6 statistics small business owners need to pay attention to, and how to avoid becoming one

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If you are a small business, no doubt you’re worried about the statistics that indicate you could fold up any time within the next five years. But it's not all bad news. The latest findings from a US Bank study have revealed the reasons why most small businesses fail during this time. So why not take a look at these six statistics and see how you can avoid these pitfalls.

1. Small business cash flow problems are responsible for 82% of failures

Poor cash flow management is one of the main reasons most small businesses fail. Your cash flow is generally an indicator of your business’ viability and takes into account your income minus your expenses. You can identify if you have a cash flow problem by running regular cash flow statements. To be viable you should be experiencing positive cash flow overall, especially in your operational activities. Cash flow issues can be caused by things such as late payments from customers and squeezed margins, but identifying them will help you put provisions in place so you can continue to operate and make you more likely to be given future funding to promote expansion.

2. Not having enough cash when starting up results in failure for 79% of small businesses

Many businesses forget to budget for what happens after they’ve opened their doors. To avoid running into this problem, you need to budget for at least enough cash to run your business for six months after you start trading. As a rule of thumb, you must be able to run your business for at least one year without expecting funds from sales.

3. Lack of thorough research and planning leads 78% of small businesses to fail 

A well-developed business plan makes it possible to run your company with a coherent and strategic vision. On top of that, by researching your industry, local/national economy and competitors carefully, you can anticipate problems and learn from others who are succeeding. It’s never too late to start identifying your threats and opportunities.

4. 77% of small businesses don’t succeed due to improperly pricing their products or services 

Avoid the temptation to severely under-price your products or services in the hopes of increasing trade. While you may think you are undercutting the competition, you can actually make your business unsustainable in the long run if you aren’t making enough of a profit to operate on. When setting prices, be sure to account for all your expenses in providing the product or service, rather than just plucking a number out of thin air. 

5. An over-optimistic attitude to potential sales and cash flow puts 73% of small businesses in danger

Optimism can give you the perseverance to succeed in business. But don’t confuse it with ignorance. Careful planning and understanding of your industry will help you avoid huge disappointments. It’s better to err on the side of pessimism by taking into account any issue that could go wrong and planning for those eventualities, such as losing a supplier which could impact your cash flow. 

6. 70% of small businesses fail because they do not consider their problem areas and fail to seek help from experts

Every business has a weakness. Is yours lack of branding, business acumen, a broad customer base, or limited financial reserves? Take a long look at your business and be honest about where the problems lie. Next, identify the experts or training which can help you overcome them, whether it’s enlisting the help of a marketing firm, narrowing down your target customer, building strong business relationships or finding alternative sources of revenue for times when working capital is low. 

If you need financial support to ensure your small business makes it through its first five years and beyond, we can help. At LVRG, we fund America's small businesses by providing working capital and cash flow solutions. Talk to us any time and see how we can be of help to your business.


Small business tips to making this Fall season your busiest ever (September 2018)

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Small business tips to making this Fall season your busiest ever (September 2018)

It's back to school time again! As we round out the year, it's important to finish strong as autumn and the run-up to the holiday season are often the busiest times of the year. October through year-end can sometimes see revenues well above the rest of the year, as the final quarter is typically the busiest. As an established small business owner you understand the importance of making hay while the sun shines, and having everything in place will help you to yield the strongest small business cash flow ever.

You want to make sure that your working capital is put to good use during this season, and that you capitalize on this period of peak sales. Follow these helpful tips to make the most of this busy season!

1. Plan, plan, plan

Every small business owner wears multiple hats, and there a lot of "shoulds" that fall by the wayside. Make this the year that you have a solid plan in place for not only the upcoming busy season but for the New Year as well. Having a plan makes it much easier to determine what is working and what needs adjusting.

2. Holiday season sales

Start getting your holiday season sales and promotions underway now. Make sure that you are ahead of the game with your suppliers and vendors if you don't want to be caught empty handed as it's also their busy season. Focusing on your holiday season sales goals and beginning a robust marketing campaign earlier than usual can help you to significantly maximize your sales!

3. Stay motivated

When you have a couple of slow days in a row, or you're just worn out from dealing with personnel issues, your motivation level can take a hit. Keep your chin up and refer back to your plan for inspiration. Remember why you started your business in the first place, and take a few moments each day to renew your commitment to yourself and your business. 

Are you an established small business owner who has hit a rough patch? The variances in sales levels and other realities that affect revenues can make managing cash flow an unwanted challenge. Contact LVRG today and learn more about our business funding options that can give you the breathing room you need to make this season one for the record books!

Small business owners survival guide when everything seems stacked against you

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If you own a small business you may be feeling like you are working against a number of forces and no one is in your corner. Does it feel like you're paddling upstream, without an oar? if so, you're definitely not alone. These days, customers are never satisfied, most people want everything for nothing, vendors are no longer willing to work with you on payment terms, and overall you just feel disrespected. Then you have the challenges of people not wanting to shop in store, because they'd rather sit at home on their phone and shop online. Oddly enough, many consumers like living in areas with vibrant, bustling downtown small business districts, yet they simply refuse to spend money in the small businesses within them. Add to that the inherent challenges of running a sustainable small business, such as managing cash flow, stocking inventory, hiring competent help, and maintaining sufficient working capital; many small business owners these days are ready to throw in the towel. Many, already have.

First and foremost, the right financing can help your small business have the financial security you need to focus on overcoming the challenges in today's marketplace. With the current environment of difficult customers and a lack of loyalty, you will need to devote a lot of effort and attention to clearing those hurdles in your effort to succeed. Don't let your cash flow management issues hold you back from dynamic growth and success. Historic data shows that 82% of all small businesses will fail due to lack of cash flow, poor cash flow management skills, and/or poor understanding of cash flow. Historical data also shows that 70% of small business owner fail from not recognizing, or ignoring what they don’t do well, and not seeking help from those who do.

Competition isn't killing your small business, you are!

Dealing with this reality can make you feel as though your efforts are all for naught, but when you find your niche, such worries can disappear. There is a market segment that is interested in developing relationships with their service providers, but to attract a loyal clientele there are a few imperative steps. Yes, it is true that today's market is beyond cruel with so many consumers simply gunning for the lowest price, or the fastest deliver; but that doesn't have to be your reality!

Under-promise and over-deliver

Many service providers and small business owners believe that telling their customers what they want to hear is a good business model. However, studies and general common sense reveal that being upfront and honest with one's customers is the best way forward. If you are a small business owner, it is important to always meet the needs of your customers. Yes, this does sound obvious, but there are many small business owners who overpromise and then, sadly, underdeliver. When you keep your clients' expectations at a reasonable level, you are more likely to delight them and exceed their needs. 

In today's ridiculous marketplace, where Amazon is undercutting everyone and wiping out entire industries by an excessive magnitude, keeping the customers who want more than the best price is essential. Once you find your performance niche, you will need to market yourself to the people who are most likely to appreciate your services and products. No one likes to be undercut, or lose customers who are chasing the lowest dollar, but when you are able to delight the customers that matter, you are more likely to grow a vibrant and thriving business.

Know your customer

The best way to develop trust with your customers is to listen. When you hear their feedback and then adapt to their needs, you will forge relationships that last a lifetime. It can often feel like you are just spinning your wheels and providing services that no one appreciates. When you feel like this, it is so easy to feel burned out and unappreciated. If you are putting your best efforts forward and striving to outperform your clients' expectations and still feel like you are coming up short, you may wonder if it's worth it. Before you throw in the towel and give up on your dream, it's important to take stock and do the research on your target customer. 

When you find out what your preferred customer is looking for, it is akin to striking gold. Once you recognize who your best customers are, it behooves you to strive to meet their every need. When you are feeling like the whole world is against you, the best remedy is to reach out to the people who appreciate your products and services the most! Don't let the price shoppers get you down, focus instead on the clients that are there to appreciate and embrace your business. 

Relationships are key

Once you have recognized the people who are the right fit for your small business model, the next step is to court them and encourage their loyalty. Are you offering perks for your regular clients, or expanding your product line to better suit their needs? Yes, today's consumer environment is beyond cutthroat, but that doesn't mean that there isn't room to grow your business and give your current customers a reason to keep coming back.

Forming business relationships in this digital age

When you are able to attract the customers who are looking for service and not just the best price, you will begin to build trust with them. Trust is the foundation for a continuing relationship that benefits both sides for the present and the future. Relationships that are based on trust are able to withstand price fluctuations and variances in the marketplace. 

When you are focused on providing the top-quality service and products that your best customers and clients expect, you will be able to rise above the penny-ante price chasing that is killing so many small businesses. If you are feeling like your market is filled with customers that are doing nothing but wasting your time, your best strategy is to rise above them and serve the customers who are worthwhile, and will help you meet your future business goals.

Get your financial house in order

If you are a small business owner and are aware of all of the pitfalls that today's business environment holds, you know that now, more than ever, it is important to have your financial house in order. If you are lacking in working capital or other business funding, it is imperative that you find a financial partner that can help you get through the tough times that almost all small business owners face. Same thing applies, as what's mentioned above, it's best to choose a real small business finance company that you can establish a long term funding relationship with, and not some fly by night lending website selling fast small business loans. When you find the right small business lending partner that is able to provide the small business loans and working capital that you need, it can feel like your worries disappear overnight. 

Don't overlook the peace of mind that proper financing can provide in this cutthroat business environment. When you are a small business owner who knows that your product or service is exceptional and is ahead of the pack, the right funding can help you to reach the right customers. Don't let the typical issues that come with cash flow management when running a small business hold you back. The right financing can make the difference between stagnation and exponential growth for a small business owner. 

Don't let cash flow variances get you down

Almost every small business that has been in existence for more than five years understands that there are going to be many cash flow variances from month to month that can be discouraging. It is difficult to rely on small business cash flow when there is such a strong variance from month to month. This variance is just one more challenge of owning a small business and is something that must be overcome. if you are looking to face this challenge head-on, consider a small business loan that can help you to even out these month-to-month discrepancies. 

Are you a small business owner who is struggling with managing cash flow? LVRG is here to help you get the working capital you need to succeed today and well into the future. Contact LVRG today and find out more about our small business loans and how they can increase your viability!

- Guest post by: Charles Barr (Co-Founder & Director of LVRG)


6 Fast Small Business Loans for a Big Fall Season (September 2018)

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6 Fast Small Business Loans for a Big Fall Season (September 2018)

Many small businesses rely on borrowed capital to fuel growth or fund other initiatives, such as marketing expenses, purchasing inventory, hiring new employees, or just manage cash flow. Sadly, less than 20% of the time, the traditional loan process through a bank works for these businesses. There are 30 million small businesses in the United States and less than 20% will ever be bankable. So, what are all these small business owners to do, when their business needs and answer quickly, to take advantage of an opportunity, to capture additional ROI, or solve an unexpected business emergency? Fortunately, there is a strategic funding source like LVRG which offer fast small business loans with a quick answer (often within a few hours) and can make funds available in a day, rather than 2-6 month application and approval time  associated with most traditional small business lending.

When people begin to operate a business, they may not be clear on the major differences between working capital and growth capital. If they don’t begin planning for both types of capital right from the beginning, they may not get what they really need from their business. They also have to be careful that they don’t try to expand too fast, because that can deplete all of their growth capital at once. If it is used up and then more is needed, it can leave a company in a precarious position and stop them from continuing their expansion. If that happens in the middle of growth, it can be highly detrimental and could even spell the end of the business. Most small businesses will need some sort of fast small business loans at one time or another; whether to acquire new equipment, open in a new location, grow their sales force, or to manage cash flow. Fortunately, there are plenty of options out there for the pro-active small business owner. Unfortunately, not all loans are the right fit. Before you apply for your next small business loan, let’s review: 6 Fast Small Business Loans for a Big Fall Season (September 2018):

Cash Flow Loans

Small business cash flow loans are one of the most common loans and can be very beneficial for your business. For this type of business financing, lenders provide you funds and use your future expected cash flow as collateral for the loan. You’re essentially borrowing from cash that you expect to receive in the future by giving the lender the rights to a predetermined amount of these receivables. These are primarily used for working capital or take advantage of short-term ROI opportunities. Your credit scores will be checked, but they play less of a role. As the name indicates, the lender is more concerned with inspecting your cash flow (usually bank statements) to approve your application. Turnaround time is another great feature of a small business cash flow loan, as funding usually takes place in a matter of days. It keeps money flowing freely and evenly.

Working Capital Loans

Working capital loans is a small business funding solution that covers the day to day operations of a business. Many businesses use this type of loan to pay their accounts payable and keep their cash flow running smoothly. Why would a small business choose this type of loan? If you are in a business where the sales are cyclical, such as retail, this type of loan is most beneficial during your dry months where sales are low. At any stage of growth, fast, flexible funding is essential to the continued success of your small business. Working capital loans are typically 3 to 15 month terms and fixed payment options to accommodate your specific needs, so you can focus on what you do best, running and building your business. It keeps your business going until you are back to your money-making norm.

Revenue Based Financing

Revenue based financing can be used for any legitimate business expense, from remodeling or business expansion to buying equipment to launching a new marketing effort. The key here is growth and our business funding options are the perfect solution for business owners looking to take advantage of growth opportunities.Instead of a business being required to pay fixed interest payments like a typical bank loan, a revenue based loan is paid with a percentage of revenues. Small business revenue based financing helps you grow your business and it does not saddle you down with long-term, highly encumbering debt. With a revenue based loan, you will pay it off in roughly 6-12 months, which makes more sense for short-term expenses. Additionally, lenders are usually willing to replenish the loan after roughly 50% is paid down, so you can continue getting more capital along the way. These short-term loans for business are popular across every industry and in every state in the U.S. From manufacturing and transportation companies, craft breweries & salons, to restaurants and retail stores; short-term small business loans are an efficient and cost-effective source of capital, when you need it. Short-term financing can help businesses build or accelerate revenue in ways they couldn't otherwise. And at the same time, working capital solutions offered by LVRG can help business owners negotiate better discounts or terms with vendors and avoid longer-term charges and fees, saving money in the long run.

Bad Credit Business Loan

No one likes to talk about it but it happens, bad credit. When a small business has a bad credit score and history, it can get real tough to obtain loans to keep your business flowing and growing. Fortunately, there are bad credit business loans that will help the owner get the funding they need and improve their credit score so they can opt for better loans with higher lines of credit available. We've found that poor credit history is not a good predictor of future business growth or success. Instead, it’s knowing when to seek business financing and having a plan for how you’ll use the capital to generate more revenue or accelerate it. Short-term business loans and business cash advances more than pay for themselves when you factor in the additional revenue they help generate and business costs they can save.

Business Line Of Credit

It's the nature of business to be cyclical. This means your businesses cash flow will find their own high and low points throughout the seasons, and throughout the years. Will you make it from this ebb to the next flow? Would getting a cash infusion in the form of a business line of credit help you? A small business line of credit allows a business owner to draw against a specified amount of financing on an as-needed basis. The advantage of a business credit line is that you only pay interest on the funds you actually draw, so you’re not stuck paying interest on capital you don’t have an immediate use for. If you’re a business owner taking out a line of credit, you’ll be spending that flexible cash on seasonal business expenses, payroll and other operational costs, insurance against emergencies and for sudden growth opportunities. In other words, as a cushion of cash flow. It’s there for you when you need it most. A business line of credit is similar to a small business loan but functions like a credit card. You apply for a line of credit, much like you would a business loan. While the small business loan gives you a lump sum of money to use upfront, a line of credit is money available for you to use at your discretion. Just like a credit card, you pay it off each month to avoid interest and have this line of credit available even after you pay off your balance. Certain businesses, such as retail establishments, benefit more from lines of credit because of the predictable variations in cash flow. Seasonal changes in sales mean earnings fluctuate on a set schedule, and extra money is often needed to continue operations during slow times. When you’re able to anticipate these financial needs, you can rely on a line of credit to provide security.

Merchant Cash Advance

A Merchant Cash Advance (MCA) can provide business borrowers with an upfront fixed amount of cash in as little as 24 hours. The funding amount is based upon a percentage of the businesses credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance. The business pays back the advance, plus a percentage, often referred to as a discount factor, from a portion of their credit card receivables or cash available plus a percentage which is often referred to as a discount factor. The remittances are drawn from the business customer on a daily, or weekly basis until the obligation has been met. MCA's are good options for small business owners who may not have strong credit but have lots of credit card activity and need financing quickly.

Not all businesses or surprises are the same, but here are some pretty common business expenses that are sometimes difficult to anticipate:

  1. Equipment failure: If your business relies on specialized equipment to do business, regardless of whether it’s a pizza oven critical to your restaurant or a large mash tun that plays an integral role within your craft brewing process, every hour that equipment is down is costing your business money. Acting fast to get up and running again is a part of staying viable.

  2. Building maintenance problems: If you do business out of an older building, it’s not uncommon to occasionally face plumbing, electrical, or other building maintenance problems. The costs of digging up a sewer line to the street or putting a new roof on your building can easily add up beyond what might be available in your cash flow—particularly if the expenses are unexpected and need to be responded to quickly.

  3. Growing pains: Most business owners welcome the opportunity to grow, but sometimes growth comes with unexpected expenses. There are sometimes overlooked expenses to hiring new employees like additional supplies, training, or maybe the need to purchase a new desk and office equipment. Depending upon your business, ramping up a new employee can become expensive. While most business owners want to see their businesses grow, it’s difficult to anticipate every expense associated with growth.

  4. Unexpected opportunities to increase profits: Not all surprises are bad news. For example, suppliers sometimes offer unexpected discounts to their customers who can act quickly to take advantage of a special offer. It might be an opportunity to purchase quick-turnaround inventory at a steep discount or maybe a special offer on a new piece of timesaving equipment that will make serving your customers more efficient. To take advantage of opportunities like these, you’ll need to act fast and won’t be able to wait for several weeks to get an answer from the local bank.

  5. An opportunity to expand: Maybe that extra space next door has become available or the bigger storefront down the street has gone up for sale. The opportunity to expand might make it possible to secure more customers and generate more income, but the added expense might be something you hadn’t anticipated. Quick access to capital might be required to pull it all together.

In a survey conducted in the spring of 2016 by the Electronic Transaction Association (ETA), 63% of the small businesses surveyed identified speed to funding as the reason they chose an online business loan. 57% cited the easy application process and 51% the affordable total loan cost. Needless to say, a quick answer and quick access to funds is an important consideration to many small business owners. 96% of those surveyed said the reason they were borrowing was to secure capital to enable or drive business growth. Additionally, these small businesses generally anticipate a 5x return for every dollar they borrow. In other words, they expect to earn $5 for every $1 they finance to purchase things like inventory (51%) or equipment (54%).

In some cases, access to capital is a great way to take advantage of new opportunities. In others, however, it can be a good way to pull a struggling company out of a pit of poor circumstances. Despite the potential for risk, capital can be the saving grace when trouble comes to call, providing the means to bridge the gap between failure and success. A few extra dollars today may mean an empire tomorrow, and can be the necessary protection against closing up for good.

Any of the fast small business funding options mentioned above, whether for a few thousand dollars or a few million, can make previously unavailable opportunities obtainable, providing a customized solution in a time of need and keeping the lights on even when the going gets rough. With ready access to business capital, the possibilities are literally limitless, offering the assets you need to promote a positive trajectory and inspire healthy growth. Getting into a cash-poor position should always be avoided, because it’s difficult to recover from. It makes sense that companies want to grow as fast as possible, but those companies must be very careful that they avoid the pitfalls of burning up their entire growth capital fund. Instead, it is better to focus on slower growth, so the fund stays strong and the company builds strength at a more sustainable rate.

So, why LVRG? We combine data-crunching software with a human touch to come up with affordable funding solutions that best fit your needs. LVRG is a team of the right people, working with the right data, getting you the right-size funding for your business. At LVRG, we believe we are different from other lending firms. We never set out to be the biggest, but we constantly strive to be the best. Our deep sense of integrity, professionalism, and commitment to the spirit of entrepreneurialism, propel our determination to provide assistance to small business owners in a challenging economic climate. LVRG Funding is the smart choice for fast, reliable, small business financing. Call (855) 998-LVRG or click the button below to apply now.


How revenue based financing can help your small business grow

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Small business owners are painfully aware of the dips that their revenue levels experience on a month-to-month basis. They are also aware of how the many challenges of managing cash flow in a small business environment can make obtaining working capital at a reasonable rate all the more difficult. 

Fortunately, you don't have to let the variances in your small business cash flow get in the way of your business funding. If you are in need of an infusion of working capital, you may want to look into revenue-based financing.

The capital you need from a source that you trust

Business funding is available in many different forms, and if you may not be a good candidate for a business loan from your local bank, it doesn't mean that you are without options. Due to the many variances in your small business cash flow from month to month, you may not meet the funding requirements of your regular banking institution.

With revenue-based financing, there is no equity needed, and your loan payment each month is a fixed percentage of revenue, rather than a set dollar amount. This percentage-based payment allows for the flexibility in repayment that is necessary for businesses that have a wide fluctuation in cash flow each month.

Short-term loan periods and long-term solutions

Revenue-based loans provided by LVRG are structured with a six 18-month loan period. This type of financing is underwritten in a straightforward manner, with your past cumulative sales as the main gauge of your suitability. This allows us to determine if you are eligible for funding quickly and offer almost immediate funding upon approval. 

The LVRG team will work with you to help you get the financing you need, even if your past credit history is less than stellar. If your established small business is doing well, but not creating enough cash flow to generate the working capital that you need, it's time to learn more about revenue-based financing. Small businesses need capital to grow, and no one understands that more than LVRG.

Interested in learning more about how revenue based financing can help your small business manage cash flow and have the necessary working capital on hand? Contact us today to learn more about our small business solutions and how we can help your business thrive now and well into the future!