • Resumes of the business’s management team
  • Business projections

Despite the relaxed qualifying requirements, not every business will be granted an SBA loan. Every business that applies for an SBA loan must meet the lending institution’s (and the SBA’s) requirements in the following areas:

  • Collateral: The borrower must provide valuable consideration that he or she is willing to give up in the event of a loan default. Collateral is most often the equipment or fixed assets to be purchased with the loan proceeds but can be almost anything of value.
  • Management ability: The borrower must demonstrate that he or she has the ability to run a successful business or to hire a team that can run a successful business.
  • Repayment ability: The borrower must be able to show evidence of good creditworthiness demonstrated by having successfully made regular payments on previous loans and avoiding defaults or bankruptcy. The borrower also must prove that he or she has sufficient current resources to make loan payments.
  • Equity: Expect to invest a minimum of 10 percent of the loan’s value from your own funds to create a favorable loan-to-value ratio.

The loan process generally works like this:

  • You complete and submit an application.
  • You participate in an initial interview with the lending institution.
  • You respond to a request for further information, including W-2 forms and pay stubs.
  • The loan receives preliminary approval from the lender.
  • The lender verifies the information that you provided.
  • The lender creates a loan package containing the forms and information required by the SBA.
  • The lender submits the loan package to the SBA for approval.
  • The loan is funded — mission accomplished!
 
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Posted by on December 27, 2011 in Finance & Investments

 

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Property Funding Strategy: REITs

26 Dec

The Real Estate Investment Trusts (REITs) market is a very significant capital market in Canada and United States. Canadian REITs have been dominating some of the large deals in the United States recently, especially in the commercial properties sectors.

Why raising capital from REITs is a good idea?

They are purposely built investment trusts for property related opportunities, and many REITs also have mandate to invest in development projects, some have also included residential projects in their mandates.

REITs are listed entities, when they identify suitable acquisition or development projects, they can raise additional capital from investors, this means, there is always an element of liquid capital available from investors, if the opportunity is a good opportunity and if the timing is right – then they can also announce placements to raise capital to make acquisitions or reduce debt.

Their investment mandate and assessment criteria are also relatively more flexible compared to the banks, REITs can provide you equity investments or through debt-financing as well.

Most of the REITs are backed by large property groups and investment institutions; this means you can utilize their networks for future projects and opportunities.

There are hundreds of REITs listed in US & Canada along, and thousands if you include international markets. Some markets have REITs that invest in international opportunities and should be considered by North American property developers.

In the 1990s, for instance, Australian REITs had made significant investments into US properties, especially shopping centers when Westfield acquired Simons and is now the world’s largest shopping center operator.

Australian institutions had also invested in US’ commercial and industrial properties along the East Coast. REITs from Canada and Singapore have also made significant investments in US, especially in today’s market – where yields in the US is comparatively highly attractive to most parts of the world; as well as currency opportunities.

 
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Posted by on December 26, 2011 in Finance & Investments, Real Estate

 

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