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Importance of Obtaining a Small Business Line of Credit

Small business lines of credit are very important tools for small business owners to utilize. As your business grows, the need for additional funds grows; lines of credit provide ready cash to help you meet short term funding needs, such as increasing inventory, dealing with seasonal cash flow issues, or taking advantage of unexpected opportunities as they come along.

Lines of credit help a business continue to operate and provide service to their customers and clients. Being able to get a small business line of credit is a signal to both the ownership and customer base that the business is well run and has the confidence of the banks and other lenders.

Getting a small business line of credit is very difficult for many small businesses in the early days of their operations. That’s because the survival rate for them is simply not very good during this period of time and many good business ideas are not able to generate the income or customer base that can allow them to make it through this tough start up period.

In order to get this during this period it is often necessary to provide a personal guarantee or provide the banks with collateral or assets to secure the small business line of credit. That gives the lending institution an assurance that whatever happens with the business they will get their money back. It also provides them with the knowledge that the owners of the business have the confidence in the quality and management of the enterprise to invest even more of their personal assets to guarantee its success.

Once a business has been in operation over two years there are more options to qualify for a small business line of credit without using your personal credit. That’s because the business has gotten over that two year invisible barrier that traps so many others and it is a sign to the lending institutions like banks and credit unions that the business is being managed and operated properly. These banks issuing this type of credit line are rare but do exist.

This allows a small business to pay its bills even faster by letting them access funds before their customers pay their invoices. It lets them smooth out any rough edges in their cash flow system and ensures that however bad business may be in the short term that they can survive over a longer period of time. It can also be used by the business to purchase or restock additional inventory, buy new equipment, and even pay for some long term capital expenses that it would not be able to do under its existing financing circumstances.

Six Sigma And Business Forecasting

They will do so because although the use of Six Sigma concepts in business forecasting is quite prevalent, it is one of the many aspects of Six Sigma that still remain under-publicized.

Lack of publicity, however, has not affected the use of Six Sigma concepts in business forecasting, easily evident from the increasing number of businesses that are utilizing Six Sigma concepts for business forecasting and allied activities.

How Six Sigma Aids Business Forecasting

Just a few decades back, business forecasting was considered the domain of senior and top management officials who usually relied on their experience, viewpoints, perceptions, and gut feelings for charting out the future prospects of the business. These techniques did not have any scientific basis, yet amazingly they proved quite effective, most probably because at that time monopolistic tendencies were prevalent, allowing businesses to get away even with the worst of business forecasting decisions.

However, the business environment has changed dramatically over the years, so much so that now no business can afford to base their business forecasting decisions solely on gut feelings and personal opinions. With growing customer awareness and increasing competition, businesses are now literally being forced to deploy highly effective management systems such as Six Sigma. Six Sigma helps in business forecasting by making available the most advanced scientific tools and techniques that rely mostly on facts and figures.

By following a data driven approach, Six Sigma automatically reduces the probability of erroneous business forecasting decisions that might have been a possibility, if such decisions were based on conventional techniques.

Importance of Six Sigma in Business Forecasting

In today’s globalized world, business forecasting has become one of the most important management functions. If business forecasting is not carried out properly, it can easily result in a complex situation where a business might find itself inundated with unsold products or services in the event of a market slump and vice versa.

In such situations, businesses will either have to bear huge losses or make their disappointments felt over missed business opportunities, both of which are detrimental for the future prospects of the business. However, by deploying Six Sigma concepts and methodologies, businesses can easily prevent such negative developments.

Six Sigma helps because it enables businesses to quantify customer needs and requirements, something that makes way for accurate business forecasts. Based on such accurate forecasts, the business can then easily alter its production plans in line with the potential future demand.

Six Sigma is basically a discipline in the guise of quality management system and as such it can be successfully deployed in each and every business domain. This implies that Six Sigma’s use in business forecasting is not an exception. For deploying Six Sigma concepts in other similar domains, businesses just need to use their imagination and creativity. The rest will follow automatically.

The Facts About Business Brokers

A business broker is a person or a brokerage firm that liaises between buyers and sellers of private businesses. They are also known as intermediaries or business transfer agents. The business broker also becomes known as the agent of the principal, which refers to the real buyers and sellers. The main task of a business broker is to assist the buyers and sellers in the sale of businesses, and this task branches out into many other responsibilities.

A business broker is tasked to determine the value of the business that is to be bought or sold. They have the necessary knowledge and expertise to come up with the MPSP Valuation, or the Most Probable Selling Price Valuation of a business. Aside from that, they can also come up with the Comparative Market Analysis because they have an authority in the market. Aside from appraising the business, it is also the broker’s responsibility to facilitate the sale or purchase of a business, from beginning to end. This involves taking care of advertisements and notices, handling the necessary paperwork, facilitating the interviews and discussions, and negotiating for the right price. They are also the ones who fill out the offer to purchase form. However, the responsibilities and authority of the business broker over the sale of purchase ends there. A business broker cannot sign documents, which is an act that can only be done by the principal.

Buyers and sellers are not required to employ the services of business brokers. However, a lot of buyers and sellers choose to use a business broker because they are very helpful in that they relieve the buyers and sellers of much of the stress in buying or selling a business. Aside from that, buyers and sellers also choose to employ business brokers because they are most likely well-connected to other buyers and sellers. This means that the broker himself is like a walking and talking advertisement of the principal buyer or seller.

Also, as mentioned above, the business broker has the professional exposure to the market and is especially helpful for buyers or sellers who have no idea whatsoever as to the value of their business. Business brokers also undergo formal training in appraisals. Moreover, their constant exposure to the market makes them experts in the field conditions. Buyers and sellers who employ business brokers will save a lot of time that can otherwise be wasted on wondering what to do next. Business brokers also help save time because they can already provide the necessary forms for the transaction.

For sellers, they can also be tasked to pre-screen buyers to find the more qualified ones, a headache that most buyers and sellers will do better to avoid. Determining whether a buyer is qualified or not is very important in facilitating a successful transaction in the shortest time possible. Yet another headache that the buyers and sellers can avoid, thanks to business brokers, are negotiations. Business brokers are used to negotiations and can negotiate more effectively for the right price.

There are three types of relationships that can occur between buyers or sellers and business brokers. The conventional buyer/seller-broker relationship is a full-service brokerage relationship wherein the broker will get a commission from the transaction. Such relationships are legalized under listing agreements and surrounded by fiduciary obligations. There are also some specifications as to the nature and extent of the relationship. This kind of relationship can also come in two forms. One is an individual broker working for a buyer or seller, and the second is a business broker working in behalf of a brokerage company.

Aside from the conventional relationship between brokers and principals, there is also what is called transactions brokers. These are brokers that do not represent the buyer or the seller in a transaction. They are a third-party agent who simply facilitates and assists in the transaction. The third kind of principal-broker relationship is called dual agency. A dual agent is a single business broker who represents both parties – the buyer and the seller – in a single transaction. In such cases, there are special laws, especially concerning negotiations of price. A dual agency can also refer to a situation wherein both the buyer and the seller are represented by the same brokerage firm, but are handled by different business brokers belonging to the firm. In such cases, the business brokers are called “intra-company agents”.

Business brokers are paid through commissions. The standard commission rates differ from one state law to another. The commission agreement is stated in the listing agreement that the broker or brokerage firm and the buyer or seller agrees upon before anything else. The amount of the commissions is also negotiable. Buyers and sellers should also be careful in choosing business brokers to deal with. Some states require broker licenses, and some may not. In states where licenses are required, buyers and sellers should only deal with certified licensed brokers. There are business brokers associations that can help a buyer or a seller choose a broker to employ. These associations bring together buyers, sellers, and business brokers.