Archive for October, 2009

Private sector development

Private Sector Development (PSD) is a strategy for promoting economic growth and reducing poverty in developing countries by incorporating private industry and competitive markets into a country’s overall development framework.

Supporters argue that PSD is an important part of poverty reduction. It is said that the private sector can go along way in developing countries toward the provision of basic services, empowering the poor by improving quality and access to health services, education and infrastructure. Strategies and best practices for ensuring that private sector development is pro-poor is a popular topic for policy makers.

From : http://en.wikipedia.org/wiki/Private_sector_development

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Entrepreneurship & Skills Development Programme

UNIDO’s Rural and Women Entrepreneurship (RWE) Programme contributes to poverty reduction through entrepreneurship development programmes- with a focus on rural development and gender equality.

Individual entrepreneurs are a driving force for competitive MSEs as a growth base. However, the policy and institutional framework needs to be conducive to entrepreneurial initiatives. Human capabilities and the right institutional framework are necessary conditions for entrepreneurship to flourish, particularly in rural areas. Therefore, the essential elements in this Programme are to create a business environment that encourages the initiatives of rural, young and women entrepreneurs and to enhance the human and institutional capacities required to foster entrepreneurial dynamism and enhance productivity.

The RWE’s Entrepreneurship and Skills Development Programme focuses on:

Strengthening the public administration to make the regulatory and administrative environment more conducive for rural, young and women entrepreneurs.

Human resource development for increased competitive entrepreneurship, technology absorbing capacities and women’s control over asset management.

Development of the policy advocacy and the collective self-help capacities of rural, young andwomen entrepreneurs.

The RWE Programme consists of three thematic areas: Rural Entrepreneurship Development, Women and Youth Entrepreneurship Development, and Creative Industries Development.

To get to the Rural & Women Entrepreneurship Unit menu :
http://www.unido.org/index.php?id=5606

Venture Capital Pros

Outside equity investors in your small business purchase are hard to find, but a few do exist.

If it’s an individual ‘angel’ that you want, you will have to explain to this investor why he/she should take the risk when there are so many other, safer ways to invest money. In most cases, angels have strong relationships with those they sponsor. Look for wealthy old-timers you already know. Or, look for specialists who know your industry.

On the institutional side, professional venture capital investment groups nearly always want majority control in growing companies. In most cases, they are seeking only high-growth companies with sales over $5 million. They are looking to invest in companies that can offer the hope of 20-40% annual rate of return on their investment!

Both angels and venture capitalists are mostly still equity investors, not lenders. There are some changes on the horizon in private placement financing, but these will be slow in coming.

Mix and match these seven sources of financing. Plan well and be aggressive about your money search. Almost all businesses get funding from more than one source. There is every reason to seek out funds from all seven!

Source : Glen Cooper, CBA, is a Certified Business Appraiser and is President of Maine Business Brokers

Customers Might Help

If there ever was a stigma attached to asking customers to help you finance your business, it’s not there anymore! Today, the practice of asking for a deposit on a job is common.

One way to do this is to require payment (in part, at least) before you do the job. Also, billing annually for year-long service contracts and offering incentives for pre-payment is now common.

Source : Glen Cooper, CBA, is a Certified Business Appraiser and is President of Maine Business Brokers

Tapping Your Suppliers

After the major sources of financing are in place, don’t overlook your suppliers for some additional help. Almost everyone who sells something to your business can be called upon for special terms if you decide to make the effort of involving them.

Equipment vendors are the most common source – leasing equipment often makes sense for cash-starved business buyers. The rates of interest will most likely exceed 13%, but, you can often get 100% financing this way. Leasing companies can also create cash for you. Sometimes, they will buy your used equipment and lease it back to you.

Another common way to create working capital is to ask suppliers to stretch the interest-free period before you have to pay their bills. In many businesses, running 30, 60 or even 90 days behind on a regular basis can create quite a large working capital account!

Source : Glen Cooper, CBA, is a Certified Business Appraiser and is President of Maine Business Brokers


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