I spotted a van on the interstate with “Too Blessed to Be Stressed” emblazoned across its back windshield. How appropriate that the driver divined that this mantra might be relevant for others to meditate upon while they navigate the freeways.

Stress is considered an occupational hazard for entrepreneurs. Having positive mantras as we navigate our business lives is one way of dealing with stress. But there are times when positive phrases are not enough to manage stress or anxiety. Emotional self-management techniques are helpful in these instances.

After the birth of my first son, I was diagnosed with post-partum depression and suffered from severe anxiety. My husband and I not only held full-time jobs, but were managing our business which included processing orders for our new online sites.

It took every fibre in my being to fight and work through the malaise of depression with all the means available to me. This included visits to medical doctors and cognitive therapists. One of the most successful treatments I found was an emotional self-management (EMS) technique recommended to me by a psychologist. The theory and techniques are explained in Instant Emotional Healing : Acupressure for the Emotions. It combines the principles of cognitive behavioral techniques along with those of Oriental medicine and the body’s energy system. My inelegant explanation is that there are physical and emotional blocks in ourselves that can be relieved by tapping certain parts of the body that correspond to meridian points in the bodies energy sytem, as in accupunture, while simultaneously repeating positive phrases that penetrate the sub-conscious mind.

The information in the book was easily accessible to me at a time when I the most stressed and unable to concentrate. I was relieved to find a technique that I could self-administer and utilize to take control of overwhelming and unproductive stress. All independent business people would benefit from techniques such as EMS to not only relieve unproductive emotions, but to optimize performance.

Factoring is becoming a popular yet not so well known tool in the arena of small business. It is an important way of keeping cash flowing through the business when invoices are delayed or accounts receivable are higher than the money in hand. Basically factoring helps you get cash for your business without having that time delay from the time you issue an invoice. They also provide you with collection services and sales ledgers that can be helpful as well. If you are a small business owner, then you should consider this guide to small business factoring as a way to fund your business month to month.

How does factoring work? It is easy and yet complicated all at the same time. The factor will generally manage your sales ledger for you while also providing you with colletion services for all outstanding invoices. Typically you will be loaned 80% to 90% of the total amount of the invoice. You will generally receive the money within 24 hours of agreeing to the services of the factor.

Factoring for a small business does cost money, though. Usually there are a couple of different costs you have to consider. A service chare will usually cover the management of your sales and collections. The other charge is a percentage of sales factored as well as an interest charge of some sort on the cash advance the factor is giving you. The interest rates, obviously, will depend on your company’s credit, the credit of the invoiced companies, and the institution you factor through.

No guide to small business factoring would be complete without telling you want to look for in a factoring company. Obviously you should look for a stable financial institution that will be able to support the business. You should also look for good terms and a company you are comfortable working with since there will be plenty of interaction. Finally, you may want to consider a company that will give you internet access to your accounts. You can easily track the ledger, sales, collections, and your factored amounts that way.

It is also important to understand that no two factoring companies are completely alike. While much of what this guide to small business factoring has explained is typical, there are exceptions to most every situation. The best thing you can do for your business with regards to factoring is research the companies you are considering. Think about what you need and what you want and what everyone is offering you.

A guide to small business factoring can never be complete. There are too many ins and outs when it comes to almost any financial transaction. There are also a number of variables involved like current interest rates, your credit rating, reliability of your invoiced companies, and many other things as well. Before you ever agree to a factoring relationship, make sure you understand all terms as well as how long the contract is for and what renewal terms are. Protect yourself and do your homework and you can use factoring as a way to keep your cash flowing.

Avoiding the top 7 business financing mistakes is a key component in business survival.

If you start committing these business financing mistakes too often, you will greatly reduce any chance you have for longer term business success.

The key is to understand the causes and significance of each so that you’re in a position to make better decisions.

Business Financing Mistakes (1) – No Monthly Bookkeeping.

Regardless of the size of your business, inaccurate record keeping creates all sorts of issues relating to cash flow, planning, and business decision making.

While everything has a cost, bookkeeping services are dirt cheap compared to most other costs a business will incur.

And once a bookkeeping process gets established, the cost usually goes down or becomes more cost effective as there is no wasted effort in recording all the business activity.

By itself, this one mistake tends to lead to all the others in one way or another and should be avoided at all costs.

Business Financing Mistakes (2) – No Projected Cash Flow.

No meaningful bookkeeping creates a lack of knowing where you’ve been. No projected cash flow creates a lack of knowing where you’re going.

Without keeping score, businesses tend to stray further and further away from their targets and wait for a crisis that forces a change in monthly spending habits.

Even if you have a projected cash flow, it needs to be realistic.

A certain level of conservatism needs to be present, or it will become meaningless in very short order.

Business Financing Mistakes (3) – Inadequate Working Capital

No amount of record keeping will help you if you don’t have enough working capital to properly operate the business.

That’s why its important to accurately create a cash flow forecast before you even start up, acquire, or expand a business.

Too often the working capital component is completely ignored with the primary focus going towards capital asset investments.

When this happens, the cash flow crunch is usually felt quickly as there is insufficient funds to properly manage through the normal sales cycle.

Business Financing Mistakes (4) – Poor Payment Management.

Unless you have meaningful working capital, forecasting, and bookkeeping in place, you’re likely going to have cash management problems.

The result is the need to stretch out and defer payments that have come due.

This can be the very edge of the slippery slope.

I mean, if you don’t find out what’s causing the cash flow problem in the first place, stretching out payments may only help you dig a deeper hole.

The primary targets are government remittances, trade payables, and credit card payments.

Business Financing Mistakes (5) – Poor Credit Management

There can be severe credit consequences to deferring payments for both short periods of time and indefinite periods of time.

First, late payments of credit cards are probably the most common ways in which both businesses and individuals destroy their credit.

Second, NSF checks are also recorded through business credit reports and are another form of black mark.

Third, if you put off a payment too long, a creditor could file a judgement against you further damaging your credit.

Fourth, when you apply for future credit, being behind with government payments can result in an automatic turndown by many lenders.

It gets worse.

Each time you apply for credit, credit inquiries are listed on your credit report.

This can cause two additional problems.

First, multiple inquiries can reduce you overall credit rating or score.

Second, lenders tend to be less willing to grant credit to a business that has a multitude of inquiries on its credit report.

If you do get into situations where you’re short cash for a finite period of time, make sure you proactively discuss the situation with your creditors and negotiate repayment arrangements that you can both live with and that won’t jeopardize your credit.

Business Financing Mistakes (6) – No Recorded Profitability

For startups, the most important thing you can do from a financing point of view is get profitable as fast as possible.

Most lenders must see at least one year of profitable financial statements before they will consider lending funds based on the strength of the business.

Before short term profitability is demonstrated, business financing is based primary on personal credit and net worth.

For existing businesses, historical results need to show profitability to acquire additional capital.

The measurement of this ability to repay is based on the net income recorded for the business by a third party accredited accountant.

In many cases, businesses work with their accountants to reduce business tax as much as possible but also destroy or restrict their ability to borrow in the process when the business net income is insufficient to service any additional debt.

Business Financing Mistakes (7) – No Financing Strategy

A proper financing strategy creates 1) the financing required to support the present and future cash flows of the business, 2) the debt repayment schedule that the cash flow can service, and 3) the contingency funding necessary to address unplanned or unique business needs.

This sounds good in principle, but does not tend to be well practiced.

Why?

Because financing is largely an unplanned and after the fact event.

It seems once everything else is figured out, then a business will try to locate financing.

There are many reasons for this including: entrepreneurs are more marketing oriented, people believe financing is easy to secure when they need it, the short term impact of putting off financial issues are not as immediate as other things, and so on.

Regardless of the reason, the lack of a workable financing strategy is indeed a mistake.

However, a meaningful financing strategy is not likely to exist if one or more of the other 6 mistakes are present.

This reinforces the point that all mistakes listed are intertwined and when more than one is made, the effect of the negative result can become compounded.

If you are stuck with a card that charges the interest rates that most companies charge (up to 30% or more), then you will know how hard it can be to repay your debts. The bets tactic to staying debt free is getting a card whose minimum amount you can be able to raise. This will in most cases mean getting a card with lower rates of interest.

You will never know until you ask.

If you just tried and the company agreed to lower your rates, you will get enormous saving s throughout the remaining life of the card that you own. Just give your company a call and try.

What things will better you Chances of getting the rates decreased?

• It’s the first time that you have requested that the interest rates be changed for that card or after very long.
• Your card history is impressive.
• Your monthly repayments usually exceed the minimum balance.
• You credit score is good.

Incase they turn down the request?

The company may only require a little convincing to allow you a rate decrease. You can tell them that you will transfer the balance to a lower interest card. In this case, the company will do as much as it can to retain you.

You can better your credit score and then revisit the issue after six months if the company maintains its position. During this time, ensure that you make all payments in time and don’t get minimum balances.

A business plan has to be very detailed and you will be expected to have done some thorough research into how successful your plan for a new business is likely to be. Your business plan will need to embody a SWOT analysis, in other words you will have to have done research into what competition your business will face and explain how your business will be different to the others which are already operating in the same niche. You will have to make an objective analysis of the strengths and weaknesses of your business idea and be able to work out ways in which the weaknesses will be turned into strengths. In other words you have to think in the long term and not just in the short term and getting your business off the ground. No-one wants to invest or lend you money for a business which has very little chance of succeeding in the long term.

Business plans are best discussed with a professional before they are subjected to the scrutiny of a professional financier. If you have never set up your own business, then you need as much advice as you can get. Business plans are intricate and you may need professional help to devise one.

The Flat Rate Scheme was introduced as an easy way for small businesses to calculate their VAT liability.

The Flat Rate VAT scheme is available to businesses with a taxable turnover below £150,000 excluding VAT (also exempt and non-taxable sales should be below £37,500).

Under the flat rate scheme, you simply keep a percentage of the VAT charged to your customers. The percentage you keep varies depending upon which industry you are in.

You ignore VAT on your purchases, the VAT you pay simply becomes a cost. Eg If you spend £10 + VAT on stationery, the cost of that stationery becomes £11.75.

The flat rate scheme does allow you to reclaim the VAT on ‘large’ capital items – where you spend more than £2,000 you can reclaim the VAT on that item.

Should I be on the flat rate scheme?

As you claim a percentage of sales, those with higher sales stand to benefit more.

Those with low purchases (therefore paying little in reclaimable input tax) also stand to gain from the scheme.

For example A business with sales of £149,000 (excluding VAT) and in the category of “any other activity not listed elsewhere” – 10% flat rate and with negligible input VAT say £500 will save £8,068 per annum by switching to the Flat Rate VAT scheme.

To see how much you might save, try the  <A HREF=”http://http://www.book-keeping.org.uk/external/vat-flat-rate.html/”>Flat Rate VAT scheme calculator </A>

How do I join the Flat Rate VAT Scheme?

The easiest way is to call the VAT advice line on 0845 010 9000, who will be able to take your VAT registration number and relevant details on the telephone, following which you will be registered after approximately 21 days.

Alternatively, you can download the scheme application form from HMRC .

How do I decide which sector my business falls into?

If your business has sales in two or more sectors, you should apply the percentage appropriate to the main business activity, as measured by your sales.

Some sectors are clearer than others. The difference between “other business services” and “services not elsewhere specified” is far from clear. If you phone HM Revenue & Customs for guidance, make sure you keep a note of the name of the person you speak to and the date of the call.

In Financial Accounting – Reporting for those outside the business, the 3 most important financial statements, relevant for budding entrepreneurs are:

1. The Statement of Financial Position or the Balance Sheet

2. The Statement of Income or The Profit & Loss Statement

3. The Statement Of Cash Flows.

The Balance Sheet shows the business’s assets, the liabilities, and the equities of a business. It is a ‘snapshot’ of the business economic resources at a certain date. That is why when you see one, it says something like, The Statement Of Financial Position as at dd/mm/yyyy.

Unlike a Balance Sheet that is a ‘snapshot’ of economic resources, the Profit and Loss Statement is a summary of the flows of earned revenues and incurred expenses of a business for a period of time. That is why when you see one, it says something like: Profit & Loss Statement for the year 200X.

The Statement of Cash Flows summarizes the ‘cash’ effects of the activities of a business for a period of time. These activities can be operating, investing and financing. The keyword that I would like to emphasize in the above definition is the word ‘cash’. It only records activities that involved the transfer of cash.

I can summarize the above even further:

1. Your Balance Sheet shows you what you own and how you acquired them (borrowed from others or contributed by you).

2. Your Profit And Loss shows you how much you are expending each period and how much you are earning.

3. The statement of Cash Flows summarizes the exchange of cash in your operating, investing and financing activities.

I personally feel that for most freelancers, when starting a small business, attention should be placed on your Profit and Loss statement because that is your record of how much income is coming in and how much expenses is going out. Take a look at the revenue items there to know which activity is bringing in money and take a look at the expense items to see which ones are costing you the most and ask yourself whether those expenses are really necessary. Are there ways in which you could cut your costs?

Costs are what any entrepreneur has to control at the start of every business. No cost item should go by unnoticed or unmonitored. Their existence must be justified. Every dollar counts. Every dollar that gets tied up in one thing is a dollar that could otherwise be used somewhere else.

This article was written for OrangesAndLime.com, to help creative individuals — artists, musicians, designers, illustrators and entertainers — build their own freelance businesses. Please note that this article serves as a guideline only. You should still seek professional advice regarding the matter because laws and practices change over time and they differ from country to country.