Thursday 31 August 2017

5 Financial Questions to Answer before Starting a Business

It is very essential that while starting your own business venture, you should properly plan before and then make required financial decisions. As in this way, you will be able to manage your money efficiently once your business starts operating.  Starting a new business might bring uncertainty, and certain situations may arise where you have enough cash flow and you need few alternative options too. That is why it is important to know whether you can answer below five questions related with finance before embarking towards new business venture.


1. If You Need Additional Working Capital, What Will You Do?

In order to bring their goals to fruition, several business owners need additional funds. So, at the initial stage of your startup venture, you must research on your priorities, as it will help you in preparing yourself id in case there is a need of additional financing for your business venture. There are two options which can be considered: Loan financing or Equipment financing.

If you are considering loan financing, it is quite essential to work with that lender which gives realistic term and amount for your business. And if your startup business is service or product based, with the required equipment is essential to keep your business operate smoothly. For the first time, upgrading, replacing or purchasing may put a severe pinch on the owner’s  cash flow but with the precise equipment financing, you can obtain those things which your venture needs without building a considerable dent in the bottom line.

2. For How Long Can You Live Off Your Savings?

While starting your own business venture, it is important to know if you have to live off your savings, then will you be able to do so or not and if yes, then for how long. As it is necessary that you should monitor your business expenses which will further help you in living within your means.  


3. What is The Importance of Business Debt Management?

Business debt management is important because it can help you in retaining your business status. As if you are not able to handle your business debts, then there is a possibility that it may result in bankruptcy or even compel you to shut down your business, which in turn will affect your credit too. So, it becomes quite tough to get any kind of credit after the discharge of bankruptcy.

4. Know What Amount of Debt Is Necessary For the Business

For successfully establishing your business, debt is very important. The reason behind this is that apart from equity financing; for establishing your startup business you can opt for obtain debt financing. But, it is essential to have right form of debt and more debt can play havoc with all the personal finance.

5. Can You Responsibly Manage Your Cash Flow?

From the start, the cash flow projections are driven by your operating cash flow. Ideally, operating cash flow is being projected either weekly or monthly for determining whether you need support from funding activities. As investing activities are designed on this basis for several businesses. Until and unless you are not in a progressive growth phase that needs purchase of assets, you will not have enough cash for further investments. As this tends to be larger transactions, they have considerable impact on cash flow of your business. Usually, it has been observed that financing activities refer as plug in the model of your business cash-flow. Any insufficiency in investing or operating cash flow can be covered with money from various financing activities. As it takes time in finding potential lenders or investors in getting cash, it’s better to know in advance how much and from where your business will get funding for balancing its cash flow.

Hopefully, now you can answer five finance related questions before starting your business venture. As if you are financially responsible from the initial stage them your business venture might have a better way of succeeding.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancial Advisory,  Private Equity,  Debt Financing  and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.


For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.  



Wednesday 30 August 2017

Essential VC Terms Every Entrepreneur Should Know

A portfolio organization is the one which a venture capital firm has already invested in. Before it happens, an angel investor is performing due diligence, or either thorough detailed company analysis. It is a sort of quick introduction for the opportunity of investment, displaying certain complex legal documents that may come in your path while starting your business.

Angel Investor

An individual providing early capital to a new startup company. Often, this happens as in the form of equity ownership or convertible debt. It is ordinary for angel investors to form that permits them to group their resources.

Working Capital

In terms of accounting, working capital = current assets – current liabilities. Current assets have short term which can quickly converted into cash, mainly accounts inventory and receivable. On the other hand, current liabilities have certain obligations that may due within a year, mainly accounts payable as well as short term debt.


Private Equity

Private equity is actually an umbrella term for huge money raised directly from recognized institutions & individuals and pooled in a fund that mostly invests in certain range of business ventures. For considerable long-term gains, attraction is the potential. Generally the fund is placed as a limited partnership, with the investors as limited partners and a private equity firm as the general partner.

Excess Inventory

Companies that manufacture goods and re-sellers that keep their warehouse stocked with products may get affected by this problem. If the too much product is manufactured, then it might end up sitting on shelves and will tying up cash flow also.

Pre-money and post-money valuation

One of the more challenging tasks of a younger company is to assess its actual value—how much it’s worth. Though not impossible, it’s not always a simple task.


Convertible Debt

Convertible debt is rather simple: the company receives a loan, and promises that the debt it accrues will then be converted into equity at a later date—when the company is financed in the future. It’s a concept that is both loved and abhorred, but it does allow a means for a young company to secure investment, and it prevents the investor from being diluted in later rounds.

Debt Financing

Using loan for getting hold of capital for starting a business venture is termed as Debt financing. Debt financing is the cash to be repaid either in the form of loan, line of credit, credit card or merchant cash advance.

Equipment Financing

Equipment financing is created for the purchasing business equipment. Your venture makes payments on the borrowed money and as soon as the debt is paid again then you own that equipment clear and free. This permits the lender to place a claim to assets of your business like the equipment itself in case you default.

Exit Strategy

All through the life span of an organization and as it will continue to expand, it’s quite common to hear about what its strategy for exit process should be like and it will further help an investor see good ROI

Moreover, there are several more than this but these are few that are good to start with. And don’t let all the VC jargon intimidate entrepreneurs.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancial Advisory,  Private Equity,  Debt Financing  and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.  


Tuesday 29 August 2017

Understanding a Startup’s Financial Projections

The financial projection for startup business can tell you how the founder of the venture sees their business beyond the raw data. And their projection associated with revenue and sales goes up and right, but they either pie in the sky or are realistic. Now the question is whether the startup business founders are merely projecting rather being justifiably optimistic what they are seeing for financial projections? Four questions that on should ask while doing financial projections are described below. Founders as well as investors alike might use this as an initial point for coming within reach of financial projections.

Do the projections accurately reflect the company’s historical performance?

For example, if projections of gross margin are dramatically reflecting lower cost of goods sold (COGS) than what was reported before, then we will automatically ask for more production or changes in input cost explaining that sort of deviation. The same is with the operating expenses and it is tempting for assuming that they will be low in moving forward, but without having a definite plan for dropping them, the financial projections might track shut with past OPEX.


Do the projections reflect a solid understanding of customer behavior?

For example, if an organization has had around 10% consumer churn in last six months then it must be a red flag if in case their projections of traction suddenly presumed to be 3% consumer churns. These projections should also imitate an organization’s understanding of various customer cohorts that have more value, the CAC or customer acquisition cost as well as the payback period for each.

Has a historically uneven graph seasonal sales magically smoothed out itself?

Many startup businesses might experience predictable and understandable revenue and sales fluctuations on the basis of weather patterns, holidays, or even modification in sports seasons, and these kinds of fluctuations might have several impacts on various geographic regions on which whole of the startup businesses operates in. While few past yearly averages are quit appropriate and helpful financial projections must always replicate the impact of yearly seasonality.

Does the projected revenue curve resemble the historical bookings curve?

Management of cash flow is critical for your business and considering your business expenses allow you to plan for future expenditure and know the projected profit from that business which in turn will help in managing your cash flow. Moreover, not entirely but if you have seen the application process of bank or lender then you won’t agree with the buyout options and will change it accordingly and this way you have choices. Always make sure that you are found the right lender who not only meets your business and financial requirements but also proffers top rated customer service. On the whole, opting lending process is also not easy way still you have to take the risk.


Typically, the cash flow projections are driven by your operating cash flow. Ideally, operating cash flow is being projected either weekly or monthly for determining whether you need support from funding activities. As investing activities are designed on this basis for several businesses. Until and unless you are not in a progressive growth phase that needs purchase of assets, you will not have enough cash for further investments. As this tends to be larger transactions, they have a considerable impact on cash flow of your business.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancial Advisory,  Private Equity, Debt Financing and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.  
                 

Saturday 26 August 2017

Pitching Your Startup Business to Angel Investors

Entrepreneurs while pitching their business idea to investors should prepare themselves with all the pros and cons of the business before seeking investment for keeping your startup in pace. It has been suggested that rather seeking investment at the initial point of your business better keep it as complement to your startup is already doing. There is no need of large amount of funding for starting your business venture.

Nowadays, it has been seen that while pitching a business idea to investors is incredibly harrowing. So before seeking investment, prepare yourself with all the pros and cons of the business in order to keep your startup in pace. It has been suggested that rather seeking investment at the initial point of your business better keep it as complement to your startup is already doing. There is no need of large amount of funding for starting your business venture.


In fact, seeking investment at an early stage might hamper your startup. It would be quite mean of developing your logistics and ideas, but the amount of time and stress in trying to meet the expectations of investors and in polishing your pitch is very nerve-racking. Instead of doing this, just crack your business and spilt it into small and prove the investors that there is a demand of your product/ service in the market by launching a website and encouraging people to sign up with their email addresses by showing their interested in your  product or service.

Need of Investment

At the time of seeking an investment for your startup, be sure that you have right reasons for that or else if the reasons are not valid then investors will definitely pick you out a mile off. Always be honest about reasons with yourself as they will surely filter through your style of pitching, messaging, and attitude. While pitching your business idea to investors, make them believe in your startup success and show that you are committed to doing anything in making your business profitable. Any kind of uncertainty that you are not committed to your business idea will at once get picked up.


Always ensure that when investors are doing their research on your startup, there must be something good to find in your business venture either website or positive presence on social media or reviews. It has been observed that being visible to others will not only help them in finding more about your business but also provides authenticity, specifically if your  presence on social media demonstrates that people are getting engaged with the product /services offered by your startup. It is obvious to come across certain challenges while starting a business venture whether marketing, cash flow, connecting with your audience or anything related with business.

 You should make sure that you are clear with your business what you are offering and have perfected your elevator pitch. Avoid waffling, as it seems as if you are not sure with your business needs and its success. So, better be definite and concise in the eyes of investor as it will provide credibility to your business. Moreover, as a founder your main goal should be growing more and more professional network. At the time of need for funding, you never know who might be next funding opportunity or source. Also, some investors can be a public figure who can be reached online. Several other investors mainly anonymity and it’s quite hard to search for any kind of information about them.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancialAdvisory,  Private Equity, Debt Financing and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.
For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.  
                 

Friday 25 August 2017

What Venture Capitalists Look For In New Investments?

If you’re thinking of bringing in new investors, they’ll want to know how much your business could increase in value if they buy shares. To work this out, they’ll need to know how much their investment will increase your sales and profitability. Just provide potential investors and lenders with a financial model presenting how business will use the more money to boost profitability and sales. Also, how initial prices and augmented ongoing prices will affect the cash flow. Usually, sales increases only after taking on additional expenditure like employing more staff, putting in huge orders for raw materials or moving to bigger premises. So, there is a need to take all these spending in control while doing financial planning.

Often, growing your business means it needs more investment, whether through improved profitability or increased sales. It can be done by taking out a loan, putting previous profits back into business, put up shares for sale to outside investors as well as searching for other financing sources including government-backed schemes.


Now days, landscape of business financing is changing drastically as more options are available to business owners which were very limited few years back. Almost half of businesses are seeking financing from several no. of places like owner investments, non-bank sources etc.  Most of the businesses face challenges while taking advantage of growing opportunities and also at the time of gaining access to capital. So it’s really important that they seek the right way of financing according to their needs. Recently, it has been seen that businesses are focusing on “alternative” lending option, but the question is how do they know that is this the right option to pursue?

Answer to this question is that businesses should seek financing when they face an unexpected challenge or opportunity because at that time there is a need of quick capital. It has been seen that most of the time; businesses don’t have enough cash on reserve or any other source of credit that will help them in withdrawing required funds during these types of opportunities. These alternative fund lending sources help in filling that void by giving access, speed availability to business owners. 


To verify what kind of financing makes sense for business as well as situation, one must consider the exact need of the funds and the timing. Alternative fund lending sources helps in providing repayment flexibility and offering creative options that fluctuates along with sales volume. It's also in need to understand the rates that are associated with while choosing other source of fund lender. This type of funding is often costly than old-fashioned bank loan as these companies act as borrow capital, liaisons from several other financial institutions which guarantees the payment. Basically, when the client defaults, they absorb the risk as well as the losses.

Angel investors find interest in the next generation ideas and willingly fund startup ideas they find worth. They usually focus on technology startups. Although the process of receiving funds from an angel investors might be straightforward, but they always expect to see complete business plan along with financial projections. This funding option is perfect for technology-focused businesses, but still need guidance in product creation and marketing. Apart from providing money, angel investors also give guidance to that business owner looking for more experienced partners. They might also anticipate a certain degree of influence on how the company is running.

Moreover, as a founder your main goal should be growing more and more professional network. At the time of need for funding, you never know who might be next funding opportunity or source. Also, some investors can be a public figure who can be reached online. Several other investors mainly anonymity and it’s quite hard to search for any kind of information about them.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Joint Venture Advisory, Financial Advisory,  Private Equity,   Debt Financing and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.  
                 

Thursday 24 August 2017

Things Investors would like to see before Investing In Startups

It is no surprise that in the current business climate of low or even sub-zero interest rates and arguably overpriced equity markets, investors are on the hunt for alternative avenues of investment. Injecting seed funding into promising young startups is one such investment that has recently grown to be very popular. This form of investment is extremely rewarding but naturally comes with significant risks.

With that in mind, it is necessary to analyze startups when considering whether or not to invest. The importance of standard analysis using financial ratios and metrics (which are reviewed here and here) is widely acknowledged. However, since these businesses are either unlikely to have much historical financial data available or might possess highly skewed financial s (due to them still being in the early stage), this article will instead explore five essential non-financial aspects of a young startup that are equally as, if not more, important to your investment decision.


If you are a potential angel investor, there are many opportunities worth exploring in order to fulfill some of this capital demand, as long as you take some considerations and precautions before embarking on your journey. Before you invest in a startup, make sure you prepare to cope with these perks – and quirks of an entrepreneurial ecosystem:

Do Your Market Research

It seems obvious, but founders come to me with ideas that seem so farfetched it’s hard to believe that they thought the product or service would work in the first place. You must know the issues, the problems being addressed, the players and the customer base. Going into a sector and niche that is over saturated just makes it harder for your company to stand out. Finding a niche that no one cares about is equally fraught with uncertainty of success.

 Is Your Company a Game Changer?

If your business doesn’t change the way people do things or see the world, you are not going to make waves and get noticed by customers or the media. You want media attention! Sure, you can make widgets until the cows come home, but having a real impact on the world is what dreams are made of.

Understanding How to Run Your Business

If you think running a startup with you, a cofounder and a couple of staff is easy, see what happens after your first seed round. If you are not comfortable managing the business, things will begin to fall apart. It won’t hurt to take on a couple of online courses to tune-up your general management skills. As you get more capital, consider replacing parts of your jack-of-all-trades CEO role with professionals. Investors want to know you can take care of their investment and have general business skills.


Quality of Character

In some respects, this should be the first consideration when we are looking to invest in a company - the quality of the person behind the company. Reputations are built on trust and easily taken away. Investors want to know that as the company grows the sincerity, commonsense, trustfulness of the founder will come across to both future investors and customers. I worked with a company whose founder had a bit of a ‘shady’ past. There is nothing serious, but enough to have people whisper at investor events. Needless to say, his company didn’t remain a client for long.

It’s Not Just About the Product!

If you haven’t figured it out yet, the product is just a piece of the puzzle, Of course, it has to be great, but the three most important reasons to invest in your startup and not the other guy is the differentiation of your business through the quality of its people, the global market reach or distribution you can attain and the product. Without all three, finding investment is difficult.

What Skill Gives You, the Founder, the Edge?

I’ve been in presentations where the founder was so sincere and passionate that she came across like Mother Teresa. The reverse, of course, has been true as well. Investors want to know you have some special skill that they can be reassured that your startup can make it past the first year.

Stay Focused

Seems like an easy request, but when you’re trying to do press releases, managing programmers and finding capital, it’s not that easy to focus on building a company. How you deal with the distractions and keep yourself focused on getting to the top will be a clear message to any investor. This also goes back to management. If you are working above your skill grade, find someone to help, be it a new employee or a mentor. I ‘shadowed’ a CEO for months because he constantly lost his focus and needed not to show it in front of his cofounders and investors. To keep him on track, two heads were a lot better than one, and he managed to get to the liquidity event successfully.

Bootstrapping

Investors love to see founders pull resources out of thin air and manage what they have with lean determination. This puts the control of the company firmly in the hands of the founder. Having all the control and running the company smoothly as well as lean shows the investor you have sound judgment and worthy of investment.

Be an Adept Communicator

There’s nothing worse to have two behind the scene nerds try to convince an investor to put money into your venture. You can’t afford to have poor communication cause a stumble on the story to an investor. 


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryPrivate Equity,  Debt Financing and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.                   

Wednesday 23 August 2017

Expanding Your Business Globally

The benefits behind expanding your startup business globally include rising sales, more no. of profits and enhanced improved competitiveness. Going global can also help in reducing your business dependency on the domestic markets. The possible downsides to global market development include legal risk, financial risk, cultural risk and possible enhanced prices before your business starts making a profit. Here are below some important things to consider while expanding your business globally.

Keeping Global Business Strong

Consider risk related to your current business needs involves serving consumers that are close to home – all those customers that have made company a success business venture. Now the question is will this global expansion prove to be distraction? And do you have proper bandwidth for pulling it off? Is your management team ready for this type of challenge? Do you have enough capital? It’s just a subject of evaluating your ability of business to continue for serving its present consumer base while taking on accumulating customers in global markets.

Opportunity for Global Expansion

A lot of companies might deter in diving into the unknown from even adopting any opportunity to expanding their market. But those who are neglecting these opportunities are losing their large consumer base from which they are getting profits. On the other hand, companies with higher growth rate are seeing international markets as untapped potential market. And this is helping them in expanding at larger scale than those who stunt company’s growth by not taking it as a value opportunity for their business.


Diversification Risk

By focusing on one market, it increases the chance of business success before diversifying into multiple markets. While entering into global export market, there are certain pressures like:

Cost – have to finance your amalgamation with debt into global export markets while your startup business starts generating overseas profits.

Time – the growing demands will definitely intensify as it seems like everything will smoothly run from the starting date.

Workload – your overall workload will be increased while expanding your startup business globally.
Furthermore, you will be able to keep your domestic market strong by focusing on only one market and it will permit you to support or might pay for your export drive.


Decide International Business Development Partners

For growing your company globally, selecting the right partner is very important. In a country where you want to expand your business, without the right customer to vouch for you and building trust with them, it is not possible to become the market leader. Again, this shows that companies should be aware of various ongoing business practices among countries as well as understand different culture to connect with them and be efficient in order to stay on the same page. So, it’s better to know what you want with clear expectations before becoming business partners. Moreover, sticking with these goals will help you in choosing the right partners so that you can tap into the right market.
  
Moreover, for the majority of entrepreneurs, maintaining and building local customer base is the first step towards success. Once this goal is achieved, few business owners think that they are ready for the next step i.e. expanding globally. It is an impressive feat to become a global company, as not every business that sets out to do that achieves the goal. In order to convert your business successfully from domestic to international, one needs a new set of factors to consider. Global business experts shared their insights with ALCOR M&A on what it takes to break down company's national borders and run an international operation.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Private Equity, Debt Financing and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your CompanyComplete the Enquiry form One of our representatives will contact you within one business day.
                     


Friday 18 August 2017

Debt Financing Is Key to Success of Business :: Startups :: Entrepreneurs

Debt financing is the cash to be repaid in the form of a line of credit, advance merchant cash, a loan, or a credit card. It involves the usual pitching to venture capital firms and investors for raising money in exchange for equity in the company. However, it is not the only way of raising capital for an organization rather it can also help in other cases too. Using loan for obtaining capital or growth funds for starting a business is referred as Debt financing. It allows businesses to get the money they require for their business without giving away equity. Provided businesses can continue with the payments of interest and pay off all they owe and will get to maintain all the remaining proceeds in the coming years.

Most important thing to consider in debt financing is to prepare a timetable for your business growth. As, if the business expansion happens in a couple of years, make sure that the loan does not need unmanageable payments done on monthly basis. Depending on how much cash you have borrowed, the terms are decided and where will you use this money. Most the small business lenders mainly work with particular industries and provide good rates to the right organization.


Advantages of Debt Financing

Debt Can Fuel Growth

Long-term debt uses include buying hiring new workers, inventory or equipment, and increasing marketing. The long-term loan can provide your organization required working capital by taking out a low-interest in order to keep your company’s working smooth and profitable all the year.

You Don’t Have To Give Away Equity

One of the best pros of debt financing for a startup business is that you don’t have to give away business share equity, which in turn will keep full control over the business.

You Don’t Have To Claim on Future Proceeds

As long as you owe the debt, debt financing will only permit you to pay the agreed-upon sum. Without allotting further money to your lenders, you have to keep all of the proceeds once debt obligations are completed. The money is all yours when you pay off what you owe, even if startup business is purchased for millions of dollars.


Drawbacks of Debt Financing

Obligations on Payment

Lenders expect that you pay off your debt like clockwork even in difficult times as they don’t have a stake in the business.

Assumption of all Business Losses

 You are the sole responsible for the all the risks, when you are the only owner of the business. When you fail then not only you need to assume your losses, but those of lenders too, as they can sue you if you can't complete your agreement.


If you have already decided that extra funding will help your business in growing to the next level, it’s really important for examining benefits of debt financing. Furthermore, with plenty of debt financing solutions, first review how you can make use of effective debt for complementing several funding sources and help technology organizations in raising required capital within specific time frames needed for M&A processes. An acquisition well-executed might be powerful tool for driving growth and enhancing investor’s value for technology-based companies. So, it’s better to take time in determining the strategy of optimal financing that will help in ensuring that your acquisition is successful.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Private Equity, Debt Financing and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your CompanyComplete the Enquiry form One of our representatives will contact you within one business day.