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Monthly Archives: February 2015

Options For Small Business Financing

In his article, “Small-Business Financing: Debt vs. Equity”, Doug Flynn of Flynn Zito Capital Management, offers valuable insights small business owners should consider when a evaluating what the most reasonable combination of debt and equity is for them.

Flynn begins with a discussion of the advantages and disadvantages of taking on debt. One of the main reasons one may take on debt is that it can often be easily secured with a broad range of terms. Also, the owner retains all of his/her equity. However, debt can also be more costly in the long run since the owner must make principal payments regardless of cash flow. Also, interest rates can be high if the business is just starting with minimal or little credit. Businesses that have a specific project or timeline may benefit more from this type of financing then other models.

The article continues with a discussion of advantages and disadvantages of sacrificing business equity in exchange for funding. Traditionally, equity investors want dividend payments or a portion of annual profits. Investors stand to gain capital when a business is sold in the future. In the event of bankruptcy, investors are always the first to be paid. This is a generally a good route for people who require long-term funding.

“In practice, most businesses use a combination of debt and equity financing. The trick is to get the right balance.” says Flynn in his closing segment. He finishes with some examples of how an owner can determine what the right ratios for them might be.

Read the full article.


Your Second Wind – Starting A New Business In Retirement

In the article, “Your Second Wind-Starting a New Business in Retirement”, Doug Flynn reminds us that it’s never too late to start your entrepreneurial dreams!

Flynn begins by naming some of the common characteristics of senior entrepreneurs. He points out they may be in a much better position to start a business then their younger counterparts because of their years of experience, wisdom, and professional contacts. Also, it is not unexpected that their financial cushion is more substantial than many 20- and 30-something year-olds considering a start-up.

As Flynn states in his article, however, it’s important to remember that with any new business, there are risks; and seniors need to be careful not to put all their eggs in one basket. They should resist committing too much of their investment portfolio in a new business. He also advises potential senior entrepreneurs to examine whether taking on a new business venture is really what they truly want, and how much time and funding can they realistically devote to it.

Read the full article.

How Can Small Businesses Better Manage Health Care Costs?

As just about every American is aware, health care is currently a highly-debated and critical social, political, and cultural issue. It also significantly impacts our economic environment and the private sector’s ability to recruit potential employees and retain current ones.

In the past, employers have attracted and retained talented workers by offering health care as part of a compensation package. In “Managing Health Care Costs: Tips for Small Businesses”, Doug Flynn offers small business owners some tips and tricks for how to deal with skyrocketing costs of employer-sponsored health insurance.

High-deductible health plans (HDHPs) is one option to consider if employee health care costs are prohibitive. An HDHP puts more of the financial responsibility on the employee, forcing them to be more conservative with their health dollars. However, employers can help ease this burden by implementing health savings plans (HSAs) for those that qualify. HSAs offer the ability to add untaxed money to a health fund to help cover high out-of-pocket costs.

Other options for employers are to shift the costs of health care or simply cut benefits altogether.  Eliminating benefits, however, poses a challenge to employee recruitment and retention. If this is the route you decide to take, make sure to explain why the policy is necessary and consider offering different types of perquisites to help make the transition easier to digest.

Wellness programs are another option cited by Flynn; but, again, employers should tread carefully. “According to research conducted by RAND Corporation, approximately half of U.S. employers with 50 or more employees offer wellness promotion programs.” The goal is to reduce health care costs by offering employees the chance to either gain or lose benefits based on health benchmark testing.

The complete article is available as a downloadable PDF.