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Succession Planning for a Family Business
Financing your Family Business without Going Broke
Financing is indispensable for the success and growth of your family business. But after you’ve already tapped out your personal funds, and perhaps those of friends or other family members to get your business up and going, you’re going to have to find a way to keep the lights on without going broke.
That means you’re going to have to borrow money or obtain credit from a variety of institutional lenders. Business loans and lines of credit will allow you to cover expenses, buy new equipment, manage cash flow, purchase inventory, create new products or services, or expand your business when the circumstances are right.
If your business is new and doesn’t have an established credit history, you may need to provide collateral to secure a loan or credit line. This could be any personal assets that you cannot otherwise monetize or afford to spend on the business, but can be utilized as security. Your best bet would be to approach a local bank or credit union where you have a personal relationship and a history of sound money management.
If your business does have a positive credit history for at least a year or two, the commercial bank that issued your business credit card is a good place to go to apply for a line of credit. Make sure that you’ve paid the balance on that card promptly each month, and if necessary, let the bank know that you’ve been shopping around and intend to move any accounts to the lender that can provide credit with the best terms. Most banks will want to keep you as a customer.
Regardless of the age or reputation of your family business, or where you go for financing, you’re going to have to prove to every lender that it is a financially solid concern, with the capability of long-term survival. So make sure you have all your paperwork in order, including all financial and tax statements, all profit and loss history, as well as a list of contacts for credit references.
You’ll also need to provide a pro forma to each potential lender. This will be a description of how you intend to utilize your loan or line of credit, how it will affect your cash flow, and how you anticipate paying back the money you’re going to borrow.
Once you’ve secured funding, make sure you stick religiously to a repayment schedule. As you continue to display credit worthiness, you will be able to increase your credit limit, borrow at more favorable rates, and most important, keep the business going without going broke.
Al Krulick is an award-winning journalist with dozens of years of writing experience. He writes and blogs for Debt.org.
Building a Dream Team, Part 1
This episode of Finance Talk explores how advisors can align with third-party professionals in order to provide more comprehensive services.
Didier Sornette: How we can predict the next financial crisis
The 2007-2008 financial crisis, you might think, was an unpredictable one-time crash. But Didier Sornette and his Financial Crisis Observatory have plotted a set of early warning signs for unstable, growing systems, tracking the moment when any bubble is about to pop. (And he’s seeing it happen again, right now.)
Didier Sornette studies whether it is possible to anticipate big changes or predict crises in complex systems.
WHY YOU SHOULD LISTEN TO HIM?
While financial crashes, recessions, earthquakes and other extreme events appear chaotic, Didier Sornette’s research is focused on finding out whether they are, in fact, predictable. They may happen often as a surprise, he suggests, but they don’t come out of the blue: the most extreme risks (and gains) are what he calls “dragon kings” that almost always result from a visible drift toward a critical instability. In his hypothesis, this instability has measurable technical and/or socio-economical precursors. As he says: “Crises are not external shocks.”
An expert on complex systems, Sornette is the chair of entrepreneurial risk at the Swiss Federal Institute of Technology, and director of the Financial Crisis Observatory, a project to test the hypothesis that markets can be predictable, especially during bubbles. He’s the author of Why Stock Markets Crash: Critical Events in Complex Financial Systems.
“Didier Sornette has immersed his life in risk.” Wall Street Journal
The American Family Financial Crisis
Some pretty alarming statistics of the American family’s financial reality. Let’s all change this with one step at a time and make sure that you have a process for making smart financial decisions in your life. It’s time to take charge of our finances and reverse this trend.
My parents won’t listen to my money advice!
Even if your parents don’t trust your judgment, you can still steer them in the right financial direction.
Mike Koenigs Interviews John Assaraf About Brain Performance and Shattering Your Financial Goals
Do you ever feel like there’s an invisible barrier preventing you from
reaching your financial goals …
… no matter how hard you work, how diligent you are in managing your money,
and how much you learn?
Well, the world’s top neuroscientists and brain experts say … you’re right!
Science has proven that every human being is conditioned to earn only a
certain amount of income. Some people are conditioned to earn $30,000 or
$50,000. Others are conditioned to earn $250,000 or even $500,000…
But the bottom line is … you have a financial “glass ceiling“!
Scientists now know that you will NEVER outperform your own internal
hidden financial self-image. Your current financial results are nothing
more than old neural patterns, beliefs, perceptions and habits that you’ve
accumulated over your life.
But brainscan studies have PROVEN something really exciting…
You can re-wire and strengthen the key areas in your brain that control your
conscious thoughts AND subconscious feelings and emotions that influence
every financial and business decision you make.
This requires applying the right brain-training methodologies and
technologies in the right way … so you can to replace limiting beliefs,
behaviors, and habits that are currently keeping you stuck.
Cindy David – What Every Canadian Must Know About Life Insurance
“I’d categorize Portfolio First Aid as a serious investment primer that has the laudable, if ambitious, goal of raising the sophistication level of the general public.”
—Jonathan Chevreau, Financial Post
“Portfolio First Aid has the right pedigree as an advice tome on healthy investing. Covers the bases of portfolio balance, building wealth, investing for income and managing risk.”
—The Edmonton Journal
The financial meltdown has taken a severe toll on the finances of Canadians, and on their confidence in financial and investment advisors. Canadians need help to learn how to diagnose what is the greatest threat to their long-term financial well-being and to follow a course of treatment to recovery.
Financial First Aid for Canadian Investors is for all the battered and bloodied investors whose portfolios are in tatters and who lack direction about what to do next. By examining the lessons to be learned from mistakes made in both good and bad markets, the authors address the common and recurring investment blunders they have witnessed over many years, and offer a clear prescription for how to repair wounded portfolios.