Types of finance providers

Unless you’re fortunate enough to have a savings account bursting at the seams, you’re probably going to have to find another way of financing your business purchase.

But there’s more to the process than simply approaching the bank, cap in hand. A somewhat bewildering range of finance providers and finance options are open to business buyers. You need to decide which options are viable in your circumstances, and which ones will suit you best.

Three types of finance are available to business buyers: loans, share capital and grants. Share capital means you are getting finance in return for equity – a share of your business.
What follows is a rundown of the main types of finance providers businesses use.

You need to decide which options are viable in your circumstances

BANKS

Banks offer many different types of loan and interest rates are higher or lower in inverse correlation to the risk you are prepared to shoulder (for example, using your house as security means rates will be lower).
Banks are conservative in their lending so you must present a convincing, thorough business plan, something a finance broker can help you with.
Advantages

• Familiarity.
• Easy access: banks are ubiquitous on the high street.
• You are not sacrificing a share of your business.
• Flexibility: you can ease cash flow burdens at the outset by arranging a loan where your first few payments are smaller than later payments.
• Long established and regulated rigorously by the Financial Services Authority (FSA).
• Debt finance offered by banks is much more accessible to small businesses unlikely to grow rapidly, or at all – the majority of small businesses – than share capital offered by venture capital funds and business angels.
• Customer service – one-to-one advice and assistance at your bank from a dedicated relationship manager. Most banks also offer telephone banking until late in the evening, sometimes even 24-hours a day.
• Internet banking means you can keep up to date with your accounts 24 hours a day.

Disadvantages

• You might require additional guarantees, which might affect your credit rating.
• You might have to provide security, and even if you don’t then this means the interest rate will be higher.
• People that need the money the most are often turned down.
• You have to pay back interest as well as the money you originally borrow.

Appropriate for
Small business buyers who do not expect their business to grow rapidly.

Business Ethics

Business ethics is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer.

Many businesses have gained a bad reputation just by being in business. To some people, businesses are interested in making money, and that is the bottom line. It could be called capitalism in its purest form. Making money is not wrong in itself. It is the manner in which some businesses conduct themselves that brings up the question of ethical behavior.

Good business ethics should be a part of every business. There are many factors to consider. When a company does business with another that is considered unethical, does this make the first company unethical by association? Some people would say yes, the first business has a responsibility and it is now a link in the chain of unethical businesses.

Many global businesses, including most of the major brands that the public use, can be seen not to think too highly of good business ethics. Many major brands have been fined millions for breaking ethical business laws. Money is the major deciding factor.

If a company does not adhere to business ethics and breaks the laws, they usually end up being fined. Many companies have broken anti-trust, ethical and environmental laws and received fines worth millions. The problem is that the amount of money these companies are making outweighs the fines applied. Billion dollar profits blind the companies to their lack of business ethics, and the dollar sign wins.

In the end, it may be up to the public to make sure that a company adheres to correct business ethics. If the company is making large amounts of money, they may not wish to pay too close attention to their ethical behavior. There are many companies that pride themselves in their correct business ethics, but in this competitive world, they are becoming very few and far between.

Ideas for Beginners

  Business ideas for beginners can be broadly grouped into two categories, viz. labor intensive business and solo entrepreneurship.

Labor Intensive Processes
The proportion of labor or capital required for the successful operation of a business determines whether the process is labor intensive or capital intensive. Since capital intensive processes have extensive initial capital requirements, they may not be suitable for small entrepreneurs. People who are interested in starting a business that involves generating employment, may benefit from the following business ideas:

Cleaning Service: A cleaning service is a good business proposition for a person who relishes the idea of cleaning apartments, homes and commercial establishments. Housekeeping is an art and people are typically deterred by the prospect of getting grease, tough stains and odors out of carpets, keeping their bathroom clean and eliminating odors from their refrigerator. Hence, a cleaning service can be a steady source of income assuming that there are no immediate competitors. Otherwise, one would have to spend money on advertising and this may eat into one's profits. Cleaning services can operate round the clock since residential apartments are generally cleaned during the day while commercial buildings are cleaned after office-hours. Considering that cleaning services earn popularity and goodwill through word of mouth, a job that is well done will rarely go unnoticed.

Moving Service: Inexpensive professional moving services are sought by people who are moving across town and are unable to contend with the heavy lifting that is a part and parcel of moving. Of course, one needs to be well built and employ other well built individuals who enjoy the prospect of strenuous work! This business has distinct possibilities with regard to expansion and one may very well end up becoming the proprietor of a countrywide moving service!

Solo Entrepreneurship
Solo entrepreneurship is meant for people who are not interested in employing others and would prefer going into business all by themselves. The Internet has also provided a platform for home based business opportunities by encouraging affiliate marketing and opportunities for making money with traffic exchanges.

Consulting Business: Professionals like accountants and financial planners, who are aware of the ingredients of a good business, can make successful entrepreneurs since their services are always in demand. Financial planners and accountants need to be certified. They need extensive experience in their area of work in order to be successful and inspire confidence. A successful entrepreneur is one who strives to establish a company based on innovative ideas and proven solutions. Skilled professionals can also establish a marketing consulting firm or a software consulting business. For more on business consulting, one may refer to the article titled, 'how to start a consulting business'.

Internet Affiliate Marketing: Internet affiliate marketing can be a wonderful opportunity for a person who is interested in participating in an affiliate program. Affiliate programs are run by sponsors who are interested in increasing the market for their product. Leads for the sponsor can be generated by the affiliate assuming that the latter has a website that has a huge volume of traffic. Although both text links and graphic links can be used for the purpose of advertisement, the host's visibility improves if it uses text links rather than graphic links. This is an excellent Internet business proposition.


Hopefully, the above article on business ideas for beginners would have provided valuable insight on the possibilities and opportunities that are available to skilled professionals as well as those with a knack for identifying and exploring money generating ventures.