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Month: November 2019

Settle Your Small Business Taxes With a Peer-To-Peer Loan

Posted on November 29, 2019 in Uncategorized

Like the saying goes, “The only things certain in life are death and taxes.” Unfortunately, small businesses know this saying all too well.

Unlike employees who look forward to their refund every April, small businesses loath the approaching spring, knowing they will have to pay Uncle Sam its share of their profits. Each year, small businesses struggling to turn a profit in an increasingly competitive business environment must pay taxes in order to keep their doors open.

With dwindling profit margins and tightened lending restrictions, however, many small business owners find themselves between a rock and a hard place when it comes time to pay the tax man. Although a business may have steady sales and revenue or thousands of dollars in inventory, banks and traditional lending institutions simply aren’t handing out small business loans like they were in year’s past, leaving small business owners with few funding options to pay their tax bill.

Thankfully, peer-to-peer lending, or social lending, has solved this growing dilemma. These modern social lending marketplaces have connected millions of borrowers with individual investors. Borrowers receive low-interest, fixed-rate loans that can be paid off in two to five years, while investors are able to benefit from decent returns in an economy with sinking bond and savings rates.

Thus, it’s a win-win situation for both small business owners in need of immediate funding and investors looking to make a small profit while helping others.

From Desperation to Exultation: One Man’s Venture into Peer-to-Peer Lending

John Mitchell is an Ohio-based small business owner who found himself in such a predicament just last year. As the owner of the only hardware store in a small town, John’s store flourished the first few years it was open.

After getting his inventory levels, pricing models, and management just right, he decided to expand his business by opening a second location in a neighboring town. John sunk all of his profits into opening his new store, which meant he was short on funds come tax time. However, knowing the success of his business, he thought he would simply get a small loan from the bank that housed his accounts and provided him with the initial loan he used to launch his business four years earlier.

Unfortunately, he witnessed first-hand the effect the recession has had on lending regulations as the banker he’s known for years denied his loan application. If he couldn’t get a loan there, where could he?

On the brink of despair, John took to the Internet to research loan options. After digging through forums and trying a few different searches, he ran across peer-to-peer lending. In less than a week after going through the quick and easy application process, he received a personal loan at a low rate for the amount he needed. A week later, John sent a check for the full amount to the IRS, and less than eight months later, he was able to pay off the loan with the profits from his new store!

If you are a small business owner who has found yourself in a similar circumstance, peer-to-peer lending can do the same for you as well, but how does peer-to-peer lending work?

How Peer-to-Peer Lending Works

A breakthrough product or service emerges every generation, and in the early 2000’s, the emerging breakthrough was social networking. From helping in the organization of overthrowing political regimes to staying in touch with friends and family members, social networking has had a profound effect on our daily lives. Now, it’s changing the small business financing landscape as well.

Peer-to-peer lending is a modern social networking solution for small businesses in search of a way of securing alternative funding. The goal of peer-to-peer lending sites, such as Prosper and Lending Club, is simply to connect individual investors with those in need of funding, and these sites are becoming an increasingly useful tool for small business owners who are unable to secure funding from traditional lenders.

Rather than jumping through endless hoops only to be denied by a bank, small businesses can receive funding via peer-to-peer lending in no time at all by following three simple steps:

Step 1: Create a Profile and Loan Listing

There are a myriad of peer-to-peer lending networks to choose from, so your first step is to research the best ones and create a profile and loan listing on the site you choose. The loan listing is essentially a cost-free ad that indicates the amount of money you need and your desired interest rate.

Step 2: Let the Bidding Process Begin

After your listing goes live, investors have the opportunity to begin bidding on your listing, providing you with the interest rate and loan amount they are willing to offer you. A major advantage of this bidding process is the fact that it can intensify as more and more lenders begin competing for your business.

When this happens, interest rates will begin dropping, potentially allowing you to obtain a much lower interest rate than you expected. It’s important to note, however, that your credit score, income, and debt-to-income ratio plays a role in the lending decision process.

Step 3: Funding and Paying Back the Loan

Another benefit of borrowing from peer-to-peer lenders is that you can accept several bids to receive your requested loan amount. For instance, if you ask for $10,000 in your loan listing to pay your business taxes, you can acquire the amount from collecting $2,000 from five different borrowers.

This makes it much easier for borrowers to receive the money they need. However, instead of making five separate payments, you would only make one payment, because the peer-to-peer lending site is responsible for dispersing the money to lenders until loans are repaid in full. They simply charge a small fee for this service.

With increased lending regulations, banks are tightening their purse strings more than ever before, making it much more difficult for small businesses to receive the funding they need to expand their business or even pay their taxes. Thankfully, peer-to-peer lending has proven to be a worthy competitor in the small business lending marketplace. If you are a small business owner and find yourself unable to pay your taxes as April approaches, or backed taxes for that matter, a peer-to-peer loan is an ideal option.

10 Good Reasons Why Small Enterprises (Small Businesses) Fail

Posted on November 27, 2019 in Uncategorized

You’ll agree with me that there are so many small businesses which have contributed a lot to the growth of economy. They have created employment opportunities for many families although some remain to be small throughout their operational life.

It is obvious that those who are starting new ventures have objectives to achieve. And to mention each business has got its own objectives to achieve such as maximization of profits and sales, minimize costs, maintain a certain level of production and labor force etc.

Failing of a business opportunity is what an entrepreneur won’t want to happen. Inasmuch as we agree with the fact that there are firms which have succeeded, we should also accept the fact that a good number of them have failed even before two years lapse after they commence business.

If aspiring entrepreneurs addressed the reasons why small businesses fail, then they will not fall to be victims of the same causes of failure. This is because they’ll be in a position to identify these causes and fix them before it’s too late.

Now you may be asking yourself as to why some businesses remain to be small throughout their operational life despite some of them making profits or are capable of growing.

4 Reasons Why Small Business Remain to be Small

1.) The owners of these businesses prefer not to expand their businesses. Some sole proprietors do not want to be bothered with the challenges of managing a big business. They don’t want to employ people to assist them in running their businesses but instead they prefer to be assisted by their family members.

2.) The nature of the product/service the business is involved in doesn’t allow expansion. There are people offering products/services which make it difficult for their business to grow.

3.) Lack of capital for expansion. There are small businesses which are viable and have the potential of growing but they lack enough capital. Such businesses have the challenge of securing funds from financial institutions. Lack of capital plays a negative role in hindering the growth of small businesses.

4.) Very low demand. If the business has a very low demand for its product or service, then at the end of the fiscal financial year/trading period the business won’t realize profits, and if it does, it’s very low, therefore the chances of it expanding are very minimal. Just to mention, realization of inadequate profits as a result of very low demand hinders the growth of small businesses.

However, there must be a starting point and as such, every business starts as a small entity and it gradually grows to a medium entity and eventually it becomes a big business entity which is either a private limited company or a public limited company. Note that a partnership business can also grow to become a big business.

Reasons Why Small Businesses Fail

1.) Wrong Reasons For Commencing Business: People who start a business for wrong reasons haven’t succeeded. Just because another person is making high profits in a certain line of business doesn’t mean that you will also make the same amounts of profits as him/her if you start the same business.

2.) Poor Business Management: When there is poor management of the business it becomes difficult for such a business to succeed in its operations. Finance, marketing, purchasing and selling, planning, hiring and managing employees is what most new business owners fail to execute effectively thus making their small businesses to fail.

3.) Lack of Commitment: Starting a business requires someone who is committed in ensuring that it succeeds. Neglecting the business will cause the business to fail. Many small businesses have failed because the owners didn’t take their time in monitoring performance and in marketing them. Some business owners leave their businesses to be managed on their behalf by incompetent people who lack book keeping knowledge and the knowledge of managing a business.

4.) Lack of Finances: Small businesses have failed because of lack of adequate finances. Some of the owners underestimated the amount of capital required and as a result of this underestimation some ended up running out of operating capital thus ending the operation of their businesses.

There are those who have no reserves which has led them not to be able to take care of loses and disasters when they occur thus making them to quit business.

5.) Over-Expansion of the Business: This has led to failure of many small businesses. This happens when there is borrowing of too much money beyond what the business requires so as to expand the business. Moving to markets that are not profitable is also over expansion of the small businesses.

An ideal expansion is the one that is driven by customers due to their high demand for the products and services which leads to high sales thus the business experiences good cash flow.

6.) Location: The place where the business is located is critical in determining its success. Small businesses have failed because of them being located in areas that are not ideal for business. They should be located in areas that are accessible, populated with people and has demand for their products and services.

7.) Personal Use of Business Money: This is the biggest challenge facing many small business owners. They withdraw money meant to operate their businesses to meet their personal wants and needs. If they continue to withdraw money from their businesses without returning it, their businesses will eventually run out of finances therefore forcing them to end the operations of their businesses.

8.) Lack of Delegation: Small enterprises have failed due to owners not delegating some of the duties to their employees. They think that if they delegate them, then their employees will not perform these duties as they would personally perform them. When such owners fall sick or are away from their businesses, then the operations of some tasks will be paralyzed till they resume to work.

9.) Not Diversifying: Small enterprises which have only one product/service to offer are prone to fail easily compared to those that have a variety of products/services.

10.) Procrastination and Poor Time Management: Postponements of tasks which the small business owners feel to be unpleasant to perform has made the small businesses to fail. An example of such tasks include following debtors to pay their debts (debt collection).

Time management remains to be a challenge for many people who own small businesses. If important tasks like delivering products to customers, purchasing stock etc are not handled in the appropriate time, then the business will lose its customers.

The above are not all the reasons why small businesses fail, there are more reasons.

A Small Business Phone System Puts Small Companies in the Big League

Posted on November 26, 2019 in Uncategorized

A small business phone system can help a small business to operate more efficiently as well as minimize communication costs. Unfortunately, most phone systems are given little consideration when a business is first starting out. Communication with business clients and customers is essential to any successful business and should be given careful consideration before the final decision is made.

There are many different options available to the business owner when looking at a small business telephone system. Most of the time, basic features are needed to conduct business on a day-to-day basis. Things such as call holding, call forwarding, music on hold, and voice mail are all basic features that most businesses use during the course of communicating with customers or clients. For this reason it is important that any system being considered has these options available.

Since communication is the core of any business, considerations must be made for how the business operates and which features would be considered most important. As an example, if the business is involved in the delivery of physical products then having a way to communicate with drivers and dispatch deliveries would be important. A small business phone system in this particular case would need to include features that allow the dispatcher to communicate with the drivers as well as sales personnel and other employees scheduling deliveries. This type of system might include a feature that allows extensions to be forwarded to cellular phones so that drivers can be reached simply by calling their extensions.

The above scenario is just one of many ways in which having a properly configured small business system can streamline productivity and save the company money. Larger businesses have enjoyed this advanced technology for some time and now many manufacturers are now making these features available to smaller businesses. Technology such as voice over IP and automatic call distribution are now being integrated into small business phone systems.

One benefit to small businesses is having an auto attendant to route calls. With this technology in place, there is no need to have someone answering the phone simply to transfer the call to another person. The phone system can route these calls based on the last name of the person they’re trying to reach or entering the extension directly if they happen to know it. If the business does not have an operator, there are ways that the system can be set up to route calls should the caller press zero.

Voice over IP technology has become the norm in telecommunications solutions. This technology allows businesses large and small to leverage their existing network for the transmission of voice communication. Phones for small business are now using this technology to allow them to have communication without boundaries. Like their larger counterparts, small businesses are taking advantage of the versatility that voice over IP provides. No longer limited to the office, employees can take their extensions with them so no matter where they’re at, they can conduct business seamlessly. Another advantage to employee mobility is that customers and clients are given one phone number. Giving a client or customer a cell phone number often results in an employee always being available whether actually at work or not. By giving a client an extension on the phone system, they will only be able to reach the employee during normal business hours. The phone system provides a voice mail where the client or customer can leave a message. During times when the employee is at work, the extension can then be forwarded to the cell phone so that the employee can be reached if he or she is out of the office.

A large consideration when choosing a small business telephone system is one of supportability. Many smaller businesses do not have internal IT support. For this reason, when purchasing the phone system support should be included in the contract price. However, if the business does have internal IT support they will need to be trained on how to add extensions and provide other basic maintenance that the business needs on a day-to-day basis.

Toll fraud can cost a small business lots of money before they realize that it has occurred. Security is of the utmost importance when implementing a small business phone system. Toll fraud occurs when unauthorized calls are made using the phone system and the phone lines attached to it. These calls are often made to overseas locations at the expense of the business. They often don’t realize it until they receive the bill and question the nature of the calls. Most of the time in these cases, the phone company will rarely reversed the charges. This is why it is important that the phone system be set up to minimize this risk. Additionally, a phone system should have the ability to block calls to specific parts of the world or to limit employees to making only local calls if needed.

The type of circuit used for phones for small companies is typically what is called a POTS line. POTS, an acronym for “plain old telephone system” is a single phone line identical to what you would see in a typical home setting. The limitation of the POTS line is that it can only handle one phone call at a time. In order for a business to receive more than one call at a time the phone company must bring in multiple POTS lines. They’re then configured in the small business telephone system as a “trunk group”. The phone system then distributes the calls to individual extensions. Due to limitations of standard phone lines, many small businesses are taking advantage of the newer technologies such as voice over IP. Since data circuits can be used for more than just voice traffic, it’s become quite appealing to even the small business owner.

A business system is becoming a necessity for many small businesses. In order to compete with larger businesses, the smaller companies must appear bigger than they are. Since many consumers will often go with well-known names, smaller businesses are going to have to work harder to establish Customer confidence. When a customer calls and the call is answered in a professional manner, the customer is more confident about the potential transaction. Having a small business telephone system puts a smaller company on the same playing field as its larger competitors.

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