Capital Made Easy and Simple Sue Malone Strategies

Capital Made Easy and Simple! Sue Malone, Strategies for Small Business Strategies

Who Needs Money? 1 Money is an essential ingredient of an enterprise at every level. Whether it is a life style business or entrepreneurial 2 Money is needed at every stage of business development 3 Start–up businesses 4 Mature businesses – need financing to stay on the cutting edge 5 6 Debt financing vs. equity financing Financing a contract Strategies For Small Business TREY research 2

What type of financing do I need? Every business has a different need • • Debt Financing? Equity Financing? Vendor Financing? Equipment/Lease Financing? Family and friends? Contract Financing What is new in 2019? TREY research 3

Business Debt • • Financing for a business which must be repaid when due The debt is paid out of the businesses cash flow Both interest and principal are paid over time While debt is outstanding it bears interest at a rate called the stated rate, it can be either variable or fixed. • Debt has no ownership in the business or participate in its earnings • Interest is deducted as a business expense • KEY: the owner keeps their ownership and rights to the earnings TREY research 4

5 Common Elements of Debt Financing • Debt financing governed by a loan agreement – promissory note • A fixed credit limit or a formula that sets available borrowings based on a percentage of receivables, inventory, etc. • Statement on how the funds will be used • Collateral description – UCC filings • Personal guarantees • Initial interest rate, an adjustment formula • Fees charged by the lender • Time period of the loan • Reporting requirements • Representations and warranties Always read the fine print! TREY research

6 Equity Capital Business obtains an outside investor into the business TREY research

Equity Financing Strategies 7 TREY research

Equity is usually all one can get in the development stage • No cash flow • Equity Investors at early stage • The business founders • “Friends and Family” • Angel Investors • Venture Capital Firms • Private equity groups • Early stage IPO’s – example • Key: exit strategy! • Development Stage Strategies TREY research 8

Angel Investors & Venture Capital Groups Angels Invest from $10, 000 to $ 2 million Venture funds much higher limits of investment dollars Time horizons Specific Industries they want to invest in Annual return targets Board participation Contract terms which increase their control over business if financial goals are not realized Preferred stock – conversion, mandatory redemption rights, antidilution 9 TREY research

Where do I find the Investors? TREY research 10

Friends and Family Add a footer 11 TREY research

Creative alternatives • • • Creative thinking to obtain capital What is in your drawer? Making it happen Decisions Price for everything Money comes in many different forms Strategies 12 TREY research

Summary • DEBT • EQUITY Credit cards – fast and easy Family and Friends – fast and easy, repercussions SBA loan - will fund start ups, Express loans, veteran owned company loans, export loans Angels will do early stage Linked in to experts Bringing in partners, advisors or board members Hybrid – Crowd Funding Perimeters are stated Keep ownership Strategies TREY research 13

Questions ? ? Every question is a good question! TREY research 14

Thank You Sue Malone 925 -381 -8409 sue. operationextstep@gmail. com Strategies for Small Business TREY research 15