Tag: Perils

The Perils of Short-Term Business Loans #business #english


#short term business loans

#

The Perils of Short-Term Business Loans

Principals, Whitestone Partners Inc. a management-consulting firm

September 15, 2015

Funding your start-up is seldom easy. Your options are limited. Friends and family members normally can only invest a small amount. Bank loans can be hard to come by. Government programs can take months to navigate. Small business owners may consider alternative and short-term lenders when cash gets tight. However, before doing so, you need to understand what you are buying.

As example, let s say that you are going to borrow $50,000. You only need the capital for one month and the small-business lender tells you it charges three percent. In most cases, this is three percent per month. In other words, if you borrow $50,000 for one month, you must repay $51,500 ($50,000 of principal plus $1,500 of interest).

If you need to extend for an additional month, it is another three percent. If you do that for a year (12 times), you would pay $18,000 in interest (12 times $1,500). However, $18,000 divided by $50,000 is 36 percent. Therefore, even if you only keep the loan for one month, you are paying an interest rate that is 36 percent per year. Of course, you ll never hear one of these lenders say that they are charging you 36 percent. That rate doesn t sound attractive. Nevertheless, that s what it is. You wouldn t dream of paying that interest rate for a home loan or a car loan. Most credit cards offer better rates.

Related:Cash Crunch: What s the Best Loan for Your Small Business?

This type of lending is very expensive. In short, almost any other loan you could get would cost you less. You could take a second mortgage on your home, refinance your automobile, apply for a new credit card or ask your Uncle John for a loan. Explore all of the other options before taking this type of loan. It s probable that any other option would cost you less, probably much less.

Another option is to bring money into your business by taking on a partner — an angel investor. Sell part of your business to an investor to get the money you need. The popular show Shark Tank shows people trying to do this each week. If you follow this route, there are many precautions you should take, but that s another topic.

Suppose you have no other options. There are no viable investors. You don t own a home. Your car loans are maxed out and credit card companies aren t interested because your credit isn t good. If you literally have no other options, short-term or alternative lending might make sense. The key question is how long will you need to borrow the money?

If you will need money for the long term and there is no other source of capital, our best advice is to close down your business. Essentially no legal enterprise can deliver a return of more than 36 percent in the end. If your business doesn t deliver more than your cost of capital, you will eventually go out of business anyway. Facing that fact now will allow you to cut your losses.

On the other hand, if you truly need the money for only a short time, it may be that such a loan will make sense. For example, you owe your suppliers money. They are refusing to provide the material you need to work until they are paid. Customers owe you money for work you have previously done. What you are owed is enough to cover your obligations and you believe that you will receive payment in the near future. In this case, a short-term loan, even at a very high interest rate may make sense because it allows you to keep working.

Be cautious, there are many lenders that prey on small business people who have a dream, but are not financially sophisticated. In some cases, the rates are usury. Accepting such rates will cause you to dig a deeper hole in the long run. Nevertheless, there may be situations where these loans are appropriate.


Tags : , , , , ,

Perils of a Broken Corporate Culture #business #invoices


#business ethics articles

#

Ethics & Compliance Matters

Reputation Damage and Tone at the Top: Uber Scandal Underscores How Corporate Culture can Bring a Company to its Knees

Reputation Damage and Tone at the Top: Uber Scandal Underscores How Corporate Culture can Bring a Company to its Knees

Uber has had its share of public relations problems lately, and is now known as yet another company having to deal with current business ethics issues. From the taxi-alternative start-up’s drivers claiming they don’t make nearly as much money as they originally promised to none-the-wiser customers getting stuck with hefty price surges at the ends of rides. As if this weren’t enough to land Uber an F rating from the Better Business Bureau (in fact, this and a few other Uber business practices were), Senior Vice President Emil Michael’s comments at a recent dinner have pushed this company into a full-on PR disaster.

Creating Culture One (Wrong) Word at a Time

The nutshell: At a dinner attended by a Buzzfeed reporter, Michael suggested Uber would embark on a smear campaign against journalists who criticized the company. In this conversation, Michael said Uber could spend millions of dollars to hire investigators to dig into the journalists’ personal data and use the information they found about their critics to threaten and/or publicly embarrass them. Although Michael claims he thought the conversation was off the record, according to the Buzzfeed reporter, it wasn’t. And he ran with the story .

Not surprisingly, a media storm ensued, leaving Uber CEO Travis Kalanick no other choice but to respond. But Kalanick’s “apology” appeared less than sincere. Rather than fire Michael for insinuating Uber would engage in such unethical business practices, he posted 14 tweets on his personal Twitter account, essentially saying his senior executive’s comments were “terrible.” Uber’s latest situation clearly speaks to what some see as the end of the old tech genre that was focused on changing the world and the move to self-enrichment.

Textbook Case for the Need for Strong “Tone at the Top”

It’s safe to say that Uber is in hot PR water, and it may be very difficult for the company to climb out. Why is that? Because the laundry list of reputation-damaging unethical business practices at Uber has experienced in the past several months may be indicative of a deeper, more critical issue: poor tone at the top, a broken organizational culture and possibly bad business ethics.

What do we mean when we talk about tone from the top? A successful ethics and compliance program must be built on a solid foundation of business ethics that are fully and openly endorsed by senior management. Otherwise, the program may amount to little more than a hollow set of internal rules and regulations. There should be an unambiguous, visible and active commitment to compliance.

For start-ups and some companies in the tech sector, culture-related wrongdoing isn’t new. In fact, it was a journalist’s report against Uber for what she believed were unethical business practices that prompted Michael’s comments at that dinner. Rather than take steps to investigate or address the bad behavior it was being accused of, Uber resorted to threats against the reporter and other critics of the company. This response underscores how problematic its culture seems to be.

A Broken Corporate Culture Will Come Back to Bite You—and Not Just Through Bad Press

While Uber may think this issue will disappear with time, it won’t. If there is an underlying issue with the company’s culture, or if it is truly one of the many companies with ethical issues, it will rear its head again in the future—it’s only a matter of time.

The same may be true for other companies in the tech space if The Wall Street Journal reporter Christopher Mims ‘ concerns play out. In his recent article, “Uber and a Fraught New Era for Tech ” he writes, “The emphasis of the tech companies being built now is much more zero-sum. Whom do we need to destroy in an effort to enrich ourselves and our investors, and what is the best vehicle for creating a consumer need that will facilitate that quest?”

Uber is at a critical crossroads and their next steps could ultimately determine their long-term success. If the company doesn’t take the time needed now to establish a strong culture. it runs the risk of losing key partnerships, employees and drivers, and so much more.

If they are nurturing an environment that prohibits or discourages employees or others from speaking up, business risks alone (i.e. safety, etc.) could significantly hamper this thriving, innovative organization.

If that happens, we all lose.


Tags : , , , , ,

The Perils of Short-Term Business Loans #business #lookup


#short term business loans

#

The Perils of Short-Term Business Loans

Principals, Whitestone Partners Inc. a management-consulting firm

September 15, 2015

Funding your start-up is seldom easy. Your options are limited. Friends and family members normally can only invest a small amount. Bank loans can be hard to come by. Government programs can take months to navigate. Small business owners may consider alternative and short-term lenders when cash gets tight. However, before doing so, you need to understand what you are buying.

As example, let s say that you are going to borrow $50,000. You only need the capital for one month and the small-business lender tells you it charges three percent. In most cases, this is three percent per month. In other words, if you borrow $50,000 for one month, you must repay $51,500 ($50,000 of principal plus $1,500 of interest).

If you need to extend for an additional month, it is another three percent. If you do that for a year (12 times), you would pay $18,000 in interest (12 times $1,500). However, $18,000 divided by $50,000 is 36 percent. Therefore, even if you only keep the loan for one month, you are paying an interest rate that is 36 percent per year. Of course, you ll never hear one of these lenders say that they are charging you 36 percent. That rate doesn t sound attractive. Nevertheless, that s what it is. You wouldn t dream of paying that interest rate for a home loan or a car loan. Most credit cards offer better rates.

Related:Cash Crunch: What s the Best Loan for Your Small Business?

This type of lending is very expensive. In short, almost any other loan you could get would cost you less. You could take a second mortgage on your home, refinance your automobile, apply for a new credit card or ask your Uncle John for a loan. Explore all of the other options before taking this type of loan. It s probable that any other option would cost you less, probably much less.

Another option is to bring money into your business by taking on a partner — an angel investor. Sell part of your business to an investor to get the money you need. The popular show Shark Tank shows people trying to do this each week. If you follow this route, there are many precautions you should take, but that s another topic.

Suppose you have no other options. There are no viable investors. You don t own a home. Your car loans are maxed out and credit card companies aren t interested because your credit isn t good. If you literally have no other options, short-term or alternative lending might make sense. The key question is how long will you need to borrow the money?

If you will need money for the long term and there is no other source of capital, our best advice is to close down your business. Essentially no legal enterprise can deliver a return of more than 36 percent in the end. If your business doesn t deliver more than your cost of capital, you will eventually go out of business anyway. Facing that fact now will allow you to cut your losses.

On the other hand, if you truly need the money for only a short time, it may be that such a loan will make sense. For example, you owe your suppliers money. They are refusing to provide the material you need to work until they are paid. Customers owe you money for work you have previously done. What you are owed is enough to cover your obligations and you believe that you will receive payment in the near future. In this case, a short-term loan, even at a very high interest rate may make sense because it allows you to keep working.

Be cautious, there are many lenders that prey on small business people who have a dream, but are not financially sophisticated. In some cases, the rates are usury. Accepting such rates will cause you to dig a deeper hole in the long run. Nevertheless, there may be situations where these loans are appropriate.


Tags : , , , , ,

The Perils of Short-Term Business Loans #sba #loan


#short term business loans

#

The Perils of Short-Term Business Loans

Principals, Whitestone Partners Inc. a management-consulting firm

September 15, 2015

Funding your start-up is seldom easy. Your options are limited. Friends and family members normally can only invest a small amount. Bank loans can be hard to come by. Government programs can take months to navigate. Small business owners may consider alternative and short-term lenders when cash gets tight. However, before doing so, you need to understand what you are buying.

As example, let s say that you are going to borrow $50,000. You only need the capital for one month and the small-business lender tells you it charges three percent. In most cases, this is three percent per month. In other words, if you borrow $50,000 for one month, you must repay $51,500 ($50,000 of principal plus $1,500 of interest).

If you need to extend for an additional month, it is another three percent. If you do that for a year (12 times), you would pay $18,000 in interest (12 times $1,500). However, $18,000 divided by $50,000 is 36 percent. Therefore, even if you only keep the loan for one month, you are paying an interest rate that is 36 percent per year. Of course, you ll never hear one of these lenders say that they are charging you 36 percent. That rate doesn t sound attractive. Nevertheless, that s what it is. You wouldn t dream of paying that interest rate for a home loan or a car loan. Most credit cards offer better rates.

Related:Cash Crunch: What s the Best Loan for Your Small Business?

This type of lending is very expensive. In short, almost any other loan you could get would cost you less. You could take a second mortgage on your home, refinance your automobile, apply for a new credit card or ask your Uncle John for a loan. Explore all of the other options before taking this type of loan. It s probable that any other option would cost you less, probably much less.

Another option is to bring money into your business by taking on a partner — an angel investor. Sell part of your business to an investor to get the money you need. The popular show Shark Tank shows people trying to do this each week. If you follow this route, there are many precautions you should take, but that s another topic.

Suppose you have no other options. There are no viable investors. You don t own a home. Your car loans are maxed out and credit card companies aren t interested because your credit isn t good. If you literally have no other options, short-term or alternative lending might make sense. The key question is how long will you need to borrow the money?

If you will need money for the long term and there is no other source of capital, our best advice is to close down your business. Essentially no legal enterprise can deliver a return of more than 36 percent in the end. If your business doesn t deliver more than your cost of capital, you will eventually go out of business anyway. Facing that fact now will allow you to cut your losses.

On the other hand, if you truly need the money for only a short time, it may be that such a loan will make sense. For example, you owe your suppliers money. They are refusing to provide the material you need to work until they are paid. Customers owe you money for work you have previously done. What you are owed is enough to cover your obligations and you believe that you will receive payment in the near future. In this case, a short-term loan, even at a very high interest rate may make sense because it allows you to keep working.

Be cautious, there are many lenders that prey on small business people who have a dream, but are not financially sophisticated. In some cases, the rates are usury. Accepting such rates will cause you to dig a deeper hole in the long run. Nevertheless, there may be situations where these loans are appropriate.


Tags : , , , , ,

Perils of a Broken Corporate Culture #business #idea


#business ethics articles

#

Ethics & Compliance Matters

Reputation Damage and Tone at the Top: Uber Scandal Underscores How Corporate Culture can Bring a Company to its Knees

Reputation Damage and Tone at the Top: Uber Scandal Underscores How Corporate Culture can Bring a Company to its Knees

Uber has had its share of public relations problems lately, and is now known as yet another company having to deal with current business ethics issues. From the taxi-alternative start-up’s drivers claiming they don’t make nearly as much money as they originally promised to none-the-wiser customers getting stuck with hefty price surges at the ends of rides. As if this weren’t enough to land Uber an F rating from the Better Business Bureau (in fact, this and a few other Uber business practices were), Senior Vice President Emil Michael’s comments at a recent dinner have pushed this company into a full-on PR disaster.

Creating Culture One (Wrong) Word at a Time

The nutshell: At a dinner attended by a Buzzfeed reporter, Michael suggested Uber would embark on a smear campaign against journalists who criticized the company. In this conversation, Michael said Uber could spend millions of dollars to hire investigators to dig into the journalists’ personal data and use the information they found about their critics to threaten and/or publicly embarrass them. Although Michael claims he thought the conversation was off the record, according to the Buzzfeed reporter, it wasn’t. And he ran with the story .

Not surprisingly, a media storm ensued, leaving Uber CEO Travis Kalanick no other choice but to respond. But Kalanick’s “apology” appeared less than sincere. Rather than fire Michael for insinuating Uber would engage in such unethical business practices, he posted 14 tweets on his personal Twitter account, essentially saying his senior executive’s comments were “terrible.” Uber’s latest situation clearly speaks to what some see as the end of the old tech genre that was focused on changing the world and the move to self-enrichment.

Textbook Case for the Need for Strong “Tone at the Top”

It’s safe to say that Uber is in hot PR water, and it may be very difficult for the company to climb out. Why is that? Because the laundry list of reputation-damaging unethical business practices at Uber has experienced in the past several months may be indicative of a deeper, more critical issue: poor tone at the top, a broken organizational culture and possibly bad business ethics.

What do we mean when we talk about tone from the top? A successful ethics and compliance program must be built on a solid foundation of business ethics that are fully and openly endorsed by senior management. Otherwise, the program may amount to little more than a hollow set of internal rules and regulations. There should be an unambiguous, visible and active commitment to compliance.

For start-ups and some companies in the tech sector, culture-related wrongdoing isn’t new. In fact, it was a journalist’s report against Uber for what she believed were unethical business practices that prompted Michael’s comments at that dinner. Rather than take steps to investigate or address the bad behavior it was being accused of, Uber resorted to threats against the reporter and other critics of the company. This response underscores how problematic its culture seems to be.

A Broken Corporate Culture Will Come Back to Bite You—and Not Just Through Bad Press

While Uber may think this issue will disappear with time, it won’t. If there is an underlying issue with the company’s culture, or if it is truly one of the many companies with ethical issues, it will rear its head again in the future—it’s only a matter of time.

The same may be true for other companies in the tech space if The Wall Street Journal reporter Christopher Mims ‘ concerns play out. In his recent article, “Uber and a Fraught New Era for Tech ” he writes, “The emphasis of the tech companies being built now is much more zero-sum. Whom do we need to destroy in an effort to enrich ourselves and our investors, and what is the best vehicle for creating a consumer need that will facilitate that quest?”

Uber is at a critical crossroads and their next steps could ultimately determine their long-term success. If the company doesn’t take the time needed now to establish a strong culture. it runs the risk of losing key partnerships, employees and drivers, and so much more.

If they are nurturing an environment that prohibits or discourages employees or others from speaking up, business risks alone (i.e. safety, etc.) could significantly hamper this thriving, innovative organization.

If that happens, we all lose.


Tags : , , , , ,

The Perils of Short-Term Business Loans #internet #business #ideas


#short term business loans

#

The Perils of Short-Term Business Loans

Principals, Whitestone Partners Inc. a management-consulting firm

September 15, 2015

Funding your start-up is seldom easy. Your options are limited. Friends and family members normally can only invest a small amount. Bank loans can be hard to come by. Government programs can take months to navigate. Small business owners may consider alternative and short-term lenders when cash gets tight. However, before doing so, you need to understand what you are buying.

As example, let s say that you are going to borrow $50,000. You only need the capital for one month and the small-business lender tells you it charges three percent. In most cases, this is three percent per month. In other words, if you borrow $50,000 for one month, you must repay $51,500 ($50,000 of principal plus $1,500 of interest).

If you need to extend for an additional month, it is another three percent. If you do that for a year (12 times), you would pay $18,000 in interest (12 times $1,500). However, $18,000 divided by $50,000 is 36 percent. Therefore, even if you only keep the loan for one month, you are paying an interest rate that is 36 percent per year. Of course, you ll never hear one of these lenders say that they are charging you 36 percent. That rate doesn t sound attractive. Nevertheless, that s what it is. You wouldn t dream of paying that interest rate for a home loan or a car loan. Most credit cards offer better rates.

Related:Cash Crunch: What s the Best Loan for Your Small Business?

This type of lending is very expensive. In short, almost any other loan you could get would cost you less. You could take a second mortgage on your home, refinance your automobile, apply for a new credit card or ask your Uncle John for a loan. Explore all of the other options before taking this type of loan. It s probable that any other option would cost you less, probably much less.

Another option is to bring money into your business by taking on a partner — an angel investor. Sell part of your business to an investor to get the money you need. The popular show Shark Tank shows people trying to do this each week. If you follow this route, there are many precautions you should take, but that s another topic.

Suppose you have no other options. There are no viable investors. You don t own a home. Your car loans are maxed out and credit card companies aren t interested because your credit isn t good. If you literally have no other options, short-term or alternative lending might make sense. The key question is how long will you need to borrow the money?

If you will need money for the long term and there is no other source of capital, our best advice is to close down your business. Essentially no legal enterprise can deliver a return of more than 36 percent in the end. If your business doesn t deliver more than your cost of capital, you will eventually go out of business anyway. Facing that fact now will allow you to cut your losses.

On the other hand, if you truly need the money for only a short time, it may be that such a loan will make sense. For example, you owe your suppliers money. They are refusing to provide the material you need to work until they are paid. Customers owe you money for work you have previously done. What you are owed is enough to cover your obligations and you believe that you will receive payment in the near future. In this case, a short-term loan, even at a very high interest rate may make sense because it allows you to keep working.

Be cautious, there are many lenders that prey on small business people who have a dream, but are not financially sophisticated. In some cases, the rates are usury. Accepting such rates will cause you to dig a deeper hole in the long run. Nevertheless, there may be situations where these loans are appropriate.


Tags : , , , , ,

The Perils of Short-Term Business Loans #business #credit #cards


#short term business loans

#

The Perils of Short-Term Business Loans

Principals, Whitestone Partners Inc. a management-consulting firm

September 15, 2015

Funding your start-up is seldom easy. Your options are limited. Friends and family members normally can only invest a small amount. Bank loans can be hard to come by. Government programs can take months to navigate. Small business owners may consider alternative and short-term lenders when cash gets tight. However, before doing so, you need to understand what you are buying.

As example, let s say that you are going to borrow $50,000. You only need the capital for one month and the small-business lender tells you it charges three percent. In most cases, this is three percent per month. In other words, if you borrow $50,000 for one month, you must repay $51,500 ($50,000 of principal plus $1,500 of interest).

If you need to extend for an additional month, it is another three percent. If you do that for a year (12 times), you would pay $18,000 in interest (12 times $1,500). However, $18,000 divided by $50,000 is 36 percent. Therefore, even if you only keep the loan for one month, you are paying an interest rate that is 36 percent per year. Of course, you ll never hear one of these lenders say that they are charging you 36 percent. That rate doesn t sound attractive. Nevertheless, that s what it is. You wouldn t dream of paying that interest rate for a home loan or a car loan. Most credit cards offer better rates.

Related:Cash Crunch: What s the Best Loan for Your Small Business?

This type of lending is very expensive. In short, almost any other loan you could get would cost you less. You could take a second mortgage on your home, refinance your automobile, apply for a new credit card or ask your Uncle John for a loan. Explore all of the other options before taking this type of loan. It s probable that any other option would cost you less, probably much less.

Another option is to bring money into your business by taking on a partner — an angel investor. Sell part of your business to an investor to get the money you need. The popular show Shark Tank shows people trying to do this each week. If you follow this route, there are many precautions you should take, but that s another topic.

Suppose you have no other options. There are no viable investors. You don t own a home. Your car loans are maxed out and credit card companies aren t interested because your credit isn t good. If you literally have no other options, short-term or alternative lending might make sense. The key question is how long will you need to borrow the money?

If you will need money for the long term and there is no other source of capital, our best advice is to close down your business. Essentially no legal enterprise can deliver a return of more than 36 percent in the end. If your business doesn t deliver more than your cost of capital, you will eventually go out of business anyway. Facing that fact now will allow you to cut your losses.

On the other hand, if you truly need the money for only a short time, it may be that such a loan will make sense. For example, you owe your suppliers money. They are refusing to provide the material you need to work until they are paid. Customers owe you money for work you have previously done. What you are owed is enough to cover your obligations and you believe that you will receive payment in the near future. In this case, a short-term loan, even at a very high interest rate may make sense because it allows you to keep working.

Be cautious, there are many lenders that prey on small business people who have a dream, but are not financially sophisticated. In some cases, the rates are usury. Accepting such rates will cause you to dig a deeper hole in the long run. Nevertheless, there may be situations where these loans are appropriate.


Tags : , , , , ,

Perils of a Broken Corporate Culture #online #business #degree


#business ethics articles

#

Ethics & Compliance Matters

Reputation Damage and Tone at the Top: Uber Scandal Underscores How Corporate Culture can Bring a Company to its Knees

Reputation Damage and Tone at the Top: Uber Scandal Underscores How Corporate Culture can Bring a Company to its Knees

Uber has had its share of public relations problems lately, and is now known as yet another company having to deal with current business ethics issues. From the taxi-alternative start-up’s drivers claiming they don’t make nearly as much money as they originally promised to none-the-wiser customers getting stuck with hefty price surges at the ends of rides. As if this weren’t enough to land Uber an F rating from the Better Business Bureau (in fact, this and a few other Uber business practices were), Senior Vice President Emil Michael’s comments at a recent dinner have pushed this company into a full-on PR disaster.

Creating Culture One (Wrong) Word at a Time

The nutshell: At a dinner attended by a Buzzfeed reporter, Michael suggested Uber would embark on a smear campaign against journalists who criticized the company. In this conversation, Michael said Uber could spend millions of dollars to hire investigators to dig into the journalists’ personal data and use the information they found about their critics to threaten and/or publicly embarrass them. Although Michael claims he thought the conversation was off the record, according to the Buzzfeed reporter, it wasn’t. And he ran with the story .

Not surprisingly, a media storm ensued, leaving Uber CEO Travis Kalanick no other choice but to respond. But Kalanick’s “apology” appeared less than sincere. Rather than fire Michael for insinuating Uber would engage in such unethical business practices, he posted 14 tweets on his personal Twitter account, essentially saying his senior executive’s comments were “terrible.” Uber’s latest situation clearly speaks to what some see as the end of the old tech genre that was focused on changing the world and the move to self-enrichment.

Textbook Case for the Need for Strong “Tone at the Top”

It’s safe to say that Uber is in hot PR water, and it may be very difficult for the company to climb out. Why is that? Because the laundry list of reputation-damaging unethical business practices at Uber has experienced in the past several months may be indicative of a deeper, more critical issue: poor tone at the top, a broken organizational culture and possibly bad business ethics.

What do we mean when we talk about tone from the top? A successful ethics and compliance program must be built on a solid foundation of business ethics that are fully and openly endorsed by senior management. Otherwise, the program may amount to little more than a hollow set of internal rules and regulations. There should be an unambiguous, visible and active commitment to compliance.

For start-ups and some companies in the tech sector, culture-related wrongdoing isn’t new. In fact, it was a journalist’s report against Uber for what she believed were unethical business practices that prompted Michael’s comments at that dinner. Rather than take steps to investigate or address the bad behavior it was being accused of, Uber resorted to threats against the reporter and other critics of the company. This response underscores how problematic its culture seems to be.

A Broken Corporate Culture Will Come Back to Bite You—and Not Just Through Bad Press

While Uber may think this issue will disappear with time, it won’t. If there is an underlying issue with the company’s culture, or if it is truly one of the many companies with ethical issues, it will rear its head again in the future—it’s only a matter of time.

The same may be true for other companies in the tech space if The Wall Street Journal reporter Christopher Mims ‘ concerns play out. In his recent article, “Uber and a Fraught New Era for Tech ” he writes, “The emphasis of the tech companies being built now is much more zero-sum. Whom do we need to destroy in an effort to enrich ourselves and our investors, and what is the best vehicle for creating a consumer need that will facilitate that quest?”

Uber is at a critical crossroads and their next steps could ultimately determine their long-term success. If the company doesn’t take the time needed now to establish a strong culture. it runs the risk of losing key partnerships, employees and drivers, and so much more.

If they are nurturing an environment that prohibits or discourages employees or others from speaking up, business risks alone (i.e. safety, etc.) could significantly hamper this thriving, innovative organization.

If that happens, we all lose.


Tags : , , , , ,

The Perils of Short-Term Business Loans #home #based #business #opportunities


#short term business loans

#

The Perils of Short-Term Business Loans

Principals, Whitestone Partners Inc. a management-consulting firm

September 15, 2015

Funding your start-up is seldom easy. Your options are limited. Friends and family members normally can only invest a small amount. Bank loans can be hard to come by. Government programs can take months to navigate. Small business owners may consider alternative and short-term lenders when cash gets tight. However, before doing so, you need to understand what you are buying.

As example, let s say that you are going to borrow $50,000. You only need the capital for one month and the small-business lender tells you it charges three percent. In most cases, this is three percent per month. In other words, if you borrow $50,000 for one month, you must repay $51,500 ($50,000 of principal plus $1,500 of interest).

If you need to extend for an additional month, it is another three percent. If you do that for a year (12 times), you would pay $18,000 in interest (12 times $1,500). However, $18,000 divided by $50,000 is 36 percent. Therefore, even if you only keep the loan for one month, you are paying an interest rate that is 36 percent per year. Of course, you ll never hear one of these lenders say that they are charging you 36 percent. That rate doesn t sound attractive. Nevertheless, that s what it is. You wouldn t dream of paying that interest rate for a home loan or a car loan. Most credit cards offer better rates.

Related:Cash Crunch: What s the Best Loan for Your Small Business?

This type of lending is very expensive. In short, almost any other loan you could get would cost you less. You could take a second mortgage on your home, refinance your automobile, apply for a new credit card or ask your Uncle John for a loan. Explore all of the other options before taking this type of loan. It s probable that any other option would cost you less, probably much less.

Another option is to bring money into your business by taking on a partner — an angel investor. Sell part of your business to an investor to get the money you need. The popular show Shark Tank shows people trying to do this each week. If you follow this route, there are many precautions you should take, but that s another topic.

Suppose you have no other options. There are no viable investors. You don t own a home. Your car loans are maxed out and credit card companies aren t interested because your credit isn t good. If you literally have no other options, short-term or alternative lending might make sense. The key question is how long will you need to borrow the money?

If you will need money for the long term and there is no other source of capital, our best advice is to close down your business. Essentially no legal enterprise can deliver a return of more than 36 percent in the end. If your business doesn t deliver more than your cost of capital, you will eventually go out of business anyway. Facing that fact now will allow you to cut your losses.

On the other hand, if you truly need the money for only a short time, it may be that such a loan will make sense. For example, you owe your suppliers money. They are refusing to provide the material you need to work until they are paid. Customers owe you money for work you have previously done. What you are owed is enough to cover your obligations and you believe that you will receive payment in the near future. In this case, a short-term loan, even at a very high interest rate may make sense because it allows you to keep working.

Be cautious, there are many lenders that prey on small business people who have a dream, but are not financially sophisticated. In some cases, the rates are usury. Accepting such rates will cause you to dig a deeper hole in the long run. Nevertheless, there may be situations where these loans are appropriate.


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The Perils of Short-Term Business Loans #business #checking #account


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The Perils of Short-Term Business Loans

Principals, Whitestone Partners Inc. a management-consulting firm

September 15, 2015

Funding your start-up is seldom easy. Your options are limited. Friends and family members normally can only invest a small amount. Bank loans can be hard to come by. Government programs can take months to navigate. Small business owners may consider alternative and short-term lenders when cash gets tight. However, before doing so, you need to understand what you are buying.

As example, let s say that you are going to borrow $50,000. You only need the capital for one month and the small-business lender tells you it charges three percent. In most cases, this is three percent per month. In other words, if you borrow $50,000 for one month, you must repay $51,500 ($50,000 of principal plus $1,500 of interest).

If you need to extend for an additional month, it is another three percent. If you do that for a year (12 times), you would pay $18,000 in interest (12 times $1,500). However, $18,000 divided by $50,000 is 36 percent. Therefore, even if you only keep the loan for one month, you are paying an interest rate that is 36 percent per year. Of course, you ll never hear one of these lenders say that they are charging you 36 percent. That rate doesn t sound attractive. Nevertheless, that s what it is. You wouldn t dream of paying that interest rate for a home loan or a car loan. Most credit cards offer better rates.

Related:Cash Crunch: What s the Best Loan for Your Small Business?

This type of lending is very expensive. In short, almost any other loan you could get would cost you less. You could take a second mortgage on your home, refinance your automobile, apply for a new credit card or ask your Uncle John for a loan. Explore all of the other options before taking this type of loan. It s probable that any other option would cost you less, probably much less.

Another option is to bring money into your business by taking on a partner — an angel investor. Sell part of your business to an investor to get the money you need. The popular show Shark Tank shows people trying to do this each week. If you follow this route, there are many precautions you should take, but that s another topic.

Suppose you have no other options. There are no viable investors. You don t own a home. Your car loans are maxed out and credit card companies aren t interested because your credit isn t good. If you literally have no other options, short-term or alternative lending might make sense. The key question is how long will you need to borrow the money?

If you will need money for the long term and there is no other source of capital, our best advice is to close down your business. Essentially no legal enterprise can deliver a return of more than 36 percent in the end. If your business doesn t deliver more than your cost of capital, you will eventually go out of business anyway. Facing that fact now will allow you to cut your losses.

On the other hand, if you truly need the money for only a short time, it may be that such a loan will make sense. For example, you owe your suppliers money. They are refusing to provide the material you need to work until they are paid. Customers owe you money for work you have previously done. What you are owed is enough to cover your obligations and you believe that you will receive payment in the near future. In this case, a short-term loan, even at a very high interest rate may make sense because it allows you to keep working.

Be cautious, there are many lenders that prey on small business people who have a dream, but are not financially sophisticated. In some cases, the rates are usury. Accepting such rates will cause you to dig a deeper hole in the long run. Nevertheless, there may be situations where these loans are appropriate.


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