Alternative Financing Vs. Venture Capital: Which Option Is Best for Boosting Working Capital?

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?

Total Parenteral Nutrition (TPN) Support

Parenteral nutrition refers to nutritional support provided by an intravenous route. Access may be a peripheral vein or central vein. Peripheral venous access is usually used for short term support and limits the volume of fluids and nutrients that can be delivered. Whenever possible, enteral nutrition is preferred in order to provide nutrients to the gut and maintain the intestinal barrier.Indications for Parenteral NutritionParenteral nutrition is used in cases of gut failure or severe gastrointestinal disease. Catheter-related sepsis is a significant risk in immunocompromised patients. In HIV/AIDS, TPN will induce weight gain, the composition of which depends on the underlying etiology of the malnutrition. Septic patients tend to gain primarily fat whereas those with malabsorption or inadequate dietary intake gain more body cell mass. It is possible that this modality may not be widely available throughout the Region. However, it is an option that should be pursued when necessary.Components of Parenteral NutritionThe solution for parenteral nutrition consists of nutrients in their simple form,namely dextrose, amino acids, lipids and micronutrients. Dextrose is the monosaccharide that provides the major source of non-protein energy. Each gram of dextrose in parenteral solution provides 3. 4 kilocalories or 14. 2 kilojoules. Carbohydrate should be provided in adequate amounts to spare protein, but not in excess as this may cause hyperglycemia, fatty liver or other complications. The recommended rate of dextrose infusion should not exceed 4 to 5 mg/kg/minute. Amino acids provide protein to maintain nitrogen balance and prevent degradation of somatic proteins. Protein requirements are calculated based on clinical condition and goals of treatment. Amino acid solutions provide 4 kilocalories per gram or 18. 1 kilojoules per gram. Parenteral lipid emulsions provide a concentrated source of energy and essential fatty acids. They may be used in conjunction with carbohydrate and amino acid solutions or alone for caloric enhancement. The energy content of lipid emulsions depends on the formulation. ten percent yields 1. 1 kilocalorie per mL; 20% yields 2. 0 kilocalories per mL; 30% yields 3. 0 kilocalories per mL. There is some evidence that parenteral lipids may have a negative effect on immunity. In patients with HIV infection lipids should not exceed 30% of total energy intake or 1 g/kg/day. Hyperlipidemia may also develop if lipids are not cleared. Thus serum lipids should be monitored at baseline and regular intervals thereafter. Micronutrients and electrolytes are provided as standardized components of parenteral solutions. These may be modified according to the needs of the patient.Anabolic TherapyNutrition support will usually result in weight gain, but for some PLWHA, classified as non-responders, there is evidence of an anabolic block, whereby the regained weight is composed of a disproportionately high amount of body fat with limited accretion of lean tissue. This phenomenon can be identified with body composition analysis. Thus,although re-feeding is always necessary, it is not always sufficient for some individuals. In cases where lean tissue gains are insufficient, an anabolic agent may be required such as testosterone replacement. Other anabolic therapies that have shown favorable results include Oxandrin, Decadurabolan, and Recombinant Growth Hormone.Palliative CareWhen AIDS patients become terminally ill and medical care becomes mainly palliative,not curative, the nutrition care plan should reflect the overall goals of care. Nutritional therapy is directed to alleviating symptoms and providing comfort. Nutrition support should be considered to improve quality of life if the patient, caregivers and medical team agree to this intervention.Common Dietary ProblemsDuring the course of treatment and care, many dietary problems can arise. Strategies to help alleviate common problems are addressed inPregnancy, Lactation and HIVPregnancy, lactation, and HIV disease engender physiologic stress, with increased nutritional needs for energy, protein and micronutrients. It is well recognized that the nutritional health of a pregnant woman influences pregnancy outcome. Nutritionalstatus has even greater implications for the HIV-infected woman who is at higher risk of premature delivery and having a low birth weight infant.Low birth weight infants have an increased incidence of infant mortality as well as medical and developmental complications. Other risk factors, such as pregnancy during adolescence, substance use, opportunistic infection, low pre-pregnancy weight and inadequate gestational weight gain impose further risks of a poor pregnancy outcome. Moreover, vitamin A deficiency has been associated with poor pregnancy outcome and increased risk of perinatal HIV transmission. Pregnant HIV-positive women should be referred early in pregnancy to a dietitian or other suitable health care professional for counselling to optimize nutritional status and improve pregnancy outcome. It is essential to assess complementary therapy use, as mega-doses of vitamins and some herbal preparations are contraindicated in pregnancy.Weight Gain in PregnancyRecommended weight gain based on pre-pregnancy weight:Underweight (BMI 25):Nutritional Requirements12. 5-18. 0 kg11. 5-16. 0 kg7. 0-11. 5 kgAccording to the Recommended Dietary Allowances for use in the Caribbean, the following requirements for pregnancy/lactation are in addition to the requirements for HIV+ women:4? Additional 285 kilocalories per day to support fetal growth and developmentAdditional 6 grams protein per dayPrenatal multivitamin-mineral daily (to include at least 0. 4 mg folic acid)Other micronutrient supplements as needed (e. g. iron, calcium)Lactation: additional 500 kcal per day and 11 grams of protein Vitamin A:Maternal vitamin A deficiency is associated with increased risk of vertical HIV transmission to the infant. However, there is little evidence that vitamin A supplementation of the pregnant woman reduces the risk of HIV infection to the infant. Moreover, high doses of vitamin A can be teratogenic. Should supplementation be necessary, the following WHO guidelines can be used.Iron deficiency anemia is highly prevalent in pregnant women throughout the world. Anemia is associated with increased risk of maternal and fetal morbidity and mortality, as well as intrauterine growth failure. Iron status should be assessed and deficiency should be treated. WHO recommend that women receive 60 mg iron during 6 months of pregnancy and 120 mg per day to treat severe anaemia.Folate deficiency:Folate deficiency causes megaloblastic anemia and is associated with risk of neural tube defects in the infant (e. g. spina bifida). WHO recommends 0. 4 mg folate supplement daily.

Online Business Ideas – The 7 Fundamental Ideas For Online Business

If you spend even a small amount of time surfing the Internet then you are going to find many different online business ideas and before long it can become quite overwhelming. Just like anything new, there is going to be so much information available but the problem is always knowing which information to listen to and which to ignore; this article covers the 7 fundamental online business ideas which you will come across online.The thing to keep in mind is that each of these ideas will manifest itself in many different forms but no matter what type of online business you are looking to set up you will find that it fits into one or more of these online business ideas. They are the fundamental building blocks of any online business and a good understanding of them will give you the start that most people never have.The 7 Fundamental Online Business IdeasEach of the following online business ideas are based around the 7 different ways of actually making money online. Whatever business you decide to start online it will fit into one of more of the following categories:AdvertisingThe first of the online business ideas is advertising and with this idea you will look to setup a website in some kind of niche. You can then put advertisements on this site that are related to the niche content you have based it around. The key to this idea is making sure you get your targeting right otherwise you are simply going to annoy people who come to your site by trying to advertise them something totally unrelated to their needs; this is a fundamental error and something you should be very cautious of before you even start.ServicesWith this idea you will setup a website that offers some kind of service to people who visit. Now this can be varied from an online gambling site that offers the gambling service to people right through to an online presence for your offline business.The main difference with the latter is that you can either simply use it as an online marketing tool for your offline business or you can totally automate it so that you use your offline brand name to create an entirely separate online business.SubscriptionsThis is my favourite of the online business ideas because it is extremely scalable and in essence fairly easy to setup. There are however a few things to consider before starting this type of model. You need to make sure that whatever you are offering a subscription to has very good content otherwise you can get yourself a bad reputation before you’ve even started. Secondly you need to monitor the subscriptions in detail and offer technical support for anyone that may have problems getting access.ProductsThis idea is fairly self explanatory, you setup a website where you sell products online. These products can be your own products or ones you buy in from a supplier, the only real difference will be the margin you make on each one. Also, it will take longer to get traction with your own products whereas others will probably already have brand awareness.CommissionsThe commissions model is similar to the products model but in this case you simply promote other peoples products and direct them to their website. You have your own affiliate code so that when anyone buys their product you get paid a commission. Effectively you are acting in the same way as a normal offline salesman on commission.LicensingOut of all the online business ideas, this one is probably the most confusing and I have certainly seen it explained in a variety of different ways and unfortunately most of them are incorrect. This idea can come in two different forms, you can either be a licensee or a licensor. In the former case you will take someone else’s brand and use it to promote your own products which you will then sell for a premium online. In the latter case you are the one with the brand that other people license off you and you get paid a fee based on this.This is quite an in depth concept and we have really just touched the surface with this article.Being a BankWhen you look at the different online business ideas you will probably struggle to come up with this one. What I mean by being a bank is that you effectively offer people lines of credit through various mediums online. Once again, this idea can be hard to understand at the beginning but becomes clear when you research in depth.You will have most likely seen companies offering checkout facilities online where you can pay for goods and services through some kind of online transaction. When you look into what actually goes on in this process then you will start to see how this model works but essentially you are being paid interest on money you allow people to borrow for varying periods of time.