photo credit: B.O.G.D.A.N.Question:

I’m an entrepreneur and have finished my business plan. I’m getting ready to raise $2 million for my startup real estate company – but a friend of mine said I should only talk to accredited investors. I’m not exactly sure what an accredited investor is and I don’t understand why I can’t talk to anybody I want to about investing in my company?

Answer:

The term, accredited investors, has to do with securities laws – both federal and state – and making sure you comply with the very onerous restrictions that go with the fundraising for your start up company. I’ll give you both the short and long answer to what an accredited investor is in a minute. But the first thing you need to know is that if you raising capital from angel (AKA private) investors, you will almost certainly need more than just a business plan. You need what’s known as a Reg D Private Placement Memorandum – PPM – in order to comply with federal and state securities laws.

If you plan on pitching your deal JUST to traditional venture capital, you do not need a PPM. However, well over 95% of start up companies are too small, too embryonic, to hit the threshold funding levels, growth levels and potential market caps to attract VC funding. Hence, over 95% of start up companies will seek their funding from private investors. Hence, over 95% will need a Reg D PPM.

Reg D is a securities law exemption for private placements that allows companies to raise investor funds without all the costly and overwhelmingly onerous legal and accounting requirements of a public offering of stock. To qualify for the Reg D exemption, you have to follow very stringent rules. One is having the PPM. Another is not soliciting the general public (this is a biggie.) Another is only pitching the deal to those investors who can really afford to take the risk and lose their money. Hence, they need to be accredited. It actually gets more complicated in that you can usually offer your deal to up to 35 unaccredited investors with most offerings, depending on how they are structured – but trust me when I say that you are better off sticking with the more sophisticated accredited investors.

If you want more detail on it, check out my web site – there you can see why you want to do this, some of the onerous penalties for not doing this (e.g. possible but not probable jail time), and the full listing of Reg D I got from the SEC. Also, from that same page, you can jump to the definition of an accredited investor.

Bonus: For more on funding documents, business plans, articles, tips and tools for entrepreneurs and start up company CEOs, you’re invited to visit my blog and web sites…and ask your own questions. While there, I invite you to download both a sample comprehensive business plan and a complete Reg D private placement memorandum (PPM) for FREE…

http://www.ShouldYouStartACompanyToday.com <~~~ The Blog + Free Sample Business Plan / PPM / Audio / More…

http://www.Virtual-Exec.com <~~~ Virtual Executive Mentoring and Consulting Services

Robert Lee Goodman, MBA, Ceo & Chief Dragon Slayer.

photo credit: Jacob Bøtter

It is amazing to me what people believe they should do when business slows down. Hopefully this story will help you or your people develop more business faster during this business melt down.

I was at an association networking event the other night and as was talking with some people a gentleman approaches and I get introduced. So we all talk for a few minutes and then I ask my favorite question, “So what are your major issues as it relates to business development during this economic down time?” And he like most others says, “Getting more business.” So I ask my next favorite question, “Well, what are you going to do about it?”

He then starts to tell me how they have all the business from one big private company and the rest of their work is in the private sector. However, all the private companies they do work for have slowed tremendously. So his strategy now is to go after government jobs.

To this I say, “Do you have 100% of the business of your private sector clients?” To which he honestly said, “Obviously not.” So I then began to lecture him on how breaking into a new market is very tough and requires time and resources to penetrate, which is ok, if you have time and resources. He then said, “Well we already have closed three government jobs.” So I said, “Tell me who you were working with?”

Well, come to find out the people he was working with were all old relationship from his company and other private companies he’d worked with that moved into the government sector. And this brings us to the 2 lessons from this encounter.

1. If you need business now, breaking into a new market is not the way to get it. Either you will have to buy you way in by being low bidder – probably at a loss, or you won’t close anything for a while. Taking a job at a loss is not something you do when business is bad. It’s something you do to grow when business is good and you can afford a loss. Spending time and resources to get something downstream is not something you do when you need business now. It’s better to use your time and resources to win business where you have a presence.

2. The key to capturing business is professional relationships. This is why the person I was talking with closed three deals. So if he’s smart, which he seemed to be, he will now use those relationships to network him deeper into this area of the government. The key is to stay close to your relationships. Let your relationships network you into other areas. Don’t just start bidding on government work. Bid the jobs where you know people. Relationships will help you learn what you have to do to win and at what price – see the first article of this series.

In addition, approach all the relationships you have – private and government and listen to the issues and concerns they have as it relations to your solution portfolio. I guarantee, if you ask my two favorite questions (see above), you will learn about other opportunities available that you can sell. Since they already value you and your company, converting them should then be easy.

Moral of the story, relationships at high levels, sell projects. Those with the “IN” win. So use your relationships to network you to others and spread like a virus through your clients organizations.

And now I invite you to learn more.

Bonus Tip: If you’re having trouble getting to C-level leaders, here is a FREE E-Book “Getting Past Gatekeepers and Handling Blockers”. Just click this C-Level Relationship Selling Link Sam Manfer makes it easy for any sales person to be effective and feel comfortable connecting with and relationship selling C-Level leaders.

Many investors balk at the idea of student investment properties. This always surprises us as we’ve owned both types, and the overall experience with students has been much better than with regular residential rentals. We’ve outlined some reasons below:

Reason 1
Parents typically co-sign the leases. The students don’t pay, their parent does, so the probability of having issues with rent cheques bouncing is much less, especially for the demographic of university bound children’s parents. When a residential tenant bounces his/her rent cheque, the landlord is stuck paying their mortgage that month out of their own pocket. With students, it’s rare that all students in a unit would bounce, so even if there is one bounce, the other students end up covering much, if not all, of the mortgage.

Reason 2
Since the parents co-sign the lease, if their son/daughter damages something the parent pays.

Reason 3
Students are typically not as knowledgeable regarding rental legislation as “professional tenants.” A bad student is gone in a year. A bad tenant can hang on and cause misery for years.

Reason 4
Students typically do not have pets, smoke, or have small children.

Reason 5
Vacancy can be better managed. A regular residential tenant can pick up after 60 days notice anytime at end of lease. Students leave either at the end of April or the end of August. Replacement students will rent starting May or September.

Reason 6
Students typically pay a premium over a family for unit rental for the same square footage.

Reason 7
Students typically go home for the Summer. Our properties are usually fully rented year round – but half occupied over the summer. That’s hard to beat!

Reason 8
The workload for an owner of a student investment property revolves around “marketing” and “outgoing/incoming” activities. Marketing is done January to February – typically. Outgoing/incoming occurs either at the end of April or the end of August. It’s usually not a year round management endeavor – so it’s very predictable.

Reason 9
Students are there for an education. They are not there to mess with their landlord – they simply don’t have the time if they’re serious about their education.

Reason 10
With “zero-down” residential purchase options available, super first-time home buyer incentives, and low interest rates, it makes us wonder who is coming to your door to rent – and why – if they are not a student? As such, in our opinion, the quality of the residential tenant has greatly deteriorated in the last five years and the students have stayed the same.

Try student investment properties out. We think you will be pleasantly surprised.

by Eric Klimstra
Real Estate Agent Profile

Daily real estate articles and online marketing tips. CompatibleAgent.com is giving away FREE Agent memberships. Join CompatibleAgent.com Today!

CompatibleAgent
234 – 970 Burrard St.
Vancouver, BC Canada
V6Z 2R4

photo credit: Universidad de Navarra

photo credit: ellievanhoutte

Based on information compiled in two studies, both venture capital and angel investments have declined this year. According to the Money Tree report, released by the National Venture Capital Association and PricewaterhouseCoopers, first quarter investments for 2009 plummeted to a 12-year low. “Quarterly investment activity was down 47percent in dollars and 37 percent in deals from the fourth quarter of 2008 when $5.7 billion was invested in 866 deals,” as stated in the companies’ press release. “The quarter, which saw double digit declines in every major industry sector, marks the lowest venture investment level since 1997.”

Still, according to Business Week columnist, Karen Klein, small business owners are still looking for and receiving private investments in small rounds.

Private Investor or Business Cash Advance?

Whether you should look to a private investor or a business cash advance for business funding, depends on a variety of factors, such as; the type of business you own, your business’s current standing, others’ interest in your business, etc.

“…venture capitalists [are] looking at early-stage deals more seriously today than in the recent past,” writes Klein in her article “Where Entrepreneurs can Still Find Private Capital.” She quotes the president of the National Venture Capital Association, who says, venture capitalists are also trying to keep late-stage businesses alive and the founder of Tech Coast Angels who says, angel investors like companies that have already been commercialized or can get aid from the stimulus package.

Small business owners who have owned their businesses for at least six months and process at least $5,000 a month in credit card sales can be eligible for a business cash advance, so startups are better off looking into private investors than business cash advances.

Business cash advance providers typically cater to small business owners who do not qualify for traditional methods of business financing, whether it is due to a less-than-perfect credit score, a lack of collateral or anything else. Still, even small business owners who do meet bank requirements, but need fast cash, or prefer flexible repayments can still benefit from the business cash advance.

Main requirements for a business cash advance:
• Applicant has owned business for at least 6 months
• Business processes a minimum of $3,500 in monthly CC sales
• Applicant has no unresolved bankruptcies
• Business has at least one year remaining on lease

If you meet these requirements and you:
• Want the freedom to use your funds however you choose
• Want fast cash
• Desire a renewable source of business financing
• Are interested in a payment method that goes with the flow of your business

…then the business cash advance is a great option for your business.

Gaston C. writes articles about the Business Cash Advance for Merchant Resources International.

photo credit: Logan Antill

There are many risks involved when Early-Stage companies begin seeking loans from a bank; however, in order to understand the risks involved, one must understand what a bank really is. A bank is defined as a financial institution that accepts deposits and channels the money into lending activities. The Federal Reserve regulates institutional banks such as Bank of America, Wachovia, local banks etc. Due to these regulations, banks assure fair lending practices, protection of assets for those who have deposited money with them, and rates that can be charged to a borrower. Most people believe that debt financing only comes from banks like this, or institutional lenders, and that equity financing comes from private or institutional investors. With Angel Investing, however, there are many ways to participate.

Private investors can provide capital in a debt vehicle. This allows private investors to play the role of a bank, but without the fiduciary restrictions of operating under Federal Reserve Regulations. These individuals are labeled as investment bankers or dealers/brokers and are governed by the Security Exchange Commission (SEC). In most cases, Early-stage businesses are better off going with an investor governed by the SEC, because to the surprise of many Early-stage businesses, the web of requirements attached to loans guaranteed by the Federal Government quickly become a hassle. In fact, many Early-Stage companies can’t even qualify for loans due to an unanticipated shortfall of capital.

When a young company seeks traditional commercial loans early on, then important revenues and profit margins are used to service the loan instead of fueling the growth of the company. Therefore, it’s very important for Early-Stage companies to funnel all of that capital towards the growth of the business instead. If this is not done, then the consequences impact negatively on the company who is trying to grow and reach new milestones in its trek to attract private equity investments. Angel Investors can expect returns sooner through the form of debt than by making straight equity acquisitions. Private investment in the form of debt can earn a return of 10 to 40 percent, which works out incredibly well for the entrepreneur and the private investor.

Karen Rands is President and CEO of Kugarand Holdings LLC, a company that connects entrepreneurs with Angel Investors. Karen got involved in the world of angel investing in 2001. She left corporate world to join one of her clients as their VP and to help them raise their last bit of go-to-market capital. What she did discover is a whole new world of investing. As Karen Rands got more involved in the world of angel investing, she had requests from high net-worth men and women and their money managers to recommend training so they could learn How to be an Angel Investor. In 2003, Karen launched the Learn to Be an Angel Investor (http://www.howtobeanangelinvestor.com) ebook series. Thousands opted in to receive the original drafts. Finally, the first 5 books of that series are available to purchase at http://www.kyrmedia.com Karen Rands’ involvement in the world of angel investing grew with the acquisition of the Network of Business Angels & Investors (http://www.nbai.net) in 2005.

photo credit: apesphere

Acquisition/Investment in Indian Companies by Foreign & Domestic Investors – Six Steps Mantra

Joint ventures, strategic alliances and acquisitions are the flavor of the day that enable fast growth focused companies to have rapid inorganic growth and expansion in new sectors. However, prior to engaging in a joint venture relationship or acquisition of an operating Indian company (“Investee company”), either by way of private placement, or secondary market, or subscription of substantial equity share capital, it is advisable for the Investor to carefully and stringently undertake the following six step mantra to avoid future surprises and heartburns:

(i) Due Diligence/Operations Audit: Extensive legal and financial due diligence of the Investee company is advisable to assess Investee company’s track record in compliance with Indian laws, statutory obligations and regulations applicable to it. The due diligence exercise (which usually takes between three (3) to four (4) weeks depending on availability of documents) not only enables the Investor to assess potential liabilities, evaluate unknown and potential, disclosed or undisclosed liabilities but also enables the Investor to assess the feasibility and viability of the proposed acquisition and rationalize enterprise valuation. If required, Investor can demand creation of an escrow account for safe deposit of a part of the acquisition cost, parked for an agreed period to mitigate against any future liabilities of the Investee company.

(ii) Resolution of Preliminary Issues: Preliminary issues, if any, arising pursuant to the conduct of the Due Diligence exercise would need to be resolved and a decision taken whether or not to proceed with the acquisition. For example, whether a change of control would affect the ability of the Investee company to carry on its business operations under the current regulatory framework and the approvals and licenses required. Unresolved issues that are not fatal to the acquisition may be identified and negotiated.

(iii) Regulatory/Pricing/Tax Issues: Identification of regulatory and tax issues that may impact the transaction is critical. In case the Investor is a non-resident, foreign direct investment (“FDI”) guidelines will also need to be assessed.

FDI either by way of acquisition/transfer of issued equity capital or fresh subscription to the equity capital of Investee company in most sectors is presently unregulated and most sectors barring a few do not require the FDI approval from the Foreign Investment Promotion Board. However, the price at which the transfer takes place will need to conform to the pricing guidelines prescribed by the Reserve Bank of India (“RBI”), i.e., the fair valuation of shares have been done by a chartered accountant as per the prescribed guidelines; and the price per share arrived at has been certified by a chartered accountant. The share consideration in respect of the shares purchased by Investor will need to be remitted to India through the banks authorized to deal in foreign exchange.

In case of transfer of shares to the Investor the transaction would be subject to levy of stamp duty ranging from 0.25% to 0.75% of the value of the shares transferred and payable in accordance with the applicable rates prescribed by the respective State where is the Investee company is registered. The transferor usually bears the stamp duty for the transfer of shares in the absence of a contract to the contrary. Alternatively, Investor can consider to subscribe to the equity share capital of the Investee Company by way of preferential allotment and avoid the stamp duty payable on transfer of shares.

Capital gains arising from transfer of shares (in the event of an acquisition instead of an issue of fresh equity) would attract tax in the hands of the seller, i.e., the existing shareholder of the Investee Company.

(iv) Contract Documentation Preparation: Upon successful resolution of preliminary issues and an affirmative decision to proceed with the acquisition, parties would need to identify and prepare commercial documentation to record their understanding of the transaction and the manner in which such transactions would be closed.

(v) Closing: A reasonable time frame is agreed within which the share acquisition would be consummated. If Closing is delayed, parties may consider to put documents/consideration money in an escrow pending resolution and satisfaction of the closing conditions.

(vi) Post Acquisition Compliances: This would usually include corporate compliances such registration of the share transfer in the statutory books of Investee Company and intimation of change of control that may be required pursuant to any regulatory approvals and licenses already obtained. For instance, Investee Company will need to inform Registrar of Companies and the RBI about the change in the equity structure of the company.

The risk of acquiring an existing operating company with its past baggage of liabilities versus setting up a new company is a critical question that most Investors face. Needless to say, the cumbersome process of setting up a new company, obtaining necessary authorizations from regulatory authorities for establishing an Indian company and growing a new business is always challenging. It is for this reason that mergers and acquisitions are not only common but the preferred way for expansion and growth in the today’s fast growing economies.

Areas of Practice:

Infrastructure, Telecommunications, Power, Mergers/Acquisition, Software/Information Technology, Business Process Outsourcing, Media & Entertainment, Private Equity and Venture Capital, General Corporate and Commercial, International Arbitration.

Professional Summary:

Seema Jhingan’s practice spans over fourteen years during which she has acquired substantial expertise in representing developers, sponsors/lenders, venture capital investors, international corporations, financial institutions, and other strategic investors involved in the establishment, development and financing of major infrastructure and IT projects in India.

Seema is a Partner with a Delhi Based Law Firm LexCounsel Law Offices and regularly contributes to journals and publications and often takes up speaking engagements. Seema can be reached at sjhingan@lexcounsel.in

photo credit: teresawer

There has been a recent wave of websites and TV shows about people starting their own business and following that path from bright idea and individual entrepreneur to small business start-up and then potentially to multinational, depending on the product or service. But what kind of audience are they broadcasting to? Well, it turns out a lot of us Brits want to start up our own small business. According to Business Link, over 10 million of us would like to start up our own business at some point.

So the encouragement is there and let’s face it, a lot of us like to be the boss. However, the whole process is easier said than done. The people who took part in the survey were asked what the main obstacle to starting up their own company was. Many cited financial concerns, be it the current UK financial climate or perhaps their own overdrafts, mortgages and debts. How would they cope if they started, but couldn’t generate enough initial funding to keep it going? After all, they’ve got the idea, the business plan, the desire, and maybe even a few colleagues. But how do they find the right people?

Well, for most of us non-millionaires, the main thing we need to do is to generate capital for the business. Since start-up companies have no established brand name and no financial records, loans are pretty much impossible. This means the entrepreneur needs to look at other ways of finding potential investment. This can be done via venture capital funding, courtesy of private investors that can run the business with you (basing their funding terms on how your business performs in the early stages of investment) or with business angels, also known as angel investors, who are usually individuals or groups of people that provide the investment in exchange for partial ownership of your company.

Where can we find these people? Well, several websites have made that gap a lot smaller. Sites like the Angel Investment Network allow UK entrepreneurs to post ideas for start-up businesses, along with details such as which market sector (be it within the UK or globally), industry niche, and what sort of investment you are looking for. The network also allows angel investors (both in the UK and abroad) to browse through entrepreneurs’ proposals based on their own investment criteria and interests. Business partnerships and new start-up companies are evolving on a daily basis, and the Angel Investment Network database now has over 60,000 members.

Mike Lebus works with UK entrepreneurs seeking investments, via the Angel Investment Network, which has since expanded into a worldwide network of websites that help entrepreneurs connect to angel investor groups around the world.

photo credit: A. www.viajar24h.com

You’ll almost certainly need to raise money to start up your company, unless you already have sufficient capital yourself. The typical costs of starting up are in obtaining premises, manufacturing your product if you have one, buying materials, stock or equipment, marketing and fees for external consultancy such as legal help, accountancy etc. Then when you’re off the ground, you’ll need working capital to keep you afloat in the gaps between paying your own invoices and receiving payment from customer invoices.

Again, your business plan is essential at this stage of setting up your business. In it you will already have scoped out what your money needs are and how you plan to raise the capital, and you’ll be using it to persuade potential investors and lenders of the benefits of funding your company. Your financial calculations in your business plan therefore need to be thorough and accurate and presented with confidence.

Everyone expects that they’ll be able to stick to their plans and only need to borrow the absolute minimum, but more often than not something unexpected crops up to throw a spanner in the works. It therefore makes good business sense to include a contingency element in the amount you request. It’s better to do that now and have the extra cash as a safeguard than it is to have to return to your lender or investor not far down the line to ask for more money. If it wasn’t in the original plan they are likely to be concerned about your financial ability and your request may be rejected.

How much money should you request? This question worries all start-up business owners. You want to make sure you have enough to keep you going without struggling, but how much will your investors or lenders be prepared to give? Most experts would advise that you should pitch somewhere in the middle – don’t leave yourself short by requesting the minimum, but at the same time don’t be greedy (and lazy) in asking for too much. You want to keep costs to a minimum and invest your money wisely in your company, while still having the security of a little extra for backup if required. What you borrow should give you a realistic challenge for your business but should not be too risky. And back up your calculation with evidence in your business plan – it has to be credible.

People raise money for their company in many different ways, not always from professional business investors or high street banks. How you raise your capital will depend on your business needs and your own circumstances. Here’s some information on various different sources of funding.

Your own money – if you have enough cash to spare, putting up your own money for the business means you don’t have to be in debt to anyone. It will also give you full freedom over the running of your company as you won’t be responsible to any other interested parties. On the other hand, you’re risking a lot personally by investing your own cash and you could lose it all – and not just your business, but perhaps also your home if you obtained the money by taking out a secured loan or increased your mortgage, for example. You should also be aware that personal borrowing rates often have much higher interest repayment rates than business deals.

People you know – if they have anything to spare, family and friends are often more willing to give you cash than external lenders or investors. Again, though, there is a high level of personal risk, both for your family or friends who could lose money, and for you – it can cause relationship tensions. If you do take money from family or friends, treat it as a formal business arrangement as you would with external funding and agree clear terms and conditions. You want to protect both your interests and ensure that there are no misunderstandings.

The bank – high street lenders usually have a variety of different packages and there’s usually something to meet everyone’s requirements. You’ll have to do a sales pitch to get your money though, and depending on financial circumstances you might also be required to find a guarantor or provide some sort of security. Don’t just go to your own bank – look around for a good deal and do your pitch to various lenders. If nothing else, it will give you good practice! If you think you might have more of a chance of obtaining money from your own bank where you already have a strong relationship and good financial history, then don’t put it first on your list of visits – present your case to a few different lenders first to hone your presentation and persuasion skills to a tee!

Even if you can’t find a lender to give you money, there is a government programme that may be able to help. The Department of Trade and Industry offers a Small Firms Loan Guarantee, in which it offers three quarters of the borrowing amount to the lender as a security guarantee. In return, you must pay an annual fee (which will be a small percentage of the remaining loan amount) to the Department of Trade and Industry. Up to quarter of a million pounds can be borrowed over a maximum 10-year period.

Outside investors – often referred to as ‘business angels’, private investors are rich professionals, often successful entrepreneurs themselves, who are able to offer a great deal of capital in return for an expected large profit and dividends when the company starts to make money. The advantage of obtaining finance from an investor rather than a lender is that they will not expect any financial returns until your business is turning a profit. Also, as successful business owners themselves, they can be a valuable source of advice to guide you in the right direction with your company. A combination of investment and lending might be a good option. Your business will seem a much more attractive and secure prospect to lenders if you already have a sum of capital to back it up. Investors will no doubt have a level of influence and decision-making power in your company, though. Most will want to be kept informed of what is going on – they will want to protect and develop their investment, of course, so you will have a responsibility to them. Also, when you start to turn a profit, it will be divided among everyone who has invested so you won’t get the full whack. Finally, you’ll need to put forward a very good business case to attract an investor – these are very wise, shrewd and experienced entrepreneurs.

Government schemes – there’s a whole raft of options available to small business owners from the government and local authorities in the form of low-cost loans and grants – in fact far too many to mention here. Your local business enterprise centre, chamber of commerce or local council will be able to advise on what options are available for your type of business. The loans are usually offered at very reasonable rates and grants are of course non-repayable (although competition can be tough). Such incentives are often given to certain types of businesses in certain industries located in certain areas, particularly in areas that are being regenerated and in fields such as science, research or engineering.

In conclusion, the key message is that however you get the money you need for your business, you’ll need a very strong business plan – and you’ll need to practise your skills of presenting to ensure you make a good impression and a convincing case.

The presentation of the document itself is also important. Keep it clean, crisp and sharp. Use a business-like typeface, use colours sparingly and use spreadsheets to create neat graphics. Have someone else look over it for you when it’s done to check for mistakes. Print it on good paper and hold it together in a presentation folder or comb binding.

Don’t just plan to read out your business plan – people can do that for themselves. Turn it into a slick presentation with a strong argument for your case. Write down what you want to say and rehearse it several times – in front of a mirror at first and then to family or friends. Confidence is key and this will come with practice. Ensure that you know the details of your plan inside out, including the figures. You don’t want the facts to trip you up. It’s also a good idea to consider what questions investors or lenders might ask and how you can answer them confidently and convincingly.

Author: Benedict Rohan
Website: http://www.mortgagenation.co.uk
Benedict Rohan works as a freelance finance writer. Commercial Mortgage, Homeowner Loans, Remortgages

photo credit: A. www.viajar24h.com

The Banks

2008 was a bad year for banks. Given what you hear on the news, most of us would think things were calming down. They are not. If anything, they are worse. For instance, are you area that regional banks are failing at a rate of more than one a week? How about the fact the federal government cranked $165 billion dollars into the 8 biggest American banks, but they still lost $418 billion in value? The latest estimates place the total capitalization of all banks in the US at 1.8 trillion dollars. That’s not bad until you realize the latest estimate of bad debt in the industry is 3.6 trillion dollars.

The facts spell out a fairly predictable path for banks in the coming months. The entire system appears to be insolvent. The federal government is the only entity with any money. It can’t let the banking system fail. The obvious choice is to nationalize the banks, close those that can’t be saved, recapitalize those that can and then launch the banks again as private entities traded on the stock markets. Taxpayers will take a bath, but there appears to be no other choice at this point.

Trade Protection Wars

The United States is the great consumer nation. By consuming like mad, we drive the world economy. Well, there is one problem. We are no longer consuming. Americans are worried and holding on to every penny they have. The cut back in spending is killing companies in the United States and causing massive job losses. The same is occurring overseas for China and other countries that import to the United States.

When a cycle like this starts occurring – reduced spending, job losses, more spending reductions – one thing always happens – protectionism. “We need jobs! Why should we be shipping jobs to India? China?” If you thought the immigration debate got people riled up, wait till this movement gets moving. If politicians fall in line with this way of thinking, then we can expect trade wars to break out.

The Good News

Unfortunately, there is a dearth of good news at the moment. Still, there are some hints that things are beginning to bottom out. Housing sales were up in December 2008. Financial gurus were surprised by this, but should not be. It was inevitable. The increase in sales signified a collective view that the bottom of the market has either been hit or is getting very close. How do we know this? Most of the buyers are investors. They are in the business of making money on property. When they start moving into the market, it is a signal that demand is going to increase. Is it a sign of a massive turn around? No, but it is a sign things may be stabilizing.

As predicted by many, 2009 is shaping up to be a rough year. If you are in financial straights or worried, it is a time to live frugally. 2010 should see a rebound, so getting there in as good a shape as possible should be your goal.

Stephen Teak writes about economic news for FactoringCompanyInformation.com – find a factoring company that will solve your small business cash flow problems with small business factoring.

photo credit: A. www.viajar24h.com

If you are an inventor or an entrepreneur, obtaining venture capital funding is most likely a major concern for you and your business. During the dot com boom, venture capitalists were fueling the growth, research, and ventures of many new companies. Now that the dot com boom has cooled, those worried about obtaining venture capital for business startup may have a more difficult time securing funding for their budding business.

Venture capital money can come in many different forms. There are actually companies that specialize in researching new companies to invest in, in order to earn a modest return on their investors money. These companies receive thousands of requests for funding monthly and may decide to fund one to two small start-ups a month. Some venture capital companies specialize in specific projects such as real estate or a technology based company. Many large, corporate construction projects are funded via some sort of venture capital agreement.

Another way to obtain venture capital for a business start up is through angel investors. An angel investor can be an individual or a group of investors that gather in order to decide which businesses have the most likely hood of succeeding. Once a business has been selected, the paperwork is drafted for the loan agreement and the business start up is funded by the individual or group angel investors. This method of obtaining venture capital for business startup may also be called hard money or hard money lending.

Recently, obtaining venture capital for business startup has come to reality television. The reality show focused on inventors that had developed a product for introduction to the retail market. The investor was coached and given seed money in order to fully develop their product. This competition played out over several months on reality television with a winner being chosen at the end. The winner was chose based upon how the judges rated the potential retail market success of the inventors product. This reality show was a neat little twist to the venture capital process.

If all of this has you a bit concerned or confused about obtaining venture capital for business startup, there is a bit of good news. The good news is that there is still capital available. If you have a solid business plan or product that you are seeking funding for, your chances are relatively high of getting the funding that you need. Venture capitalists may not be throwing money around like they once were but there is still money available for those that are deemed fit via a solid business plan.

Author: Rebecca Game is a 30 year entrepreneur and owner of Digital-Women.com®, an online networking community for women in business. Visit: Digital Women- Loans for Women