Are you a business owner wondering how to stay ahead of constant changes in the SEO arena when you have enough to deal with running your business? SEMrush helped us improve our marketing with a collection of useful tracking and reporting tools. Learn more below.
As someone without prior digital marketing experience, when I was just starting out marketing my business, SEO seemed like a very long uphill climb. Like Everest high.
Add to that the fact that we’re in an extremely competitive space– business loans– which has an average competition score of .93. We had a lot of hurdles to cross to gain visibility.
Many of our competitors have been cranking out content for years, and a lot aren’t half bad at it. So, I knew looking at what they were doing would be the best place to start.
My only problem was… we had no idea how to do that or where to start.
SEMrush’s Domain Overview Search helped us get clarity about our competition
After doing a little digging around, I decided to give SEMrush a try after seeing it recommended so many times on various guides.
The first report I started using– and still the main one we use– was and is the Domain Overview Search report.
We’re primarily a small business lender, so I started by pulling data comparing our biggest competitors in the small business lending space to find out what topics and keywords they were ranking for:
Running the Organic Search Positions report on each of our biggest competitors helped identify other terms both big and small.
That not only helped show us what terms we should be targeting but told us more about their own keyword strategy as a whole– what’s working for them and where they’re falling:
We created pages for our major keywords early, but with little to no domain authority, we weren’t seeing much results.
However, what really worked well for us was targeting some of the less competitive keywords in our niche, terms we were able to identify and rank for with the Domain Overview Search report:
SEMrush’s Organic Research Tool told us what was working (and what wasn’t)
Once we had a good collection of content up and we were working on our on-page and off-page SEO, we used the Organic Research Tool to regularly monitor our rankings:
The report not only showed us how our rankings were improving day-by-day but both our visibility and changes in our traffic for each individual term.
Another really useful tool we’ve used this report for is to pay attention to what SERP features we have.
With snippets becoming such an important part of SEO, we’re constantly trying to snag new snippets for various terms– and this report helps tell us when we were successful.
We also used the Position Changes report on a daily basis to see how rankings were fluctuating. The report is especially useful for finding out when a page is newly ranked:
Between these reports, we had pretty much all the information we needed to know what was working and what wasn’t and make changes accordingly.
And don’t forget to set up the Position Tracking Tool, which is useful for setting up automatic updates on your focus keywords to go out to you on a daily basis.
It’s especially nice if you’re too busy to remember to check your reports daily, which is bound to happen especially for other business owners:
And their Site Audit and Sensor Helped us stay on top of issues
Chances are if you’ve never done a site audit, your website has a ton of on-page and/or performance issues that are affecting your visibility and ranking.
In addition to creating great content and monitoring how that content was doing, we used the Site Audit tool to help us take care of issues plaguing the site, which we were quickly able to minimize and keep down:
We then use the Sensor tool to keep on top of any potential Google updates in relation to our industry so we can know the moment an algorithm update might have gone live that could affect our rankings:
Backlink Audit tool helped us avoid a major ranking hit
Another tool we’ve used to similar benefit is the Backlink Audit tool. It’s helped us identify toxic domains that are linking to us that could set off a red flag to Google.
When we notice a problematic link, we can easily handle it right then and there in the Audit tab within a matter of seconds:
Earlier in the year, we had a big hit to the site caused by some bad links that affected our rankings that were acquired via a negative SEO attack on our site by what appeared to be one of our competitors.
At first, we weren’t sure what was causing it and were worried we’d just been hit by an algorithm update or something.
However, with this tool, we were able to identify several bad links that had just been directed at us and disavow the links that were causing the issue, fixing it right then and there.
One Year Later: Major results with SEMrush
Just over a year from the moment we started our big push, the site’s rankings have taken off thanks in part to the SEMrush tools we utilized and traffic is climbing at an accelerated pace.
This is what our charts look like from December of 2018 to December of 2019, one year later:
And the number of keywords we rank for has exploded (and our number of top three and #4-10 place rankings):
SEMrush’s slew of comprehensive reports and tools not only helped us create a plan of attack by running effective research on our competitors that informed our keyword strategy, but it also gave us the tools to monitor that growth on every level and remove– and avoid– issues that could potentially affect our ability to rank.
The end result has been big gains for us in a short window of time with a concrete impact on our bottom line (and continued growth even now).
If you’re a business owner who doesn’t know much– if anything– about SEO, I can’t recommend the SEMrush tools more for crafting your keyword strategy, helping you rank, and making sure you stay there.
How to value a business: How much is your business worth?
Whether it’s to acquire funding via a small business loan or investors or sell the business, properly valuing your business is an important step that needs to be done right.
The more accurately you can appraise the value of your business, the more funding you’ll be able to generate and the greater chance you’ll have of securing a buyer.
A business valuation is the process of determining how much your business is worth.
There are several specific methods that are typically used to calculate a business’s true worth, but these are the 3 main overarching valuation methods which all specific methods fit under:
3 Methods to Value a Business:
Income-based: Calculates valued based primarily on income metrics such as revenue and profit. This includes the Discounted Cash Flow method which takes into consideration projected future cash flow value at present compared to risk as well as Capitalization of Earnings, which is a combination of revenue, profit, and cash flow projections.
Asset-based: Calculates value based on a business’s assets.
Market-based: Calculates value based on the sale of similar businesses within your same industry.
It’s also important for entrepreneurs in the market to buy or invest in to be aware of how business valuations work, so they know how to properly value a business which they’re considering purchasing or making an investment in.
No matter where you fall in the process, you should invest the necessary time to better understand how business valuations work.
That’s why the purpose of this guide is to break down how business valuations work, methods for doing so, and tips to help make the process smoother for all parties involved.
Table of contents
Preparing to value your business
3 Primary methods for calculating the value of your business
How to value your business example
Tips to make the most of your business valuation
First, let’s talk about some important tips for preparing for your valuation:
Preparing to value your business
Before we dive into the major business valuation methods, there are some important steps you should take to prepare for your business valuation.
Appraising the value of your business is a big step no matter what point in the business growth timeline you’re at, so investing a bit of time to prepare beforehand can help make sure things go off without a hitch.
Here are 4 things you should do before valuing your business:
1. Learn about business valuations
Since you’re reading this, you’re probably already at this step.
However, it’s important to mention that because business valuations can be complex and are directly tied to the success and/or ultimate monetary value of your business, you should take some time to learn about business valuations.
Learn about the different valuation methods, what type of business should use which method, why, and all the various details you should take into consideration when valuing the business.
For example, two of the most important terms you should look into are Seller’s Discretionary Earnings (SDE) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).
SDE and EBITDA are both arguably the two most common types of business valuation methods (which fit into one of the major valuation method buckets we’ll talk about later), though they’re similar in nature.
Both are essentially methods for calculating a business’s pure net profits, SDE generally being used for small businesses under $500,000 in value and EBITDA for businesses above that.
2. Research your industry
Business valuation methods take more into account than a business’s performance and well-being, they look at the industry as a whole as well.
For that reason, take some time to research the industry the business is in– if you don’t already do that regularly– to understand its current state and direction.
Financial information for most public companies is easily enough found online and a great way to get an idea of the state of the industry. However, you can also search out potential business sales listings on sites like AngelList for any that might exist within the industry as another great resource.
3. Get your finances in order
This one might sound like an obvious step in retrospect, but it’s often overlooked until it’s too late.
If you’re the business owner, chances are, there are things you can do to measurably improve your company’s financial situation within a matter of a few months to a year.
Take time to review critical reports such as your profit & loss and balance sheet to get an idea of where you can make improvements.
Also, make sure you have certain financial documents in order which will be necessary for the valuation process:
Profit & loss statement
Tax filings
Licenses and other proprietary documents
Other basic business finance reports
We’ll go more into considering a professional appraiser later, but it’s important to mention at this point that a professional business appraiser will run a full financial audit of your company, so while they will cost you they’ll take care of this step entirely (and with accuracy you can count on).
4. Review your assets
Similar to the previous point, you’ll also want to review your assets.
This is important for all financial calculations, but most notably for asset-based valuation methods.
Start by making a list of all your business assets (which essentially includes anything that adds value to your business), including both:
Tangible, and
Intangible assets
Within these two groups exist all kinds of different business assets, including:
Tangible assets:
Physical assets such as property/real estate, your production machines, and delivery vehicles
Inventory
Cash
Investments
Intangible assets:
Intellectual property such as patents and trademarks
Subscriber list
Brand reputation
Similarly, don’t forget to take stock of all your liabilities, which can include:
Business loans
Accounts payable, and
Expenses
3 Methods for valuing your business
Now that you’ve taken steps to prepare for your business valuation, whether you’ll be doing it yourself or hiring a professional, it’s time to break down the 3 overarching business valuation methods.
Each method below calculates the value of your business differently. Some methods are used more often than others, however, each is useful to know as they all have a place depending on the industry and other factors.
As a final note, if you’re doing the valuation yourself, work to make it as unbiased and accurate as possible. Inflating your numbers will only hurt you in the long run, from giving you an incorrect picture of your business health to turning away potential buyers.
Also, resist the urge to mesh methods together. Each method’s calculation can be run separately, but attempting to mesh them together is bound to result in skewed results.
These are the 3 approaches to business valuation:
1. Income-driven method
The income method for business valuation uses metrics such as profit and revenue (typically, future projections of those metrics), as the basis for valuation.
There are 2 primary methods used within the income approach bucket:
Capitalization of earnings method
This method takes into account factors such as a business’s cash flow to calculate its future profitability. This method is best for established businesses with stable profit.
Discounted cash flow method
This method, which calculates the value of a business based on its future cash flow projection, is ideal for new businesses with high growth potential.
2. Asset-driven method
Asset-driven methods use, as it sounds, a business’s assets to calculate its value. These are especially good for real estate and investment-based businesses.
Again, there are several different methods within this approach as well, including the Adjusted Net Asset method, which adds up a business’s assets and subtracts its liabilities to find its value.
To use an asset-driven method, you need to have an idea of what monetary value you can place on your assets. If you’re not sure, instead of running a guesstimate, do some research to make sure those estimates are as accurate as possible.
3. Market-driven method
The final business valuation method is the market-based approach.
This approach primarily takes into account the purchases of comparable businesses in your industry as a marker of its value.
This can be a useful method if you’re looking for a quick ballpark estimate as if you know of another similar business in your industry that recently sold, chances are your business will sell for a similar value.
This method is especially useful if your industry is experiencing rapid growth (such as tech) as there are likely examples you can reference in your industry.
Make sure to gather data on all comparable businesses and don’t just settle on the data from one. The more data you can provide to a potential seller, the more solid you’ll make your case for pricing your business at what you decide it to be.
How to properly value your business: Example
While there are many different ways to calculate the value of a business, for the sake of the example, we’re going to use the most common method, the SDE method used often for businesses of <$500,000 in value, for our example.
Adrianna owns a local family restaurant originally started by her parents when she was a child called Luiz’s Hot Spot. She’s interested in getting a valuation for the business so she can put the restaurant up for sale.
First, Adrianna starts by gathering the basic financial numbers we touched on above for the business:
Annual SDE: $95,000
Annual revenue: $475,000
Assets:
Real estate: $175,000
Equipment and furnishings: $35,000
Inventory: $100,000
Liabilities: $50,000
Next, Adrianna will use these numbers to calculate the average value for her business.
Calculating SDE
Using bizbuysell.com’s latest statistics, the restaurant industry as a whole has an average multiplier of 1.98.
To roughly calculate the value of her business, then, Adrianna takes her $95,000 calculated SDE, found with this equation:
Net earnings (before taxes) + Personal earnings + Non-essential expenses for the year (one-time, non-repeating expenses– doesn’t include COGS) – Liabilities = Your SDE
Then runs her SDE through this equation: Business’s SDE x Multiplier, using the multiplier of 1.98 to get her estimated business value:
Keep in mind that this calculation, in particular liabilities and intangible assets, includes things we didn’t cover here such as future prospects, local economy projections, and other elements.
What other factors affect the value of Adrianna’s business?
In addition to the abovementioned factors, there are other factors that can affect the true value of Adrianna’s restaurant that aren’t included in this rough SDE estimate.
There are a whole collection of additional elements that must be factored in to get an accurate value for the business, including:
How eligible is she for financing?
How loyal are her customers?
When will key employees retire?
Supplier relationships may change
Several factors influence the final number, including the fact that Luiz’s is a family-owned restaurant and a change in ownership will be specifically impactful to such a long-held local establishment. In addition, the trend away from individually owned restaurants, local business growth, and community response.
Keep in mind that the above example is only a rough estimation and shouldn’t be used in exactness to run your own valuation.
Rather, use it to get an idea of what a real business valuation might look like to help you prepare for your valuation.
4 Tips to make the most of your business valuation
Preparing for and executing a business valuation is a big event.
You not only want to make sure that you’re properly prepared, but that you do everything you can to make the most of the valuation throughout the process– and give yourself the greatest odds of success at acquiring funds or an eventual purchase.
Here are some additional tips to help you make the most of your business evaluation.
1. Be realistic (and take emotion out of the equation)
One of the most common mistakes of business owners during the valuation process is to overprice their own business due to bias.
As the owner, you know how much effort you’ve invested in growing your business. This enormous effort can skew your perception of the value of your business, making you overvalue your business.
This is all the more reason why one of the accepted evaluation methods is so important, because it takes that emotional aspect out of the equation.
2. Consider giving your marketing and public appearance a facelift
One of the simplest things you can do to improve your chance of selling the business, and at a desirable price, is to give your marketing and overall public appearance a facelift before putting it up for sale.
The way the public views your business inevitably plays a big part in the process of acquiring a buyer as they will see your business first the way everyone else does.
Taking a bit of time to update your marketing campaigns, branding, advertising, even simple things that might be a bit out of date such as your business cards, signage outside your business, and your facility itself will go a long way toward securing a buyer.
3. Get key employees on board
It’s common for key employees to stay in place after selling. After all, it’s easier for the buyer to keep an already well-oiled team in place rather than hire and train their own.
For that reason, it’s important to make sure you can secure those key employees now and get them on board with the eventual sale and transition.
When you decide to reveal this information is up to you, perhaps you decide not to reveal anything until a prospective buyer is in place, but it’s something you’ll want to do sooner than later to reduce surprises. That way, you can communicate who from the team the buyer can count on staying when the transition occurs.
Secure not only letters of intent from those key employees but also any vital vendors as well. The more you can guarantee your potential buyer that these key elements will remain in place, the more you’ll reassure them of the return on purchasing your business.
4. Consider hiring a professional appraiser
At this point, it might be obvious that appraising your business yourself is risky at the very least.
Between the natural bias that business owners experience and tendency to overvalue when it’s their own business and the complexity of business evaluation methods, appraising the value of your business may be in better hands with a professional.
A professional appraiser can be costly, up to several thousand dollars for a full appraisal, but they’ll run a full audit on your financials to make sure that your valuation is accurate.
In addition to this, having a record of a professional valuation will give credibility to your valuation that is indisputable during negotiations.
A personal valuation is definitely faster and saves you money, but not only may that valuation be incorrect, a buyer is more likely to negotiate the price down without evidence of a professional appraisal.
It’s your business– get the most from it
Valuing your business is a big step in any entrepreneur’s career, whether it’s your first or fifth and your business is worth $200,000 or $2 million (or more).
You not only want to make sure you’re properly valuing your business but that you make that valuation and sales process as smooth as possible and put yourself in a position to maximize your return from that sale or to acquire the maximum amount of funding for the business.
Use the above tips to prepare for your valuation, consider which method might be best for you, apply the additional tips for making the most of the process, and consider hiring a professional appraiser.
It’s your business. You worked hard to grow it into what it is today, so don’t skimp on the details. Get the most you possibly can from your time and hard work.
Mezzanine debt, also called mezzanine financing, is a type of financing that got its name due to the fact that it’s a debt-equity hybrid.
Mezzanine financing gives the lender the ability to convert to an equity interest in the company in the case of a default, which makes it a frequent option during acquisitions and buyouts.
While as a type of debt it has the highest risk, high mezzanine loan interest rates also offer the highest potential returns for lenders, though with flexible repayment terms for borrowers.
Is a mezzanine loan debt or equity?
Mezzanine loans are a hybrid of both debt and equity, which can make them a bit a difficult at first to understand.
The best way to understand them is that they’re a form of debt financing that has equity options built in, which allows it to take on the form of an equity investment if those options are exercised.
Mezzanine debt isn’t commonly used, as roughly only about 10% of debt is mezzanine debt, and therefore it’s often considered lower priority than senior debts. However, its unique qualities make it a useful option in the right situation.
How does Mezzanine debt work?
Mezzanine debt creates a new level of flexibility for borrowers and lenders that otherwise wouldn’t be possible.
Mezzanine lending is often sought-after as an aid to companies with specific acquisition goals. Mezzanine lenders also tend to be long-time investors in the company, making them a trusted partner to make those projects a reality.
Mezzanine loans often have a few unique qualities, including:
As opposed to traditional bank loans, mezzanine loans typically have a higher return than senior debt and are often unsecured
Mezzanine debt is subordinate to senior debt but higher priority than pure equity
There is no principle amortization
A portion of the return on a mezzanine loan is fixed, differing from pure equity
Explaining mezzanine financing can be a bit confusing even with a thorough explanation, so let’s look at an example.
Mezzanine financing: Example
Bill is looking to purchase a company worth $10 million, so he goes to a lender he’s hoping will finance the purchase.
Bill isn’t approved for the full amount, but he gets $5 million toward the purchase. To bridge the gap and get the remainder of the financing he needs to make the purchase, he looks to get mezzanine financing.
He acquires mezzanine financing for $4 million, making his direct investment just $1. That breaks down to:
$5 million basic loan
$4 million mezzanine loan
$1 personal investment
On the repayment side, the mezzanine lender then charges a 16% interest rate as opposed to just 6% with the bank loan. However, as opposed to paying interest charges monthly or annually, Bill has the option to add those charges to the cost of his loan, giving him added flexibility.
Pros and Cons of mezzanine debt financing
With a more thorough explanation of what mezzanine debt is, let’s talk about why you might want to consider using mezzanine debt as well as the drawbacks of doing so.
Mezzanine financing has the unique ability to offer lenders a way of obtaining equity in a business, something no other type of debt financing can do. It can have a considerable impact on a lender’s rate-of-return in some cases.
However, it’s not without its cons for both lenders and borrowers. Here’s a breakdown of both the pros and cons of mezzanine debt for lenders as well as borrowers:
Pros and Cons for borrowers
The greatest pros exist in what mezzanine financing can do for borrowers. However, mezzanine loans offer their own cons as well.
Pro: Leverage
A mezzanine loan offers borrowers financing they otherwise wouldn’t have been able to acquire, giving them more purchasing power and the ability to earn a higher return on equity optimal cases.
Pro: Looks better on your balance sheet
Because mezzanine financing often appears as equity on a company’s balance sheet, it makes your debt level appear lower than it is, making it easier for you to qualify for financing.
Pro: Tax-deductible interest
Interest payments on a mezzanine loan are typically tax-deductible, which can account for a large amount of savings over the course of a year.
Pro: Flexible repayment options
Repayment options with mezzanine debt are often highly flexible, with the ability to add interest charges to your loan’s balance or even pay those charges with cash.
Con: Using a mezzanine loan for purchasing leverage is risky
While mezzanine loans have unique benefits for borrowers, they also come with their own set of cons. The primary con of mezzanine loans doesn’t inherently exist in the loan itself but in the way they’re typically used.
Using a mezzanine loan for purchasing leverage comes with a high level of risk. There’s no guarantee the company is going to be a success, or even break even on your investment, so that loan may become a significant debt.
Con: Equity interest
If you as the borrower default on a mezzanine loan, you could be required to provide equity interests to lenders.
Pros and Cons for lenders
The pros and cons of mezzanine loans for lenders are more direct and typical as they relate to lending, but they’re significant nonetheless.
Pro: Equity benefits
There are just a few pros of mezzanine lending, but they’re significant.
First, lenders can potentially gain equity, giving them the ability to take advantage of the growth of a business and the resulting equity.
Pro: Interest income
Another pro is that mezzanine loans typically have very high interest rates, which gives mezzanine financing a high potential return.
Con: Subordinate debt
Because mezzanine debt is considered subordinate to pure debt, a mezzanine debt from a lender may not be secured by any hard collateral.
If a business defaults, by the time all senior debt is paid, there may be no more collateral or cash-equivalent to pay repay the loan.
A unique type of financing
Mezzanine financing is entirely unique among the wide-ranging collection of business financing solutions.
It serves an important role that other financing vehicles can’t fill, making it a useful tool for both lenders and borrowers.
Are you a lender considering using Decision Logic?
A potential borrower whose prospective lender is requesting a bank verification through Decision Logic’s automated system and you’re wary of what it is, how it works, and whether it’s secure?
We know bank verifications sound odd at first sight– but this technology is the only way to verify bank statements instantly and securely.
In short, the Decision logic is the most secure bank verification technology created to date.
Read on to find out more about Decision Logic, why it originated, who developed it, and how it works.
After reading, we hope you have a clearer understanding of the importance of the Decision Logic software in creating a safer lending environment within the U.S.’ post-subprime crisis economy.
Why do lenders use Decision Logic?
Decision Logic was developed by CEO Carl Fredericks– former Vice President of an IBM partner and account manager for several governments, industrial, and financial institutions– and CTO and President David Evans– who has over 25 years as a Chief Technology Officer and experience as a Scientific Adviser to the UK Government among other roles.
The Decision Logic software was developed to be an advanced bank verification system that would enable lenders to instantly verify financial information in the battle against fraudulent bank statements which has been a growing concern and becoming more prevalent in the business lending space.
It was designed in the wake of the 2008 financial crisis caused in part by a loosening in upholding qualification standards for the approval of home mortgages where many applicants were submitting altered statements to get approvals for mortgages they were not qualified for.
Without adequate technology to verify if the banking information placed down during the qualification process was valid or not, many received mortgages beyond their financial capability.
As a result, families were left paying for a mortgage they couldn’t afford and ultimately lost their homes in the housing bubble that resulted from it. As the evolution of the financial technology markets spread to the business side of things. Decision logic has become the standard for bank verifications.
For lenders, Decision Logic gives them a way of quickly and easily verifying qualifying bank information that helps them make a smart decision about who they lend to, a practice that helps not only the lender but the borrower as it keeps them from taking on a loan they can’t afford.
And so, Decision Logic doesn’t just help prevent fraud but improve industry standards throughout the fintech industry.
Is Decision Logic a scam?
It’s natural– and healthy– to be wary of any service that asks for your banking information. Especially in the days of mass data breaches and other technology-related scams.
After all, in the information age, information itself is valuable and can be misused.
However, it’s an occasional misconception by some aspiring borrowers that Decision Logic itself is a scam designed to steal your banking information.
In fact, that couldn’t be further from the truth.
Decision Logic today works with over 21,000 financial institutions and is a trusted entity that helps make the lending process easier for both borrowers and lenders.
According to Decision Logic’s documentation:
“We have partnered with the leading credit and financial data providers around the world to offer a unique Data Provider Aggregation Environment. DecisionLogic has harnessed the latest technologies of these data providers and brought to the market a solution that is innovative, easy to use, efficient, and secure.”
For many lenders, Decision Logic is a trusted partner that helps them, and the borrower, proceed through the approval process faster and with less hassle.
How Decision Logic works
So, how does the Decision Logic service work?
If you’re in the process of applying for a business line of credit or loan, you might be wondering what exactly the service will do in accessing and retrieving your information.
If you’re a lender, you might be wondering exactly how you can use Decision Logic to streamline the information retrieval process.
Here’s a breakdown of each step:
Step 1: Send a link
Before closing a business loan or advance application, the lender sends a custom Decision Logic link via either text SMS message or email which the applicant/business owner accesses.
Step 2: Customer opts-in
Next, the applicant inputs their banking information. Keep in mind that this link can only be used once, so as soon as the link is used it can’t be accessed again.
Step 3: Opt-in successful
Once the information has been inputted, the opt-in is successful and the verification process is complete.
The customer will then receive a success notification and is redirected to the lender’s website automatically.
Keep in mind, as a further security measure, if the applicant does not input their information within a certain period of time, that link is voided and will no longer work.
In addition to that, only underwriters will have access to the data– and strictly date-to-date business statements– not Decision Logic or the lender.
Step 4: View bank statement
Now, the lender has access to the applicant’s bank statements which they can review for authentication purposes. This also allows the lender to connect via API and helps expedite the funding process.
The statement the lender receives is a read-only version of the applicant’s business bank statements, solely for the purpose of helping determine approval.
And that’s all there is to it! The entire process is started and completed in as little as a matter of minutes.
Does Decision Logic store access to your banking information?
This is a common question from potential borrowers as they move through the application process.
This simple answer is:
Decision logic does not keep your login credentials on file.
Its technology allows a lender to retrieve the last 12 months of banking activity and as well as for them to cross-reference the data received when applying for the loan to avoid deals being funded with doctored statements.
It also allows the financial institution to view your current months’ activity to prevent prospective borrows from double funding– i.e. taking two loans from different lenders at the same time and effectively over-leveraging themselves and becoming at risk for default as a result.
Decision Logic review: A quick look
If you’re a lender, should you use Decision Logic? What are the benefits? And are there any other services like Decision Logic?
As there’s nothing on the market like Decision Logic, given that they’re the originators of the technology which is still in its infancy,
It’s hard to run a comprehensive review, as with Decision Logic being the originators of the technology, there aren’t many yet offering a similar service.
“Built for brokers and lenders” as it states on Decision Logic’s service page, their flagship product offers 90 days of transaction history, the defining feature of this version of the Decision Logic service.
However, for those lenders who want to be able to pull more data…
DecisionLogic 365 is Decision Logic’s premium version, offering all the same features of DecisionLogic 90 including training, integration, and 24/7 tech support, but with one big upgrade: you get 365 days of transaction history.
This version of Decision Logic has a bigger price tag, though with 4x the data, it’s to be expected.
3. Finicity’s Financial Data Services
Finicity is another option to consider if you need a solution that will provide you with as much financial data as possible while streamlining the qualification process for your clients.
As opposed to a single product offering, Finicity is a data aggregator that has the ability to do many things in terms of acquiring financial data securely.
However, most notably, with Finicity’s Account History Aggregation, you get 180 days of transaction history, with the ability to get up to 24 months of transaction history as a one time pull, twice as much as DecisionLogic 365.
Similar to Decision Logic’s 90 and 365 services, this includes insights such as:
Income deposits
Expense categorization
Transaction descriptions
Account and loan balances
In addition to this, just as Decision Logic’s services, Finicity’s financial data services also include the ability to verify identity and account information, making it a comparable match to Decision Logic’s pioneering service.
Give the best to your clients and customers
As a lender, you want to make the application and qualification process as easy and painless for your prospective customers as possible.
After all, who likes filling out a ton of paperwork, running to the nearby printer, scanning, then emailing copies?
Decision Logic is a cutting-edge, secure technology that takes the hassle of locating and sending off your business bank statements away and replaces it with a simple and easy solution that takes just minutes to complete.
If you want to streamline your application process and erase the hassle of gathering and sending bank statements for your customers, an automated financial statement service such as Decision Logic can help do exactly that.
Want to know how write a business plan? Not sure what needs to go in each section or how long it should be? Read on to find out.
How to write a business plan
Every small business has a beginning. It’s an exciting time with a lot to look forward to.
But the launch of every small business is not created equal.
If you want to make sure your business gets started off on the right foot, you need to make sure that launch includes a critical element: a well-crafted business plan.
Creating a business plan is an integral part of starting a business. A good business plan outlines not just who you are as a company and what you’re selling, but your organizational structure, marketing strategy, and financial plan among other things.
To put it simply, it’s an A-to-Z guide to running your business the way you want (and need, for it to be successful).
That’s why in this guide, we’ll show you everything you need to know about writing a business plan, including:
What is a business plan?
The 8 steps to writing your business plan
How long should a business plan be?
Business plan examples
With your business plan in hand, you’ll have a permanent resource you can use to guide the development of your business in every way.
So, let’s start with the obvious question:
What is a business plan?
If this is your first time putting together a business plan, or if you’re just looking for a bit more clarity on what a business plan is and is used for, this is the best place to start.
A business plan is a guide of sorts, both for you and those interested in your business (i.e. potential investors).
It tells the story of who you are as a company, what your goals are, and how you’re going to get there. And it does all that while being as thorough as possible.
Goals should have dates, a detailed marketing plan to back that up; a product strategy that makes it clear why you’re selling what you’re selling and how you’re going to make it better; and, finally, a financial plan that shows how you’re going to manage all that money your business is going to be making.
If there is any part of running a business that you’re unfamiliar with, this will be the point that you’ll want to start doing some research, as you’ll need a basic grasp of everything from marketing, product development, financials, and your organizational structure to create a good business plan.
What needs to be in a business plan? (The 8 Steps to writing a business plan)
Now that we’ve got that out of the way, what are you supposed to put into your business plan?
There are 8 things every good business plan should have. They are:
Executive summary
Company overview
Market analysis
Organizational structure
Product strategy
Marketing strategy
Financial plan
Appendix
With a thorough description of each of these areas, you’ll have a detailed business plan in place that should not only guide you in your business’ development but make you look good with investors.
How to write a business plan: A step-by-step guide (intro to steps)
Creating a business plan can seem a bit overwhelming when you consider everything that goes into one.
But if you take it one part at a time, you’ll find the plan coming together before you know it.
Now, let’s jump into those 8 steps we just talked about and do just that: break each part down into easy steps to follow.
And remember: If you’re unsure of anything right now, just write down what you do know about each section. Later, you can come back and flesh that section out.
With that said, here are the 8 parts of every business plan:
1. Write an executive summary
First, you’ll want to write your executive summary.
An executive summary is a summary of where your business is now and where you want it to go. If you’re trying to interest investors, this is also a good place to add a little bit about what makes you stand out as a company and why your company is going to be a success.
How long should it page? About a page is fine, though it could be longer.
If that feels impossible, consider that your executive summary is exactly that: a summary. It’s not a thorough breakdown.
Think of your executive summary as the prelude to the rest of your business plan. Later, you’ll go more into your product, marketing, positioning, and financials. For now, just give them an effective and concise summary of the most important parts.
What are those? The SBA recommends the executive summary of a business plan includes these 6 pieces of information:
Mission statement: Describe your business and its goals in a paragraph.
General company information: This includes the date of your company’s formation, the owners/founders, their roles, and how many employees you have.
Highlight successes: Place any notable data (in visual form such as a graph) regarding the growth of your business. Remember, your business plan should impress potential investors (unless you’re solely doing it for your own use, in which case this can be skipped), so you’ll want to offer something that signals you’re bound for success if you have it or other positive notes about why you’ll be successful if you don’t have that.
Products and/or services: Describe your product or service and your market.
Financials: This section is important if you’re looking for investors as you’ll list your funding goals as well as anyone you’ve already worked with in the past to secure funding.
Plans and goals: What are your goals for the future. The last part of your executive summary should mention what those goals or plans are.
This first section might seem like a doozy, but keep in mind that it’s arguably the most important section of your business plan because it summarizes everything that will come after it.
The great part about starting with this too is that it will help give you a better idea of what you’re going to put in each of the proceeding sections, making the rest of the business plan go smoothly.
2. Complete your company overview
Next is your company overview. Consider this the basic information that those interested in your business will need to know about how you function.
That includes:
What does your business do? You spent a lot of time selling your business in the previous section, now you need to make it crystal clear what your business does.
Your market: Who do you sell to? What is the need you’re serving? How are you serving that need?
Your business type (legal structure): Explain what business structure you are and why you’ve decided to choose that structure. Also, list how ownership is divided and managed.
Make sure your answers to these points are to the point. This is an overview, like the last section, so you don’t have to spill all the details (not until later).
However, you also want to make sure it paints an attractive view of your company if you’re preparing this to acquire funding.
3. Do a market analysis
Next on the list is a market analysis. This is an analysis of your industry, your competitors, and any other important information relative to your market.
Now is when we move from concise overviews to more detailed breakdowns of the major areas of a business, so you’re going to want to make sure to get into the nitty-gritty here and show that you understand the market you’re stepping into.
And if you’re just doing this for your own use, it’s a great exercise it making sure you know enough about your industry and market as a whole.
Make sure to include this information in your market analysis:
Industry summary: List the basic information about your industry: its size, growth, current health, and any data connected to it related to trends or anything else.
Target market demographics: Now focus in on your target market: who specifically are you selling to? Beyond that, you’ll want to talk about who your customers are, where they’re located, and any other information relative to demographics.
Target market size: How big is your target? How fast is it growing? These are also questions you’ll want to answer in this section.
Target market behavior: Where does your target market make purchases? When do they buy? List anything related to your market’s behavior.
Market share: How much market share do you predict being able to capture?
Pricing tolerance: You’ll also want to know everything you can about what you can and should be pricing your product at.
Market entry conditions: What barriers are there to entering your target market? You need to be aware of these before jumping in, whether it’s licensing, regulations, expertise in personnel, etc.
Competitors: Who are your competitors? What makes them stand out? How will you be better than them and/or stand apart? What are their strengths and weaknesses?
As you might be able to tell already, this is possibly the most research-intensive part of the entire business plan.
However, having said that, the research you’ll be doing to complete this section is invaluable, even necessary, to your business’ success.
Leave out even one of the above sections and you’ll be flying in dark without all the information you’ll need to make smart decisions as your business grows and is presented with challenges.
4. Define your organizational structure
Moving on from your market analysis, the next deep-dive is into your organizational structure.
This section is all about defining what kind of system your business uses to manage itself.
Who does what? Who reports to who? How do your teams break up? These are just some of the questions you’ll want to answer.
Here’s everything you’ll need to define:
Organizational structure: Create a visual document/chart of some kind that shows how your business is structured, including who has what role and who is in charge of managing what part of the business.
Ownership: If you have partners, how does ownership break down? Who is responsible for what?
Backgrounds: Detail the backgrounds of all notable team members including partners, managers, and your board of directors. This section can be quite long, and that’s okay. Make sure not to leave anyone out.
Future hires: How does your team need to expand in the future? What key roles do you need to fill on the way to accomplishing your goals?
5. Define your product strategy
Now let’s move on to your product strategy. This mostly has to do with product development and the research involved in positioning your product within your market.
Here’s everything to include in this section:
A general overview of the product and/or service: What product or service(s) do you offer? What need does it fill in your market for your target customer?
Product development stage: Is your product complete and ready to ship? Have you sold units/acquired customers already? Is it just in the ideation stage? If it’s the latter, describe what you’ll be doing to complete the product or service offering to have it ready to ship.
Patents / Intellectual property: If your product or service depends upon a patent or some kind of intellectual property, explain what where they stand.
Sourcing and fulfillment: Who is making the product? Where are you shipping it from? Make sure this is clear to you now there are no problems down the line when it’s time to start selling.
Remember that as you craft this section, like all the other sections, you want to show that you know what you’re talking to if you’re preparing your business plan for potential investors.
Make your product, service, or idea look good and explain why you believe it will be successful.
6. Define your marketing strategy
Next, with your market and product sections complete, you’re well-prepared to move on to defining your marketing strategy.
In this section, include any and all relevant information related to how you’re going to market your product or service.
This includes:
Advertising and promotion: How will you market your product or service? This section is likely to be on the longer end as you should be detailing not just how but why.
Positioning: How will you be positioning your product or service? What is your reasoning supporting this decision?
Sales strategy: How will your sales team function? Will you have one at all? How will they work with marketing? At what stage will they begin interacting with the customer and what kind of overall sales process will be implemented?
Validation markers: You should have several hypothesis or tests in place to validate your offering, it’s positioning, and marketing and sales efforts. Without these things in place, there’s no way to know if your product or service is a success or failure and no reference point to come back to to make improvements.
This is one of the main sections you may yet have quite a few question marks on. As we mentioned earlier, don’t worry. Just do your best to fill out as much of this section as possible, do the necessary research, then come back and finish it later if necessary.
7. Write your financial plan
The final step in terms of the written information you need to provide for your business plan, it’s time to dive into the financial side of things.
How much does your product cost to source? How much are you selling it for? How many units can you move in a month? What is your overhead and other costs? These are just some of the questions you’ll want to answer.
If your business has been around for a bit, the best place to start is your current financial reports. Things like your profit and loss report, income and revenue statements, accounts receivable and payable, and any other financial reports.
And if you don’t have anything, create something that shows projections for important financial figures such as sales and revenue. Just make sure you’re not making numbers up out of thin air. Support these projections with market and competitor research.
These are some of the documents you can include relevant to projecting future financials:
Cash flow forecast
Projected income
Capital expenditure budget
If including projections, make sure to include them for the next 12-month period as well as either 3 or 5 years at least for a more long-term view.
With those projections out of the way, you’ll also want to include a section on funding. If you’re looking to acquire investors or will be investing a portion of your own funds, here is where you’ll outline exactly what you’ll need.
Make sure to include:
How much funding you’ll need to get started
Projected future funding needs
And what those funds will be used for
After reading this section of your business plan, an investor should come away with a clear understanding of why you need funding and what acquiring that funding will allow you to do for the business.
8. Include an appendix
The final step in good a business plan is less new information as it is the place where you stuff all those things that are important but might not have fit anywhere else: an appendix.
In this appendix, you’ll want to stash any and all important data or other supporting information you didn’t include throughout your plan already.
That includes additional:
Data: Charts, graphs, you name it.
Details: Anything relevant to your business that may not have fit anywhere else.
Legal documents
Additional images: If you’re a restaurant, additional menu item images, you get the idea.
Resumes: If your plan may have been lacking in supporting data or you simply think it will help, you can include your resume and the resume of any of your founders or key managers as a supporting document.
Anything that you feel is important or valuable but just didn’t quite fit in the plan should go here. And since it’s a gathering of somewhat random items, make sure to include a table of contents to make this section easier to navigate.
How long should a business plan be?
At this point, one of the questions you might be left with is: exactly how long does my business plan need to be?
Fortunately, that’s an easy question to answer:
As long as it needs to be to succinctly outline or define each major aspect of your business.
The SBA suggests a business plan be no more than 50 pages. However, that all depends whether you’ll have investors reviewing that plan or not. If it’s just for your own personal use, even a few pages can suffice.
Your marketing plan might be a few detailed paragraphs. Then again, it might be a bit more involved and require several pages.
Ultimately how long each section will be will depend on what you need to say and your ability to break down that information as succinctly as possible (without leaving out any vital information).
Business plan examples: What does a business plan look like?
Now that you know how to write a business plan, let’s go over some business plan samples.
We know that was a lot of steps, and it might not be entirely clear what your business plan should look like, so we’ve gathered some great samples as additional resources that you can review to get a better idea of what your business can look like.
Keep in mind that if you use any kind of software that allows you to put together a business plan, such as:
then you won’t need to worry about looking over samples as they will guide you through the process. Still, it can be nice to see an example to make sure you’re creating your business plan right.
With that said, here are a few business plan examples to help you get a better idea of how your completed plan should look:
For the most part, business plans are the same across industries, with only small differences.
Keep in mind that once your business plan is complete, take some time to show it to everyone from your business partners to key personnel to get their feedback.
The more eyes who are directly connected to your company’s goings-on who look at it, the better it will be and the more buy-in you’ll be able to get right from the get-go in terms of your company mission and direction of each major moving part.
Create your business plan
Now you know how to write a business plan that covers all the major areas pertinent to any new organization, there’s only one thing left to do: create your business plan!
Take the 8 steps we’ve broken down here and start writing a business plan of your own one step at a time, making sure that each section is as comprehensive as possible.
After all, this is going to serve as a guidebook of sorts that will help direct your entire business’ dealings for years to come, so it’s worth taking some time to make it right.
Even if you need to take time to really think hard about your goals, and a good number of hours to research your competitors, it’s worth it to make sure you put together a thorough business plan.
So, don’t let anything else stop you. You’ve got everything you need– so get writing!
Bizfi: The Rise (and Fall) of a Fintech Trailblazer
The year was 2005.
A brand-new company– Merchant Cash and Capital (MCC), later known as Bizfi– was shaking up both the financial and technology industries in the United States with a revolutionary new approach to conducting business (especially online).
The mission for Merchant Cash and Capital was simple and straightforward in these early days. MCC would act as a purchaser of future credit card sales, a brand-new concept in 2005 and a move that laid down the foundation for the future financial technology movement of today.
Growing rapidly in the first five years of its existence, Merchant Cash and Capital founder Stephen Sheinbaum decided to establish a secondary operation– Next Level Funding– that acted as a broker for small business owners and entrepreneurs that were having a tough time getting financing in the middle of the Great Recession.
Next Level Funding was going to help drive business to Bizfi, still then Merchant Cash and Capital, and accelerate the growth of their unsecured business loans through direct calling or telemarketing and other online sales channels.
The fintech movement takes off
At this stage in the early history of the fintech movement, online businesses were beginning to take off, opening up a world of opportunity for entrepreneurial endeavors that simply hadn’t existed before.
Shopping online had finally “gone mainstream” and people were familiar with– and maybe more importantly comfortable with– sending their personal, private, and payment information to strangers over the internet.
On the flip side of things, traditional lenders and business owners were anything but familiar with these online enterprises.
They remembered the Dot Com Bubble of the 1990s– and the way it blew up in many business owner’s faces– and looked more than a little bit skeptically at what people were calling the true power of the Internet and how it might revolutionize business forever.
Combine that with the fact that the Great Recession was in full swing (peaking in 2008, three years after Merchant Cash and Capital was founded) and traditional businesses were folding left and right and creditors were finding more people defaulting on their loans than ever before, and it’s easy to see why a company like Merchant Cash and Capital was able to swing in on a chandelier and start gobbling up market share.
Bizfi is formed
It took 10 years of rapid expansion to decide that it was time to bring both Merchant Cash and Capital and Next Level Funding under the same roof, operating them as a new single entity.
Under the leadership of founder Stephen Sheinbaum, the organization was restructured and reorganized, offices were consolidated, and the workforce was brought under a single roof. And, at the same time, there was rapid expansion.
Ten years from MCC’s founding, 2015 saw Merchant Cash and Capital and Next Level Funding merge under the same roof of the Bizfi moniker.
And, as it would have it, success for the company formally known as Merchant Cash and Capital came very, very easy.
By the time 2016 rolled around even the most old-school and traditional of lenders recognized just how powerful, important, and influential the fintech industry was going to be.
Bizfi had a huge head start on the rest of the pack, as according to industry reports they were one of the largest originators of merchant cash advance packages in existence at the time.
And then, just like that… the company disappeared almost completely.
What drove Bizfi out of business?
Within less than a year of the time that it seemed inevitable they would take their place as a top player in a quickly growing industry, Bizfi was out of business.
Journalists that had been following the meteoric rise were stunned. Industry experts couldn’t figure out what had happened and even those that had been working with Bizfi were shocked to learn that they were going to be shuttering their doors forever just when things looked like they were poised to take off like a rocket.
A postmortem is still being conducted on the company formerly known as Bizfi, partly due to the fact that it didn’t cease operations until late 2017, and much of what happened during the period between 2016 and 2017 that could have changed the company’s fate so drastically remains unclear.
One thing, however, is certain: Between 2016 and early 2017, Bizfi had grown too large far too quickly and that led to several factors that would eventually spiral out of control.
Several factors likely contributed to driving Bizfi out of business, but there were primary red flags among those factors.
Here are some of the primary factors that led to Bizfi going out of business:
They hired too many too quickly that did not have enough underwriting experience
Prioritizing closing deals, Bizfi hired quickly but not effectively, choosing to hire many who didn’t have enough underwriting experience. This led to a cascade of negative effects.
First, underwriting managers were incentivized to fund as many deals as possible.
That might sound obvious, but they were encouraged to close deals to cover up their default percentage even if the deal didn’t make sense business-wise.
As a result, they funded too many large deals with too high a risk.
They funded deals for brokerages, also known as ISO shops, that shouldn’t have been funded, especially considering the size of the deal.
They lent heavily to young businesses
Bizfi was known at the time for offering entrepreneurs that only had six months of business experience under their belt and monthly revenues of at least $15,000 highly favorable financial packages that likely didn’t befit their financial or business standing.
They found many new entrepreneurs who wanted to take advantage of their services, but those same deals quickly ran their businesses into the ground.
After all, nearly 75% of all new businesses will eventually fail. Lending to such young businesses large cash sums was unheard of due to the risk, and unfortunately, Bizfi became a reason why that’s the case.
They lent heavily in high-risk industries
Similarly, Bizfi also became a popular financing option with some of the riskier industries in the entrepreneurial world:
Brick-and-mortar retail shops
Restaurants and bars
Health and fitness centers
And business service operations
These together made up the bulk of the Bizfi clientele, though each of those industries is considered high risk, high turnover, and has a high likelihood of failure in the first five years (SBA).
Eventually, Bizfi was sending more money out the door than they were bringing in, even though the bulk of their loans were short-term with sky-high interest rates.
Compared to traditional lenders with 10% APR packages, Bizfi routinely offered loans that carried an APR of 150% or more– interest rates that most entrepreneurs found next to impossible to meet with any real consistency or regularity.
Eventually, Bizfi began searching for outside investment, especially as the business markets started to cool across the globe. Institutional interest in the fintech industry continued to remain strong, but many of these larger operations had little to no interest investing in a company as overextended as Bizfi had become.
And by July of 2017, the Bizfi party was officially declared over.
Bizfi closes its doors
In July of 2017, according to sources close to the company, all remaining employees were given a 90-day notice that the company was to cease operations and terminate their employment.
It was the culmination of a series of layoffs, this the largest at more than 200 layoffs– many of which had been original employees at Merchant Cash and Capital or Next Level Funding.
In a CNBC interview in 2015, Bizfi founder Stephen Sheinbaum said that they had hopes of securing an equity investment that would allow them to go public by the following year in 2017. However, that investment never became a reality.
July 2017: Bizfi sells its marketplace and other assets to World Business Lenders
Following the wave of layoffs, the assets held by Bizfi were divvied up and sold off, with many of them purchased at deeply discounted prices by World Business Lenders or WBL (formerly one of the top competitors for Bizfi in the fintech space).
According to Bizfi founder Stephen Sheinbaum, who joined WBL as a managing director in July of 2017, WBL purchased the Bizfi brand, marketplace and other pieces of the company.
August 2017: Bizfi sells its portfolio to Credibly
One month later, in a separate deal, Bizfi sold the servicing rights to its $250 million dollar portfolio and 5,200 merchants to another fellow competitor, Credibly.
“Acquiring the servicing rights of BizFi’s portfolio is a testament to our data-driven approach and laser focus on the working capital needs of small businesses,” Credibly founder and Co-CEO Ryan Rosett said in a press release. “We welcome our new customers and are committed to ensuring that their growth capital needs are met.”
According to a Bloomberg report, the deal allows Credibly to offer additional capital to that existing 5,200 customer base.
If you’re looking for accounting software that makes doing your own business accounting easier or looking to replace your accountant, both QuickBooks and Quicken are tried-and-true options that can’t be overlooked.
But which is better? And how do you know which is specifically better suited for your needs?
That’s the purpose of this guide: to give you a detailed breakdown of both QuickBooks and Quicken so you know what their strong points are and which you should choose.
Table of contents:
QuickBooks vs. Quicken: A “Quick” Summary
When Quicken is better
When QuickBooks is better
QuickBooks vs. Quicken: A “Quick” Summary
Before we dive into our detailed review, for those who want the summarized version (or a “quick” summary– pun intended), we’ve broken down the essential points below.
If you rather not wade through a list of benefits and features and just want to get the short of it, this is for you:
When to use QuickBooks
QuickBooks is by far the more robust accounting software. If your only reason for needing business accounting software is for, well, accounting, then QuickBooks is the better option by far.
QuickBooks is perfectly suited for small businesses while also having the necessary features to support you as you grow, no matter what direction your business goes.
While QuickBooks is the more expansive business tax software, Quicken has a niche that is sure to be attractive to some small business owners: it’s a great personal finance tool.
If you’re a sole proprietor, or just a solo business owner, an accounting + personal finance software might be a good fit for you.
Quicken is also well-suited for those who own rental property as it gives you the ability to track tenants and manage your lease terms and rental rates.
However, if these odd benefits aren’t of value to you, QuickBooks is hands-down the better software.
Here’s a breakdown of all key features available with QuickBooks/Quicken:
Quicken Home & Business
Quicken’s Home & Business version is ideal for small business owners who need basic business accounting software but who also want to take advantage of Quicken’s useful personal finance features.
On the business accounting side, Home & Business offers reports such as profit & loss and cash flow, helps you maximize tax savings, and will categorize your expenses.
In addition to these business accounting features, you’ll have an effective personal finance manager as well. You’ll be able to create personal budget goals, track your spending, and even manage any financing you have.
Quicken Home & Business has one version and costs $100 for one year, as opposed to QuickBooks’ monthly setup.
QuickBooks Small Business
QuickBooks Small Business, or QuickBooks Online, is the online version of QuickBooks accounting software. As opposed to Quicken’s Home & Business version, which offers a balance of basic personal and business features, QuickBooks offers a comprehensive suite of business features.
There are several versions of QB’s online software, each proceeding plan offering a few additional features you may or may not care for, from adding additional users onto your account to printing 1099’s.
Depending on which plan you go with, QuickBooks by intuit will cost from $20 to $150 per month, including a $25 Simple Start, $40 Essentials, $70 Plus, and a $150 Advanced plan.
Quicken vs. QuickBooks: When Quicken is better
So far, we’ve summarized the main takeaway of the comparison between QuickBooks and Quicken.
However, if you’re looking for a more specific breakdown of what key benefits and drawbacks each software has, we’ll cover that in these next two sections.
First, here’s where Quicken shines over QuickBooks:
Quicken is more affordable
One of the biggest differences between Quicken and QuickBooks is the fact that QB charges monthly, while Quicken’s software is an annual license.
What that means is you’ll only be paying $100 a year for Quicken’s Home & Business, but you’ll need to purchase it every year. However, with QuickBooks, you’ll likely be paying between $25-70 each month, which can quickly add up to far more than what you would pay with Quicken.
Quicken can track your finances (both business and personal)
If you need, or want, a single software that tracks both your business and personal finances, Quicken is a great option.
With its mix of key personal finance and business accounting features, if you’re a solo business owner that works from home (or some equivalent), Quicken might give you everything you need in a single software.
With Quicken, in addition to its basic accounting features, you can track investments, loans, and spending while managing your business accounting, though only if you do a few minor transactions here and there (otherwise it can get very messy).
Quicken vs. QuickBooks: When QuickBooks is better
While Quicken is more affordable and offers the ability to track personal finances and do your business accounting in one place, QuickBooks stands above it in most regards.
Here’s when QuickBooks is better:
QuickBooks has more robust accounting features
While Quicken has some definite positives, if you’re looking for a true business accounting software, it falls short in many ways.
QuickBooks offers business accounting features such as payroll, time management, inventory management, purchase orders, and automated invoice features.
In addition to these features, with QB you also have access to a slew of integrations for various accounting software that can make the software even more powerful.
QuickBooks has better accessibility and usability
Of the two, QuickBooks is generally the more polished. The interface is cleaner and simpler and it’s easier to find what you need.
Quicken, on the other hand, can seem a bit busy mostly because of its personal finance features, which just become an obstacle to wade through if you have no use for them.
In addition to this, QuickBooks lives in the cloud, whereas Quicken is a basic desktop software. That means whatever happens to your computer, your information is safe. It also means you can access your software with QuickBooks even if you’re offline, something you can’t do with Quicken.
Quicken or QuickBooks: What is better for your business?
Whether Quicken vs. Quickbooks is better mostly depends on how much use you can get out of their personal finance features.
If you have no use for personal accounting features, and instead just want the best business accounting software available, QuickBooks is the perfect option.
However, if you’re a solo business owner who manages all their own finances, something like Quicken can be incredibly useful in bringing everything together into one interface, making it easy to manage everything.
Just make sure to remember the importance of keeping your business and personal finances separate.
Finance has an integral part to play in a business. At a basic level, sufficient financing ensures that businesses have enough cash flow to maintain daily operations. This also assists in investment-related decisions, and facilitates smooth spending. A business’s ability to secure financing is essential for realizing tactical and strategic objectives.
Money greases the wheels of all businesses; it’s imperative that finances are carefully managed to ensure uninterrupted business activity, access to capital, and the ability to leverage opportunities as they arise. In an ideal world, businesses would generate sufficient revenue streams from sales of goods and services to cover costs. Businesses routinely face challenges in the marketplace, particularly with capital investments which require loans and other forms of financing.
The infancy stages of a business
Companies either succeed or they fail. What happens is largely dependent on a business’s ability to finance itself during the different stages of its life-cycle. There are typically 3 phases in a business life-cycle, notably the start-up phase, the growth phase, and the maturity phase. During the start-up phase of a business’s operations, financing comes from a variety of sources notably the owner/founder’s personal savings account, assistance from friends and family, small bank loans, and even credit cards.
If the business plan is ironclad, the business owner may be able to attract significant investment from angel investors, venture capitalists, and other sources of financing. For example, an entrepreneur may be willing to relinquish equity in the company for capital financing. This is a commonly used method by business owners who have a great business plan and investors who are eager to hitch their wagon to the business.
The growth phase of a business
During the growth phase of the business life-cycle, financing is equally important. Growth a.k.a. expansion necessitates significant investment in a business’s operations. Further, human resources are needed and this requires significant investment.
It is possible for businesses to tap into cash flow, but this precludes shareholders from taking dividends. External capital sources are essential during this phase of operations. Several options currently exist, including venture capital firms, but they can be detrimental to the owner’s equity and control over the company.
Fortunately, entrepreneurs who opt for this method of financing will receive a substantial advance upfront. Other options include bank loans. It is worth pointing out that interest can be deducted from all taxable income, meaning that debt-financed capital is inexpensive. If a business is listed on the stock exchange, the issuance of shares serves as an effective way to generate a stash of cash. A word of caution is advised: the business must be a proven performer.
During the growth phase, there is another method of generating financing, particularly for companies involved in selling high-end products including vehicles, machinery, equipment, luxury goods and the like. Unlike a convenience store cash business, luxury items or big-ticket items are typically paid off over time. Assuming an invoice value of $100,000 on day 0, a company may not want to ‘carry’ the customer’s debt obligation for several weeks or months.
An effective way to obtain financing during the growth phase and the mature phase of a business is invoice financing. This financing method is primarily geared towards B2B organizations where the terms are 30, 60, or 90 days in duration. Invoice financing is a product of the invoices that are due to be paid to a business.
It is highly effective at maintaining a stable cash flow. Invoice financing comprises multiple different products for financing accounts receivable. This typically takes the form of invoice factoring – a form of invoice financing. Assuming a company is owed $100,000, invoice factoring can ensure that 80% of that amount is paid upfront by the invoice factoring company ($80,000) and the balance is paid back over time (30, 60, or 90 days) less the factoring fee (for example 0.5% – 2%).
The reason why businesses use invoice financing is to boost cash flow immediately so that day-to-day operations can be taken care of and the business doesn’t run into a negative cash flow situation. Invoice financing isn’t that difficult to implement, provided the debtors are trustworthy and have an established and verified relationship with the SME.
The mature phase of a business
During the mature phase of a business’s life-cycle, it typically has a proven track record of performance. This means that it is likely a creditworthy business, and able to tap short-term capital loans and financing from a variety of sources. If the business has a healthy balance sheet and income statement, it is much easier to access capital from a variety of markets such as equities markets, capital markets, and bond markets.
Other forms of financing such as peer-to-peer financing and investment financing remain on the table. As a rule, you can expect the infancy stage of the business to be funded primarily by the owner, close friends and family. As the business grows, other financing options open up, including bank loans, business loans, non-bank lenders, angel investors, and invoice financing options too. Once a business has an established presence with credible clients, invoice financing is a particularly attractive option available to business owners.
Working as a contractor has a lot of things going for it. You get to work flexible hours, the income is typically better, and you’re basically your own boss.
As a contractor, you also happen to carry specific responsibilities, among them purchasing contractors insurance.
Some states and industries may not require contractors insurance, but if you care about your business, you should get insurance protection regardless of whether it’s a requirement or not.
And if you’re a general contractor, then it’s even more imperative to have contractors insurance coverage. As the prime contractor of a construction project, a general contractor stands to benefit immensely from having the right contractors insurance policies.
The responsibilities of a general contractor
The overall operations of a construction site fall under the supervision of a general contractor. The management of employees, acquiring construction business loans , dealing with contractors and suppliers, and reporting on a project’s progress to those that commissioned the project are also part of a general contractor’s responsibilities.
Being the one in charge of an entire construction project means a general contractor is responsible for lots of workers, subcontractors, equipment, tools, and materials. The job is so massive in scope that not getting the proper type of contractors insurance coverage for any of them would be the height of irresponsibility, at the very least.
So what benefits can a general contractor get from contractors insurance?
Protection from claims
Construction is one of the most dangerous professions in the world. Thousands of construction workers worldwide suffer injuries while on the job. Workers can also cause injuries or property damage to third parties within the construction site when, say, a tool slips from their hands. If you’re the general contractor of a project when the things mentioned above take place, you can expect claims and lawsuits to head in your direction.
However, if your company has workers’ compensation insurance, any employee injured while working for you won’t have to worry about the expenses for their medical treatment. And if they lose wages because of their inability to work, workers’ compensation will cover it. With workers’ compensation, there would be no need for you to pay what is due them out of pocket.
As for third parties that suffer injuries or sustain property damage in the middle of your construction project, any claim they make can be paid for by general liability insurance, if you have one. Even if claims turn into lawsuits, your general liability policy will cover your legal expenses as well as the compensation the court might award your employees if it rules in their favor.
Protection for tools, equipment, and materials
The tools, equipment, and materials in a construction site can prove to be tempting for thieves. In fact, theft is not uncommon in construction sites. You wouldn’t want to lose them to these people. You wouldn’t want them to suffer any kind of damage as well. You are, after all, responsible for all of them, being the general contractor.
However, if you have a builders risk insurance policy that provides protection for tools, equipment, and materials, you will have one less thing to worry about. Builders risk insurance also provides coverage for the structure itself. So if fire, wind, lightning, hail, explosion, vandalism, and vehicles or aircraft cause any damage to the structure, you can rest assured that most builders risk insurance policies will pay for it
Compliance with state requirements
As mentioned above, not all states require contractors insurance, but most of them do. As a general contractor, you would want your entire project to be compliant with regulations set forth by the state within which you’re operating. Having general liability insurance, workers’ compensation insurance, and other types of contractors insurance is resounding proof that you are, indeed, following state laws.
Reputation boost
Clients, in general, will always want protection for any project they’re paying for, and that’s why they usually hire contractors with the proper insurance coverage. In all likelihood, they’ll only choose from a pool of insured contractors, and ignore everyone else. Having the right contractors insurance policies assures you then that your company’s name will be in that shortlist for any major construction project.
Peace of mind
Few things can give a general contractor peace of mind better than proper contractors insurance coverage. Considering the risks involved in construction, you’ll be more at peace knowing that if anything untoward ever happens with your ongoing construction project, your contractors insurance provider will always have your back.
While no one purchases contractors insurance and actively wishes that they get to use it, having that kind of coverage prepares you for any complications that might take place. In an industry that can be particularly stressful for its players, having contractors insurance policies can make you feel confident that your business will go on, even when somebody gets hurt or property gets damaged, stolen or lost.
How does it work? When does it come into play? How do I read my business credit report (because, if you haven’t seen yours yet, it’s somewhat different from a personal credit report)?
Your business credit report works largely the same way your personal credit report does: it serves as a tool for obtaining financing, in this case for your business, and sometimes for obtaining supplies from vendors.
For those reasons alone, your business credit report is critically important to your business.
Without a good business credit score, it will be much more difficult to obtain funding for your business when it needs it and it could cripple your ability to obtain supplies at ideal prices depending on your industry and type of business.
So, you should not only check your business credit report now for potential errors and so that you understand what might be affecting your score, but make it a habit of checking up on it annually.
But you probably have a few more questions about how your business credit report works. So, below, we’ll be covering:
Each of the above agencies provides a form of business credit report to gauge your business’ creditworthiness. However, each does so a bit differently (with its own entirely unique scoring model), and that’s really where business credit reports vary from personal credit.
Here’s more information about each agency and how their scoring system works:
Dun & Bradstreet
Dun Bradstreet, or D&B, offers a comprehensive report that offers your D&B rating and D&B PAYDEX Score in addition to several other metrics.
PAYDEX is D&B’s business credit scoring method, which uses a number system from 1 to 100, the higher the score the better.
Preferably, you want a score of 80 or above, which means that your business generally makes payments on time and is in good standing. If your score is 49 or below, you’re considered a high credit risk.
Experian
Experian has several reports including its Business Credit Advantage Report, which provides financial scores, payment history, and even tips for improving your score.
No matter which report you get, they use what they call their Intelliscore system, which uses a similar 1-100 scoring model as D&B’s but takes into account a wider range of factors than either D&B or Equifax:
However, these differences aside, a score of 76 or higher– almost identical to D&B’s 80– is the number to shoot for as it signifies that you’re at a low risk of defaulting on your loans.
Experian also offers a financial stability risk score, which scores your business from 1 (best) to 5 (worst) based on the stability of the business as a whole:
Equifax
Equifax’s Small Business Credit Report collects your company’s payment history, credit utilization, score, and other information.
Their scoring model is more similar to the personal credit scoring numbering system in that numbers range from 101-992, the higher the number the lower the risk and therefore better.
Similar to Experian financial stability risk rating, Equifax also offers a Business Failure Score that measures how likely your business is to close within the next 12 months, with scores ranging from 1,000-1,880. Again, the higher the number the lower the calculated risk, so you want as high a number as possible for both scores.
How to pull your business credit report
Unlike personal credit, there is no federal program in place that requires agencies to offer you one free credit report annually.
That means you’ll need to pay for your business credit report no matter how you slice it, but the process is simple and straightforward and you can obtain it directly from each of the three reporting agencies.
Alternatively, you can sign up for free updates to your business credit report in many places (such as D&B here). However, you’ll probably still want to get that first business credit report copy so you know how you’re looking.
Reading your business credit report
All three main business credit reporting agencies offer some form of business credit report which you can obtain at a price.
No matter which agency you go with, they’ll include mostly the same basic information, though there will be some differences.
Keep in mind that if your business is too recent, there may be no information listed. Similar to 9002 or 9003 credit with personal credit reports, you may simply not have enough credit history to have generated a score yet.
Here’s an overview of the primary information you should find on your business credit report no matter who you go with:
Company information
Your business credit report will typically list information such as your business name, address, phone number, type of business, and parent companies.
However, in addition to that information, you’ll also find SIC/NAICS codes that specify your industry, key employees, and annual revenue/sale volume numbers.
Payment history
Your payment history will likely be separated into several sections such as commercial payment history (loan payments, leases, insurance) and supplier payments, though it may also be a summary:
Just as with your personal credit, your payment history plays a critical part in calculating your business credit score. Which, in turn, affects your ability to be approved with lenders.
For that reason, this is one of, if not the, most important section to pay attention to. What does your payment history look like? Are there any smudges? Does everything show as on-time or do you have payments that show as past-due or, worse, in collections? Are you being consistent in paying down any balances?
No matter what your situation, work on getting back to current and stay there with all your vendors, lenders, and other payments.
Public records
Another important part of your business credit report that mirrors a personal credit report is public records.
This includes items such as:
Judgments
Liens
Bankruptcies
Lawsuits
Each of these can negatively affect your business credit, so it’s important to which of these items you can take care of, which it’s having the item removed, paid off, or other.
As with your payment history, public records and legal issues are used to determine your risk status for financing, so make sure to clean up or get rid of any of these that might show up as soon as possible.
If you have any kind of lien of bankruptcy on your report, lenders may use that as an automatic rejection or, if nothing else, it may serve as a major check against your perceived creditworthiness.
3 Tricks to improve your business credit
Now that you have all the information you need to get up to date on your business credit, it’s time to turn your attention to what steps you can take to make improvements.
Here are 3 tricks you can use to improve your business credit:
1. Use vendors that report to the business credit bureaus
It’s harder to find ways to improve your business credit than it is with personal credit. With personal credit, anything you finance is likely going to be reported to the major credit bureaus.
However, with business credit, that’s not necessarily the case.
The answer? Search out vendors in your industry who are known to report to the business credit bureaus.
Most industries have at least one major vendor who reports. For example:
By ordering the supplies your business needs regularly from a company that reports to the business credit bureaus, you can start building your credit through purchasing the supplies your business needs to operate on a regular basis.
2. Open a business credit card
Personal credit cards improve your personal credit. Business credit cards do the same for your business credit.
If you’re running a business, it’s best to take advantage of every benefit available to you. Business credit cards often have special perks that personal credit cards don’t have.
Plus, while many credit card companies that offer business credit cards also report to the personal credit bureaus, some don’t. That means you can safely work on your business credit without risking your personal credit.
To find out more about the best business credit cards and which report to the personal credit bureaus, read our guide on the best business credit cards.
A UCC lien is typically filed on your business when you receive a business loan or other type of financing. Simply, a UCC lien is a claim on certain assets by a lender in the event that you can’t fulfill your debt.
In particular, pay attention concerning any UCC liens on your business credit as these may be there in error.
If the lien is for a debt you’ve paid off, your lender may not have requested the removal of the UCC filing from your report. In that case, it’s a simple matter of requesting its removal.
Stay on top of your business credit
Business credit is foreign to most new business owners, and because it functions a bit differently, it can be confusing.
However, the basic idea is the same: your business credit is an important factor that will determine your ability to obtain financing (in this case, for your business).
As a result, you should do everything you can to not only find out what the condition of your business credit is but take steps to improve it and then continue to monitor it for changes moving forward.
To succeed in business, you need every edge you can get. Staying on top of your business credit is an easy way to do just that.
