Does your business have online presence?

86.8% of Canadians today are considered “internet users”, and this number continues to grow year after year. That means that approximately 30 million Canadians have used the internet within the last 12 months. The internet is such a powerful tool because it can be used for so many different reasons. Average Canadians use the internet to: surf the web, shop, find out the news, search up articles, play games, and use social media. Let’s focus on shopping; consumers are not only using the internet to shop, but as a tool that helps shoppers figure out what product(s)/service(s) that they want.

What better way can business owners reach their target customers then to have their information readily available 24 hours a day, 7 days a week?  With the technology era in full effect, people are going online to: educate, communicate, and communicate. So how can businesses take advantage of the internet and help it grow their business?

1. Google. How does your business rank in Google? When someone is searching for your product or service, will they find you at the top of the first page? When Google users perform their searches, they usually find the result they are looking for on the first page. If your product or service does not appear on the first page you may be losing out on critical opportunities.

How can you fix this? There are several way to approve your ranking on Google, some will cost more than others. Here is a list of some online tools you would want to look into:

• SEO (have an expert optimize your website so that Google can recognize its content)
• Adwords (an easy way to be seen in Google searches)
• Social Media (Facebook, Twitter, LinkedIn, You Tube, Google+)
• Blogging (share your expertise and opinions with the online community)

If you use these 4 tools effectively, your business should see an improvement in website traffic as well as an increase in sales. Ultimately, driving traffic to the website will spread the name of the business and help build the brand.

2. Reviews/Testimonials. Reviews are great for consumers because they are proof that the product/brand has been purchased before and unbiased opinions from those that have used it.  For businesses that do not have a history of reviews or testimonials, it is hard to prove their legitimacy without showing a history of business.

Testimonials and references are important for any business that is looking to change suppliers or manufacturers. Because it directly affects businesses, it is important to make sure that current clients are thoroughly satisfied with the products/services they currently receive.

3. Feedback. Feedback on your product or services is a great way to see what is working well and what can work better. Improvement and innovation are crucial for the future development of businesses. While not all feedback is positive, it is important to listen to your customers so that they do remain your customers.

4. Business Directories. Business directories not only display contact information, they are a great source for business leads when people are looking for certain types of industries. While phone books have been used for decades, most directories are now offered online (Yellow Pages, 411, Google). It is a simple way to have all your contact information available as well as a link to your website with products/services.

While businesses do not require a website to succeed, if you are looking to drive new customers and growth, it is important that your business can be found when companies are doing their research.

Thanks for reading!!

Michael Wong
Able Business Credit
Vice President - Business Development
416-909-2369
mwong@ablebusinesscredit.com

Why does Factoring send off Red Flags? A Popular Misconception..

Factoring is still a relatively new financing method within North America, and business owners still do not understand what factoring is. While it is a popular and accepted practice in the UK, it has been slowly growing in the United States and Canada. As it becomes more increasingly difficult to get approved for a business loan, many entrepreneurs are left in cold with very few options available. This is where factoring may be the best solution to help free up cash flow while payments are being made. In this blog I will attempt to educate not only business owners, but all individuals who do not fully understand what factoring is.

By Definition; factoring is a financial transaction where the business sells its accounts receivable to a factor at a discounted rate. Businesses use factoring to improve their cash flow so that they can use the working capital to pay off expenses and continue to grow the business.

Here are some of the concerns that have been raised by business owners:

1. Business owner to supplier relationship; many business owners choose their suppliers based on the relationship they have with them. It is no secret that business owners become more sceptical when they find out that their supplier is now using a factoring company to chase their bills. They see factoring as a weakness rather than an opportunity to expand the business. But in reality, factoring is a very quick source of financing that basically gives business owners access to cash that will eventually be theirs.

2. Business owners believe that their customers might leave if they find out they’re factoring. This is one of the most difficult obstacles for entrepreneurs to overcome; they are so worried that factoring will scare their customers and lose out on business.  While there may be a few owners that think this way, large corporations deal with factoring company’s everyday because they understand the financial stress of 60 day credit terms. And if businesses are THAT worried about having a factoring company call their customers; non-notification is an alternative where the customer would never know.

3. Interest rates; while factoring receivables is more expensive than a bank facility, it is meant as a short term solution when cash flow becomes tight. If you are only factoring in 3-6 month intervals, the interest incurred over that period is not significant. Most businesses that use factoring services do so until they are approved for bank financing. Factoring companies are not in the market to compete with financial institutions but instead partner with banks when they are not approved for a line of credit.

Let’s not forget, while most Canadian banks do not have a factoring department (National Bank of Canada being the exception), they do provide ABL (asset-based lending) services. While these services are being applied in a different process and at lower rates, the mechanics are essentially the same. While factoring continues to gain acceptance in the North American culture, it is important for business owners to be open to the idea of working alongside and with factoring companies.

Feel free to send me an email at mwong@ablebusiness.com with any questions or comment you have on this post.

Temporary Staffing is on the RISE

Temporary staffing can no longer be considered a temporary solution for businesses. It is become an increasingly popular method for businesses who do not want to have to lock in their employees for years to come. As a result, there is a steady increase in the percentage of contract workers in Canada. While not all businesses have adapted; here are some of the benefits that come with temporary staffing.

1. You can hire a specialized contract worker to complete a specialized project.
2. There is very little training required in most cases.
3. Most contract workers are not provided benefits.
4. Contract workers can be brought in during peak seasons and let go right when the contract is complete.
5. Productivity is higher because they are only brought in when the work load is strenuous.

The number of temporary employees continues to rise, as there were approximately 2 million people within Canada that were considered temporary workers (Statistics Canada). These numbers will continue to grow as businesses begin to adopt the new practice. Workers are also starting to understand the importance of working in temp positions because it expands their current skill-set as well as adding invaluable experience.

As much as there are benefits to having temporary employees, companies can end up losing highly qualified workers because they are offered full-time positions at another company. It is safe to say that the majority of the workforce is still looking for full-time positions, and a good amount can be considered valuable workers; so are these temp workers really the cream of the crop? Many will take temporary jobs because they are currently unemployed or are looking for another job. So why were they unemployed/unhappy in the first place? That’s one question managers will have to pry out of interviewee’s.

Regardless of the answer, temporary jobs will continue to grow in the market place as businesses look to maximize their working capital. That’s not to say that full-time positions will disappear; but over the past couple of decades, businesses and corporations have been looking for ways to remain competitive in their respective industries. Downsizing and outsourcing are two methods that come to mind when businesses are restructuring.

I’ll finish off here with a question; would the economy function adequately if the majority of the workforce were contracted?

Why So Many Start-Ups Fail..

Every entrepreneur has a vision of where they see themselves 10 years from now. While it’s nice to dream big, it’s not possible (yet) to jump into the future and have a large corporation at your fingertips. Personally, I would like to be the CEO of an up-and-coming business that is built towards the future. For that to happen I have to continually remind myself to follow these suggestions.

Outsource

Small business owners often believe that doing all the work themselves (marketing, sales, business development, accounting, legal, etc.) is the best and most cost effective way to manage a business. This might have been true in the past, but there is a reason that so many of these specialized positions are well paid.  They do their jobs better then any entrepreneur can, and in the long run they will make your company stronger.

Let’s use online marketing as an example; while you could go around promoting your website to various blogs, newspapers, social media outlets and emails, marketing companies have the right tools and contacts to drive the most traffic to your website. They know the ins and outs of an industry that is growing everyday and can really boost sales with an effective online marketing campaign. While costs may seem high in the beginning, this is where I suggest you look at the bigger picture and how spending now will impact future sales.

Embrace Change

This can be taken in many different ways; as times change, so must your business. We’ve seen this all too often with corporations that have relied on their brand recognition and their products to maintain sales year after year. For some of these company’s they will continue to shrink because they were not able to adopt as the market continued to shift. As much as you might want to resist change, it will come at your own demise.

Change can come in almost any part of a business, whether it is employee’s, location, marketing, or even customers, embracing change is an important part of development for any business. While change is not always good, it can create an opportunity to learn from these mistakes and hopefully build a stronger business.

Value Your Customers

It’s easy to forget about the customers you have when you are trying to find new ones to add. But it is just as important to maintain your current customers as it is to add new ones. It is important to build relationships with each and every customer so that they not only feel valued, but also feel like they are adequately taken care of. Don’t just worry about getting the sale, try and help your customer in other areas of their company so that you can build a higher level of trust. The more your customer trusts you, the harder it will be for them to leave, even if they can find a better price elsewhere.

While these suggestions can not guarantee that your business will be successful; these tips can help overcome the many hurdles involved with owning a small business. While there are more obvious tips to running a successful business, my objection was to focus on some of the areas we might take for granted. If you have any additional questions about running a business or would like to speak to me about some of your business problems, feel free to email me at mwong@ablebusinesscredit.com.

Cheers.  

When the Bank Says No..

When businesses need money, the first call is to the banks. They offer affordable rates and long term solutions for businesses that are approved. But where should businesses look to if the banks say no?

“My company is only 2 years old and the bank says I have not been around long enough”

This is a story that several new business owners tell when they are looking for financing for their business. They might have great sales and a strong business plan, but the bank is fairly strict on handing out money to new start-ups. Banks like dealing with businesses that have been around for 10 years and have a model that keeps them consistently in the black. While your business builds toward getting approval from the banks, alternative financing can be an affordable option that does not affect the future growth of the company.

“So what can I do?”

A great option for businesses that are growing rapidly is, alternative financing. Whether it is financing receivables, hard assets, equipment, inventory, or even purchase orders; they can all be secured by the lender to provide financing. Through a revolving credit facility or a loan against the asset, financing options are readily available for business plans that make sense. One of the biggest benefits of alternative financing is the flexibility it can provide to any client. It is well documented that banks require several covenants, while alternative lenders can be very lenient on how funds are dispersed.

“How will this help my company?”

For businesses that are running successfully but are stretched out for cash, this is a great solution to help financially manage growth. While most businesses look at raising equity as a more viable solution, it can be a much more expensive in the long run. While alternative financing is often considered expensive debt; it is considered very cheap compared to raising equity. By raising equity, you add an additional shareholder and funds that can be used towards the business. However, if profits for the company begin to grow, they will be shared based on percentage of ownership. In most cases, adding an additional shareholder to the company entitles them to decision making power based on the ownership they have in the company.

While alternative financing might seem like a costly endeavour in the present, we try to advise clients to look into the future. We see alternative financing as a temporary solution for growing businesses and a bridge to businesses whose payables and receivables do not line up.

Feel free to send me an email if you have any questions or would like additional information. 

Why Factor Your Receivables..

Factoring is a quick and easy way for businesses to access cash that is waiting to be paid by customers. 30, 60, and 90 day credit terms are an expected practice for companies in the b2b market. By offering credit terms to customers, you build stronger relationships and gain market share that can ultimately drive sales. But while cash is tied up in accounts receivables, future business might have to be put off until these receivables are paid off. This is where factoring can be an effective financing tool to bridge the gap between payments and collections.

While rates and advance amounts vary for each client, financing can be priced as low as 0.75%/30 days and up to a 95% advance upfront. But more importantly, by factoring your receivables your business will have more flexibility and a less strenuous time managing growth.

If you can have the opportunity to work with the bank for financing, we say go right ahead! Banks offer the most affordable options and if your business can get approved, great; but banks tend to be very stringent on businesses they choose to approve and companies who are factoring are hoping to eventually fall under that criteria. Anyone who has ever dealt with a bank also knows it’s a long and slow process to get funding. It can often take months before funds can be withdrawn. If your business is looking for quick cash, alternative lenders can often setup accounts in as quickly as a week and provide same day funding.

Factoring is often perceived as an expensive form of debt, but it is a relatively cheap alternative in comparison to raising equity. While equity is a solution that does not cost the company money, it dilutes the overall value of each shareholder. So if a company is growing and profits are expected to increase, it may be a more viable solution for them to factor their receivables.

So next time your business is strapped for cash, consider factoring some of the receivables that have been aged >30 days.

www.ablebusinesscredit.com - 1 855 800 5525 - info@ablebusinesscredit.com