Monthly Archives: January 2016

Affordable Cities for Startups Your Business

For the second year in a row, cities in the South give entrepreneurs the best chances to keep their startup costs low, while big cities remain among the most expensive places to start a new business, new research finds.

The study from SmartAsset revealed that nine of the 10 cheapest cities to start a new business in are in southern states, including three in Tennessee.

To find the cities with the lowest startup costs, SmartAsset collected data on the typical costs of starting and running a business in 80 of the largest cities in the United States. They calculated the total expected startup costs over the first year of operation for a company based on five factors:

  • 1,000 square feet of office space.
  • The cost of gas and electricity for a 1,000-square-foot office.
  • The average cost of filing fees for either incorporation or filing as an LLC.
  • Legal and accounting fees.
  • Payroll costs for five full-time employees, earning the city’s median annual salary.

Topping this year’s rankings of the most affordable cities for startups is Chattanooga, Tennessee. The city is attractive for entrepreneurs looking to save money because of its relatively low costs for office space and employee payroll. The research shows that it would cost $225,442 for a business owner with five employees and a 1,000-square-foot office to run a first-year startup there. That’s up about 2 percent from a year ago when the costs were $221,000. [See Related Story: 15 Important Startup Lessons for New Entrepreneurs]

“If you decide to start a business in the Gig City, you’ll be in good company,” the study’s authors wrote. “Many startups and accelerators operate there, including the Lamp Post Group and Gigtank 365.”

Overall, the 10 most affordable cities to launch a startup in are:

  1. Chattanooga, Tennessee: $225,442
  2. Wichita, Kansas: $232,057
  3. Greensboro, North Carolina: $232,326
  4. Columbia, South Carolina: $232,541
  5. Knoxville, Tennessee: $232,620
  6. Little Rock, Arkansas: $233,877
  7. Memphis, Tennessee: $234,524
  8. Lexington, Kentucky: $234,945
  9. Orlando, Florida: $236,513
  10. Winston-Salem, North Carolina: $237,983

Similar to a year ago, many of the 10 most expensive locations for startups are larger cities, including three in northern California: San Jose, San Francisco and Oakland.

For the second year in a row, San Jose and San Francisco are ranked as the two  costliest cities to launch a business in. San Jose, where costs rose 3.9 percent from 2015, has the most expensive payroll and legal and accounting costs of the 10 cities with the highest startup costs, while San Francisco had the third highest office space and legal and accounting costs and second highest payroll expenses.

This year’s 10 cities with the highest startup costs are:

  1. San Jose, California: $439,831
  2. San Francisco, California: $422,455
  3. Washington D.C.: $395,017
  4. New York, New York: $384,389
  5. Boston, Massachusetts: $378,436
  6. Bridgeport, Connecticut: $356,853
  7. Oakland, California: $346,241
  8. Seattle, Washington: $345,615
  9. Trenton, New Jersey: $336,611
  10. Newark, New Jersey: $328,396

While they are considerably more expensive, entrepreneurs shouldn’t necessarily rule out starting a new business in any of these cities.

“After all, many of the startups that have become household names are headquartered there,” the researchers wrote. “There’s also something to be said for the talent pools in these areas.”

A complete breakdown of the costs for each city in the five areas examined can be found on the SmartAsset website.

 

Small Loans is Suitable For Small Business

While the ability of small businesses to obtain capital has improved in recent years, getting a traditional bank loan is still a tough obstacle, a new study finds.

Research from Pepperdine University’s Graziadio School of Business and Management and Dun & Bradstreet revealed that over the last four years, there has been a 13 percent increase in access to capital for small businesses. However, most are getting that money from personal assets and not banks or online lenders.

The study revealed that only 38 percent of small business respondents qualified for a bank loan within the last three months, compared with 70 percent of mid-size businesses.

It’s been even tougher to obtain a Small Business Administration Loan. Just 1 percent of the small businesses surveyed qualified for an SBA loan over the past three months.

Looking for information on business loans? Fill in the questionnaire below, and you will be contacted by alternative lenders ready to discuss your loan needs.

Although low credit scores might have precluded you from getting a loan in years past, today’s lending environment is more open to subpar credit ratings.

“While traditional banks may be restrictive when it comes to obtaining credit, there are alternative options,” said Michael Kevitch, president and founder of Small Business Funding.

Alternative lending sites such as Small Business Funding tend to base lending decisions on the financial realities of a business rather than the financial history of business owners. Specifically, Kevitch said, alternative lenders take a close look at business performance, industry type, time in business and cash flow before handing out a loan.

The important for your business

So, your company needs money that you currently don’t have. Maybe your business is just taking flight and is still lacking the necessary funds, or perhaps you have high aspirations with low profits at the moment.

If loans are your go to choice for financing, you’ll need to decide between a traditional bank loan and an alternative lender. For the latter, peer to peer (P2P) lending might be a smart option if you’re looking for a smoother, faster borrowing process.

According to Investopedia, P2P lending lets individuals borrow and lend money without an official financial institution as the intermediary. Lenders collect income from interest, usually at a higher cost than with traditional loans, while borrowers access financing they may not have been approved for elsewhere.

“P2P loans can often offer higher approval rates and competitive interest rates  a stellar combination,” said Emily Bartz, a writer at NextAdvisor.com, which provides independent research and comparison tools for financial, tech and business products. “The beauty of P2P lending is that it offers borrowers a more personal experience by avoiding big banks and financial institutions. Plus, borrowers can rest easy knowing that their lender is accredited and provides legitimate loan support.”

Another upside, according to Bartz, is that P2P lending is flexible, allowing borrowers to complete the process in pieces. [See Related Story: A Guide to Choosing the Right Small Business Loan]

Is P2P right for you?

So how can you determine if P2P lending is right for your business? Be sure to ask yourself these questions:

Is it legal in your state?

Not all states allow P2P lending. However, it may depend on the platform you use. For example, according to LendingMemo, 49 states provide funding through LendingClub, while only 47 do so through Prosper.

“Potential borrowers should make sure that P2P lending is legal in their state, as it is prohibited in some areas,” Bartz said. “You can usually find this information fairly easily on the lender’s website or by completing a quick Google search,” she noted.

Before committing to the idea, research which sites are accessible in your state.

How quickly do you need the loan?

One potential downside of P2P lending is that it might take longer than a traditional loan, thus hurting any immediate transactions or aspirations, Bartz said.

Bartz said that “if you are in a time crunch, P2P lending might not be ideal.” Make certain that your company’s needs are in tune with the time frame of your lending process before settling, she advised.

Is your financial standing good enough?

Bartz noted that it’s important to consider costs such as interest rates and origination fees. While not all P2P lenders require this, it’s smart to determine whether your credit score is high enough, and your business makes enough money, for you to be approved.

“It’s crucial that all potential borrowers have a clear understanding of exactly what they’ll be paying and have a plan to keep their payments consistent and on time,” she told Business News Daily.

What are your options?

There are quite a few choices of loans when it comes to P2P lending. Once you’ve put a financial blueprint into place, you can start to explore your options and decide which will offer the best APRs, loan amounts and repayment terms for your credit score, Bartz said.

Depending on the size and age of your business, you may want to explore which type of loan is the best fit for your company’s needs.

“If you’re a brand-new business, you’ll likely want to look into personal loans that you can use for business purposes, because you likely won’t meet the requirements of a business loan,” Bartz said. “On the other hand, if your business has been around for a year or longer, a small business loan will be best for you.”

 

Card Printing Services for Small Businesses Tips

Are you trying to choose an online business card printing service for your business? We’re here to help you find the one that’s right for you. While some printing services are appropriate for larger businesses, we found four that we think are best for small business or freelancers’ needs.

Online business card printing

The best business card printing services for small businesses produce high-quality cards without requiring you to use special software or to have design skills. You should be able to create your new card design easily online, see high-resolution previews online, and receive your new cards in a timely manner. The best services also provide a wide variety of card stock choices, images, fonts, colors and card shapes.

Benefits of online business card printing services:

When you create your business cards, think about how you plan to use them. If you are using them for offering discounts or one-time opportunities, you can save money by choosing a low-priced option. If you plan on using them to give to contacts whom you wish to sell high-priced items to, you’ll want a card that is attractive and worth keeping that may cost a bit more. If you plan on using them to share your contact information with a lot of people at a convention or other large sales opportunity, you’ll benefit from a card that scans well with a business card scanner or even a near-field communication (NFC) card that can be scanned with a mobile phone.

How we evaluated online business card printing

Top Ten Reviews (TTR), a sister site of Business News Daily, has been testing online printing services for many years. We discussed business card printing with the reviewers who recently evaluated business card printing and online printing services. We were also able to access their sample prints from more than 10 printing companies to help decide which online card printers we thought would be best for small businesses.

After looking over Top Ten Reviews’ research notes, talking with the reviewers, evaluating the sample products and conducting our own research, we found the best three printing services for small businesses plus one well-known option, Vistaprint, that did not make it into our top three. These online services are simple to use, do not require image editing software and have quick print run times.

This online printing service offers standard, square, textured, rounded edge and odd-shaped business cards. It also sells quality black-colored cards, embossed and foil cards. You can even buy cards made out of recycled wood, sand paper or pot moss. If you do not have your own design, you can choose from a wide selection of high-quality templates. The online card editor is simple to use and it shows you what part of the cards to not put text on. The print previews are large so you can easily ensure that your cards are correct before you place your order. Jukebox cost a bit more than low-priced printers, such as Vistaprint, but the quality is worth the investment.