Category Archives: For Investors

Marketlend Academy: Investor Survey Results

The investor survey results are in!   We were genuinely surprised by the strong response and the results and believe it is worth sharing them with the wider community since many SMEs can benefit from understanding what investors are really looking for.

While not scientific, one of the most interesting things to note is how more “subjective” elements like strength of brand or originality of concept didn’t carry much weight with investors when it came to evaluating an investment.

Even more interesting were some of the independent comments on what matters to investors which we learned from asking respondents to contribute things that didn’t fit in multiple choice.  Here’s a sample of what we learned:

• The honesty and integrity of all involved, platform included, is absolutely vital.
• 1. I believe a list of account suppliers should be submitted and some should be contacted randomly without notice of the borrower to find out whether they pay on time full. 2. All directors should be interviewed and asked random questions on the company and borrowing money. They should also be compelled to sign a supplementary document stating they are aware of the loan its conditions and they understand completely. I do not mean one of those ridiculous solicitors forms, and you insist it be done in front of a solicitor of your choice, not their choice. 3. Ask what type of car they own and whether financed. 4. Make a surprise visit and be a customer to see how they perform delivering their service or product. 5. Consent to judgment in the event of default so you are not in court suing under a personal guarantee for 4.5 Million plus costs on a loan I made. 6. Consider in expanding your horizons where you lend against T.A.C claims and also a case such as mine? People need money and will J.V. these claims and put a corporate up as a firewall for the transaction, so the credit laws are bypassed. These come to mind now. However, I will expand later in the week as I find this an interesting question as to me these questions a part of the platform in providing a loan.
• I look at the character / integrity of the people as best I can assess it. Even if the business goes down, the best quality people will find a way to meet their obligations.
• The uninsured loans I have rejected (most) have lacked credible purpose for funds or credible sources for existing funds or the documentation taken as a whole lacks veracity.
• When investing in a company and judging the likelihood of them defaulting, I take into account total equity.
• I like to see evidence of tax payments in statements.

To view the survey answers, click here.

Marketlend Academy: How To Work With Investors

It can feel like running a marathon just to go through the gruelling paces of building your business to the point where it is ready for investors. Once you cross that finish line, guess what? It’s time to run another one. That would be the race for investors.

 

Attracting investors and keeping them happy is another endurance test that comes with a lot of pressure. But how you do that can make all the difference in the financial health of your business and its future growth. Some of these tips might help you interact with investors in ways that concurrently discipline your organisation to become a better company.

 

1. Continue running your organisation with confidence and integrity.  

 

You may have offered others a stake in your business, but the worst thing you could do once you have their support is forget that you’re still in charge.

 

According to a recent MarketLend survey of our investors, the reason they’re most likely on board is because what you were already doing is working. More than 50 percent of respondents said they invest because of strong past financial performance, and another 23 percent do so because they were impressed with ongoing product or service innovation.

 

Investors will definitely bring critiques and opportunities to improve to your business, but you can’t let their opinions dominate your decision-making. If you do, pretty soon you’ll be spinning in circles instead of passing mile-markers on the way to your vision.

 

2. Make decisions and do things that prioritise revenue.

 

When you’ve finally got the big bucks, you suddenly have a chance to move forward many of your best ideas. It’s easy to fall victim to problems like mission creep or green-lighting risky strategies. If you find yourself spread too thin or tempted to veer off budget with your new-found cash, it’s time to course correct. Stick to your business plan.

 

In our MarketLend survey, 50 percent of investors said the best business plans sold them on the idea that the company has a clear path to revenue. Unless you have equally clear evidence that a change in course will yield better results without exceeding projected expenditures, do the things you said you would do.

 

3. Develop a strategic and consistent internal communication plan with your investors.

 

Investors will expect periodic reports on how the company is doing. At a minimum, they will expect and appreciate a consistent and transparent bookkeeping system that will reassure them that their investment is being well-spent. But this is also about relationship-building. Your approach going into these interactions—especially the first few!—will set the long-term dynamic.

You’ll want to establish openness and respect from the start, but you also need to know before you open your mouth or put up a PowerPoint presentation what kind of relationship you want with your investors.

 

Your investors don’t need to be overlords. They most likely don’t want to be. So don’t give them that power. After all, you know your business best. The entrepreneurial resource First Round Review has many relevant insights regarding how to achieve this relationship balance in its guide, “The Secret to Making Board Meetings Suck Less.”

 

4. If you have bad news, present it directly and have a solution ready.

 

You will inevitably have to deliver bad news to investors at some point in your relationship. This is normal, and it’s a chance to present yourself as a strong leader and a problem-solver..

 

If you have to drop negative numbers or acknowledge mistakes, according to recent research from the Institute of Electrical and Electronics Engineers, it’s best to be direct. Don’t hide or gloss over the obstacle. Get it out there quickly, give investors a moment to process, and pitch them your ideas on what can be done to improve things. If you manage this well, your investors will have more confidence, not less, in your business and your ability to lead it.

 

5. Understand each investor’s expectations and keep them in perspective.

 

Whether you have a few investors with whom you have direct personal relationships or thousands of crowd-funders you’ve never met, try to find out why exactly they came on board. This can take place via 1-on-1 conversations or through a digital polling tool. When you know what they saw in you, then you can deliver on their expectations.

 

You may be surprised to discover how realistic your investors are about the prospect of your mutual success. It might even alleviate some of the constant pressure to perform.

 

As one MarketLend survey participant said: “I look at the character and integrity of the people as best I can assess it. Even if the business goes down, the best quality people will find a way to meet their obligations.”

 

Marketlend Academy: 5 Questions Every Small Business Must Answer Before Moving to the Cloud

Are you a small business considering Cloud services?  With so many industries moving their workloads en-masse to the cloud, the question of risk versus benefit is more critical than ever for potential cloud migrants. As a business eyeing a higher level of IT infrastructure, you need to be aware of the dangers of public clouds and how you can avoid the pitfalls that have compromised so many companies. We now have more information than ever about the real value of moving to the cloud, and whether it really is the respite for on-prem IT infrastructure woes that it promises to be.

 

Before your company changes to a new, public Cloud, it’s essential to perform an evaluation and look at what works and what doesn’t. This list of questions will help you validate your cloud transformation strategies.

 

Will I Get a Tangible Reduction in TCO?

 

Total Cost of Ownership (TCO) is one of the most important pre-migration metrics to assess. Aside from the cost of the migration itself, what is the tangible cost benefit post transformation?

 

To properly evaluate this, you need to work closely with your finance team to come up with the right numbers. If a particular service runs 24/7, moving it to the cloud may eat up your profits.These cost dynamics will call on technical as well as financial minds, but the extra time will put the most transformative apps first in line for the migration.

 

Am I Prepared for a Major Cloud Outage?

 

Technology is susceptible to breakdowns and a cloud is no different. Don’t assume that a cloud provider made adequate provisions for redundancies in case of a widespread outage. Make sure you can still maintain the level of control that you have with your current infrastructure. One way to plan for such an event is to consider a multi-vendor approach so critical processes have a failover, or a backup system on standby, on a completely different public cloud.

 

Netflix offers a great example of proper planning. The video streaming service outage-resilient architecture is designed to handle the unexpected. The company admits that they spend more because of the redundancies they use, but that’s the price you must be willing to pay when one hour of service disruption costs you $200,000.

 

How much would an outage cost you in dollars, not to mention the loss of goodwill and possible customer exits? Building redundancies might cost more than you planned, but it could help you in the long run.

 

Will I be Locked Into a Service?

 

One of the biggest USPs of cloud service providers is the flexibility to scale up or down as required, but if the service doesn’t perform to your expectations or your monthly bill is higher than you expected, you need to be aware that migrating your data is expensive. Depending on what workloads you migrate, it could weigh down heavily on your IT budget if one vendor doesn’t work out and you want to move your applications elsewhere.

 

Technically, there’s no lock-in because all providers use a pay-as-you-go model. What they won’t tell you is that the cost of ‘pay-to-go-elsewhere’ can be prohibitive to smaller businesses and startups once the bulk of workloads are running on their cloud.

 

Consider using a multi-vendor approach. AWS offers greater ease of automation, while IBM SoftLayer’s bare metal offering affords more control over server configuration while eliminating the ‘noisy neighbor’ effect of multi-tenant servers. Can your business leverage these differences to get the best of both? That will not only increase your level of control, but it will make cross-vendor transitions more cost-effective because your workloads are spread out.

 

Will I Have the Same Level of Control as Before?

 

Control is about how much visibility and accessibility a cloud provider offers you. The multi-tenant model – where hardware, applications and compute resources are shared between several users or tenants – won’t allow you to customize your environment like you can with your existing system. A bare-metal server with the attached cloud, on the other hand, will give you more control over latency-sensitive workloads because the virtualization aspect that leads to things like performance degradation and the noisy neighbor effect are absent.

 

Bare-metal obviously costs more because it’s a dedicated resource, but it gives you more control over critical applications. An ideal middle ground would be to use bare metal servers to complement your virtualized services so you leverage the cost benefits of a virtual environment but safeguard your critical processes by using bare metal.

 

The question your business must ask and answer is, “how much control can we afford to give up so the cost benefit is still meaningful?” That will help clarify what type of public cloud deployment works best for you while retaining optimal control.

 

Other Questions to Ask Before you Decide

 

Assuming that public cloud vendors have adequate security measures can leave you exposed. Information systems security uses Confidentiality, Integrity, Availability, (CIA), as a framework of evaluation, but such evaluations often ignore the architecture element. Moreover, security, scalability and reliability are still major issues with the multi-tenancy model even when it is well architected.

 

Container technologies like AWS Lambda, a serverless computing system that runs your code on the cloud, can certainly help mitigate these problems, but it has limits. Have you planned for it or are you simply relying on the service provider’s features to provide the isolation and security that your customers’ data needs? Answering this is critical to deciding what type of implementation is ideal for your workloads and what specific applications can be entrusted to the cloud.

 

There aren’t any standard answers to fit every business, but answering these questions in the context of your business will give you a 360-degree of what to expect and what to avoid when moving to a public cloud. The risks are still there, as they are with an on-prem solution, but they can be neutralized – or at least minimized – when the planning involves foreseeing specific scenarios.

 

Marketlend Academy: Why You Should Write A Business Plan for Your SME Before You Start

Are you thinking about getting yourself out there and finally starting a small business of your own?  You’ll need a business plan. 

 

What’s a business plan?  

 

In the simplest terms, a business plan is simply an outline of what your goals are for the small business, and how you plan to go about accomplishing them. Some people refer to it as a vision for your business.  We like to refer to it as a road map to accomplishing your goals.

 

How small the business does not matter that much, coming up with a comprehensive outline for your business is definitely the best way to start. Same as you cannot build a house without a blue print, you shouldn’t start a small business without a business plan. 

 

Your business plan is supposed to be very clear and precise, defining the essentials but kept simple. It should be a written document and will be a tool you will return to again and again in managing the business as it grows.

 

A plan should include the following (but it’s not limited to these):

 

1. Executive Summary.

This should be the very first thing you do when coming up with a business plan for your small business. Generally, you are providing answers to questions you would have had developed in a five-minute interview (imagine someone interviewing you or, better, actually have someone you know interview you and write notes). Give a detailed description of the business.  What’s the deliverable or product, who are  your customers and what is the path to get them.

You should make this executive summary as enthusiastic as possible, while keeping it concise with a fine touch of professionalism.

If you intend on seeking a loan, make it clear how much money you need and how the money will be used.

 

2. Business Description.

Here you are going to tackle your small business’ mission statement, its legal form of ownership, its objectives and its key offerings.

In a nutshell, you will be describing the business as a whole. Here, you may also want to talk about your strengths, competencies, why you think your small business will succeed, the experience and skill you are going to be bringing to this new venture.

 

3. Marketing Analysis/Strategy.

It is here that you are going to justify your sales forecast.  Base it on market research.  Basically get your hands on as much information as possible (surveys, industry data, media reports, etc.).  Consider doing your own hands-on research with potential customers in do-it-yourself focus groups.  There is nothing like getting real opinions from real people. Your aim should be to make it clear that your small business is viable and that the sales forecast made are reasonable.   

This is also the part of the business plan where you do an in-depth research about your competitors so you can come up with a better strategy of surpassing them. Every business has a competitor or will have one soon.

Determining your physical location in your business plan is very important as it tells a lot about operational realities, consumer traffic, marketing landscape, etc. 

 

4. Management and Operations. 

It has been noted that one of the major reasons behind businesses falling is poor management. In this section of the business plan, you will make sure you state clearly your management qualifications and the structure itself. You may want to attach the resumes of the people involved.  The success of any company also depends on its ability to recruit, train and retain quality employees. Take some time to consider if you need full-time, part-time or Gig economy help.

 

5. Miscellaneous

In this section of the business plan, you are going to attach any information which you were not able to make fall under the other above mentioned sections.  Be creative here and use this as a catch-all for additional ideas.  You never know what additional thoughts and concepts can come in handy.

Marketlend Academy: Investor Survey

Are you a sophisticated investor?  It’s time for our first for entertainment-purposes only investor survey (we’ll be doing a series for borrowers, too, so please keep an eye out).

 

CLICK HERE TO TAKE THE INVESTOR SURVEY

 

At Markeltend, we always want to learn.  The more we know about what matters to our investors and our borrowers, the better we can make the experience for everyone and the stronger the community becomes.

 

We’ve turned to SurveyMonkey this week to try something new.  If you have a minute (literally, we timed it) please take this short investor survey.  It’s intentionally broad and even a little quirky, but it’s designed to explore the different things that influence investment decisions.

 

After all, sophisticated people often approach the same activity very differently.  Inevitably, they’ll make decisions on what businesses to invest in based on a wide range of factors, from a company’s profit and loss statements to the appeal of its brand identity.

 

So if you’re a sophisticated investor, what factors do you consider in your business investment decisions? Please take our brief survey so we can all learn a little bit more.  We’ll share the results in future posts.  Thanks!

 

CLICK HERE TO TAKE THE INVESTOR SURVEY

Marketlend Academy: Five Reasons To Utilise The Gig Economy For Your Small Business  

What do you know about the gig economy?  How an employer manages their growing small business has changed immensely in the last 10 years, with both employees and employers alike now relying on the flexible and cost effective nature the gig economy presents.

 

The gig economy refers to the segment of the workforce that relies on freelance and independently contracted jobs. The rise of the gig economy isn’t something necessarily new, but with the growing incentives of flexibility and entrepreneurship, it has seen a steady implementation into the workforce, and now even small businesses.  

 

With the gig economy becoming a growing trend globally, its important to understand why it can be a benefit for your small business. Here are five reasons to utilize the gig economy for your small business, unlocking your businesses potential:

 

Creating A Collaborative And Healthy Environment

 

Would you believe people work more efficient and effective when they’re happy? Well statistics have shown that members of the gig economy are so happy with the results of this particular workforce, that 90% plan to continue their professional careers remotely via independently contracted work or freelancing.

 

Where independently contracted work or freelancing doesn’t necessarily give the traditional comfort and security of a part-time or full-time job, it has empowered and enabled freelancers to create and negotiate their own flexible schedules, as well as crutch on the comfort of working from home. The ability for contracted workers to benefit from their environment at home, while being transparent and fulfilling their work with their employer, can lead to a partnership that is equally beneficial for your small business.

 

Short term solution without long term consequences financially

 

Your small business will benefit from using independently contracted or freelance workers for the simple reason that you’re not taking on a long term financial obligation. Having more space in your pocket will be important for your small business, and hiring part-time or full-time employees can bring on burdens of their own. With the flexibility gig economy work presents for your small business, it’s necessary to pinpoint early on when creating your small business what work can be done remotely, and what needs to be done in house.  

 

Technology

 

The gig economy and technology are converging at a growing rate. With the outsourcing of technological work becoming one of the thriving workforces within the gig economy, it’s no secret why: With the always growing network of computing, communication and technology, it’s important to understand the technological resources you must utilize to protect and strengthen your small business.

 

From anti-hacking software to creating employee time-cards online, many aspects of keeping and protecting a growing small business refrain back to technological work, so utilizing independent contractors who can maintain and sustain the technological needs of your small business will be important.

 

Productive and Creative Work

 

One of the more basic elements of understanding the importance of the gig economy to independently contracted workers or freelancers is the very basic principle that it allows workers to be both productive and creative. With the support and transparent relationship you’ve built with your independently contracted worker or freelancer, you have shown your trust in them to fulfill and meet your businesses expectations, while giving them the comfort and stability of working remotely. From these expectations will come contracted devotion and mutual respect from your independently contracted worker, understanding the benefit and privilege of working from home.

 

Less Maintenance

 

When you hire through the gig economy, you ensure yourself less daily maintenance at your small business. With this in mind, it’s important to understand the benefit less maintenance has on you as the overseer of your business and it’s employees. Having work done from remote locations can create an environment in which you are able to maintain your workplace with a little more ease due to less visual obligations.

 

The gig economy is not perfect. From less security for employees to less stability for employers, it can have its negative effects if relationships and partnerships aren’t monitored and maintained properly.

 

Workplace dynamics have been historically unpleasing for employees, and the rise of the gig economy can be attributed in some instances to the perceived perils of the traditional workplace. There are many reasons to utilize the gig economy, from the environment it creates for you as an employer, to the flexibility it creates for your employees.

 

Marketlend Academy: The Value of Insured Loans

Insured loans can bring real peace of mind to investors because insuring a loan brings protection in the face of often unforseen events that prevent the repayment of that loan.  How do insured loans work?  First, insured loans need a pioneering platform to realise their potential, one that is built on best practice, transparency and flexibility.

Marketlend’s proven first-of-its-kind borrower and loan risk assessment systems are supported by carefully structured insurance (in certain circumstances) and loss protection policies.

What does insurance cover?

• Payment on insolvency
• Repayment of Principal Advanced.
• Collection Costs
• Legal Costs

You can learn more about the model here, and we will also be developing more insured loan material for Marketlend Academy in the days ahead.  But we want to share a recent experience that drives home the value of insured loans.  The experience is best recounted in the words of our founder and CEO, Leo Tyndall, in the following excerpted from a message to investors.  His communication underscores how Marketlend’s robust model supports both investor interests and the health and vibrancy of SMEs.

“I think it is important to share the following with you as a member of our community of investors.  In further confirmation of the strength of Marketlend’s unique model, all investors involved in a recent liquidation have now been repaid their principal as a result of the successful approval of the claim on the trade credit insurer.  This positive outcome shows how trade credit insurance gives investors a proven safety net.  It also shows the value of the innovative structures we have in place that make our pioneering platform robust, transparent and investor-friendly.

This outcome also underscores a critical aspect of all business lending that no investor should ever overlook: no matter how you may scrutinise the financials of an entity, ultimately the unforeseen can undermine an investment despite how seemingly sound it is.  

Adding the additional layer of trade credit insurance not only supplies the safety net that worked so well in this instance, but also provides another independent level of scrutiny since the insurer itself is also involved in assessing the financial strength of the company.

Thank you.”

— Leo Tyndal, CEO and Founder, Marketlend

Marketlend Academy: How do you hire a bookkeeper?

When starting a small business, the list of important financial decisions that go into the development of your newly formed enterprise can be overwhelming. From establishing an office to paying employees, the finances and expenses can pile up.

 

With this in mind, it’s important to hire a bookkeeper who can help sort out the money side of the business and establish good professional record-keeping, freeing you to focus on the other critical tasks involved in getting your newly formed business up and running smoothly.

Bringing someone on board to manage the financial matters may seem a significant expense in the short term, but it can save you time and money in the long run.

 

When hiring a bookkeeper for your small business, you’ll want to follow these fundamental steps:

 

• Decide if you need an employee, firm or consultant

Do you want your bookkeeper to be an employee? Would you prefer to work with a bookkeeping firm? Or would an independent consultant on contract be a better option? Much depends here on the size of your business and the size of your budget. If your business is big enough, with daily accounting needs, a staff position might be the best way to go. For smaller businesses, a firm or consultant might be a less costly and perfectly effective choice. Either way, make sure you don’t underestimate the importance of good record-keeping from the start.

 

• Look for someone that understands your business

When hiring a bookkeeper, you’ll want to find a firm or consultant that is experienced in working within your specific industry. For example, if you’re starting a restaurant or eatery, look for someone established in the industry who has handled the bookkeeping for food establishments in the past.

 

• Find a bookkeeper with computational knowledge

You don’t need a computer wizard as your bookkeeper, but with the growing use of online accounting software it’s important to hire a bookkeeper who is up to date with the growing technological tools that have expanded their work. This is a benefit for you and your business because the bookkeeper will be able to utilize the technology that enables them to be transparent while delivering data-based analysis of your business to you.

 

• Know the bookkeeper’s track record

You’re giving your bookkeeper responsibilities essential to managing your company’s finances which include proprietary information. Make sure this individual or company has a proven track record. Reach out to former clientele. Check references. Do a criminal background check. Excellent references that demonstrate your candidate’s experience, honesty and reliability are a safeguard against a poor hire that can affect your company’s bottom line.

 

• Decide whether you need an accountant as well

A bookkeeper will help with the day-to-day tasks of managing and recording company expenses, from payroll to purchasing. An accountant will go further and provide big picture financial analysis of your company and tax filing. Understanding the difference between a bookkeeper and an accountant is important for your new business, with both potentially playing a vital role to any growing startup. From the daily operations standpoint, a bookkeeper is the wise starting point. But as your business grows, you may find the services of an accountant invaluable.

Marketlend Academy: 5 mistakes business owners make when trying to get finance

Marketlend Academy: How are your loans different from other SME lines of credit?

Lending to SMEs to support sustainable growth is what Marketlend CEO and Founder Leo Tyndall is passionate about, and he wants his company to lead the way as a responsible organisation that treats lines of credit with care and delivers transparency. Click to video to here more or scroll down for a transcript of his latest chat.

 

 

So when you say giving them a line of credit, and pay them straight, no, we don’t, we pay their suppliers. So, we pay their suppliers, and we pay their suppliers based on invoice of the verified and checked, and those invoices are then presented to us, and then we pay that supplier, and then when they actually get the goods, they then sell them, and obviously then they pay us in the 90 days after that.

 

So, and even if our line of credit, uninsured which is a product, which is a little bit similar to like a loan, but it’s a limit, we pay the supplier. So, we allow them to pay suppliers, or services, and what we provide is a line of credit. It’s a little bit similar to an overdraft: we give them a line of credit, it’s renewable, and reviewable every 12 months, they pay it on time, investors are happy, now roll the facility over, and they can keep it going. And, the point being, is that they can then run their business knowing that if they get a big order, they’ve got this line of credit they can use, if they don’t have many orders, they can close the line down, or can reduce it, so there’s that flexibility there.

 

And that’s not what they’ve got when they go and get personal loans, or I call them personal loans, but S and E loans, ’cause they’re just pure loans.

 

Yeah, correct. yeah, and the other reason why we do that, is that we don’t really like the idea of giving people pure cash, because it could be used for alcoholism, gambling, and a few other, we’ve seen one before, where they present an invoice and we went to pay it, but before we paid the invoice, we looked at these bank statements and noticed that he was actually gambling. So, we said, “Look, we don’t think we’re gonna pay that.” Because, obviously, we look at their bank statements, and he was probably gonna use the cash that we paid for the goods, with his own income so he could do some gambling or whatever he was gonna do.

 

So, we look at their bank statements, so we have a number of steps, so, first thing we do is we actually look at their ability to repay the debt for debt servicing ratios, and they’re financials, after their financials we give their bank statements, we then review their bank statements and look at the entries on the bank statement. We have a team member whose only job is to look at those bank statements, and what he’ll do is, he’s a risk officer, and he’ll identify any unusual activity, but also the ability to repay, because the financials may not match the bank statement as well.

 

And then in this case, what we did was we saw that there was a number of gambling sites that were being paid, and even though we weren’t providing him the cash, we identified that that was a risk, and we didn’t want to lend to him.