New Venture Thinking

Before diving into a new project, take the time to think about its feasibility, costs, marketability, acceptability, applicability, and definition of success. Why would you want to start a new venture, usually to make money! The structure of our society compels the generation of funds. The fungibility of money translates into the ability to accomplish goals and objectives in our daily lives.As an example, let’s assume you wish to create a website to deliver Forex services. Forex stands for foreign exchange; it’s an accessible medium for trading currencies for many traders. Low cost of entry, easy access to leverage along with twenty-four hours of operation six days a week, makes this an attractive alternative to traditional trading methods such as stocks and bonds. Services in our example will be information products, some you will create yourself, and others that you will resale.FeasibilityIs the project feasible, can it be done, with your resources? Can a Forex website bring in enough money to pay for itself plus profits? Feasibility does indeed seem possible due to a large number of Forex websites in existence. Many sites do not constitute proof, conduct additional research to consider how profitable. What new angle can you bring to the world? Maybe your niche will be accepting cryptocurrency for all transactions?CostsWhen we ponder costs, don’t forget about the opportunity costs along with the expenses. Can you think of something better to do with your time? Most likely you will develop new capabilities, will you be building transferable skills? Creating a website involves some technical skills that you could learn if so inclined, it is possible to outsource some tasks. Again we see the old saw; you are going to pay either time or money. Take an accounting of what it will cost you to get resalable products and or what you will need to make your own.

Are you able to sustain the venture without undue hardship? A pro forma sheet can be helpful when planning future business expenses. Keep a keen eye on possible costs and hidden liabilities. Regulations and laws are ripe with surprises for new enterprises, thoroughly research any planned expansion such as hiring employees. The amount of red tape that you have to deal with may not outweigh the benefits you will receive. The goal is to eliminate unexpected obligations. There will, of course, be unforeseen events; navigatable best by the person who is best prepared to deal with the issues that are predictable.MarketabilityA website cannot be profitable solely because it exists, think regarding what value a site can bring to your potential customers. The more goodness you can give to people the more capital you can make. Do you think that the products that you offer are valuable? It is nigh impossible to sell something that you do not believe has value.Now is the time to think about your marketing strategy? How will you attract customers? There are many methods available from, email lists, search engine optimization, advertising, blogging, joint-ventures, affiliates, cold calling, farming, word of mouth, and many others. Pick a combination of methods that agree with your marketing budget. You will pay with time or money so select your mix, make a plan and be ready to take action.Acceptability”Acceptance” by Bernard Goldbach is licensed under CC BY 2.0Would you be comfortable telling someone you respect that you are involved with your project? Respect is difficult to earn and easy to lose. Consider the effect your actions will have on your reputation, hiding behind a facade will not ease your soul. Just, do the correct and professional thing every time. When you know deep down that you have given it the appropriate amount of effort, rest easy. Forex websites are ripe with charlatans and hucksters, think of ways to combat the initial negative impressions that some may have of your business. Do you have the force of will to stand up to criticism?ApplicabilityDo you have or can you learn the right skillset to be successful at what you wish to accomplish? Do you even like what you plan to do? If you are doing it merely for the money then good luck. Working on something you dread does not lead to long-term happiness, no matter how much dinero you make.Do you currently trade in the Forex market, would you use the products that you are trying to sell? Have you got the coding skills to develop trading robots? Are you an exceptional organizer who can outsource everything and keep tabs on how your operation is running? Find out how to use your strengths to your advantage and figure out how to outsource your weaknesses, over time you may be able to gain additional capabilities, but at the onset of your business make plans for mitigating what you lack. It may be possible to take on a partner who is strong where you are weak.

SuccessWhat does success mean to you? Ah, we all want to be a success, but unless it is defined unambiguously, we can never reach it. Success is not some general feeling of doing well; success is a goal achieved. So be sure to specify your goals concretely so that you can measure your achievements. In the case of our Forex website success could be defined successively with each goal being more demanding than the previous. Initially, the goal could be that the website recoups all the monetary expenses invested in the operation. Next, you could want to value your time at a particular rate say, one hundred bucks an hour? Tracking your time versus income minus investment would reveal the hourly rate that your site is paying you.ConclusionShould you start your venture or lay it aside. Taking time for it to fester in your brain is not a wasteful activity. Creativity flourishes when your mind is at rest, so after thinking about your new venture for some time let your subconscious dwell on it for a while. Ultimately, you could decide that what you planned to do is not feasible, and that would be a good thing, you would then know what you do not want to do, along with some skills on how to think about what you may want to do in the future. The information and research conducted will reside in your subconscious and may unexpectedly prove useful when your creativity demands it.

Alternative Financing for Wholesale Produce Distributors

Equipment Financing/Leasing

One avenue is equipment financing/leasing. Equipment lessors help small and medium size businesses obtain equipment financing and equipment leasing when it is not available to them through their local community bank.

The goal for a distributor of wholesale produce is to find a leasing company that can help with all of their financing needs. Some financiers look at companies with good credit while some look at companies with bad credit. Some financiers look strictly at companies with very high revenue (10 million or more). Other financiers focus on small ticket transaction with equipment costs below $100,000.

Financiers can finance equipment costing as low as 1000.00 and up to 1 million. Businesses should look for competitive lease rates and shop for equipment lines of credit, sale-leasebacks & credit application programs. Take the opportunity to get a lease quote the next time you’re in the market.

Merchant Cash Advance

It is not very typical of wholesale distributors of produce to accept debit or credit from their merchants even though it is an option. However, their merchants need money to buy the produce. Merchants can do merchant cash advances to buy your produce, which will increase your sales.

Factoring/Accounts Receivable Financing & Purchase Order Financing

One thing is certain when it comes to factoring or purchase order financing for wholesale distributors of produce: The simpler the transaction is the better because PACA comes into play. Each individual deal is looked at on a case-by-case basis.

Is PACA a Problem? Answer: The process has to be unraveled to the grower.

Factors and P.O. financers do not lend on inventory. Let’s assume that a distributor of produce is selling to a couple local supermarkets. The accounts receivable usually turns very quickly because produce is a perishable item. However, it depends on where the produce distributor is actually sourcing. If the sourcing is done with a larger distributor there probably won’t be an issue for accounts receivable financing and/or purchase order financing. However, if the sourcing is done through the growers directly, the financing has to be done more carefully.

An even better scenario is when a value-add is involved. Example: Somebody is buying green, red and yellow bell peppers from a variety of growers. They’re packaging these items up and then selling them as packaged items. Sometimes that value added process of packaging it, bulking it and then selling it will be enough for the factor or P.O. financer to look at favorably. The distributor has provided enough value-add or altered the product enough where PACA does not necessarily apply.

Another example might be a distributor of produce taking the product and cutting it up and then packaging it and then distributing it. There could be potential here because the distributor could be selling the product to large supermarket chains – so in other words the debtors could very well be very good. How they source the product will have an impact and what they do with the product after they source it will have an impact. This is the part that the factor or P.O. financer will never know until they look at the deal and this is why individual cases are touch and go.

What can be done under a purchase order program?

P.O. financers like to finance finished goods being dropped shipped to an end customer. They are better at providing financing when there is a single customer and a single supplier.

Let’s say a produce distributor has a bunch of orders and sometimes there are problems financing the product. The P.O. Financer will want someone who has a big order (at least $50,000.00 or more) from a major supermarket. The P.O. financer will want to hear something like this from the produce distributor: ” I buy all the product I need from one grower all at once that I can have hauled over to the supermarket and I don’t ever touch the product. I am not going to take it into my warehouse and I am not going to do anything to it like wash it or package it. The only thing I do is to obtain the order from the supermarket and I place the order with my grower and my grower drop ships it over to the supermarket. “

This is the ideal scenario for a P.O. financer. There is one supplier and one buyer and the distributor never touches the inventory. It is an automatic deal killer (for P.O. financing and not factoring) when the distributor touches the inventory. The P.O. financer will have paid the grower for the goods so the P.O. financer knows for sure the grower got paid and then the invoice is created. When this happens the P.O. financer might do the factoring as well or there might be another lender in place (either another factor or an asset-based lender). P.O. financing always comes with an exit strategy and it is always another lender or the company that did the P.O. financing who can then come in and factor the receivables.

The exit strategy is simple: When the goods are delivered the invoice is created and then someone has to pay back the purchase order facility. It is a little easier when the same company does the P.O. financing and the factoring because an inter-creditor agreement does not have to be made.

Sometimes P.O. financing can’t be done but factoring can be.

Let’s say the distributor buys from different growers and is carrying a bunch of different products. The distributor is going to warehouse it and deliver it based on the need for their clients. This would be ineligible for P.O. financing but not for factoring (P.O. Finance companies never want to finance goods that are going to be placed into their warehouse to build up inventory). The factor will consider that the distributor is buying the goods from different growers. Factors know that if growers don’t get paid it is like a mechanics lien for a contractor. A lien can be put on the receivable all the way up to the end buyer so anyone caught in the middle does not have any rights or claims.

The idea is to make sure that the suppliers are being paid because PACA was created to protect the farmers/growers in the United States. Further, if the supplier is not the end grower then the financer will not have any way to know if the end grower gets paid.

Example: A fresh fruit distributor is buying a big inventory. Some of the inventory is converted into fruit cups/cocktails. They’re cutting up and packaging the fruit as fruit juice and family packs and selling the product to a large supermarket. In other words they have almost altered the product completely. Factoring can be considered for this type of scenario. The product has been altered but it is still fresh fruit and the distributor has provided a value-add.

The idea for factoring/P.O. Financing is to get into the nuts and bolts of every single deal to ascertain if it is doable.