Practical tips and tools for growing a business

At the moment when the entrepreneur realizes that it is impossible to cover all the funds needed by the company from the existing cash flow, various options for attracting additional funding are considered. The first choice is most often attracting financing from a commercial bank. Historically, the financing environment of companies and the availability of bank capital are largely determined by the four leading banks, which, according to the statistics of the Financial Industry Association, manage approximately 78% of the total corporate lending portfolio of commercial banks. However, only two of the leading banks have grown their corporate loan portfolio in 2021, moreover, due to the events of 2022, the banking sector has become even more conservative in business financing. The prudence of banks does not reduce the need for financing in business, as a result of which entrepreneurs also look for financing in less popular banks or in the alternative financing sector. How to navigate the range of available financing and which financing is the most suitable for your company?

Changes in leadership positions
When thinking about the most popular commercial banks among entrepreneurs in Latvia, the usual duo of Scandinavian banks comes to mind - SEB banka and Swedbank, both of which together managed EUR 1.95 billion respectively in 2020. and EUR 1.56 billion. large corporate loan portfolios. In 2020, the portfolios of these two banks made up 48% of the total credit portfolio of business loans of commercial banks. TOP 3 was completed by Luminor banka with EUR 1.4 billion. a large portfolio.

A drastic change in leadership followed in 2021, when Citadele increased its business loan portfolio by 98%, which was an incredible leap against the background of other banks. It should be mentioned that the portfolios of the former leaders SEB banka and Swedbank decreased by 8.7% and 2.6% respectively in 2021, which further strengthened Citadele banka's position as the owner of the second largest portfolio.

These portfolio changes very clearly mark the trends of leading banks in business financing - while SEB and Swedbanka stand out with lower interest rates, but at the same time reduce financing volumes, Citadele seems to be the most open and active of the big banks. If you receive a refusal of financing from your current bank, we definitely encourage you to approach other credit institutions, especially those that have recently been focused on activating business lending (for example, Citadele or Luminor).

The prudence of leading banks encourages the activity of small banks and the growth of their portfolios.
Companies often give up in their search for bank financing when all four leading banks have been approached, but we have good news - there are six more commercial banks in Latvia that lend to companies, and four of them have increased their corporate lending portfolio by more than 10% in 2021. In the context of the reduction of the portfolio of the two Scandinavian banks, such data most likely indicate the migration of customers to smaller banks as well.

Contrary to the largest commercial banks, the smaller market participants are forced to actively fight for each customer, which is also reflected in lower collateral requirements, higher risk tolerance and smoother evaluation. BluOr bank, OP Corporate bank, Industra bank, Signet bank and Regional Investment bank can be suitable for the implementation of the largest investment projects. It should be mentioned that OP Corporate bank also specializes in leasing financing very successfully, helping you to purchase agricultural, forestry and other specialized equipment with very competitive leasing interest rates. Industra bank, BluOr banka and Regional Investment banka are ready to consider financing for current assets without collateral. On the other hand, Signet banka, in addition to classic financing instruments, also specializes in bond issue projects, which can be particularly useful for larger companies.

Evaluating the entire spectrum and approach of active banking services, we can conclude that products and risk tolerance in the banking market are very diverse. While one bank is cautiously consolidating its portfolio, other market participants rush to take advantage of the business opportunities that have arisen, therefore we invite entrepreneurs not to limit themselves to approaching leading banks, but also to look for financing in smaller banks or in the non-banking sector.

Non-bank financing as a complement to the banking sector is not mutually exclusive.
In situations where the bank cannot finance or bank financing is not suitable, there are many possibilities to solve the financing issue with the help of alternative or non-bank financing. For example, Capitalia's advantages as an alternative lender include lower collateral requirements, faster funding and higher risk tolerance. There are also a number of other specialized lenders, venture capital funds or factoring service providers. Alternative financing can be especially suitable in cases where the company does not have sufficient collateral or a loan is needed for a short period of time (for example, as seasonal financing or for the fulfillment of a specific order).

A bank loan does not exclude the use of additional non-bank financing, and most often even complement each other. Capitalia has a positive story of experience and cooperation with Industra banka, within which the metal product manufacturer RKF Nākotne, SIA successfully refinanced a long-term loan of EUR 800,000 to Industra banka with the help of Capitalia. In turn, in cooperation with SEB bank, Capitalia finances the well-known producer of chocolate truffles, Pure Chocolate, in the form of a mezzanine loan. Capitalia actively cooperates with Signet bank in bond purchase and issue transactions.

Working with small and medium-sized enterprises for more than 15 years, Capitalia has a great opportunity to assess the business financing environment and recommend the best solutions to the client even if Capitaia is not the most suitable financier in the particular case. We have also developed a convenient and simple tool that helps to find out which type of financing is the most appropriate in the specific situation and phase of the company's development.

In the fast-paced everyday life, it can be difficult to understand how to focus your attention. We constantly live in an abundance of emails, notifications and other distractions that make it difficult to focus on what is important to us. Ideas on how to focus your energy on the work with the greatest impact can be gleaned from these three books, which are also in the library of Capitalia employees.

1. James Clear's Atomic Habits (also translated into Latvian) is a great book for anyone who wants to learn about the power of habits. Clear describes how small changes in our daily routine can make a big difference in our productivity. He also gives practical advice on building good habits and breaking bad ones.

Here are some key takeaways from the Atomic Habits book:

• Basics of Habit Formation: The author explains how habits are formed and how we can change them.
• The power of small changes: Kleer argues that small changes in our daily routines can make a big difference in our productivity.
• The Importance of Reminders and Rewards: Clear explains how small reminders and rewards can help us form new habits and break old ones.

2. Your Brain at Work: David Rock's book is a fascinating look at how our brain works. Rock explains how our minds are built to promote productivity, but also identifies factors that can easily undermine it. The author also provides a series of tips on how to overcome any distractions and improve your concentration skills.

Here are some of our most interesting takeaways from Your Brain at Work:

• Two modes of thinking in the brain: Rock explains that the brain has two modes of thinking: focus mode and diffuse mode.
• How to overcome distractions: The author gives advice on how to overcome distractions and focus on absolute focus.
• The importance of breaks: Rock explains that regular breaks are essential to maintaining focus and productivity.

3. Essentialism: The Disciplined Pursuit of Less by Greg McKeown is a book about the importance of focusing on what really matters to you. McKune argues that we are often too busy trying to do too much, which leads to burnout and stress. He offers a framework for identifying and eliminating distractions so we can focus on what matters most to us.

Here are some of the most interesting insights from the book:

• Learn to say no: The author argues that we need to learn to say no both at work and in everyday situations.
• The power of clarity: McCune explains that we need to be able to define for ourselves what we want to achieve (in life/work) so that we can focus our efforts accordingly.
• The Importance of Compromise: McCune argues that we cannot achieve and have absolutely everything, so we must be willing to compromise.

These three books are a great resource for anyone looking to increase their productivity. They provide practical tips and strategies that can be easily implemented immediately by gradually adjusting your daily habits. As a result, with relatively little effort, you can learn to manage your time and energy more effectively and achieve more.

Entrepreneurs often do not ask us for funding, but for contacts to solve everyday situations of various nature. We do the same and ask our clients for advice and contacts. To make it easier to find such useful contacts, we have collected the most frequently requested service providers that we confidently recommend to our clients in this table.


We regularly update and supplement this table, and we are also open to feedback and suggestions on how to improve this material.

There can be various reasons why an entrepreneur may decide to sell his business: the desire to rest, focus on a new project, the desire to move or a number of others. The purpose of this article is to provide practical information and contacts for service providers so that a business owner can prepare and then successfully sell their business for the highest possible price. The article also includes links to sample buyer confidentiality statements and letter of intent.

BY YOURSELF OR WITH A CONSULTANT
The company's sales process is quite specific and also requires significant time resources. An experienced consultant (broker) can not only significantly save the manager's time when managing a business sale transaction, but also significantly improve the company's sale price with his advice and contacts, earning his commission many times over. Compensation for business sales consultants usually consists of two components: a fixed monthly or sales milestone fee and a success commission, which tends to be 3-6% of the sales price of the business.

Business sales consultants are ready to take on transactions if the expected business sales value exceeds EUR 1 million. Unfortunately, the company manager has to deal with smaller transactions on his own. Especially for such cases, our following article can be particularly useful. Business sales consultants also have specializations, usually related to the size of deal they prefer to work with. For example, focusing on business sales transactions in the amount of EUR 1 - 10 million, the financial company Capitalia has helped to find buyers and investors for companies such as Uprent, Altero, TVG, Manapolis and many others. For example, consultants such as Superia and Argen Partners are active in transactions over EUR 10 million.

DURATION OF SALE OF BUSINESS
Selling a business is quite a long project and usually takes about one year from start to finish. In general, the stage of attracting a buyer can be divided into three stages: preparation, approaching buyers and closing the deal. Of these steps, the seller himself controls the progress of the process well only in the preparation stage, which is also often the shortest and takes 1-2 months. Approaching buyers and negotiating the conclusion of the transaction can proceed very smoothly, but it also tends to drag on a lot - each party getting stuck in their own decision-making corridors or consultations.

PREPARATION
In the preparation stage, the company must first organize its company so that the buyer from the outside can easily understand it and also take it over. This would mean auditing the company's balance sheet (for example, by carrying out an inventory of stocks, excluding assets not related to economic activity, etc.), making sure of the record-keeping procedures (register of contracts, trademark rights). Often, companies have made significant investments in IT systems, but they do not appear on the balance sheet - capitalizing such items (turning them into assets) would more accurately reflect the existing assets of the company's property, as well as improve historical profitability. Also, often the company's basic operating principles are not reflected in documents - procedures or policies. It is ideal to prepare the undertaking in such a way that the investor, after getting acquainted with the finances, contracts and internal documentation, can orient himself well in the company's operating principles.

Another important aspect is to assess the dependence of the business operation on the selling member. If the seller of the business is also a manager, without a clear replacement for that role in the company, the buyer must immediately look for a replacement manager after the acquisition. The most attractive situation for investors is if the seller has already prepared in time for the transfer of his functions and the company already has a manager independent of the participants. If the seller is also the manager of the business, then it should be calculated that the buyer will require a transition period of 1-2 years, when the seller will need to hand over the reins of control to a representative appointed by the new owner.

Another very important stage of preparation is the issue of communication - how to inform employees, suppliers, customers and others about the planned business sale. As much as the owner may want to keep information about the sale hidden, it usually gets out one way or another. It is a good practice to prepare your communication plan ahead of time, and to inform key partners and employees before the start of the business sales process. Interestingly, the sale of a business is usually associated with a negative connotation in society, so it is recommended to use the keyword "attracting an investor" in communication, which in turn has a positive impact. Employees may be concerned about their jobs, but historically it has been proven that new buyers want stability after acquisition. What's more, often new investors can also offer broader and international career growth opportunities that may not have been available before.

The last preparatory work before approaching potential buyers is the preparation of documents. It is a good practice to prepare the documents in 2 packages. The first is general information, which is hardly confidential and is in the form of a document or presentation (this is called a teaser in English). This description briefly outlines the company's operation, role in the market and highlights the main aspects why an investment in this company would be attractive. This material is sent to interested buyers first. On the other hand, the second - information memorandum - is already being prepared, descriptive in detail, gathering material about the company's activities, products, market, customers and finances. In essence, the information memorandum is very similar to the prospectus that companies prepare for stock listing on the stock exchange (the sample here is Viršu's share issue prospectus). In transactions worth up to EUR 10 million, a question and answer session with potential buyers is often used instead of an information memorandum.

Another important question to prepare for is to come up with a clear and convincing answer about why the business is being sold. Retirement may be one of the easiest answers, but usually the story is a bit more complicated.

BUSINESS VALUE IN BRIEF
Determining company value in sales is more of an art than a science. However, there are a couple of basic rules. First of all, very often the following formula is used as a basis for calculating the company's value: the company's value is five times the company's annual profit. If the company is in a fast-growing industry and has also demonstrated rapid turnover and profit dynamics, this multiplier will be more than 5. But in general, there is a long series of circumstances that affect the value of the business, including the organization of the company, general economic conditions, location, market competition and others. A general indication of the company's value is provided by the business valuation calculator developed by Capitalia and Lursoft, which is available on Lursoft's website or at the link Biznesavertiba.lv. However, for more detailed advice on business value calculation, a professional business valuer such as Capitalia, KPMG or others should be involved.

FINDING A BUYER
The best buyer for your business can usually be identified by the business owner himself. Namely, has anyone previously been interested in acquiring a company that is still operating in the industry and could gain significantly from the acquisition of this business. And no less important question - who has the money. Depending on the size of the company, the buyer's search is expanded geographically. For example, for a transaction up to EUR 1m million, the buyer will most likely be in Latvia, Lithuania or Estonia. For transactions up to EUR 10 million, it is worth including Sweden, Finland and Poland as buyers. To some extent, the direction in which to look for a buyer is also determined by the geography in which the company markets its product or service. So, if all customers are exporting to Germany, then it would be natural that the possible buyer of the company would be from this country.

Negotiations with buyers should be started at the same time and as wide as possible. The best deal for the seller usually comes when there is an opportunity to interest 2-3 buyers who compete with each other for the best offer. When addressing investors for the first time (by calling or writing), a brief description of the company and the essence of the transaction is offered, offering to send the prepared additional material after this first contact. If, after getting acquainted with the initial material (teaser), the buyer is interested in learning more, it is allowed to conclude a confidentiality agreement (English - non disclosure agreement or NDA) in order to determine the level of care with which the investor must treat the additional information provided.

After signing the confidentiality agreement, either an information memorandum is sent to the interested buyer or detailed answers to questions of interest to him are prepared. Often, investors also want to get to know the management team or come to visit the company in person. Based on the received information, the buyer is required to submit a purchase offer, which includes both the price and (and no less important) the purchase conditions. Classic purchase terms can include the enterprise value calculation methodology (rarely a simple fixed number), deferred payment terms (if offered), payment arrangements, as well as other requirements that are critical to closing the deal. This is when the main bargaining takes place with the buyer on the transaction price. It is important not to forget to find out whether the financing necessary for the buyer's transaction is already available or whether it is planned to look for it.

The stage of searching for a buyer ends with the intention of signing a protocol with the investor, which also stipulates the basic conditions for which the business would be sold.

CLOSING OF THE TRANSACTION
The buyer begins the stage of concluding the transaction with a company inspection, which covers both financial and legal audits, as well as operational audits. Auditors are usually engaged to perform this review. Although the buyer pays for such an audit, the seller has to expect significant time consumption on his side, both in preparing materials (especially for the accounting department) and in answering a series of questions. Usually, the duration of the in-depth examination is 1-2 months. If any significant discrepancies are discovered during the inspection, for example as a result of improper record keeping or non-compliance with accounting laws, the transaction may collapse. Also, if the company has no experience with auditing, this whole process can be like a cold shower. Therefore, one of the recommendations is to conduct a financial audit of your company in the preparatory stage, even if such an audit is not required by law. Such a pre-study will allow to prevent possible inconsistencies and will help identify the order of the necessary documents.

After the due diligence, the buyer and seller, or more precisely their lawyers, begin negotiating the purchase contract. While both parties to the transaction may want to keep this contract short and to the point, in discussions with lawyers these documents tend to grow significantly in length, describing various possible scenarios and risks. This is understandable, because selling a business is not quite like buying a car on the market square. Depending on the size and complexity of the transaction, legal advisors of various calibers may be involved, but for local transactions, we can certainly recommend cooperation with Reguls or Markvarte specialists.

In the case of larger business sales transactions, where the buyer is another company operating in the industry, the permission of the Competition Council may still be required before the transaction can be concluded. But the most important thing to remember is that the transaction is closed only when the money is in the seller's account.

SUMMARY
Yes, the process of selling a business is tedious. But every entrepreneur usually has to go through it only once in his life. It is better to be prepared for this, and unless there is a special desire for sharp sensations and new experiences, it is advisable to engage a consultant for such a process. It's not for nothing - as some real estate brokers once advertised - you can't fix your teeth either.

Usually, a company valuation is required as part of a business transaction, for example when selling a company, buying/merging with another company or attracting investment . You can also calculate the approximate value of your company yourself, however, business partners can value the opinion of experienced company appraisers, including Capitalia, more highly. Therefore, below we present different methods of how the value of the company is determined and how it is practically possible to improve it.

In order to determine the adequate value of the company, three basic valuation methodologies are used in practice in such situations - the income method, the asset method and the comparative company method.

The income method predicts the company's financial performance in the future and determines (capitalizes) the value of future income in the present form. The working principle of this method stems from the fact that receiving EUR 100 now is more valuable than after 1 year, because during this one year it would be possible to invest these hundred euros (for example, in a deposit) and get a larger amount of money at the end of the year. So, in simple words, if a company promises to earn EUR 100 in one year, then the revenue method determines how many euros this future revenue is worth now. The more risk a company's future earnings are exposed to, the bigger the "discount" should be applied to the company's future earnings. For example, if the company's future income was as safe as a deposit in a bank whose rate could be, for example, 10%, then the present value of 1 year's future profit in the amount of EUR 100 would be EUR 100/(1+10%) or EUR 90.90. So the income method states that I would not care whether I receive EUR 90.90 now or a company income of EUR 100 a year from now. Based on this basic principle, the future income of the company is predicted and the sum of the present value of all these incomes is determined. The main disadvantage of this method is the difficulty associated with forecasting future income, as well as determining the necessary "discount" (or capitalization rate) for the company's future income.

In order to improve the value of the company according to this method, it is necessary to work on the guarantee of future revenues - to conclude cooperation agreements for longer terms, to attract stable customers with a long operating history who would have a low risk of bankruptcy. However, future earnings can never be fully predicted - in a changing economic and political situation, even the most secure and reliable future earnings can become risky.

The second valuation method is asset valuation . As the name of the method suggests, this approach determines the price of the company's balance sheet assets (equipment, inventory, etc.), and all the company's liabilities (bank loans, debts to suppliers, etc.) are subtracted from it. Since this method is not based on subjective assumptions about the company's future performance, the asset valuation methodology can be considered a simpler and more realistic approach to identifying the company's market price. However, this method does not take into account the intangible assets of the company, which are not reflected in the balance sheet (for example, trademarks, developed procedures, customer loyalty, etc.), so the asset method is used basically only when valuing companies in difficulty (close to insolvency) or in case of liquidation. although it is relatively easier to increase this value - by purchasing new assets and reducing liabilities -, in practice, this method is not required in the case of a company sale or investment attraction.

The third method is the method of comparative companies and transactions . Due to its simplicity of use and ideology, this method is often the most popular of the mentioned company valuation techniques. This method states that the market price of a company is derived from the value that buyers are willing to pay for similar company/s. For example, if my competitors have just sold their hotels at a price equal to 50% of their last year's turnover, then my hotel should also be priced at 50% of their last year's turnover. Unfortunately, this method does not take into account the fact that companies, although working in the same field of activity, are different, and these differences are also reflected in the true market value of the company.

Although information about similar companies is worth capturing and taking into account when planning your company's future strategy and development plans, in this case it is difficult to justify why the company's value is higher than other recently sold competitors. Competitor research provides insight into a company's potential value even before ordering a formal valuation, but this method does not have a single answer to how to improve a company's value.

None of the methods described above are without their shortcomings and applicable to all valuation situations, so professionals usually use several methods in parallel when determining the value of companies. It should also be taken into account that valuations may differ depending on whether the entire company (significant control) or minority parts of the company is being valued.

Timely customer payments are one of the keys to the success of the company's development - they ensure a smooth circulation of cash flow, which further provides the opportunity to regularly expand the range of stocks, purchase new fixed assets, improve the company's efficiency, etc. However, almost every entrepreneur has encountered a situation where a client is regularly late in paying bills. How to get customers to pay their bills on time? We offer six solutions to improve customer payment discipline.

1. Stricter payment conditions
Although flexible and customized payment terms for each customer can certainly improve the relationship with the specific customer, there are debtors who will use your hospitality to their advantage and delay your especially suitable repayment term. In such cases, it is recommended to throw politeness aside and dictate a stricter and shorter payment term. Perhaps such a tactic will motivate the client to pay more smoothly.

2. Specific payment date
If cooperation with the client is regular, it may be necessary to agree on a specific payment date every month, just like in a bank. Choosing a relevant date will allow you to send an invoice for the amount to be paid ahead of time, while the client will be able to plan his cash flow in time to make the payment on the specific date.

3. Advance payments
If the cooperation with the client has been started relatively recently, or if he makes orders of an impressive size, an advance payment may be a suitable solution. Perhaps requesting an advance payment will not be a popular decision in the eyes of your customers, but it will ensure the planned cash flow for your company. In addition, advance payments allow you to safely establish new collaborations with customers - after gaining trust, the payment terms can be varied as far as possible.

4. Factoring
In the framework of factoring (purchase of invoices), the customer transfers the payment not to the seller, but to the financial institution. The financial institution pays up to 100% of the invoice amount to the seller immediately after the invoice is issued and sent to the customer. Depending on the client's country of registration, size and operational history, banks and also alternative financiers offer factoring services to individual clients. Capitalia also offers factoring for Baltic companies.

5. Late payment penalty
It is often possible to motivate customers to make payments on time by imposing late fines. The fine can be, for example, 2% for each day late. In cases where the customer is able to make the payment, but forgets about it or deliberately delays it, the introduction of a penalty can motivate the customer to make the payment faster.

6. Gratitude to timely payers
It is also possible to use a strategy that is completely opposite to fines - to reward those customers who make payments on time. Gratitude should be such that it motivates the client to pay on time, but so that it does not create a hole in your company's budget. Good examples would be gift cards, discounts for future purchases, etc

Few entrepreneurs do not want their business to grow. A bigger company is more stable, more profitable and more interesting. Companies can grow more slowly or more rapidly. Often, in order for a company to grow, it needs additional financing. It is worth raising if the expected benefits to the business are greater than the cost of such capital. We have collected the most typical situations in which Capitalia has provided business financing , summarizing our experience over 15 years.

For working capital
There are a number of industries where earnings are strongly seasonally concentrated. A good example would be farms where our customers like Sprīdīši (perhaps seen in the egg stand at Rimi and other stores) and Vairogi have raised capital in the off-season to be able to easily return it from income at the end of the active season. For other companies, the season can be Christmas (Pure Chocolate and Pharm & med), for others spring (for example, Ganders). For all these companies, the capital raised helps to smooth out income fluctuations or prepare the necessary working capital for the seasonal rush.



For the implementation of large projects
When implementing large and long-term projects, companies often use bank loans, which are usually slightly cheaper than alternative financing. However, situations often arise when a bank loan is not enough even for the implementation of long-term projects. For example, the real estate developer in Liepāja, Lion Estate, used funds for faster project completion. Visual Media, on the other hand, raised money for the installation of additional advertising screens when the leasing limit was used. On the other hand, it is easier and faster for companies to attract alternative financing for projects and orders with a deadline of up to one year. For example, GP Systems (builders of mobile communication towers) and Aerodium Technology (manufacturers of wind tunnels) have done so.

To cover unexpected costs or investments
No matter how well you plan, situations may arise when unexpected and quickly preventable expenses arise. Solving problems is the daily routine of every successful entrepreneur and alternative financing can be a tool in cases of such unexpected expenses. For example, the Sprīdīši farm attracted financing when the flock of laying hens had to be replaced due to illness. The financing made it possible to ensure the continuity of production before receiving the insurance premium. On the other hand, the design company Eltex had an unplanned need to fulfill the liability guarantee and additional funds made it possible to smooth the created gap in cash flow.



For refinancing obligations
It is useful for a business manager to review his expenses on a regular basis (for example, once a year) to ensure that such expenses are necessary and optimal. One of such cost items can also be financing costs. Therefore, often thrifty entrepreneurs, such as Passive Home, Mostest and Liepāja Trans Storage, have turned to refinancing other more expensive or less flexible obligations in terms of repayment.

For the purchase of equipment or machinery
When buying highly standardized and locally available machinery or equipment, financing needs can mostly be solved by offers from banks or specialized industrial leasing providers. On the other hand, alternative financing can be useful for non-standard equipment or the purchase of equipment from abroad. For example, Rino Timber purchased wood processing equipment from Slovenia this way, and Rujas Meži - a harvester from Austria.

For the purchase or redemption of a business
Financing transactions when buying another company or buying out one of the shareholders are quite tricky, so banks are reluctant to deal with them. As a result, it is easier for companies to finance such an investment with alternative financing, while after concluding the acquisition process, refinance at the bank. Its owners, RCG Lighthouse, used alternative financing to repay an investment from venture capital fund Flycap. On the other hand, the Estonian chip producer Vogler Eesti used an additional loan to buy out minority shareholders.

For a security cushion, for expected or unexpected expenses, as well as for special business transactions - the use of alternative financing is wide. It is important for progressive company managers to understand the importance of this business management tool and how to apply it so that competitors who know how to use it do not rush ahead.

A "bridge loan " is a short-term financing for a company until the time when the business will attract long-term capital or receive funds from the implementation of the project. Accordingly, the name of the specific financing (translated from English - bridge, connection) indicates the use of financing - it is a loan for companies with a term of up to 12 months to ensure the missing financing for the realization of a specific transaction.

Companies most often use bridge financing in the following situations:

1. Business acquisition financing: Bridge financing can be used to help a business acquire another business if it lacks the cash to close the deal immediately. For example, Capitalia financed the owners of RCG Lighthouse to buy a minority stake in the company from another investor. This funding was later returned by selling the company to another investment company in Lithuania.


2. Expansion financing: Bridge financing can be used to help a business expand its operations until long-term financing, such as a bank, is raised. Its metal products manufacturer Nākotne used Capitalia bridge financing with a 12-month term until a long-term commercial bank loan was arranged through a thorough process.


3. Working capital financing: Bridge financing can also be used to help a business meet its short-term working capital needs, such as increasing inventory in preparation for the season. The money in such a situation would be returned after the end of the active season from the income. Mobile telecommunications tower construction company GP Systems raised bridge financing for a 4-month term to implement a major order from LMT. The funding was returned after the completion of the project at the expense of the client.


4. Real Estate Financing: Bridge financing is often used to help businesses purchase or renovate real estate. The loan is returned to the financier after the successful sale or refinancing of the property. Capitalia's client, real estate development company Z-Haus, used bridge financing to purchase a prospective plot of land for the construction of an apartment building. The loan was repaid by profitable refinancing with a private lender.


5. In the implementation of European Union fund projects: short-term financing can serve as the necessary co-financing to implement the fund support program. The loan is returned by receiving funds from grants from EU funds, including the Rural Support Service. For example, Grobiņa's metalworking company Sensotech used Capitalia financing for the purchase of new equipment as part of the EU funds support program, repaying the funds together with receiving the grant.

If you're considering bridge financing, it's important to carefully consider your needs and goals. You should also compare the rates and reputation of different lenders before choosing a payday loan provider. Founded in 2007, Capitalia is an alternative financing provider with the longest operating history and the highest recognition among financed companies. Capitalia operates in accordance with European best practice lending standards and has already financed more than 5,000 businesses in the Baltic States, including also offering loans with the support of the state and the European Union.

With bank interest rates on the rise, as well as the cost of building materials and services, it might seem like the real estate industry is headed for a downturn, but recent observations from Capitalia suggest otherwise. Developers are not only in a hurry to complete the started projects, but are also making plans to start new projects. What are the biggest challenges and trends in real estate development from the lender's point of view?

Despite the price increase.
Almost everyone has felt the rising inflation in recent months, but it has not paralyzed daily activities and spending. A similar observation is in the real estate developer industry. Despite the price increase, developers continue the started projects and fight the price increase in different ways - someone has bought most of the materials on time, while another accepts a lower project profitability than originally planned. Also, during the course of the project, the planned property sales prices are adjusted, taking into account market changes. Alternative financing often helps in solving the price issue, which helps to finance unplanned additional costs during the project.

Growing activity in the region as well.
Since Capitalia started financing development projects in the spring of this year, more and more interest has been received from regional developers in Liepaja, Valmiera region, Salaspils and other cities. For example, in July of this year, Capitalia granted EUR 150,000 in financing to cover additional costs to the real estate developer "Lion estate", which operates on the Liepāja side. On the other hand, in the spring of this year, Capitalia issued a loan for the completion of the "Smailes" project in Valmiera region. Regional projects are often of a smaller size, which accordingly includes less risk both in the construction process and in attracting funding . The proportion of new projects in the region is much lower than in the Riga area. Thus, the demand for apartments in newly built or renovated houses is equally high, which opens up great opportunities for smaller developers in the region as well.

Alternative lenders have their advantages.
Since the geopolitical tensions in Europe, banks' approach to lending has become even more cautious and conservative. In order to receive bank financing for the implementation of a development project, the entrepreneur must ensure his participation in the amount of at least 30-40% of the total amount of the project. In addition, receiving an additional amount to cover unexpected costs is often very difficult or even impossible. Also, banks prefer to develop projects in Riga or its surroundings, while regional projects are considered potentially less liquid and profitable. The approach of alternative financiers is more flexible with lower requirements for the entrepreneur's financial participation and security. Also, financing can be received faster than in commercial banks. In case of unexpected costs, it is possible to more promptly agree on adjustments to the funding amount and receive an additional loan, if necessary. All these aspects result in smoother project execution and timely sale of the object. Although bank interest rates are lower, often the earlier completion of a project can offset the difference in interest costs incurred by using more expensive but faster financing.

You cannot live without your own capital.
It is important that throughout the execution of the project, it is in the lender's interest to maintain a healthy loan-to-value ratio (loan-to-value). This means that developers should also consider investing their own capital in the implementation of the project. It is great if the land property on which the construction works are planned to be carried out is already owned by the entrepreneur, the construction site preparation works have been carried out and all the necessary permits have been received. It is more complicated if an entrepreneur wants to implement a project "from scratch", where a loan is already required for the first step - the purchase of land. Such a project will sooner or later reach the loan-collateral ratio, at which the lender will no longer be ready to provide financing for the continuation of construction work. The recommended own participation is in the amount of 20-30% of the total costs, which not only reassures the lenders, but also provides a small reserve to cover unplanned costs.

Capitalia prefers to finance the final phase of the project
The earlier the project is in the phase, the more risks its realization involves. For example, when starting zero-phase construction works, an entrepreneur may encounter unexpected obstacles in the construction of communications and roads, in the process of coordinating the project and building permit. It is especially risky to attract financing when all the legal and preparatory issues have not yet been resolved. Capitalia recommends attracting financing when all fundamental issues have been resolved and the green light for project implementation has been received. Likewise, the completion of all preparatory work allows the lender to feel more comfortable financing the specific project and provides confidence in the professionalism of the entrepreneur. Capitalia prefers to fund the closing phase of a project when it is confident that the allocated funding is sufficient to complete the project. Also, in the final phase of construction works, there is a much lower risk of encountering unplanned costs and other surprises, since most of the work is already behind us.

„ Despite changes in material prices and the property market, Capitalia gladly engages in real estate development projects, helping to build a housing stock not only in the surroundings of Riga, but also in smaller Latvian cities. Together with our clients, we are very proud of the projects we have financed so far and we are actively looking for opportunities to get involved in the implementation of new projects," admits Artūrs Soročenkovs, head of Capitalia's Financing Department.

Historically, if an entrepreneur needed money for his business, he turned to his bank. Unfortunately, over time, many banks' decision-making processes have only become longer and more bureaucratic. Also, there are enough situations when bank financing is not the best solution for the company's needs. Therefore, more and more often, company managers understand that they must also be able to navigate well in bank financing alternatives. Such financing for companies includes bond issues (Storent, Elko Group, Eco Baltia), sale of shares on the stock exchange (Madara Cosmetics, Virši, Delfingroup) and alternative loan providers (Pure Chocolate, Peruza, Gandrs).

When banks are the best solution
Loans from banks are usually cheaper than from alternative lenders. This is due to the fact that banks can raise funds relatively cheaply through deposits. Therefore, a bank loan is a good basis for long-term financing, for example, for the purchase of real estate or production equipment. Also, bank financing is suitable in cases where there is no need to hurry with the transaction and you can calmly go through a relatively longer bank loan evaluation process. Banks also offer a fairly wide range of additional services (current accounts, currency exchanges), which can be useful in the day-to-day life of a company and convenient if they are located in one place.

However, it should be taken into account that every year the difference in the price of money for receiving in a bank or from an alternative lender has decreased significantly, especially for smaller loans (up to EUR 100,000). For example, corporate loans of up to EUR 25,000 from the largest Latvian banks cost from 12-20% per year, which is the same cost range as the leaders of alternative financing, such as Capitalia.

When to turn to alternative lenders
The trump card of alternative lenders is the speed and ease of the financing process, while many entrepreneurs value the flexibility of loan repayment terms. As a result, companies very often use alternative lenders as a supplement to existing bank loans, as well as in situations where financing is needed quickly or for a relatively short period of time (up to a couple of years). It is important for entrepreneurs not to miss out on business development opportunities, and a slightly higher cost of capital with alternative lenders often pays off handsomely in terms of time and resources saved. Alternative lenders (including crowdfunding platforms ) offer amounts from EUR 10t to 1 million. For larger amounts, bonds can be a good solution.

Why release bonds
Bonds, which are essentially a standardized loan, are issued either by companies that do not have access to bank credit (including fast consumer lenders, for example, 4Finance and Delfingroup) or those for which this financing complements bank loans (for example, Eco Baltia and Storent). . Instead of the company receiving funds from one financier (as it would be in a bank), bonds allow the company to turn to a wide range of investors, where each one finances part of the capital needed by the company. Organizing a bond issue is a fairly regulated process, so it usually does not pay off for amounts below EUR 3 million. The terms of the bonds are usually 3-4 years and they are not amortized - the money is returned to the investors either by refinancing the old bonds with new ones or by repaying them with other means available to the company.

In what situations is a stock exchange quotation appropriate?
Another financing alternative for companies is to sell their shares on the stock exchange to a wide range of investors. In this way, for example, Madara Cosmetics and Delfingroup have successfully attracted new capital for the development of the company. Using the stock exchange to attract financing is already worthwhile for relatively larger companies. Representation in the stock exchange also gives additional visibility and the opportunity to attract new customers, which, for example, has been successfully used by the fuel dealer Virši. The process of issuing shares is also quite strictly regulated, and the company has to account for additional reports and monitoring mechanisms, so companies usually go this way if the goal is to attract capital from EUR 5 million or more on the stock exchange.

Summary
In general, in recent years, the field of alternative financing has progressed very rapidly and offers very flexible and easily accessible capital, which is currently only slightly more expensive than the funds offered by banks. Financing is one of the daily working tools in every entrepreneur's workshop. Therefore, it is important for every manager to understand the arsenal of options and to be aware of which tools to use in which situations.

• Frequent mutual settlements ( loans , advances) with the owner or manager of the company, as well as related companies;
• Amount of accounts receivable or inventory below industry averages (indicates that inventory and write-offs may not be performed regularly);
• A disproportionate amount of "cash on hand" for the business (most likely indicates that cash transactions are taking place in the business).

Successful creation and development of an agricultural business is unthinkable without a thoughtful use of financing. The spectrum of farm financing needs has always been broad - from seasonal working capital to large-scale purchases of machinery, land or equipment. Submitting applications and information to several credit institutions is always a time-consuming process, moreover, often the lender's offer is not suitable for the specific financing need or does not meet the expectations of the entrepreneur. How not to get confused in the financial world and choose the most suitable type of financing and service provider?

The planned repayment term as the first criterion for choosing a lender
When starting the search for financing, the first task at home for an entrepreneur is to be aware of the financial needs of his business and the planned repayment period of the loan. Historically, both in accounting and in other aspects of the financial world, financing is divided into two basic categories - long-term and short-term financing. The term of the loan usually also corresponds to the nature of the use of financing - long-term investments are usually financed with a long-term loan - purchase of real estate, equipment, machinery, construction projects. On the other hand, short-term financing most often fulfills the function of supplementing current assets - funds for the purchase of mineral fertilizers and other materials, payments for equipment repairs and other services, as well as for the payment of salaries and taxes.

If the bank refuses?
Often, the search for business financing is limited to financing from commercial banks, where after the first refusal, the entrepreneur adjusts or even cancels his financing and growth plans. It should be noted that in addition to bank financing, alternative financing is also available, which can be useful in a situation where bank financing is refused. In the context of geopolitical upheavals, the caution and collateral requirements of commercial banks have increased, which affects the availability of financing for companies that do not have available collateral or do not have perfect financial performance. If bank financing is not suitable or not available, we invite you to consider receiving financing from specialized non-bank lenders. Such financing providers include such companies as Capitalia, Agrocredit and others. The advantages of alternative lenders are faster evaluation, lower collateral requirements and higher risk tolerance. Alternative financiers are also much more willing to offer and are often used specifically for short-term lending needs. Although the rates of non-bank lenders will be higher than those of banks due to the additional risk taken, the quick and convenient acquisition of financing often compensates for the higher loan price.

For long-term financing, a commercial bank will most often be the first and right stop
Historically, commercial banks in Latvia focus directly on long-term financing services, and the agricultural sector has always been handy and relatively safe for all leading commercial banks. Although the process of evaluating and receiving financing in banks is often very time-consuming, due to a relatively lower interest rate and long repayment terms, a commercial bank will be the most suitable provider of long-term financing. At the same time, the entrepreneur should expect that the bank will also need a guarantee. Agricultural land, buildings, other types of real estate or registrable equipment are most often used as collateral. Despite the fact that the conditions of each bank are slightly different, the loan evaluation time in commercial banks is usually 1-2 months and the amount of financing is around 70% of the offered collateral's market value, determined according to the opinion of a certified property appraiser. Interest rates for long-term bank loans are usually between 3% and up to 6% per year, excluding EURIBOR or the variable part of the rate. It should be mentioned that with the increase of the variable part of the interest rate, the price of bank financing has increased rapidly in the last year, which must be taken into account when evaluating the total cost of the loan.

Equipment purchase = leasing
The purchase of machinery is very common in the agricultural business, as it ensures the most essential function of the farm - field processing and management. Similar to the case of long-term financing, the most optimal solution is likely to be offered by leasing from leading commercial banks. The conditions are particularly friendly for the purchase of new machinery, where banks finance up to 95% of the purchase amount, in addition to offering seasonal repayment schedules that are adjusted to the farm's cash flow. In the case of classic leasing, the equipment belongs to the leasing company, while the company is registered as its holder. Such a structure provides good security for the lessor, which also results in relatively low interest rates of 2% to 7% per year, excluding EURIBOR.

Complications can arise if the farm purchases equipment that does not qualify for commercial bank leasing (for example, the equipment is too old or specific) or if the viewed tractor equipment is located abroad, where the seller requires the full purchase price before delivery. In such cases, financing from specialized lenders can be useful, where equipment already owned by the farm can serve as collateral, or sometimes financing can be issued even before the delivery of the viewed equipment. It should be noted that various non-standard solutions and deviations from generally accepted commercial banking practice also involve additional risks, therefore the price of alternative financing for the purchase of equipment will most often be from 9% per year.

When time is more important than price
In agricultural business, situations often arise when the speed of receiving financing is more important than other conditions. The rising prices of arable land and the high demand for it are very favorable to those who sell it, and often the property is sold to the owner who is able to pay for it the fastest. Clearly, under time pressure, bank financing loses its appeal due to the disproportionately long evaluation periods. For this purpose, alternative or non-bank financing, which provides for faster evaluation terms and lower security requirements, will undoubtedly be the most suitable. For example, in the case of Capitalia, if the entrepreneur has submitted all the information necessary for the evaluation, the decision will take only 1-3 working days and the interest rate will start from 10% per year. The so-called "bridge financing" structure is often used for the operational purchase of properties, i.e. due to time pressure, the entrepreneur receives more expensive alternative financing and after purchasing the property, turns to a commercial bank to refinance the initially received loan for a longer term and a lower interest rate.

Seasonal working capital financing - the most common financing need and niche for alternative financing providers
It is hard to imagine a more seasonal business than grain farming, where almost all the company's income is concentrated in a few months, while the farm's expenses far exceed its income during the rest of the time. This situation creates an imbalance in the company's cash flow, which has been further exacerbated by the rising prices of mineral fertilizers and other materials over the past year. Therefore, spring is a particularly active time when farms plan the funds needed for the season and are actively looking for funding to do all the preparatory work for a good harvest.

Similar to long-term loans, credit lines for working capital of commercial banks will also require collateral, while unsecured bank loans often have high qualification criteria, so alternative financiers are increasingly addressing this financing need. Fast evaluation terms and lower collateral requirements are the primary reasons why, in addition to commercial bank financing, farms also use alternative financing. Often, all major farm assets already serve as collateral for a bank loan, as a result of which it is impossible to receive additional financing. It is a common practice in the non-banking sector to finance without additional collateral, which is especially appreciated by customers.

In order to make the everyday life of entrepreneurs easier, we have summarized the financiers most suitable for each agricultural company's needs in the following table:

During the last year, the business environment has experienced various upheavals, where the difficulties caused by the pandemic have been replaced by a rapid increase in the prices of energy resources and materials. Changing market conditions require careful planning and implementation of preventive measures to mitigate negative consequences. Although it is impossible to see into the future, there are various steps an entrepreneur can take to quickly adapt to changes in the business environment.

Cost review and optimization
As a result of a sharp drop in turnover, it is not always possible to reduce costs as quickly, which can result in losses and a lack of working capital. It is essential to be aware of the largest cost items and maintain them in a healthy proportion to revenue depending on the industry. It is recommended to review all regular invoices once a year and consider whether it is really an inconsiderable expense, without which it is impossible to live. Labor is often the biggest cost - it is important to evaluate the efficiency of personnel and the redistribution of responsibilities in time. It should be noted that successful business continuation in difficult conditions sometimes also requires such unpopular decisions as downsizing the team.

Income planning
Good sales today do not guarantee the same stable income tomorrow. It is very important to maintain regular contacts with the main buyers and customers, thus monitoring the future intentions of the partners and possible changes in the order volumes. If the company's operation is based on cooperation with one or a few large buyers, it is equally important to systematically monitor the financial condition of the buyers and the assigned post-payment limits. If, as a result of the research, a worsening of the client's financial situation is detected or other alarming signals appear, such as an increasing tax debt or publicly registered payment delays, we recommend reviewing the terms of cooperation and payment with the specific client. Diversification of buyers and products may take longer, so it will not be a quick-to-implement crisis management activity, but a long-term strategy aimed at by the entrepreneur in order to gradually reduce the concentration of buyers. Diversification of products and services can also be an important aspect for reducing business risk, so that the business does not depend only on the sale of a niche product or service. On the other hand, the free planning tools developed by Capitalia for entrepreneurs can also be useful in cash flow and income planning.

Review of financial obligations
Settlements with lenders in dynamic market conditions can cause quite a bit of worry. It is very important to pay special attention to credit lines and overdrafts that are about to expire, and we encourage you to start negotiations with lenders about the annual extension of credit lines in good time. If you feel that the financial burden is already too great, we encourage you to start negotiations with lenders about schedule changes. On the other hand, if the company has a low amount of financial obligations or no obligations at all, additional short-term financing in the form of a loan or credit line can create an additional sense of security and reserves for unplanned or seasonal costs.

Mitigation of debtors' risks
As a result of fluctuations in the economic situation, the payment discipline of buyers can deteriorate, which can lead to a lack of working capital and even losses in the case of bad debts. Capitalia has previously collected and published various tips for mitigating the risks of debtors , and we invite entrepreneurs to implement them in their daily business as well. It should be noted that it is important not only to regularly monitor existing debtors, but also to thoroughly research new cooperation partners before offering deferred payment.

Refusing to sell unprofitable products and services
If the company is engaged in the production, sale or provision of services of a wide range of goods, it is very important to realize the profitability of each category of goods or services separately. Sometimes companies continue to produce goods or provide services with low profitability in the name of long-term cooperation or other economically unjustified reasons. If necessary, we invite you to abandon unprofitable products or services, accordingly reducing the costs associated with their production and provision.

In the rush of everyday life, it is often difficult to juggle scheduled meetings, company and team management, personal activities and other responsibilities in time. Fortunately, in the depths of the Internet, there are also various tools available for free that help you both plan your time and improve your and your employees' productivity. Below we have collected some of the most effective time planning tools that we also use in our work organization.

Trello
Trello is a popular project management tool that makes it easy to organize different projects and tasks with note boards, lists, and individual task cards. Being a visual tool, Trello helps you organize all your tasks and projects in an easy-to-understand manner. Each project or task can be assigned a separate card, which can be moved to another list when the project has progressed further or is completely completed.

To get the most out of Trello, start by creating a separate board for each project or area of activity. Then create several lists on each whiteboard, dividing the project or task into different stages of development. Finally, cards are added to each list, thus distinguishing individual tasks to be completed within the project. It is possible to add deadlines when the task must be completed to the cards, different colors to ensure full transparency of the project. Assigning different colors or grades can emphasize, for example, the degree of urgency or status of a task. If the task indicated on the card is complex, it is possible to divide it into even smaller stages with the help of an internal list (checklist).

A separate Trello board for each employee can also be useful, so that no task gets lost between different work responsibilities.

All of Trello's core features are available for free. However, if you have a larger team using Trello, the paid version of Trello will provide you with more options and the ability to express yourself with more variety of whiteboards.

Google Calendar
Google Calendar is a useful tool for planning your daily schedule and appointments - basically it works as a free digital planner. In Google Calendar, you can create events and meetings, as well as set reminders that are sent to your email or phone shortly before the specified time. It is also possible to send the invitation to the meeting to other participants, and in cooperation with Google Meets, it is also possible to conduct the meeting in the digital environment very easily.

To use Google Calendar effectively, we recommend creating a separate calendar for work and personal life. Then the planned events or meetings are placed in each calendar. Google Calendar also allows regular reminders for recurring events, such as weekly team calls. If all employees of the company use Google Calendar within one Google corporate account, it is also possible to view the calendars of other employees. Such availability of information makes it possible to schedule a joint meeting at a convenient time for everyone. Doodle can also be an interesting tool for finding shared meeting or event times.

If you still choose to combine all your activities in one calendar, we recommend coloring the events corresponding to each area of life in a different color. Thus, when looking at the calendar, it will be immediately clear whether, for example, a business meeting or a personal visit is scheduled today.

Whimsical
Whimsical is a visual collaboration tool that allows you to design charts and diagrams. It is a great helper for generating ideas and organizing thoughts visually, besides, it is possible to collaborate with several people in one "noteboard", giving each of them the right to comment or correct. In our experience, Whimsical is especially useful for dividing a larger process or project creation into separate steps and to understand in what sequence what steps should be taken to implement the project.

To use Whimsical effectively, we recommend creating a new project and choosing a chart or schematic type. Whimsical's free tools and templates will help you create the scheme you want. After creation, it can also be downloaded in the format of your choice.

The free version of Whimsical includes the ability to create unlimited public charts, as well as four privately available charts, which seems to be more than enough, so the free version can get by.

Canva
Canva is a very convenient tool for creating designs, presentations and social media posts, which is easy to understand even for those who are not familiar with Photoshop functions. The program offers various design samples for all situations in life, so all you have to do is add appropriate text, an icon or an image to the sample, which you can upload yourself or choose from Canvas's range of free visual materials.

In the program, it is also possible to save the company's characteristic color shades or favorite designs - thus you will always be able to prepare design solutions suitable for your brand identity. Similar to Notion, Canva also has a commenting and collaboration option, so your colleagues or employees will also be able to participate in the material development process. For social media posts, it is possible to create a publishing schedule that allows you to plan the publication of prepared designs. Such a feature also helps to ensure that all scheduled posts are consistent with the company's brand and visual identity.

The free version of Canva will suffice as long as you are satisfied with the range of free images and presentation templates available.

Toggl
Toggl is an easy-to-use time tracking program that helps you measure how much time you spend on different tasks. When you start working on a specific project, you can record the time with the help of a timer built into Toggl, and at the end of the day or week, you can see how much time it took to complete each task in the automatically generated reports. The time reports offered by Toggl help you find "time thieves" and help you plan your time more efficiently.

Such a function can be especially useful for improving various processes (with the help of Toggl it is possible to understand which stages of project execution are the most time-consuming) and for making more effective decisions, as well as for studying the workload of employees.

The results collected by Toggl can also be easily integrated with other project management programs, including Trello and Google Calendar.

Tweek.so
A free tool for planning daily work has been developed in Latvia. It allows you to put together planned tasks for the entire working week and mark their completion. The tool is a good replacement for many of the usual work planning in paper calendars. In Tweek.so, you can sort tasks into different categories, add a due date, various reminders, and track their progress.

For example, Tweek.so can be used to plan your daily schedule. The user can mark each appointment or visit as a separate task and place it in a specific category, such as "work" or "personal activities". You can also create tasks that repeat regularly, such as a daily sports practice or a weekly team meeting.

Tweek.so can also be connected to a variety of other productivity tools, including the popular Google Calendar, which helps you group all your to-dos in one place.

Pause Gmail
If you use Google Gmail e-mail for work, then the option to "pause" receiving new e-mails with the Pause Gmail plugin can be useful. No new e-mails will arrive during this time, but you will be able to write replies or compose new letters. Such a pause in the receipt of new letters can give you the opportunity to focus on the work to be done and to answer the letters that have already accumulated at the beginning. Receiving e-mails can be suspended for a certain period of time, for example two hours, during which it will be easier to focus on a specific project.

In addition to Pause, Gmail can be used to read emails more efficiently. For example, by using Pause Gmail throughout the day, except for a few hours in the morning or evening, you can set aside a few specific hours to devote directly to reading emails. This way, you will be able to filter emails, focusing on the most important emails during the specific hours and leaving the less important emails for another day.

Focus Session
In Windows 11, in addition to the standard clock, Microsoft offers Focus sessions, which consist of, for example, 25 minutes of work and a 5-minute break. During the work session, all notifications from chat programs, etc. are turned off, allowing maximum concentration on a specific task.

As part of the focus sessions, it is possible to start a meditation lesson guided by the tool, which will help clear the mind and focus attention on the task at hand. In addition, a task tracking tool is available in the focus session, which helps you keep track of the time spent and focus on the work to be done. During the focus session, you will receive points for each completed task to keep you motivated. However, if you feel that things are not going well and your thoughts are elsewhere, you can also pause the focus session timer and continue when you feel ready.

A focus session is a useful tool for planning your daily work, as it can help you prioritize the most important tasks and complete them efficiently and effectively. For example, you can use a 25-minute focus session to work on a report or presentation.

An alternative is the so-called Pomodoro timers, such as Pomofocus.io, which also allow you to manage the time of concentrated work and rest.

Companies often find themselves in financial difficulties, which prevent them from making payments on time. Before starting cooperation with a new partner, it is necessary to make sure that the promising client will pay his bills on time. How to avoid potentially late debtors?

1. Control of debtors. Before providing post-payment to the client, it is worth checking the financial status of the partner. This can easily be done using the information provided by Lursoft and credit bureaus (such as Crediweb). An automatic risk assessment tool is also offered by Okredo, a company that recently started operating in Latvia. When checking the company, it is worth paying attention to such indicators as current tax debts, the amount of equity capital, entries in defaulters' databases and the amount of existing financial obligations. It is important that the company has its own internal (albeit simple) policy on in which cases post-payment is granted and how such post-payment amount is determined and renewed.

2. International databases. Before starting cooperation with a new foreign client, it is increasingly necessary to make sure of the client's reliability and solvency. Information about each company can be found in the company register of a specific country, for example Germany, Great Britain or Sweden - information about late payments and tax debts can provide a deeper insight into the company's payment discipline. It is important to verify the security of the company from the perspective of money laundering risks by checking whether the company and its related persons are not included in the sanctions lists here and here.

3. A debtor control mechanism has been developed. If a customer starts to fall behind on payments, it is important not to shy away from solving the problem and take controlled steps to recover the debt. Many companies have pre-established procedures for what to do if a customer is late on payment. In the first days of the delay, it is recommended to contact the customer by phone or electronically and find out the reason for the delay and the potential repayment time. If the payment is delayed for a long time, it is recommended to gradually send various warnings to the client about publishing the delay in public databases. However, if the customer continues to delay payment or cannot be reached, it is necessary to contact a debt collection specialist who would deal with debt collection through court.

4. Accounts receivable insurance. For businesses with high sales volumes and long payment terms for customers, factoring or receivables insurance provided by a financial institution is a suitable solution to avoid receivables. It is easiest to insure debtors in international transactions that are carried out on a relatively large scale. Such insurance services are offered, for example, by Marine Services Group, Credeo. In international transactions, credit risk insurance is offered in the form of an Altum credit guarantee instrument.

With the growing popularity of social networks and digital marketing, every company has to think more and more actively about maintaining its website and presence in social networks. The belief that "if I can't find it online, it doesn't exist" also affects businesses and attracting potential customers. Although most businesses have a website or social media accounts such as Facebook, it may turn out that just having a working website or an active social media account is not enough. Therefore, even if your company does not sell goods or services on the Internet, it is recommended to allocate part of the marketing budget directly to increasing and improving the company's online presence. Below, the Capitalia team has collected various tips on how to make your company's online presence more effective and attractive to customers.

1. Unified content across different social networking platforms
Using different logos, multiple fonts, different font sizes, or conflicting information such as a business phone number makes a business look disorganized and untrustworthy. The type and style of communication should also be unchanged - if your company's client is, for example, a start-up, the choice of words and the client's address can be relatively unforced. However, in order not to confuse the client, it is preferable to maintain communication in a similar style on all social networks and platforms - thus, wherever a potential client sees your company, he will immediately recognize it.

2. Domain registration
Not registering a business domain allows anyone to register and use the business name. Identical domains can easily confuse anyone who searches for your company on the Internet and finds another company with the same name. Ambiguity can cause a potential customer to decide in favor of a competing company whose name is the same on all Internet sites. In addition, the first company that registers the specific domain also becomes its owner - if your company misses this opportunity, you should look for new domain and even name options. The domain should be as simple as possible and as close to the real business name as possible. This information also applies to social network accounts. Creating social network accounts does not require a lot of time and money for business , but it can save unpleasant misunderstandings in the future. And it will continue to be as important to control digital assets online as it is to register a company.

3. Correct language without grammatical and spelling errors
Language errors in any text published by the company lowers its value in the eyes of the customer. Even if your clients are not teachers of the Latvian language, rewriting or obvious grammatical errors give the impression that an insufficient amount of work has been invested in the creation of the text and indicate carelessness. Before publishing any text, it is helpful to have a couple of people proofread the text, who might spot errors that the author may not have noticed. If the main language of the website or social network is another language, for example English, it is also worth checking the created article with Grammarly - an application that marks and corrects spelling, punctuation and even style mistakes in the text.

4. Creating a professional email address
By creating an e-mail address intended specifically for business needs, you intuitively indicate to the client that the company's employees know how to separate personal from business relations and are serious about their company. This shows professionalism and a high quality bar for everything the company offers.

5. Regular online communication with customers
Failure to respond to questions or comments on the website and social media can give customers the impression of poor customer service. Customers may suspect that, in case of an unsuccessful order, returning or exchanging the product could also be a complicated and time-consuming process. Feedback and regular communication with customers can also help improve business performance and customer satisfaction. Although it is not directly related to product sales or quality, it is possible to learn something useful for the company from each comment received. If customers see that you are responding to their messages, they will be encouraged to write back, and this is a good way to gain customer insight into your business and how it works without a large investment .

6. Regular use of social network accounts
Humans tend to bond with things and people they can rely on. If a company-owned social network account exists, but new posts are rarely and irregularly posted on it, it will not bring any benefit to the company. In addition, with today's abundance of information in the digital environment, if a company publishes new information infrequently, it can easily disappear into the depths of the Internet. Regularly posting and communicating with people on social media will not only make your business seem more human and attract new potential customers, but will also satisfy an algorithm that will show your posts more often to random viewers.

7. Regularly updated and improved information
Most often, the first information about a company appears on the web the moment a customer uses the Google search engine. If the information that appears there is inaccurate or outdated (for example, an article about the company's achievements in 2018), the customer's interest in the company and trust in it may disappear. The easiest way to solve this problem is to take control of the information that is distributed about the company. This can be done by registering your business with Google and editing the information that appears when your business name is entered into the search engine. The same applies to the information on the home page. It is very important to follow up so that the information there corresponds to reality and is regularly updated. This will show that you are paying close attention to your company's online image and that no detail has been overlooked. In addition, potential customers will know that you are still active and offer the services mentioned on the website.

8. Website optimization also for mobile use
The use of smartphones has undeniably become an important part of everyday life and business. More and more people are using various search engines on mobile phones to find what they need in their daily run. If a potential customer finds your company's website and tries to view it on a mobile device, but the website is not adapted for such an activity, the texts there will be inconvenient or impossible to read, and the overall appearance of the website will likely be visually unattractive and impractical. By the way, adapting the website for mobile phones also improves the company's SEO rating - how high the website appears in Google's search engine listings. Thus, the optimization of the homepage will also improve the chances of finding the company on the Internet.

9. High-quality visual materials
The human brain processes an image 60 thousand times faster than text, which means that if images are posted on a website or in social networks, they will always create the first impression of a company even before reading any sentence. If the posted image will be of low quality, or out of context, it will accordingly create a bad first impression of the company. As is well known, the first impression is often decisive for the client to understand whether he wants to start cooperation with the company.

Working in the field of venture capital , we have often encountered businessmen's concerns about the investor's participation in the company after the investment has been made. This fear is both about the board/council member appointed by the investor and his powers, as well as the share control in the company.

Needless to say, the fear of losing unanimous control is not justified, especially when it comes to investments made by professional investors (companies or individuals whose main occupation is making investments). Investors are ready to invest in the company mainly due to great faith in the management team (founders) and their ability to achieve good profit and growth figures in the future. Thus, the role of investors after the investment remains at the level of investment control or providing general advice, relying on the fact that the other participants will provide the management of the company. Accordingly, everyone does their job.

It is important to remember that the goal of investors is to make money by making good investment decisions by investing in multiple industries and companies. Without management and other participants (or in conflict with them), such a goal cannot be achieved. Investors' role in a company is typically limited to board or board positions, which provide the opportunity to "look after" their investment, as well as share advice and contacts where they can be useful. The better the company and its management team perform, the less control and advice is needed. Therefore, I strongly advise entrepreneurs to avoid the phrase "just looking for money" when addressing potential investors, because it indicates four things:

• uncertainty about one's competence to manage the company;
• not wanting to listen to anyone else's opinion;
• a plan to "extract" money from the company by "putting" on other owners or
• misunderstanding about the investor's investment motivation.

Since time immemorial, people have been accustomed to providing their services or goods only for an appropriate remuneration. You pay either with your money or with your data for every product or service you consume. You pay both ways for using some services - for example, a Netflix subscription not only charges a few euros from your bank account every month, but also collects your data about the movies and series you watch.

Since the misuse of personal data can have a significant impact on people's lives, regulators are taking various measures to protect personal data. One of these measures is the need for a privacy policy required by the European Union's General Data Protection Regulation (GDPR).

What is the privacy policy?
The GDPR requires that when using personal data, people must be told why and how their data will be used and what their rights are in relation to their personal data.
This information is usually reflected in a document called a privacy policy, which is published on the company's website.

What is personal data?
Personal data is any information that can be used to identify a natural person. Personal data may include, for example, first name, last name, phone number, email address, location, age, IP address, work email address and other information.
However, personal data is not company data that does not relate to any specific person (for example, an email address info@website.com).

When does your website or application need a privacy policy?
The main criterion is simple - if your company uses personal data, you must have a privacy policy.
Typical cases where personal data is used are when the company:

• uses online contact forms;
• send email notifications;
• process payments;
• supplies goods or services;
• analyze website or app visits;
• uses online questionnaires;
• uses live chat or chatbot;
• company users have user profiles.

In these cases, the company uses personal data and the GDPR requires the company to have a privacy policy. If a company uses personal data but you don't have a privacy policy, data protection authorities can fine the company.

In addition, your business service providers may also require you to have a privacy policy. For example, it is currently required by the App Store, Google Play, Google Analytics, Facebook, Shopify, as well as several payment service providers.

Why is a privacy policy important?
If you have an appropriate privacy policy:

• you comply with the law (GDPR).
• you avoid unexpected fines. If a company does not comply with the GDPR, you can be fined up to €20 million or 4% of your total worldwide annual turnover (whichever is greater).
• One of the largest fines for privacy policy non-compliance with GDPR was received by WhatsApp in the amount of 225 million euros.
• Recently, small businesses and individuals in Europe have also often been fined for not having a privacy policy or for not having enough information in their policies.
• Thanks to the privacy policy, the company will gain the trust of its customers. Customers will know why you need their personal data and how it will be used.
• The Company will comply with the request for privacy policies that may be required by third parties such as payment service providers, app stores and others.

What information should be included in the privacy policy?
The privacy policy should tell you how and why you use personal data. Other information required by the GDPR must also be provided, such as:

• company/organization information and contact information;
• which particular website, app or activities are covered by the privacy policy;
• what personal data is used;
• why and how the company uses personal data;
• legal basis for the use of personal data;
• how long personal data is stored;
• to whom you disclose your users' personal data and whether you transfer personal data outside the EEA (European Economic Area);
• users' rights, including the right to submit a complaint to a supervisory authority (in Latvia – Data State Inspectorate).

How can I create a privacy policy?

• Law firm: The best option, but usually not cheap and does not offer an immediate solution.
• Online generator: For example, Ligalio's privacy policy generator allows you to instantly create a privacy policy for a website or app at a friendly price using a self-help tool.
• Templates/templates: usually offer a “generic” version of a privacy policy that does not meet the needs of a particular company, as each company uses personal data differently.
• Write it yourself: unless you are a lawyer or GDPR specialist, we do not recommend this.

Where should I put my privacy policy on my website or app?
The GDPR does not specify where exactly you must place your privacy policy on your website or app. However, the privacy policy should always be easily accessible. This means that a person does not have to search for information, but it should be immediately clear where and how this information can be accessed.

A direct link to the privacy policy must be clearly visible on every page of the website. Therefore, the most popular place to place a privacy policy on a website is at the bottom of the page, in the footer.

Also, your privacy policy should be easily visible and accessible in your app.

There are a number of financial ratios that business managers can use to keep track of their company's performance. These financial ratios are like a rear-view mirror of how the company has fared, and they are the basis on which the manager plans for the future of the company, understanding what it can and cannot afford. Some of the most important indicators in company management are:

PROFITABILITY INDICATORS
Profitability indicators are the simplest of all financial indicators, but also the most important in the daily life of a company manager, because they are the simplest indicator of business success or failure:

Basically, it indicates how profitable the company is. A good amount of profit depends on the specific industry in which the company operates. These are areas where companies operate with very high net profitability (for example, mobile operators) and very low (wholesale companies). We have summarized the average profitability indicators of various companies in the industry in the following table.

Gross profitability indicates how much value is added in the process of producing or providing services. Again, a good or bad score basically depends on the industry in which the business operates

The amount of return on equity indicates how much, in percentage terms, the company is able to earn on the capital invested by the owners. This return should be at least 10%, but preferably 15-20%

LIQUIDITY INDICATORS
Liquidity ratios are indicators of a company's ability to meet its short-term financial obligations.

The amount of liquidity (or working capital ratio) indicates whether the company has sufficient assets to cover short-term liabilities. Current assets are those assets that can be easily converted into cash within a maximum of 1 year, while short-term liabilities are all claims that the business has to pay within the next year. A good amount of liquidity for the company is in the amount of 1.2-2. As with profitability indicators, each industry may have its own norm and therefore it is important to compare the calculation of your company's indicators with similar companies. For example, in the food retail industry, the liquidity ratio is almost always below 1.

By itself, the EBTIDA indicator may not tell you much about liquidity, but rather indicates how much cash the company generates, ignoring how the company is financed (how much it has borrowed). This indicator is often used by credit institutions when calculating how much loan amount can be granted to the company (usually no more than 3-4x EBITDA amount), as well as when calculating the value of the company, for example in business sales transactions.

INDICATORS OF THE AMOUNT OF LIABILITIES
These ratios measure the extent of the company's liabilities and are an important measure to ensure that the business does not expose itself to unnecessary risk by taking on too much liability. Also, these indicators are used by financiers, evaluating the company's ability to attract additional money for business .

The amount of equity ratio indicates how much of the company's assets are financed by the owners' funds. The closer this indicator is to 100%, the more the company finances with equity funds.

This ratio indicates how much the company relies on liabilities for its financing. Again, it is important to compare this indicator with the average size among companies in your field. A low amount of the indicator may indicate that the company is not using the growth opportunities that would be provided by additional credit financing. On the other hand, a high indicator (compared to the industry average) may indicate that the business is exposed to additional risk due to excessive liabilities. Typically, a good debt-to-equity ratio is in the 1-3 range.

ASSETS TURNOVER RATIOS
Asset turnover ratios indicate how quickly the company is paid by its customers on average, how quickly it pays its post-paid invoices and how smoothly the inventory turnover is.

Each industry has different principles on how long it is customary to allow customers to pay invoices for goods or services sold. However, if a company's accounts receivable days are above the industry average, this potentially indicates poor customer payment discipline or more favorable customer terms than competitors offer

On the other hand, creditor days indicate how quickly the company itself pays its post-paid invoices. Again, each industry may have its own principles, but it is also worth following how this indicator changes for the company over time. An increasing number of accounts payable days indicates to both financiers and other cooperation partners that the company may have difficulties with working capital and cannot pay its invoices on time.

Alternatively and more accurately, it would be better to count inventory turnover days not against the turnover of the company, but against the cost of purchased goods. A high inventory turnover rate (especially relative to the industry average) indicates that the company does not need to hold large inventories (and therefore invest in working capital) to ensure sales.

WHAT'S NEXT
A good first step would be to think about what the main KPI (key performance indicator) is for your business. For example, in the case of the financial company Capitalia, it is the amount of monthly financing issued, the proportion of doubtful loans, as well as the net profitability. On the other hand, the speed of inventory turnover would be important for trading companies, but manufacturers pay great attention to gross profitability. It is worth calculating your main financial indicators yourself or asking an accountant so that you can follow how the company is doing once a month. Also, it is useful to compare these indicators with the results of your competitors using Lursoft data or our table of industry averages. We have collected sample formulas for calculating the indicators mentioned in the article in this example.

A business plan, like any written work, should be tailored to a specific purpose. In this article, I review the main differences that should be observed when preparing a business plan for the following three purposes - attracting an equity ( risk capital ) investor, attracting credit , restructuring.

When preparing a business plan for attracting venture capital , it is important to remember that investors invest money in a company to receive a return from the sale of company shares in the future or from dividends. Thus, this business plan should emphasize long-term (five or even more) growth and profit prospects. The financial calculations can be supplemented with an investment return calculation for an investor who would invest in this company/project - in the form of IRR or annual return.

For potential creditors, the most important aspect is not so much the company's potential income and rapid growth potential, but the security of the issued loan and the company's ability to cover interest and loan amortization payments. As a result, the business plan should emphasize the amount and value of the collateral against which the loan would be issued, as well as cash flow data in an average time frame (2-5 forecast years), which would indicate when and with what "reserve" the loan repayment can be made. Financial calculations can be supplemented with DSCR (debt service coverage ratio) and Credit to EBITDA (earnings before interest, tax, depreciation and amortization) indicators.

The restructuring business plan , compared to the other types of business plan, requires the "shortest" time perspective and typically focuses on a 1-2 year forecast of the company's operation. As the name suggests, the restructuring business plan focuses less on the description of a beautiful and distant future, but on short- and medium-term actions that will lead to quick and improving effects in the company's operations. In the financial section, the unequivocal focus should be on detailed cash flow forecasting and analysis. Detailed monthly forecasts are important for this type of business plan, and analyzes of various development scenarios can be very useful.

If the company is unable to fulfill its obligations within the specified deadlines, tense situations may arise both in negotiations with financial creditors and suppliers. In this article, we have compiled a list of recommendations for what to do in the following cases:

1. Understand the reasons
An entrepreneur should thoroughly delve into the company's financial data - balance sheet, profit or loss statement and cash flow statement. It is important to be aware of the company's current financial position and what has caused the current cash flow problems. In later communication with your creditors, it is important to be able to identify the causes of the problem in order to then propose a solution to fix it.

2. Identifies the solution
Once the cash flow problem is identified, an action plan is developed to get out of the situation. Such a plan can be related to cost reduction (for example, giving up less important expenses, reducing the number of employees), giving up unfavorable orders or selling assets (unused or unencumbered fixed assets, inventory or stock). In case of overdue receivables, look for a solution with debt collection companies and draw conclusions on how to change the receivables control policy in order to avoid similar problems in the future. There are companies that also purchase delinquent accounts receivable.

3. Go out for talks
Realizing that the company will not be able to pay the creditors, the best thing the company can do is to warn the creditor as soon as possible about the situation. Both lenders and trading partners have a great interest in ensuring that the company can survive the crisis, and will almost always be ready to make compromises in payments in order to help the company in such a situation. In these conversations, it is extremely important to communicate the analysis of the situation (reasons) and solutions - the first two preparatory steps described above. If possible, create your desired payment plan in advance to offer the creditor a ready-made solution.

In conclusion, if the company is not or feels that it will not be able to settle its obligations, it is recommended to start negotiations with its creditors in a timely and proactive manner. It is important in the eyes of creditors to see that the company comes to such negotiations prepared and with a plan. In its long history of financing companies, Capitalia has seen that with such a pragmatic approach it is possible to find a way out of even the most difficult situations and ensure the company's longevity.

It is known that financing is one of the important business tools to achieve the set goals and successfully develop the company. It is great if a company can provide the necessary capital based on historical profits or working capital, however, for faster growth, the company may often need to attract external capital. There are two basic ways for a business to get money: either (1) borrow money or (2) raise equity and sell shares of the business to an investor. In the following article, we will mention how one type of financing differs from another and in which cases each one is better suited.

Loan for the company
A loan for a company is the simplest and also the most frequent way to attract additional funds to a business. When receiving a loan, there is a clear obligation to repay this money with a certain interest rate in a certain period of time. The main advantage is that the relationship with the recipient of financing is very clear and simple - the entrepreneur must return the loan and the relationship ends. Also, the loan provider does not get involved in the management of the company in any way, only through the terms of the loan agreement can certain limitations of actions be set.

The biggest disadvantage of loans is that if the company is unable to repay the loan, its owner will often be personally responsible for repaying the loan, or the creditor will be forced to sell the company's assets and property pledged to recover the debt. Respectively, the consequences of business success or failure are on the entrepreneur's own shoulders. Also, interest expenses and loan amortization create fixed and regular obligations, which can cause difficulties in case of rapid changes in circumstances.

There are three basic ways that a company can raise a loan : (1) in a bank, which is the most frequently used path; (2) from an alternative financier that can offer funds in situations where bank loans are not suitable or available and (3) bonds that can be traded both publicly on the stock exchange and offered to a limited group of investors.

Investments
Investment is the purchase of equity shares in a company. In this process, the company increases the total amount of the company's equity by issuing new shares (or shares), which are purchased by the new investor . This investor accordingly becomes a co-owner of the business and the success of this investment is closely related to the success with which the company manages to develop. An equity investor does not have to repay any specific amount as in the case of a loan, but makes a profit by hoping to sell his shares in the company at a profit in the future. It is also the main advantage of this financing that the success of the entrepreneur and the financing provider is closely linked and all responsibility is no longer solely on the shoulders of the business founder. It should be taken into account that the investor will want to participate in the main decisions of the company and will also claim dividends, according to the size of his shares in the company.

This is also the main drawback of this source of financing, which the entrepreneur has to reckon with. Respectively, the relationship between an investor and an entrepreneur is significantly closer and more intense than between a lender and an entrepreneur. Also, you can only "get rid" of the investor by selling the company to another investor/s.

Equity investments can be provided by specialized venture capital ( venture capital ) funds, as well as wealthy individuals or companies. Recently, more and more companies in the Baltic States also use the opportunity to attract investments by selling shares in their company publicly on the stock exchange.

How to choose which type of capital raising is more suitable
A loan for a company is more beneficial when the company is already working with a positive cash flow and the entrepreneur has reasonable confidence in the ability to repay the loan (income has stabilized). The loan can be used for the purchase of property and equipment, as well as for working capital and other short-term purposes, such as seasonality adjustment, stock purchase or the fulfillment of larger orders.

The first stop for a loan is usually a commercial bank, where the loan interest rate is likely to be the lowest. Credit from commercial banks is more suitable for financing long-term projects - the purchase of property or equipment. However, banks are more demanding about financial indicators, they have higher collateral requirements and financing evaluation takes longer. Therefore, the offer of alternative financiers is often more convenient for short-term goals. Moreover, in conditions of high euribor rates, bank loans are often already in line with the products of alternative financiers in terms of costs.

On the other hand, attracting an investor is more beneficial if the company is in an early or rapid growth phase or if the loan is not yet available. Also, investments are characterized by a more uncertain term of investment - usually three or more years, depending on the industry and the size of the company. Below are several instances where investment is likely to be the right type of capital:

• The company is new or in an early phase – the business cash flow is weak or unstable and capital is needed for, for example, product development, prototype production or the fulfillment of first orders. New companies will most often not qualify for a loan from a bank or other credit institution, so in the early phase investment or equity is the only way to develop. For the implementation of new ideas and product development, capital is allocated by organizations such as the Latvian Business Angel Network (LatBAN), various acceleration funds or private investors.

• Business needs money to significantly increase the company's volumes. In this case, the company must have previously proven itself as a profitable market participant, and the necessary money would help the company reach its maximum potential. To get that amount of money, you may often have to hire a professional management team, additional sales staff, or open new departments. Enable capital funds , such as FlyCap, BaltCap, Change Ventures and others, are most often used for this purpose

• The small business needs additional help in the field of management or contacts that would help to obtain currently unavailable resources. In this case, investors are the “smart money”. In other words, their value is higher than the value of money itself. They usually help companies find new customers or supplier channels. These types of partners are usually the previously mentioned business angels or other larger companies.

• The company does not qualify for the loan. It is important to remember that in order to receive a loan, the company's financial data must meet certain criteria, and the loan will not always be available. If the business is new, with negative cash flow, low equity, or if the owner has no assets to back the loan, then an investor may be the only way to raise more money for the business. Both business angels and private investors and business partners are suitable for this type of investment.

Where to look for funding
To discuss in more detail what type of capital is the most suitable for the company in a particular case, you are welcome to contact Capitalia's financing specialists. If we are unable to offer the capital we provide, we will always refer the entrepreneur to the most suitable financier in our opinion. Also, Capitalia has developed a free, convenient online tool to not only find out the best type of financing, but also to receive specific recommendations about the most suitable financier and its contacts.

Financing growing businesses, especially in the small business sector, has always been problematic. While business models and the way companies operate have changed and moved forward, traditional bank financing has remained in place. A loan is always useful for companies , but other forms of financing should not be forgotten.

A business loan is undeniably a useful tool for business development, however, it is important to distinguish situations in which another type of financing might be more useful for a business. Usually, companies' first choice is to apply for a loan at a commercial bank. However, applying for bank loans usually takes a very long time. The procedures are long and impose a heavy administrative burden on the company. Banks often require several years of company data, as well as management documents and cash flow projections. Also, banks expect some collateral, real estate or some other personal assets from the entrepreneur. And even then, a positive decision and successful funding are not guaranteed. Banks review applications in internal credit committees, which may decide that companies are too risky for financing, or may reject if the company represents an industry that the bank has already over-lent and has reached its limit in the bank's loan portfolio. And to receive a negative answer, the entrepreneur has to wait several weeks.

Business consultants often inform that a loan is not always the most suitable way of financing working capital. If the company gets a new, important order, the money is needed for the business immediately and spending time on a loan application at the bank is not worth it. Likewise, getting stuck in a repayment period of 12 months or longer to finance an order will incur recurring costs.

In such situations, your company does not need to take on additional liabilities, but rather turn balance sheet assets, such as invoices, into working capital. Invoice financing offers a much more flexible short-term financing mechanism. Invoice financing, or factoring, can help a company get frozen funds faster for invoices that have been issued but are waiting weeks or even months for payment. Using invoice purchase , offered by both commercial banks and alternative financiers, companies can immediately receive up to 100% of the invoice value.

Using outstanding invoices, which show the company's future revenue, provides for needs that need to be met now. On the other hand, in the case of a loan, the amount of money will be paid out once and will have to be returned to the financier over a longer period of time.

When looking for new sources of financing , companies often turn to various providers of venture capital , which serve as an alternative to a classic loan . One such alternative is a business angel - an investor who will take your company under his wing and help you develop your business faster. For a business angel investor, the average amount of investment tends to be smaller than for venture capital funds, typically from 50 - 100 thousand euros. When attracting capital, you should be careful how much of the company you plan to transfer to the control of a business angel investor. Also, it would be unwise to offer an investor a board member position if they don't have the time, experience or sufficient knowledge of your business.

Likewise, you can also consider the idea of bringing in a strategic investor instead of a venture capital fund. This could be a customer, supplier or other business partner with whom you already work, who may also be interested in investing in your company. A strategic investor usually has "deeper pockets" than an angel investor, but usually has a specific investment objective. Therefore, it is important to find out in advance the real reasons for investing. An investor can use your technology for their own benefit, which can have a negative impact on your business. But there are also cases where an investor wants to invest for the benefit of both parties, so it is always important that you and the investors have the same interests.

Another new possibility in the Baltics is the financing of the company's development through the co-financing platform capitalia.com. With the help of such platforms, you can attract the necessary financing without giving the control of the company to the investor. Platform financing also has other advantages, such as quick decision-making and fundraising , flexibility and simplicity.

Before you go to a venture capital fund, clarify your goals. How much capital do you need? Do you want passive or active investors? Are you planning to expand your marketing activities? Increase the management team? By answering these and other questions, you will have a better understanding of who to turn to for investment capital, be it venture capital , business angel, strategic investor, co-financing platform or something else.

If you choose the venture capital route, it is preferable to use a circle of acquaintances who could give the fund good recommendations about you. Also, always do your homework - find out what kind of investments the specific venture capital fund is interested in and what your company's needs are. Come to the meeting well prepared and give a short and concise presentation. Know your main business goals and be honest with your investors when you present them with those goals.