Whether you want to launch a business or grow it, you may have the need to capitalize it. In short, this means financing it. And in doing so, there are things to consider as you open your doors, or take your business to the next level.

First, what does capitalizing do?

Technically speaking, capitalization refers to the cost of equipment that is written off as depreciation over time. It also refers to the converting of retained earnings into capital or of an operating lease into a capital lease. In general terms, it means the investment you make in your business, generating money to make the business happen. It may be called funding, backing, capital investment, or owner’s stake.

When you capitalize a business, you’re able to combine funding with your operating cash flow to pay for assets such as equipment, vehicles and real estate, or plan for growth through purchasing inventory, hiring employees, or financing receivables. It also allows your business to reserve funds for emergencies.

There are many ways to capitalize a business. Two of the more popular ones are equity or debit funding, or a combination of both.

Equity funding

As in other financial situations, equity basically means ownership. Capitalization through equity funding involves the investment of the owners, which can take on many forms. Investors can own stock or shares in your business, or partners can be issued partnership interests.

Equity funding can be beneficial in that there is no debt involved and therefore no credit history is required. The money comes outright from the “owners,” so in most cases there’s no need to pay back investors.

The downside is that while investors provide essential funding, they also gain important rights. You may lose some control over your business as every investor will be able to have a say in how funds are spent. If your business is your baby, you may not want to relinquish that kind of power. In addition, in most cases, investors also recoup their share of the profits, which may end up being more than the cost of a loan.

Debt funding

Another way to capitalize a business is through debt funding. This allows you to take immediate action to open your doors or grow your business by taking out a loan.

There are many ways to do this, whether direct financing through a bank or more complicated arrangements such as with angel investors or venture capitalists. Debt funding is beneficial in that you don’t have to give up any ownership interests. The business remains in your control. At the same time, you make regular payments that can help you build business credit. And going forward, the interest you pay on the loan can be written off as a business expense.

The downside of debt financing is that you’ll need enough cash flow to make regular loan payments. Not making timely payments can hurt your credit rating. Taking out a loan can also can increase your debt-to-equity ratio, which can paint the business in a negative light. Another disadvantage is the debt is often tied to collateral, which may be the business itself or the owner’s personal assets.

Capitalizing interest

Something to consider when capitalizing your business is the opportunity to capitalize interest. This refers to the interest you pay on loans to finance your long-term assets. When you capitalize interest, you add the cost of the interest to the book value of the long-term asset.

In that way it’s seen as a depreciation expense rather than an interest expense. This can reduce the business’s profit “on the books,” while not reducing its cash flow.

The downside of this option is that you cannot realize the tax benefits in the same year the loan is taken out. The interest expense can be recognized as a depreciation expense in a later period.

Capitalizing your business is something every owner must consider whether they’re just starting out or they’re ready to grow, acquire, and move into new markets. Many times, the capital comes from a variety of places – owner’s savings, personal investors, interested partners, or long-term business loans. However, you choose to obtain funding, there are options that can help you succeed.

Authored By Diedre Barret – Senior Vice President of Sales and Marketing for Guaranty Bank

Facebook, Twitter, Instagram. Chances are you’ve heard of all these and countless more in your personal life, you may have your favorites, or you may ignore them all together. But in business, social media is essential. Whether it’s to create brand awareness or generate leads, social media connects your business to the world and can be an essential component of your overall marketing plan.

FIVE TIPS to help ensure you’re getting the most of your social media strategy:

Choose the right platforms for your business

Did you know that are more than 60 social networking sites? Social media platforms vary in features, functionality, and target audience, so choosing where to invest resources depends on your business and who you’re trying to reach.

For B2B businesses, it may be helpful to focus on Facebook, Twitter and LinkedIn. For B2C companies, and especially those seeking younger audiences, adding Snapchat, Instagram and Pinterest may be a sound decision.

To get started, focus on setting up and maintaining three or four sites. On each one, make sure you’re listing up-to-date, consistent information about your business and that you’re optimizing your profile for each site.

For example, on Facebook you can add a “Shop Now” call-to-action on your cover. For each account, make sure your brand is represented with your logo, colors, taglines and smart copy. Be sure to link to your social media accounts from your website.

Think content, content, content

Thinking you have nothing important to say stalls you from posting anything! In reality, content ideas are all around you. Remember that YOU know your business, but your customers do not. Let them know about new products or services. Post a behind-the-scenes look at your office or facility. Weigh in on a topic that’s happening in your industry, and invite comments from others. Depending on the platform, consider adding videos or customer polls, which can be entertaining and engaging. You can always highlight information from your website – this will maximize your web content and drive traffic!

Important to keep in mind also: IMAGERY. Posts with pictures are more likely to get likes or clicks. Social Media Examiner reports that 74% of social media marketers use visual assets in their social media marketing. 

 Post regularly

Make social media part of your daily and weekly tasks. Depending on your audience and platform, you’ll want to post, share, like, follow, or retweet several times a day or a few times a week. To make things more efficient, create a social media calendar to generate and coordinate your posts, and schedule bulk-posts on a free software platform like Hootsuite.

Your business may lend itself to regular topics and themes. For example, if you’re an accountant, you may want to do weekly posts for “Tax Tip Tuesdays.” This lets your audience know to watch for your posts every week, and it gives you an opportunity to showcase your expertise, which can generate leads.

Pay to Play

The ever-changing algorithms used by social media platforms can make it challenging to ensure that your customers and potential customers actually SEE your content, which can be frustrating after you’ve spent time collecting and cultivating it. So placing social media ads can be effective in getting your message out there.

Most social media platforms offer advertising opportunities, and they vary based on how they look and how much you’re willing to spend. To get started, focus on which platform your customers are most likely following you.

Then, determine your business objectives: Do you want to raise awareness, increase engagement, boost traffic to your website or generate revenue? Depending on your goals, the platform can guide you through options in graphics, timelines and audience.

Interact

Finally, remember that social media is social. Just like your business often grows through word of mouth as well as networking, your business can grow by interacting, commenting, sharing, and participating in social media. This is called ENGAGEMENT and we all want it!

When you post, invite others to comment, and do not be shy about posting on other business’s pages. Posting and commenting keeps you in the conversation and top of mind to viewers. Every time they see your profile picture your brand is reinforced. Stay in the game!

In summary, social media can boost your marketing efforts and add visibility and credibility to your brand. If you’re just starting out, take the time to set up your social media accounts. Assess new and existing accounts and make sure they’re optimized for every opportunity.

Authored By Diedre Barret – Senior Vice President of Sales and Marketing for Guaranty Bank

Authored By Diedre Barret – Senior Vice President of Sales and Marketing for Guaranty Bank

When you started your business, maybe it was a side hustle. Or maybe you set out to fully establish your business from day one, but the ramp up time was slow and you needed another stable job to supplement your income. At first, you probably spent a couple of hours per week on the business and made a little bit of money to cover the costs. As time went on, you started to see that there was a way to make this a full-time job.

Now it is time to scale the business.

Maybe you need capital to increase production, employees to handle demand, marketing to reach the next level or capital to fulfill a big order.

Here are 6 topics to consider as you scale your business:

Ask your bank for additional services:

Your bank can be an invaluable resource for add-on services that help to make day-to-day business a bit easier. Services such as remote deposit, payroll services, company credit cards, integration with accounting software and many other services are offered by your bank at little to no cost. Each of these services can help you to save time or money to allow you focus on growing the business.

Look for the free (or low cost) money:

When people think of grants, they typically associate them with non-profits or student businesses.  There are thousands of grants available to for-profit businesses each year. But, where do you find them?  A great place to start is the local bookstore or library. There are books published each year that list all available grants and give a blueprint for how to write your application. You can also look to government entities, such as the U.S. Small Business Administration.

Finally, you should seek information from your local government office on grants available in the area. You can also check with your bank to see if there are any funding options at low cost through government backed programs.

Use social media to tell your story:

Many people use social media to pitch their product, but few businesses do it with any strategy. The key to social media is consistency and supplying content that people will read. Here is a simple road map to follow when building a marketing plan around social media.

• Run a like/follow campaign to build your presence. Give away your product as a way to reach more people.
• Humanize your business. Tell stories each week about your employees; or your struggles; or your successes. People are interested in you just as much as the business.
• Get involved in the community and share your stories with your followers.
• Be consistent. Try to post once per week (or more) and use themes to help organize posts. Themes can include ideas like Product Mondays, Employee Wednesdays and Community Fridays.

Know your numbers:

Knowing your numbers can make your business grow much faster. If you were asked your sales from last month, would you know the answer? Let’s say you do know the answer and it is $50,000. From that $50,000, how much did the company make after all expenses were paid? These are fairly basic questions that a business owner should know each and every month. If you don’t know the numbers, how do you where to focus for growth?

Here are a few tips when looking at your numbers on a monthly basis:

1. Quantify success and failure.
2. Know exactly how much it costs to produce your product.
3. Create value in order to get premium pricing and profitability.
4. Know what it costs to run your business each month (overhead).
5. Be aware of problems before they arise by looking at trends in costs and revenues.

Utilize SAS solutions to fill a void:  

SAS (Software as a Service) and can be used to perform many different jobs to improve the efficiency of your business. Many SAS solutions are free for trial or basic versions and then have a monthly charge for a subscription to the service. According to idonethis.com, the average startup uses 17 SAS-based solutions on a monthly basis. As technology becomes faster and more intuitive, look to SAS as a way to optimize your business.

The #1 reason businesses fail:

The number 1 reason a business fails is not enough revenue has been generated to sustain the business. Another way to say this: you need to get out and SELL. Sales are the life blood of the business and in order to scale, you need the revenue and demand to support the increase in production. Think of alternative channels to sell your product such as strategic partnerships, co-ops, online, local, wholesale or white-label. Open up more sales channels and the revenue will follow.

During the 2016 – 2017 school year, Guaranty Bank partnered with EverFI to bring Financial Education to local area schools.  The program is designed to provide digital education resources to schools, with no cost to the school or school district.  Financial education courses include everything from introductory topics such as saving and budgeting, to advanced topics like insurance, taxes, and investing.  At the end of the program, students will have a more thorough understanding of financial concepts and are better prepared to make decisions. These skills will help them reach their financial goals in the future.

Guaranty Bank, along with EverFI, were able to provide instruction for 296 students in 3 county schools.  This added up to over 1,800 hours of learning.  Scored topics included financial literacy, understanding money, and money management.  The results for the participating students were astounding!

Financial Literacy

The course on financial literacy included lessons on banking, savings, payments, credit scores, student loans, renting vs. owning, insurance and taxes, consumer protection and investing.  The students increased their pre-test scores by an average of 89% upon completion of the course.  The greatest gain was seen in the renting vs. owning segment.

Understanding Money

The key question in the understanding money course is, “can you help your friend from outer space understand the difference between needs and wants?”  In this course, the students completed lessons on the following topics:  responsible money choices, income and careers, making plans with money, credit and borrowing, insurance and safety, savings and investing.  Students showed the highest gains in savings and investing.

Money Management

Research shows that feelings of self-efficacy, or confidence in one’s ability, are an important outcome in financial education.  This confidence in financial capability will carry all the way into adulthood.  After taking the course on money management, the students are more confident and better prepared to make financial decisions.

If you would like more information on Guaranty Bank and our commitment to financial education, please click here.