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FOUR DIFFERENT WAYS TO FIND FUNDING FOR YOUR BUSINESS

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FOUR DIFFERENT WAYS TO FIND FUNDING FOR YOUR BUSINESS

Dominic Allon, Vice President and Managing Director, Intuit Europe

Starting your own business can be challenging in today’s competitive and overcrowded market. Even if you have an original idea and a strong team to work with, getting access to and securing finance remains one of the biggest stumbling blocks to overcome. Recent research has revealed that because of this, start-up firms are relying heavily on credit cards, with more than half using credit to keep their businesses afloat.

Luckily there are more options than ever to secure finance and help you get your business off the ground and stay afloat. These can range from P2P lending and invoice financing to crowd funding and loans from family and friends. Whilst all of these can be viable options for a small business, each one should be assessed with careful consideration before being the agreed finance option.

Here we look at four different ways to find funding for your business.

Friends and family

Firstly, let’s take a look at the option of borrowing from family and friends. This can seem simple, attractive and potentially lucrative for both you and your investor, but small business owners should follow certain rules to avoid damaging personal relationships. For example, clarify whether the loan is secured, when payments need to be made and if there will be interest. It’s important to agree everything in writing before getting started to avoid unwanted disputes later down the line.

This option does carry less risk for the business, depending on the relationship with the relative or friend. It also works well for the ease of getting a loan (i.e. no credit checks) and can offer better pay back rates, no loan rates at all and also the joy of shared success. But you should be totally sure that whatever happens, your relationship will come first.

P2P lending 

Another viable funding option is P2P lending. This can open many doors for small business owners. Borrowing money directly and cutting out the intermediary banks can be a lifeline for companies which have been refused funding by traditional routes. It also offers the added benefit of being able to select the most attractive loan rate.

While the barriers to P2P lending are low, it can require enormous time and effort to process the loan. There are also some privacy issues connected with P2P platforms, so borrowers must be comfortable with their financial information becoming publicly available for lenders online.

Crowdfunding

Crowdfunding is a good route for small businesses facing difficulty raising funds through traditional routes. Crowdfunding investors contribute various amounts towards the overall target amount, and instead of return on cash, they are offered a stake in the company or benefits, such as loyalty points or free products. It’s a good way to get faster access to funding as well as a platform to engage with potential customers and investors, and attract media attention.

Business owners should bear in mind that a crowdfunding campaign is open to the public, which leaves your idea vulnerable to copy-cat competitors. Many crowdfunding platforms are non-regulated which puts the responsibility of safe practice with the investor and entrepreneur.

Invoice financing

Lastly, invoice financing is an interesting option for small business owners that need fast cash but don’t want a loan or to give up equity to investors. This type of funding allows them to release cash tied up in outstanding customer invoices, so it can be particularly helpful for businesses that face problems with late payments and cash flow.

Allowing a third party to collect unpaid invoices might sound appealing, but that also means they take control of the customer relationship. The business owner must inherently trust the financial provider to handle the relationship sensitively and in line with the brand’s reputation.

Whichever financing option you choose, never forget to do your research and consider all the options available. Weighing the benefits and pitfalls for each will help you determine the one that meets your needs and grow a successful and thriving business for years to come.

Business

Audi aims to sell one million cars in China in 2023

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Audi aims to sell one million cars in China in 2023 1

BEIJING (Reuters) – German premium automaker Audi aims to sell 1 million vehicles in China in 2023, versus 726,000 vehicles in 2020, the brand’s China chief Werner Eichhorn said on Wednesday.

Audi, which is making cars in the world’s biggest auto market with FAW Group, will also add more products in China, Eichhorn said. Audi’s rivals include Daimler and BMW.

(Reporting by Yilei Sun and Brenda Goh; Editing by Himani Sarka

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Business

Netflix forecasts an end to borrowing binge, shares surge

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Netflix forecasts an end to borrowing binge, shares surge 2

By Lisa Richwine and Eva Mathews

(Reuters) – Netflix Inc said on Tuesday its global subscriber rolls crossed 200 million at the end of 2020 and projected it will no longer need to borrow billions of dollars to finance its broad slate of TV shows and movies.

Shares of Netflix rose nearly 13% in extended trading as the financial milestone validated the company’s strategy of going into debt to take on big Hollywood studios with a flood of its own programming in multiple languages.

The world’s largest streaming service had raised $15 billion through debt in less than a decade. On Tuesday, the company said it expected free cash flow to break even in 2021, adding in a letter to shareholders, “We believe we no longer have a need to raise external financing for our day-to-day operations.”

Netflix said it will explore returning excess cash to shareholders via share buybacks. It plans to maintain $10 billion to $15 billion in gross debt.

“This is in sharp contrast to Disney and many other new entrants into the streaming market who expect to lose money on streaming for the next few years,” said eMarketer analyst Eric Haggstrom.

From October to December, Netflix signed up 8.5 million new paying streaming customers as it debuted widely praised series “The Queen’s Gambit” and “Bridgerton,” a new season of “The Crown” and the George Clooney film “The Midnight Sky.”

The additions topped Wall Street estimates of 6.1 million, according to Refinitiv data, despite increased competition and a U.S. price increase. Fourth-quarter earnings per share of $1.19 missed analyst expectations of $1.39.

With the new customers, Netflix’s worldwide membership reached 203.7 million. The company that pioneered streaming in 2007 added more subscribers in 2020 than in any other year, boosted by viewers who stayed home to fight the coronavirus pandemic.

COMPETITION HEATS UP

Now, Netflix is working to add customers around the globe as big media companies amp up competition. Walt Disney Co in December unveiled a hefty slate of new programming for Disney+, while AT&T Inc’s Warner Bros scrapped the traditional Hollywood playbook by announcing it would send all 2021 movies straight to HBO Max alongside theaters.

Disney said in December it had already signed up 86.8 million subscribers to Disney+ in just over a year.

“It’s super-impressive what Disney’s done,” Netflix Co-Chief Executive Reed Hastings said in a post-earnings analyst interview. Disney’s success, he added, “gets us fired up about increasing our membership, increasing our content budget.”

Netflix said most of its growth last year – 83% of new customers – came from outside the United States and Canada. Forty-one percent joined from Europe, the Middle East and Africa.

For January through March, Netflix projected it would sign up 6 million more global subscribers, behind analyst expectations of roughly 8 million.

Revenue for the fourth quarter rose to $6.64 billion compared with $5.47 billion a year ago, edging past estimates of $6.63 billion.

Net income fell to $542.2 million, or $1.19 per share, from $587 million, or $1.30 per share, a year earlier.

Netflix shares jumped 12.5% to $564.32 in extended trading on Tuesday.

(Reporting by Eva Mathews in Bengaluru and Lisa Richwine in Los Angeles; Editing by Sriraj Kalluvila and Matthew Lewis)

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MGM Resorts drops takeover plan for Ladbrokes-owner Entain

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MGM Resorts drops takeover plan for Ladbrokes-owner Entain 3

By Tanishaa Nadkar

(Reuters) – Casino operator MGM Resorts International on Tuesday ditched plans to buy Ladbrokes owner Entain after the British company rejected an $11 billion takeover approach this month, sending Entain’s shares down nearly 12%.

The United States is seen as the next big growth market for sports betting, spawning a series of transatlantic partnerships tapping in to European technology and expertise. These include Caesars Entertainment agreeing last September to buy William Hill in a 2.9 billion-pound deal.

MGM said it would not submit a revised proposal or make a firm offer for Entain, which had said the approach announced two weeks ago significantly undervalued its business.

Entain shares closed down 11.9% at around 12.44 pounds in London. MGM shares were up 2.5% at $30.54 in New York trading late on Tuesday afternoon.

“We look forward to continuing to work closely with MGM to drive further success in the United States through the BetMGM joint venture,” Entain said in a statement.

Online betting firms have benefited during the COVID-19 pandemic-led lockdowns, as customers took to playing from home when casinos and betting shops were off-limits.

MGM had previously said a merger with the British bookmaker would be compelling and believed a deal would help expand BetMGM, which the two have operated since 2018.

The proposal, on the basis of 0.6 MGM share for each Entain share, was also backed by billionaire Barry Diller’s IAC. It valued Entain shares at 13.83 pence each when it was first announced.

Complicating matters, Entain Chief Executive Officer Shay Segev decided to step down just seven months into the role and in the middle of negotiations with MGM to take a job with sports streaming service DAZN.

Segev’s departure, as well as limited engagement in talks shown by Entain and a difference in price expectations between the two sides, led MGM to decide to walk away from the deal, according to a person familiar with the matter.

Entain, previously known as GVC, has itself expanded rapidly through a series of acquisitions and owns the bwin, Coral and Eurobet brands, operating traditional British high street betting shops as well as offering online gambling.

“While we are genuinely surprised MGM didn’t up its consideration … we don’t think this changes MGM’s ability to secure equity value enhancing benefits from the attractively growing US sports betting and iGaming pie,” JP Morgan analysts said.

The brokerage said it would not rule out further discussions with Entain depending on how the company shareholders reacted, adding it would be tough for someone else to buy Entain given so much potential equity value coming from the 50/50 BetMGM joint venture.

(Reporting by Tanishaa Nadkar in Bengaluru; Additional reporting by Joshua Franklin in Miami; Editing by Keith Weir and Matthew Lewis)

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