•  

Local Office Blogs

rss
Feel free to peruse our blog or search for posts based on a specific term.





April 5, 2016

Originally featured in Thinking Bigger Magazine - March 2015

As a small business owner, there may come a time, if it hasn’t already, when you need money and you need it now.

There are a variety of funding options available: banks, home equity, the SBA, friends and family, investors, accounts receivable factoring, credit cards—the list goes on and on.

However, what if you have exhausted all of those sources and still have a short-term need for cash? As you begin the quest to find financing, you may consider alternative funding—an option becoming increasingly popular for small businesses across the country. 

 Because the traditional banking system’s regulations have made it increasingly difficult, time-consuming and, in some cases, impossible for a small business to get quick funding from their bank, this niche financing  industry has emerged, filling a need that many  primary funding resources have overlooked. 

What Exactly Is Alternative Funding?

Lending Club and Kabbage are two examples of companies providing alternative funding services. These, as well as other organizations in this niche, are primarily online resources focused on providing fast and flexible short-term financing to small businesses.

Typical lending ranges from $10,000 to $100,000. After the process has started, it usually takes about a day for the company to receive financing, assuming all the funding conditions have been met.

Kansas City is actually home to an alternative funder, CapFusion. Though the company provides funding to small businesses across the country, the company’s founders are based in Kansas City. And they may pay extra attention if they receive an application from a business that is located here, too.

Why Isn’t Everybody Using Alternative Funding?

There are pros and cons to all funding options, but the main cons associated with alternative funding include the associated costs, the dollar limits and the relative experience of the lender.

The costs of these loans can be significantly more than annualized rates associated with conventional financing. Using alternative funding, a typical transaction’s annualized interest expense is anywhere from 30 percent to 50 percent. Remember, there is a reason this niche is referred to as “alternative funding” and not primary funding.

Additionally, the players in this space typically lend in much lower dollar amounts than other types of financing. The thought behind this being, once a company has stabilized its cash flow and has time to patiently search for the best conventional financing arrangement, it will no longer need alternative financing. 

Lastly, as a relatively new niche, many companies in this space are relatively young. Some small business owners simply may prefer working with more established, well-recognized institutions.

What You Should Do

As if running a business doesn’t present enough challenge to the small business owner, I’ll add one more. It is important to understand all the financing options available to you and the pros and cons before you make a decision. Put in the time and effort to analyze your alternative financing options, the same way you would research other goods and services.

While working with an online alternative funding source may be your best solution, make sure your needs align with the company’s capabilities, and make certain you are working with the lending company that will be providing the financing, versus a broker, which will lead to substantially more costs.

Learn more about the author of this article, Daniel Kjergaard and our Entrepreneurial Services Group.




June 4, 2015

In 1997 Joyce Farris, Managing Director and current leader of our Kansas City Construction Industry group authored an article which appeared in the May - June edition of The Builders Association publication, Modern Builder. Her article contains helpful information for those considering starting their own construction company, then and 18 years later. Following is her original article – “A Few Basics for the Start-Up Company”.
So, you’re thinking about starting your own construction company. You have lots of great ideas and the technical capabilities, but what now? To some it may sound as easy as hanging out a sign and opening the office doors, but unfortunately, there are a few more behind the scenes items for you to think about.

Develop A Cash Flow Plan:
Developing a cash flow plan should be your first objective when considering a new company. Cash flow is merely cash coming in to the business and cash going out of the business. There never seems to be a problem with figuring out how to spend cash in a start-up company – the need for supplies, hiring of personnel, leasing office space, phone lines, utility deposits, etc. The problem is where to get the funds to start with. A decision should be made on how much of your personal savings you will need to invest in the company and whether you will also seek outside financing.

Before you can seek outside financing you will need to develop a business plan or a cash flow projection. A projection is a tool for mapping out when you will be required to expend cash in relation to when you will receive cash for the work performed. As you estimate cash inflows, consider seasonality of your work, sales history of similar businesses, and the overall economy. In determining the cash inflows and outflows, remember that you may have to spend the money to do the job before you can bill anyone and expect to receive payment. The major issue in developing a projection is to be realistic.

There are several sources for outside financing from friends, family, banks to the Small Business Association. Regardless of whom you reach out to, you will need to demonstrate that you have a sound business plan. Know “how much” you will need, “how long” until you would be able to start repaying the borrowed funds and “for what” the borrowed funds will be foremost on any lender’s mind.

Seek Advice From Your Accounting and Legal Advisors:
Now that you’ve developed your business plan it is time to consider what type of legal and tax entity would best fit your needs: an S-corporation, C-corporation, Partnership, LLC or Sole Proprietorship? The differences in the entities mainly involve the method for reporting and payment of tax and the business liability that you as the business owner are willing to accept. A discussion with both your accounting and legal advisor will provide you with the best options for your situation.

Once the entity type is decided, your advisors will draft and file articles of incorporation for the company, if necessary, and file for federal and state I.D. numbers. The I.D. numbers are a company’s equivalent to an individual’s social security number. The I.D. numbers will be required for  opening bank accounts, filing payroll and sales tax returns, and filing federal and state income tax returns.

Develop a Financial Information System:
Financial information lets you track the profitability of the company and the cash flow requirements. Accurate financial information is essential for you to make management decisions and is imperative if you intend to continue to borrow money or bond jobs.

At first, you may wish to have outside accounting company prepare the payroll and payroll tax returns or to perform all of the accounting functions. This type of arrangement is termed “outsourcing”. Outsourcing is well suited for start-up companies as it allows for accurate and efficient accounting records to be maintained while allowing the company to hire limited accounting and administrative personnel.

However, if you prefer to hire the administrative personnel and prepare the financial information in-house, then you will need to select an accounting system to fit your needs. As you select a system, leave room to grow and consider any special information tracking you require (i.e. job costs). In addition, you will need to consider the information that you will need to supply to the users of your statements – bankers, bonding companies, investors.

Develop Relationships With Other Professional Advisors:
Throughout the stages of your company, you will have a need for insurance or bonding and a good insurance advisor can help you determine how much coverage you need, when you need it and how to pay for it.

Other advisors, such as marketing consultants, may be needed at some time during the life of your business. In choosing any professional advisor, consider someone who understands your industry and who understands your needs as a start-up company.

Now that you have administrative basics out of the way, it’s time to open the doors.




Tags

Phoenix tax Accounting affordable care act Alex Elliott anna howell Audit audit and assurance Award Awards awards and recognition BEPS Best Places to Work Betty Isler Bill Tapp BizJournals biztips bizwomen Blog Brad Hale brenda brigman bryan koch CBIZ CBIZ Kansas City CBIZ KC CBIZ MHM CBIZ MHM Memphis CBIZ MHM Tampa Bay cbiz security and advisory services CBIZ Women's Advantage CBIZBlog CBIZKC CBIZMHM CFO CFO & Controller Conference cfo conference CFO of the Year CFO of the year awards Charity Community Involvement Conference Construction Controller Conversation With country club plaza Craig Gilman cwa Dave Enick DOL EBP EBP Audits Ed Rataj Employee Benefit Plan Audits Employee Benefits employee engagement EmployeeBenefits entrepreneur EntreprenurialServicesGroup ESG Eustis Corrigan events Food Drive healthcare HR Human Resources Innovation International Tax Jenny Matasic Josh Finfrock Joyce Farris Kansas City KansasCity karen cassella KC CFO Breakfast Series KC Events KCEvents Linda Lauer Lloyd Grissinger Local Managing Director Manufacturing Mark Baricos MBJ Megan Murdock memphis Memphis Business Journal Memphis Daily News memphis super women in business mentoring monday mergers and acquisitions moira house Networking NFP Not-for-profit Paul Dunham pci compliance Phoenix promotions real estate Revenue Recognition SALT Service Social Committee sonya daniels Sponsorships Start Up Start Ups State and Local Tax steve dunavant Success Super Women in Business Tampa Bay Tampa Bay Business Journal tangible property regulations Tax Tax Incentives tax reform The Daily News Top Workplaces Tracey McDonald transaction advisory services Transfer Pricing UMB Bank University of Memphis Volunteer workplace award