The Benefits and Challenges of International Expansion

by Crestmark 11. December 2014 08:23

Many successful businesses in the U.S. turn their eyes overseas for new markets in which to grow their company, their client base and their finances. Some companies even take advantage of so-called “tax inversion” loopholes by merging with other companies and then moving their headquarters outside the U.S. in order to reduce their taxes.

Regardless of the method taken, businesses that traditionally deal solely in the U.S. can often faces challenges and hurdles when trying to expand abroad. The cultural differences alone can cause problems for some companies. But if you’re thinking of growing your business and expanding into different countries, be on the lookout for the following potential pitfalls and follow these tips to avoid them.

1) Know your audience.

You could make a presentation to a client in the U.S., and that client could love what you’ve done and consider it a rousing success. But when you make that same presentation to an international client, it falls flat.

In this case, the problem is likely not with the presentation itself, but with the delivery. Be sure to edit your presentations and pitches to fit the local market to which you are presenting (Japan, China, Germany, etc.). You may need to adjust the content or format or even revamp the entire pitch if it does not fit the target audience.

Be sure to maximize your time, as well. American audiences typically prefer quicker pitches, while European clients likely want to absorb a presentation for longer than an hour.

Finally, one helpful tactic is to design a website for each market, rather than create a blanket international site for all overseas markets. This shows attention to detail to each market and would allow for easier communication to specific nations.

2) Emphasize your history.

You’re presenting your company and your product to a new market, but you aren’t completely starting from scratch. There are certainly financial, cultural and trend differences between the U.S. and international markets, but you should still be sure to emphasize the successes you have had domestically.

After all, you’ve reached the point of considering international expansion, so why hide from the success that brought you there in the first place? Just be sure to tailor your product or service to your new target audience.

3) Understand cultural differences in business relations.

Each market will have different cultural quirks that might go unnoticed but could hamper your efforts to expand abroad. For example, American businesses commonly give positive feedback on presentations, but that feedback might not amount to much in terms of making a deal. European clients, though, prefer to make presenters earn their praise, so take a statement of affirmation from a European businessman to heart.

4) Plan ahead.

International expansion can help grow your business, but it also requires funds to bring it to fruition. Legal fees, acquisition costs, marketing, advertising and new salaries are a few of the expenses necessary to spread your business abroad. Be sure to have enough money set aside to take care of these fees, and set limits for your business so that you have some left over to give yourself a head start once you debut internationally. This will allow you hit the ground running rather than having to work to regain the money you sank into the expansion.

International business expansion is a difficult process, but one that pays off if done properly. Be sure to prepare and execute properly in order to reap all the benefits possible.

 

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How Much Is Enough to Borrow for Your Business?

by Crestmark 25. September 2014 06:25

When you're struggling with meeting the financial demands of your business, you may need access to capital. Whether you're a newer business or you've been established for quite some time, a shortage in cash flow can hinder your operations. It's important to decide exactly how much you need to borrow when you're worried about making payroll, securing supplies for an upcoming special project, or when you need to take care of unexpected equipment repairs. If you borrow too much, you're spending more than you need to on interest and loan repayment and that’s money that you could be spending on other things. If you don’t borrow enough, you'll be scrambling to cover your expenses. 

 

      

Here are some tips for narrowing down your budget to help you determine the amount of working capital you might need:

 

Forecasting Your Future

Use conservative estimates on leads, conversions, sales and profit margins. 

Analyze previous monthly, quarterly and annual reports for a comparable estimate. 

Learn your industry's high and low seasons; not only when they happen, but why they happen. 

Make projections for company growth, in both employee needs, equipment needs, and customer growth.

When you're planning to borrow money for a new chapter in your company's history, factor in the method, fees and interest associated with your financing.

 

New Businesses

If your business is young, it can be even more difficult to estimate how much you'll need to handle growth. A common rule of thumb is to try to cover costs through the first six months of business, but it’s a good idea to build in a safety margin even above the 6-month mark.  Here are expense categories you should analyze: 

Payroll – Add up the salaries and wages for yourself, your employees and anyone else doing work for your company. Include sales, human resources and seasonal help. Don't forget the taxes and fees that must be paid to the government and to any associations.

Marketing and Collateral Expenses – Include the costs of signs and business cards, marketing materials, and product or service development.  

Overhead – Estimate costs for your office and operations, including rent or mortgage, supplies, insurance plans and utilities, business licensure, vehicle registration and long-term equipment. Consider all of the necessities you'll have to purchase, even furniture and computers.

Extra Expenses – Talk to someone experienced in your business or ask a mentor for advice. They would be a great resource for information about expenses, fees and pitfalls you may not have considered. Most business owners are willing to help with hints and experiences that will help other people avoid repeating their mistakes. 

 

Established Businesses

If you've been in business for a while, you may be planning to expand your operations. If you want to get a loan or business line of credit, it's important to organize your books and understand where all of your money is coming from and where it's going. Ensure that you'll have enough funding by making a list of your current and future expenses, as well as your sources of income. 

Start with your routine expenses that are part of your monthly budget.

If you're expanding, list any costs involved in additional personnel, equipment, office space and operating supplies. 

For special projects, total the amount of capital needed to fund. Look at supplies, personnel, shipping and transportation.  

Borrowing the right amount of money can help you grow your business without the aches and pain of overwhelming expenses. Once you've mapped out all of your costs and projected your income, you'll have a better idea of how much you need to borrow. While there's no exact science to estimating the right amount of financing, doing your homework will get you closer to a reasonable estimate.

Keep in mind that you don’t have to go through this process alone. The lending experts at Crestmark can work with you to determine the best solution. Give us a call today! 

 

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2014 IPO Update: A Look at the Debutantes

by Crestmark 18. August 2014 05:29

Believe it or not, 2014 is already more than half over. It started out with a bang when sixteen companies had their financial coming out parties in January, and it's been a busy year ever since. There are 135 initial public offerings (IPOs) on the books so far for 2014. The step from being a privately held company to IPO has had a positive effect on some, but for others – not so much. Let's take a look at five debutantes of 2014 to see how they've fared.

                     stock market

Parsley Energy

Parsley Energy, Inc. (NYSE:PE), based in Midland, Texas, went public on the NYSE on Friday, May 23, 2014. With operations in the Midland Basin, the independent oil and gas company has grown significantly from a two-person start-up in 2008 to a solid producer of 12,000 barrels of oil per day. Parsley's initial offering of 50 million shares made their market entrance at $18.50. They closed last week at $23.73 with 117.81 million shares.

ServiceMaster

ServiceMaster Global Holdings, Inc. (NYSE:SERV) debuted with an opening share price of $17 on Wednesday, June 25. It closed at $17.95 on its first day. The commercial and residential maintenance and service provider started with an initial offering of 35.9 million shares. As of Monday, June 30, it was selling at $18.75 per share.

Eagle Pharmaceuticals 

Not all IPOs have done as well as they'd hoped. Eagle Pharmaceuticals (NASDAQ:EGRX) went public on Wednesday, Feb. 12. It sold 3.4 million shares. The New Jersey-based company opened at $15, closing on its first day at just $12.83. It has rebounded a bit, bumping up to $13.57 as of Monday, June 30. Eagle Pharmaceuticals, founded in 2007, develops and commercializes injectable drugs for oncology and critical care medicine. 

Malibu Boats

Based in Malibu, Tennessee, this sporting boats manufacturer has made modest gains as one of the early IPO debutantes of 2014. Malibu Boats (NASDAQ:MBUU) opened at $14 on its first day, Friday, Jan. 31, closing at $17.03. It sold 7.1 million shares. As of June 30, the recreational boating industry continues to embrace Malibu, as its stock price was holding at $20.03. 

GoPro

One of the biggest splashes in IPOs for 2014 has been GoPro (NASDAQ:GPRO). The innovative highline sports camera maker has gained a lot of attention with its recent offering, opening at $24 on Thursday, June 26. With much excitement around its first day, it closed at $31.34. It sold 17.8 million shares. As of June 30, GoPro was selling at $35.76. 

As IPOs continue to garner attention in 2014, with many companies planning to go public before 2015there's hope for upcoming public offerings for the rest of the year. For companies that seek an increase in funding, the market has shown promise for some, but for others, it's just been a struggle.Going public isn’t the only way to raise funding, however – if your business is in need of working capital, call us today to talk about options - we are happy to help! 


 

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The Shifting Role of E-Commerce in the U.S. Economy

by Crestmark 11. August 2014 09:56

The Internet's impact on the U.S. economy is always growing. The share of online sales is slowly creeping up as the share of brick-and-mortar retailers continues to decline year over year.

E-tailers See Growth

A recent study by the Centre for Retail Research estimates that the online retail share of sales in the U.S. is expected to hit 11.6 percent this year. The figures for nine major countries, including G-8 nations France, Germany, Italy and the United Kingdom, were based on estimated online retail sales of goods. This is good news for U.S. e-tailers, who rely on 55 percent of the country's population to shop online. Online sales that were ordered via mobile devices are estimated to be as much as 13.8 percent for 2013, and are expected to rise to 19.9 percent this year. These figures didn't even include restaurant food, insurance, tickets, and gambling purchases.

                                                     

E-commerce Sales Are Up 

The U.S. Census Bureau has also announced that for the first quarter of 2014, the total retail e-commerce sales are up 2.8 percent over the fourth quarter of 2013. That's in increase of $71.2 billion. The estimate is adjusted for seasonal variation, not price changes. When compared to the first quarter of 2013, the increase is 15 percent. Unadjusted, the year-over-year comparison is an increase of 14.9 percent for e-tailers, and an increase of 2.2 percent for all retail sales.

Retail Storefronts Decline during E-commerce Rise

While e-commerce increases amid promising signs of an economic recovery in the U.S., more retailers are expected to close their brick-and-mortar storefronts. Staples, Inc. has announced that it plans to close 225 office supply stores by the end of next year. RadioShack, known for selling electronic gadgets and trending tech toys, announced in March that as many as 1,100 of its stores worldwide would close. In recent weeks, however, the company has decreased that number, citing disagreements with its lenders over the best way to manage its poor performance. According to reports by USA Today, RadioShack announced a loss of $191 million in the fourth quarter of 2013 over its 5,524 stores and dealer outlets. With 4,300 brick-and-mortar locations in the U.S., the company still plans to close a large number of stores, but no longer one-fifth of its locations.

The shift from retail storefronts to ecommerce business is hardly over, as there’s dust still left to settle in the broader shopping landscape. This transition is likely to bring more innovation to the marketplace, with brick and mortar stores finding new and creative ways to serve their customers, and internet based businesses working to take market share away from those same companies. This type of healthy competition is great for consumers though, and we look forward to seeing how things play out for the rest of 2014!     


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Business

What Type of Lender is Right for My Business?

by Crestmark 10. July 2014 05:54

When business owners or executives first realize the need for working capital, it can be difficult to know where to start. People often ask, “Should I call my local bank? What about non-traditional lenders? What’s the difference between the two?” We hear this all the time, and wanted to provide a resource to help! 

We recently released an Infographic titled “What Type of Lender is Right for My Business?” This provides a quick and easy reference piece for prospective borrowers to determine whether they’d be better suited pursuing a traditional bank line of credit, or to look into alternative financing. Each lending option has unique characteristics, and this infographic helps clarify how different business situations are best suited for certain lending options. 

The infographic follows a flow-chart format, and leads users through a series of yes / no choices about their business. Key points that determine the right fit include: 

- Does your business have three or more years of positive business history?

- Do you have limited or negative equity?

- Do you have limited or inconsistent profitability?

- Do your assets exceed your liabilities?

- Does your business have positive trends?

- Are there opportunities for growth?

By answering each of these questions, it’s easy to see whether your business may qualify for traditional or non-traditional lending. We are excited about this release, and hope that many businesses find this useful! 

              is alternate lending right for my business

Are you in the market for a business loan? If so, ask yourself the questions on this infographic and then give us a call to discuss! We’d love to help walk you through the process of figuring out what lending option would be best for you and your business. 

 

 

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