Category: Small Business

3 Things That Will Instantly Disqualify You from a Business Loan

Posted on by KWD

When preparing to borrow funds to invest in your business, you want to feel confident that the loan is likely to be approved.

We have prepared this list of 3 ways your loan will be instantly declined to help you overcome them before getting started. Once you can overcome these three issues, you’ve increased the likelihood of the ‘go-ahead’ you are hoping for.
1. You are not managing your monthly creditor obligations well.
This looks like:

  • dishonouring transactions in your bank statements,
  • unarranged overdrafts in your bank statements, and
  • late payment of bills

You can overcome this by:

  • preparing a monthly budget outlining due dates of creditor invoices and payments and making sure money is in place to pay your direct debit payments on time.
  • forecasting your cashflows with your accountant to predict when there will be a shortfall, so you don’t take too much out of the business too soon.
  • Negotiating better payment terms with both your creditors and debtors so your cashflow cycles are in synch.
  • Making sure there is sufficient working capital in the transaction accounts to allow for seasonal fluctuations in your business.

2. You don’t have a clear purpose for the loan funds.
Gone are the days where you can go to the bank and ask, ‘how much can I have?’ With responsible lending protocols in place, you need to have a simple explanation for the loan purpose.

You can overcome this by:

  • Preparing a forecast to show the outcome of the introduced working capital, such as the increased turnover of that new equipment or staff member.
  • Showing invoices, quotes, or website links for the equipment you want to buy.
  • Settlement statements for any loans you want to refinance.

3. There are a large number of credit enquiries in a short space of time.
It makes sense that when you are applying for credit without a broker you may apply to a couple of places and see what the best deal is, but if there are a large number of enquiries in a short space of time, lenders start to ask what might be going on and why no loan has been successful before now. It may also take points off your credit score each time an enquiry is made. So, be mindful with the number of enquiries you are making, or better yet, work with a broker like Spinach to save time and hassle.

At Spinach, we are business loan brokers who work with 26 financiers to find solutions for any business purpose. So, to have a confidential chat about your preparedness, or about the goal you are trying to fund, get in touch with Jemma on 021358433, or jemma@spinach.co.nz or visit our website www.spinach.co.nz

*Note this is not personalised financial advice. Usual lending criteria, fees and interest rates apply.

Small Business, Big Dreams: Finding the Right Loans for Your New Zealand Enterprise

Posted on by KWD

Starting a small business is a big undertaking, but it can be incredibly rewarding. Unfortunately, you’ll need more than big dreams and enthusiasm if you want to improve your chances of success – that’s where small business loans can help your NZ enterprise thrive.

Making your dreams work without funding is difficult, especially in today’s fast-paced business world. You’ll need some money to work with to grow your company.

A small business loan is the perfect way for businesses to get some money to work with. They can then use that money to purchase more inventory, hire more staff or do whatever else they need to grow their passion project.

Getting a loan sounds like a fantastic stepping stone towards success. But, as with any financial undertaking, there are a few things you should think about before you apply for any small business loans in NZ.

Getting The Best Loan For Your NZ Company

When it comes to business, you should never jump first and think later. Poor financial decisions can seriously land you in hot water! Always think your business decisions through before you do anything drastic, like sign up for a loan that might not be quite right for you.

How do you know what loan is right for you?

Before you call anyone, whether they’re a potential lender or a helpful lending broker, it’s extremely important to get all of your things in order.

Always stay organised. Make sure you know where any important business documents are, such as income statements, and consider gathering them if you think you’ll need them.

Furthermore, prepare yourself mentally as well. Make a plan about what you’ll do with your loan, how you plan on making the money back and so on. You’ll be more likely to succeed in getting small business loans in NZ if you can show that you’re an organised business person who’s serious about what they’re doing.

Using this convenient online business loan calculator is an easy way to get an idea of how much your loan will cost.

Next, you need to think about the type of loan you need. A good way to determine what kind of loan you need is to identify your business needs. There are several types of business loans available, so it’s vital that you choose the most suitable one for your specific situation.

A few, but not all, of your small business loan options are:

  • Asset Finance. This type of loan is secured against your assets, such as equipment or inventory. If you default on the business loan, your lender can seize your selected assets to recoup their losses. Asset finance can be a good option for businesses that need to finance the purchase of assets, but it’s important to ensure you can afford the monthly payments.
  • Unsecured Business Loans. These loans aren’t secured against any assets. This means that the lender is only relying on your business’s creditworthiness to repay the loan rather than on collateral. These loans are generally more difficult to get than asset-backed loans, but they’re a great option if you have a good credit score.
  • Working Capital Loans. These NZ small business loans are used to finance the day-to-day operations of a business rather than funding the purchase of large new equipment or machinery. Daily operation assistance can include paying for inventory, payroll or marketing expenses. These tend to be short-term loans, with repayment terms of generally one to three years.
  • Plant And Machinery Loans. This kind of loan is used to finance the purchase of equipment or machinery. A loan of this type is often secured against the equipment that’s being purchased. This is a fantastic option for business people who are seeking loans to expand their operations with new equipment or to upgrade their existing equipment.

Once you know what type of loan you need, then you’ll need to find the best lender for you. This task is exceptionally daunting for small business owners with little to no experience with NZ small business loans. So, to make sure you get the best results possible, we highly recommend working with a professional loan broker who will offer you personalised assistance.

Would You Like Some Expert Assistance? We’re Here To Help!

Thinking about everything that goes into applying for a small business loan can be very confusing and frustrating, regardless of why you need the loan or how much money you need. Making the wrong choices can result in you paying more in interest than you really need to.

How exactly can you make all the right choices? That’s easy; just call our team of friendly loan brokers at Spinach.

We have plenty of experience with NZ small business loans, and we’re passionate about helping people just like you get the funding they need to thrive. Every unique business makes Aotearoa better, and we want you to succeed!

Would you like our help? Call us on 0800 SPINACH, or reach out to us through our contact page.

To get the funding you need, call us at Spinach!

10 Things Startups Should Know When Applying For A Small Business Loan

Posted on by KWD

Starting up your own business is thrilling and rewarding, but it’s also challenging. This is especially prominent if you do not have the funds to get your company off the ground. While you could slowly save up money and see your company grow in a few years, you could also get the help of an experienced business loan broker to help you get a small business loan.

But, applying for and getting a business loan is no easy task, and you should never go about it lightly. Whenever you apply for a loan, you should educate yourself to be prepared and responsible. When you deal with money, it would be best if you’re always smart about it.

What Should I Be Aware Of Before I Apply For A Business Loan?

A good business loan can be a fantastic way to boost your startup business. With the help of a business loan broker, you have a good chance of getting a loan, and then you can do what you need to do to grow your company. Then, when you see more profits, you can continue to thrive as you easily pay back your loan.

But, building up your company isn’t always that simple. If you want to do things right, there are a few things that you should know about before you start on any kind of application for lent money. If you are too hasty, you could end up in a bad situation that could even be costly.

Therefore, if you are considering getting a loan to help your business, keep these things in mind before you go to a business loan broker or lender:

1. You Need A Plan. To maximise your success, you should always have a plan. This includes planning out how your business will grow, what you will do with the money if you successfully get a loan, how you will pay the loan back and more. Your lender will probably also want to know how you plan on using the money, so you need to be prepared.

2. You Should Reflect On How Much Money You Need. Of course, when you’re asking for money, you should know how much you’ll need. When you’re determining this number, you should think about what you want the money for and how much that’ll cost.

3. You’ll Need To Have Your Business’s Financial Details Ready. Even if your company is new, you’ll need to have your details ready for your business loan broker and lender to see. This information will help them know more about you and where the loan’s money is going.

4. Your Business’ Credit Score Matters. A credit score is a great way to determine if a business is credible. Most lenders will always check your credit score when examining your details.

5. Your Personal Credit Score Matters As Well. Like your business’s credit score, your personal credit score also matters. This score will help lenders determine if you’re trustable with your money.

6. If You Put In Too Many Applications, Lenders Could See This As A Bad Sign. Some people may be tempted not to see a business loan broker and simply send in many applications to different lenders to get more money. But, this can be a red flag to lenders.

7. Not Ever Lender Is The Same. Every bank and lender is different and could offer good or bad deals. Because of this, you should never go with the first lender you find unless you really know they’re ideal.

8. There Are Different Kinds Of Loans. Like lenders, there are several different kinds of loans for various situations. It’s essential for you to understand what kind is best for your company.

9. Read Everything Thoroughly. Applying for a loan affects you and your business, so you don’t want to get caught off guard by the small print. Always read every document you get so you fully understand what you’re getting into.

10. An Experienced Business Loan Broker Can Make All The Difference. If this is your very first time applying for a loan, the process may seem confusing and complicated. So, seeking help from a professional loan broker can genuinely help you financially and mentally.

I Want To Apply For A Small Business Loan, Where Can I Find Help?

Dealing with loans can be very difficult and stressful – but a friendly and understanding loan broker can help you through each step. Our team at Spinach excels at assisting New Zealand businesses with loan applications, and we’re here for you if you need us.

Applying for a loan may seem difficult at first, and you may be tempted to not apply for one at all. However, a loan’s funding can be what you need to truly turn your startup into a success. For more information on how you can successfully get a loan, please visit our contact page to get in touch with our helpful team.

Give your startup the boost it deserves with assistance from our knowledgeable loan brokers at Spinach.

Commercialising your Intellectual Property

Posted on by KWD

Commercializing IP

Commercialization is the process of introducing a new product/service into the market. It means making an idea or concept into a real business opportunity. For example, you have a new business idea for a new tool to help with trades. In order to go through the commercialization process, you will need to undergo a process of market research, development, consultation, drawing up business, distributing, and marketing plans, prototyping, and protecting your intellectual property before you make it commercially available in the mass market.

Following are some general steps involved in the commercialization process:

1. Describing the Product or Service

A clear and concise description of the product/service is written in the first step. The description should be easily understood by a person who is unfamiliar with the concept and should demonstrate the benefits and features of the product/service.

2. Protecting Intellectual Property (IP)

Before you talk to others about your business idea, it is crucial that you protect it. You will need to find the method of IP protection that is the most suitable for your business and apply for it. It is important that you make sure that any third-party that is discussing your idea or product with you will not disclose confidential information.

3. Market Research

The next step is to research the market so that the market, competitors, and customers that the new product/service will face are identified. You will need to use a marketing plan to draw up your strategy so you can identify and reach your customers. It is also very important that you confirm that your product fills a need and has a competitive advantage. Furthermore, the product’s viability needs to be financially evaluated. You will need to include detailed financial projections and cost estimates in this plan. These estimates will be crucial as you look for money from banks or other sources to support the product/service production.

4. Identifying Commercialization Pathway

A plan for product development is also needed that includes how the product will be released to the public. Should the product technology be developed and produced by the technology owner, licensed to someone else, or sold to someone else to develop? You will have to make preliminary estimates of the market size as well as its willingness to accept the product. You will also need to determine the costs of the full development of the product. Your choice of licensing, assignment, manufacturing, or joint venture may have an impact on your future strategy. For instance, if you are thinking of using overseas manufacturers for your product’s production, you will need to identify the key issues such as freight and distribution, quality control, etc.

5. Refining the Product

Once your product is introduced for the first time, you may need to refine it. You will also want to protect the intellectual property involved in the development of the product, finalize its design, test the product, and add/improve any features to make the product more marketable.

6. Developing a Business Plan with a Commercialization Strategy

Additional resources may come in handy at this point in the commercialization process. You may need to consult a professional to acquire financing, develop company structure or business plan, or create a marketing plan for your product. You may determine that you need to finalize legal agreements and partnerships. Market and product testing are ongoing during this stage of the commercialization process.

7. Exploring Funding Options

Depending on the nature of your concept or product, key funding options that you may consider include:

  • Crowdfunding
  • Grants
  • Business loans
  • Other sources of financing such as investor groups.

8. Business Growth Opportunities

Assuming the product is well-accepted in the targeted market, you may want to develop your business to include the expansion or acquisition of manufacturing facilities, financial analysis, marketing and promotion, strategic partnerships and planning. You will need to reevaluate your resource needs and organizational structure. Assuming that your business is prospering and growing, it may be appropriate to pursue improved technology or new products. You may also need to add staff. As your business grows, you will need to continually evaluate what you need to take advantage of the opportunities you might encounter in the future.

Most of the things we take for granted nowadays begin at an inventor’s bench. Achieving such success is not easy but once an innovation yields desirable results on the market, it is well worth the effort required to get it there.

New Year’s Resolutions for Your Business

Posted on by KWD

As a business owner, the beginning of a new year is the best time to assess the state of your operations and determine what you can do to make your business even stronger moving forward.

Following are some new year’s resolutions to consider for your business:

1. Growth

Growth is probably the number one goal of every business. You need to be able to consistently increase sales if you want your business to grow. Take some time to review and understand how your business has changed since the end of the last year. Get professional advice from an accountant. They can help with financial planning to keep you on the right track.

  • Marketing

Expanding your customer base is the key to your business growth. Implement various marketing strategies to create consistent promotion throughout 2019. Start the new year by updating your website and making it SEO friendly. If you don’t have a marketing expert on staff, 2019 may be the year to start looking for one.

  • Cashflow Management

Many businesses fail each year and running out of cash is usually one of the primary reasons. If your financial records are not up to date or if you don’t work with cashflow forecasts, then it will be really difficult for you to address cashflow problems. It is recommended that you create reliable cashflow forecasts so you can identify periods when your business risks running out of cash. Proper cashflow management will also allow you to avert a cashflow crisis before it’s too late.

  • Upgrade Your Technology and Workflows

You can’t expect your employees to reach their full potential if your firm is relying on legacy technology. Embracing new technologies such as collaboration platforms, cloud computing, etc. will allow you to streamline most of your business processes. It will also result in increased productivity as your employees will be able to access their critical documents and get their work done from any connected device.

2. Succession Plan

Now might be a good time to review, evaluate, and update your business plan to make sure it remains consistent with your business goals for both short-term and long-term future. It is highly recommended that you have a succession plan in place and operate the business to create value for the new leaders in your staff.

  • Training Staff

Make sure your staff is well-trained as it will lead to increased employee satisfaction and productivity. Take on apprentices and support employees to gain qualifications while working. When your employees have confidence in their ability, it’s a massive benefit to your company as a whole. Obviously, if your employees struggle to perform important tasks, they will be less productive. Therefore, employee training is very important.

3. Reviewing Health & Safety Policies

Health and safety in the workplace should always come first. If you act on improving the health and safety in the workplace, it will make the environment safe and ideal for your employees and will also ensure personal safety. It is recommended that you review your company’s health and safety policies, rules, and regulations. Know the rights of your employees and find out if your company is providing sufficient information on keeping employees safe in the workplace.

As an employer, it is your legal obligation to provide a safe working environment to your employees. Implementing the proper health and safety policies is a good start. Visit our health and safety blog to learn about New Zealand health and safety legislation and how you can implement the policies in your business.

4. Modernize Working Arrangements for Staff

Last but not least, annual reviews of employees should be a part of your business policy. Have open discussions with your staff. It will lead to clarification of expectations as well as better working relationships. Reviewing your role in employee relationships is also a good idea. Consider flexible working arrangements e.g. flexible hours, job sharing, working from home, etc. as a way to modernize working arrangements for your staff.

Final Word

Simply making new year’s resolutions and hoping they come true is not enough. In fact, only a small percentage of people actually keep their new year’s resolutions. The good news is, you are in control of your actions, so you have the ability to follow through on the new year’s resolutions for your business. Stick to the above-mentioned resolutions and your company will be in an even stronger position when next year rolls around.

 

Spinach are your specialist business brokerage. Give our friendly staff a call on 0800 774 622 today for advice on how we can help your business grow.

What to Consider When Employing Someone for the First Time

Posted on by KWD

Employing and keeping the right people for your business can play a major role in achieving success. Hiring employees can be time-consuming and expensive, but it is very important that you do it right if you want to grow your business. If you get it right, then your staff can become your most valuable asset.

Following are some steps you should follow in order to make sure that you comply with New Zealand employment law during and after the hiring process.

1. Create a Clear Job Description

Make sure you are clear about the kind of person you want to hire, the amount you are willing to pay, and the skills they require. Keep an accurate record of each candidate throughout the hiring process, this includes their weaknesses, strengths, expectations, as well as interview notes. This information will be useful during the candidate selection process.

2. Employment Type

It’s important to consider which employment type you need. Each type of employment can mean different set of responsibilities for the employee.

Depending on certain requirements, you might consider employing a:

  • Permanent employee
  • Temporary employee
  • Causal employee
  • Apprentice or trainee
  • Contractor

3. Determine Who is Doing the Recruiting

There are many tasks involved in the recruitment process. These include:

  • Writing the job description
  • Advertising the job (both offline and online)
  • Communicating with potential candidates
  • Answering questions about your business and the job
  • Interviewing and evaluating applicants
  • Communicating with candidates that didn’t get the job

The recruitment process can take a lot of time which you may not have. So, it might be a good idea to outsource the recruiting job to someone in your team.

4. The Recruitment Process

Following are some steps to follow if you manage the recruitment process yourself:

  • Advertising the job
  • Evaluating the applications
  • Conducting interviews and reference checking
  • Selecting the best candidate

5. Make Sure Each Employee Has an IRD Number

Every employee you hire must have an Inland Revenue number. Also known as an IRD number, this number is used by Inland Revenue to identify and categorize employees for tax purposes. You also need an IRD number as an employer. Anyone can apply for this online.

6. Hiring People from Overseas

If you are considering to hire workers from overseas, then you must make sure they have the correct type of visa and they are allowed to work in New Zealand.

Overseas workers may include:

  • Refugees
  • People on a working holiday
  • International students
  • Workers with trade or professional qualifications

7. Sign the Employment Agreement

Once you have selected the best candidates, it is time to give them a written employment agreement that is specific to the type of the employees. It should include all the agreed conditions. Make sure that the employees have signed the agreement before they start working.

8. Help Your Employees Get Started

Your new employees may not understand everything unless you help them out. Apart from providing all the job-related information your new employees need to learn, you should also make sure they know their pay and tax details are accurate. Talk to your tax agent, accountant, or Inland Revenue to make sure you understand your obligations and get everything right.

9. Understand the Rights of Your Employees

Your new employees should make your life easier. But it is normal for the workload to increase when they first begin. This is because they are still coming up-to-speed with everything. During that time, you must not forget about the rights of your employees.

New Zealand law sets out minimum entitlements and rights for all employees, whether it is included in their employment agreement or not. Make sure your employment agreement doesn’t provide for less than the minimum rights.

Following are the basic rights for your employees:

  • Minimum pay
  • Paid time off
  • Setting an employee’s minimum rights
  • Sick leave
  • Public holidays
  • Bereavement leave
  • Making sure they are not unfairly discriminated against
  • An employee’s right to refuse to do work due to safety reasons

10. Be Clear About Your Company’s Goals and Expectations

Whether you have hired one new employee or many, it is important that you define and agree on what is expected of them from their first day. You should be clear about this during the interview process.

Final Word

Your employees are your firm’s most valuable asset. Good people are hard to find and hiring can be expensive and time consuming. Whether you are hiring one employee or many, it is important to follow the above-mentioned steps. If you get it right, then you will ensure that you hire the right people.

 

As always, Spinach care about the health and success of your business. If you need to discuss financing for your business, do call us on 0800 SPINACH or 0800 774622 and one of our lending specialists will be glad to help.

Important Things to Know About Your Credit Profile

Posted on by KWD

Credit score is something a lot of people tend to ignore. But knowing about it is very important because it is one of those things that eventually sneaks into your life and ruins all the fun. If you want a future with certain assets in it to make you comfortable and happy, such as a house, a car, money for your children to go to college, etc., you have to get a loan or invest in the fundamentals of your finances.

Knowing about your credit score is very important as it can be used to assess whether you can repay your loans, which you can then utilize to significantly improve your financial situation. All in all, your credit score may mean the difference between getting a loan or not.

What is a Credit Score?

Your credit score is an important piece of information that helps lenders when they are assessing creditworthiness for any kind of lending. It takes into consideration whether you are likely to repay the loan in full or pay your bills on time.

How Credit Score is Determined?

Credit-reporting agencies calculate and maintain your credit score. Higher credit score means better credit profile. Better credit profile has several benefits including lower interest rates charged by your money lender or creditor.

Your credit score is divided into several categories such as payment history, length of credit history, amount owed, new credit, types of credit debt used, etc. Different companies take different factors into consideration. Credit bureaus operating in New Zealand collect information to determine your credit score. They then provide this information to lenders that request it.

Bad Score? Bad News

You may already know that bad credit score can affect your ability to get more credit. What you may not know is that it can affect various other aspects of your life as well. For example, it may encourage a potential employer to inspect your past business habits more carefully and reassess hiring you. This is because bad credit score reflects poor reliability on your part as an employee.

Risk Indicators

There are some certain aspects of your lending behavior or credit history that may affect your credit score negatively. When your credit score is negatively affected, your credit risk to the lending company is increased, hence ultimately increasing your interest rates.

Following are some common risk indicators;

  • Not paying your installments and bills on time
  • Opening lots of new credit accounts in a very short time
  • Short-lived accounts
  • Defaulting on payments
  • A short credit history

How Do You Improve Your Credit Score?

If you have a bad credit score, don’t lose heart because there are some things you can do to improve your credit score over time. The first thing you should do is sort out your debts. If you are experiencing problems in meeting the requirements of loan repayment, find ways to get back into a regular payment cycle. By showing a clear record of repayment over a period of time, you can demonstrate (via repayment history) that you have reformed your credit behavior. Over time, your past credit problems will become less relevant and your recent payment patterns will become more relevant to your credit score.

It is important to remember that banks aren’t the only credit providers. Utility or telecommunication companies are also credit providers. This means you have to make sure that all of your bills are paid on time.

Tips and Facts

Following are some useful tips and facts regarding credit score:

  • If you are thinking about making a big purchase (house, car, etc.) for which you have to apply for loan, then it is recommended that you ask the lender for the type of credit score they use. By doing this, you will be able to determine how your credit score will affect this purchase as well as your future loans or purchases.
  • Different financial institutions and companies use different indicators to determine whether or not you will receive a loan. Some of the factors that may be taken into account include your age, income, lending history, net worth, employment history, etc. These factors are weighted differently in different companies.
  • If you are planning on getting married, then it is recommended that you look at each other’s credit scores so you can work out what you will both collectively owe, how to pay it off, as well as how your credit score will be factored into your budget.
  • If you have a feeling that your credit score may not be so great, keep in mind that you can always make a comeback. The first step is to evaluate your situation and find ways to get your finances in order.

At Spinach we want to help our clients get the best possible outcome for their loan applications and for their goals alike. If you would like to discuss this topic further and get an indication of where you would stand with our lenders, please do call us on 0800 SPINACH (0800 774622) or email info@spinach.co.nz