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Tag: innovation

  • 3D Copy and Print

    3D Copy and Print

    The bizarre-sounding copying phenomena called 3D-printing have been mulling around from the past.  Recently, it has been in the limelight; specifically in the press for the wrong reasons.

    In 2013, a University of Texas law student, Cody Wilson created a blueprint for a single-shot 3D-printed handgun, named ‘The Liberator’.


    However, guns have posed a serious threat to peaceful living when in the wrong hands. But what if you could hastily manufacture them unsupervised,  from the comfort of your home?


    His company Defense Distributed, had been distributing downloadable weapons plans for free. This would be great if it was planned to enable you to build something more useful to society.


    The point is, with this new device, you can literally make a 3D copy of any imaginable object – even your food!


    3D printing builds parts (mostly out of plastic) based on the central concept: using a digital model like your CAD drawing (Computer Assisted Drawing).


    This is then turned into a physical three-dimensional object by adding material a layer at a time. This is where the formal name for 3D printing, Additive Manufacturing arises. They are no bigger than a normal Deskjet or heavy-duty paper printer and are quite a marvel to watch in action.

    3D printing is a fundamentally different way of producing parts compared to traditional subtractive (CNC machining) or formative manufacturing technologies.

    The brands

    Some top 3D printing brands include MakerBot, XYZprinting, Formlabs, and LulzBot. You can pick them up from as little as $200 to $4000.

    These prices naturally depend on your end product size, material, complexity, and level of detail you need.

    The most expensive one, if you are into heavy-duty manufacturing would set you back a cool $2,500,000. That is the price tag for Imprimere’s Model 2156.

    Some of the advantages of using 3D printers include:

    • Speed: You can upload complex designs from a CAD model and print in a matter of hours.
    • You have more design freedom. It gives you complete customization of designs.
    • It is more eco-friendly: Additive manufacturing methods use only the material you need to build a component. You can recycle and re-use the raw materials.
    • Costs: Compared to traditional manufacturing, the labour costs for a 3D printer are almost zero.
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    Image source: 3DHubs

    Application in the world

    Since its uptake in as far back as 2010, a lot of the products we use are manufactured using 3D printing.  You will find its application mostly in the medical and dental industry and used for custom prosthetics, implants, and dental aids.


    They are used to manufacture high-level sporting gear that is tailored to fit you perfectly. Naturally, you can also ‘print’ your own customized fashion accessories. This would give you more flexibility when it comes to your specific style, colour, and material.

    For a more comprehensive comparison of 3D Printers available to you, look at the 3D Printing index on the resources page.

    Here is a list of cool things you can create with a 3D printer. If you are looking for great ideas for Xmas or birthdays – this might just be it!

  • Digital Fundraising

    Digital Fundraising

    The latest abbreviation in the finance and crypto-world is ‘ICO’. This word, however, gives global financial authorities like the U.S. Securities and Exchange Commission (SEC) nightmares for several reasons.

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    Not to be confused with Initial Public Offering (IPO) which is used by firms to raise cash through the issuing of shares to the public. An ICO (Initial Coin Offering) works like crowdfunding, but for digital currency and tokens.


    We recently covered a feature on raising funds and capital for a business but missed out on one relatively new method. Many companies are using ICOs to raise capital for their businesses.

    Why ICOs?


    The concept of an ICO works similarly to how a company raises capital through shares in that it is all based on contrived value.


    Funding raising in effect boils down to sales! If your actual product or service has nothing substantial or intrinsic to offer a client base, then it is nothing more than a scam.


    Launching an ICO is quite easy, and to an extent, many tech companies are now catching onto it.

    An ICO is the cryptocurrency space’s rough equivalent to an IPO in the investment world. ICOs act as fundraisers of sorts; a company looking to create a new coin, app, or service launches an ICO.

    Investopedia

    If you still do not believe it is possible, just listen to this testament from someone who did it after unsuccessfully knocking on the doors of conventional funders.


    The alarming spurt rate of ICOs often brings with it a scourge of potential scammers. The SEC and other institutions have to step in to monitor and regulate them.

    Social media platforms like Facebook and Google – which house a bounty of users (potential investors) have banned ICOs ads due to possible prey on unsuspecting investors; exposing them to con artists.

    Basically, the scammers use fancy websites, laden with impressive figures and terminology to con users into buying into their coins or tokens.

    Though the tokens barely even cost a cent, it adds up if they have millions of people buying in.  Once they have reached a certain amount in funding – they close shop and disappear!

    To create a new digital coin:

    Create a product concept or Business Plan for the coin or what is called a Whitepaper. This describes in great detail what the coin or token aims to do; the core technologies behind it; the team and their qualifications; the product’s lifecycle/growth path etc.

    Once completed and water-tight, the whitepaper would be submitted along with an application to one of the best Cryptocurrency Exchanges for review.

    Naturally, you would need some initial working capital for liquidity. Some of this is raised through your savings and others through institutions (via loans etc).

    You must then assure your investors of a solid return on investment (ROI) and deliver – which goes back to sales. Unless your offering is a scam, you actually need to do some work!

    This assurance comes via regular updates (marketing campaigns can have a tremendous or adverse impact on the uptake and price) on milestones reached.

    The updates are also necessary to keep your investors abreast with progress and might convince them to increase funding.

    Growing interest and the addition of more funds create demand for the coin/ token which, in turn, drives up the price and market capitalization.

    Most successful ICOs of all time

    NEO:

    Known as “China’s Ethereum”, and backed by Microsoft, Alibaba and the Chinese government, NEO uses smart contract applications. It does so, however, with the addition of decentralized commerce, digitized assets and identification.
    It enjoyed a considerable hike in token value from $0.03 to $88.20, NEO has big things coming with a 294,000% ROI.

    Ethereum:

    Unlike Bitcoin, the second-most valuable cryptocurrency in the world has more functionality than just being a coin. Its ledger technology is used to build and deploy decentralized applications a.k.a. “smart contract” technology.
    Ethereum’s ROI has been nothing short of jaw-dropping at 230,000%. Having sold its tokens at $0.31, an Ether token now sits at a whopping $713, second in value only to Bitcoin.

    Spectrecoin:

    The “premier privacy-focused cryptocurrency” enables users to send and receive currency worldwide with total anonymity. It is currencies like SpectreCoin that have most government tax offices quaking in their boots.
    If you had repurchased a token in November 2016, that puny $0.001 would be worth $0.64 today, or an ROI of 64,000%.

    Ark:

    With Ark, collaboration is the name of the game. The platform’s SmartBridge is a lightning-fast ecosystem designed to integrate other cryptocurrencies into its blockchain.
    Investors were eager as any to buy in, and they have made a 35,400% gain given today’s token price of $3.54.

    DigixDAO:

    DGD, which stands for Digix Decentralized Autonomous Organization, is a self-governing community. It gives out grants to different projects which will promote the growth of the DGX network.
    At a current value of $346.88 per token, this gives them a return of 10,722%.

    Quantum (QTUM):

    QTUM is an open-source value transfer platform which focuses on mobile decentralized apps or Dapps. QTUM is the world’s first proof-of-stake smart contracts platform.
    They hosted a highly successful ICO in March 2017, and since that time has seen an ROI of 6,400%.

    Source: investinblockchain.com

    In conclusion

    The prospect can be daunting for a cryptocurrency investor looking to make money off new investment opportunities while remaining cushioned from fraudulent ICOs and dodgy coins and tokens.


    As there is no guarantee that any cryptocurrency or blockchain-related start-up will be genuine or successful.

    You simply need to be vigilant and take steps such as getting to know the core team, poring over the whitepaper with a big magnifying glass. Naturally, you should be monitoring the progress of the token sales.


    Most importantly, you must just use common sense to gauge just how feasible the project is to ensure that you’re not falling for a scam.

    Remember, if it’s too good to be true, then it isn’t true!

  • Get more organised digitally!

    Get more organised digitally!

    We often hear the phrase “technology is your friend” To what extent this friendliness is, to help you to cope with your daily activities or business plans depends on how you embrace it.

    Life can be chaotic. Which so much to do it is easy to frequently miss important appointments. Delays often come from having to wait till you get to a PC to respond or not remembering contact details. The worst is having to ask someone repeatedly for their number or business cards.


    If you often experience that, you are getting it all wrong and definitely need this friend!

    The need for emails

    Emails are on a progressive, disruptive path to eliminate postal services. They even facilitate and encourage the acceptance of digitally signed documents.
    Most financial companies and legal institutions in many developed countries already accept digitally signed documents.

    Your digital signature confirms that the information originated from you and has not been altered through encryption. This makes it legally binding.

    Naturally, you need special software or Adobe Sign, to digitally sign and attach as a PDF to an email.

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    Thanks to emails, we can now also easily store and get in touch with our contacts. It could be in the office, lounging around a park, watching your children play; even onboard/at the underground train station.

    Additional email tools

    Calendar and contacts syncing is a simple tool which is not offered entirely by all domain host providers. It works wonders along with your calendar and scheduler.


    If you need a simple CRM tool to just help with email contacts and plug into an existing sales app, you can do so with a useful add-on like Outlook Customer Manager.


    There are certainly advantages of decluttering your emails. This helps to alleviate the frustration of unimportant mails getting in the way of the ones you need to access frequently. For that, there is a clutter service offered by Office 365.


    Additionally, to avoid retaining important attachments, and clogging up space on your mailbox, you can with a click, save large file attachments directly to your cloud storage.


    With all that relevance of emails, it is critical that you source the best one – even if it costs a bit more than the (free) webmail services provided by Outlook (Hotmail), Gmail and Yahoo.


    Naturally, with a paid service, you will almost be freed from the scourge of spam and malicious items embedded in documents. In some cases, they are screened even before landing in your mailbox.

    More advanced features


    Other perks like a ‘catch-all service’, data loss prevention, in place-hold (compliance features), and advanced threat protection. You can add them as essential services to give you an even more peaceful emailing experience.


    You can, for instance, use In-Place Hold (Litigation Hold) to place user mailboxes ‘on hold’ and preserve mailbox items permanently.

    This feature is especially crucial for those in the financial and legal sectors – requiring emails and its contents to be preserved for a minimum of seven years typically. Security is the central factor that has kept the postal service in business – well at least for now.

    Your checklist when shopping for a good email solution:

    • A decent-sized mailbox – with archiving ability – 50GB is the new standard size (don’t get short-changed!).


    • Should allow you to sync emails, calendars, and contacts onto multiple devices – and it must always work!


    • SMTP is now the standard and preferred Email protocol. If you are still on POP3 or even IMAP – run away!


    • Customizable domain (a .com or .net or any other you have bought), with the option to add more domains and email aliases. (info@ …sales@ etc).


    • Sync to an active directory – to keep your user-profile and allow for ease of single sign-on or extra security features like two-factor authentication. (Prevents unauthorized people from accessing your emails by pairing to your phone via an SMS code).


    • Your mailbox (since you are storing contact details or using it along with a CRM or ERP solution) must be GDPR-compatible.

    Final thoughts

    Finally, a good email hosting service should provide the ability to add innovative features in the future. These include extra archiving space, advanced threat protection, and enterprise voicemail. These are characteristics of a good email solution.

    Preparing to use an email solution can be effortless if you have the time. Most software suppliers like Microsoft (Office 365), have support sites with primary training material and “how-tos”.

    Check out Microsoft’s Support page to upskill your Office, email, and overall cloud-software aptitude.

  • Vocations of the Future

    Vocations of the Future

    There is a lot of banter, which is backed up by well-research papers on how Automation and Robotics (powered by AI) will replace manufacturing jobs.

    Blue-collar jobs are not the only ones however, that face imminent and progressive extinction.

    A recent survey report conducted by the World Economic Forum predicts futuristic trends affecting certain jobs in the modern workplace.

    Robert Solow predicted decades ago, in his Solow-Swan model, a massive driving force of global growth: technology.

    And the evidence is prevalent with the likes of Apple, Google, and Amazon championing stock markets with Billion-dollar market capitalizations. They also create an abundance of jobs globally.

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    Disruptive technological advances such as AI (Artificial Intelligence); the ubiquitous high-speed mobile Internet (5G); widespread adoption of big data analytics; cloud technology; and the recent Blockchain technology will be the drivers of this job evolution.

    Based on the report, by 2022, this job evolution will be firmly in place as it has already.

    In a matter of just 4 years, we could have a situation where jobs such as postal service clerks, data entry clerks, and bean-counters (accountants and auditors) would be made redundant.

    Impact on services

    Software like Microsoft’s Dynamics 365, aims to remove ‘silos’ within customer relationship management (CRM) and enterprise resource planning (ERP) processes.

    The latter takes over (fully automates) back-office operations such as stock-taking and supply chain management.

    Such tasks will be performed via software, reducing the need for more human supervision. Consequently, the focus would be more on managerial roles.

    In the sales and customer service realm, technologies like Microsoft’s AI will provide automated insights to guide employees on improving customer experiences.

    Furthermore, it may lower support costs by using virtual agents or Chatbots to eliminate in-house AI experts and those writing code. This will  result in more redundancies!

    World's jobs

    On a positive note, newer and more exciting jobs such as data analysts, machine learning and AI specialists, digital transformation experts and in general information system services will be on the rise – up to 135 million globally, according to the Report.

    The fields to benefit directly from new technologies would be information technology; information security; innovation; customer services and risk management (financial services).

    Impact on finance

    Another group of professionals whose nature of work will be affected due to the advent of ‘disruptive technology‘ is financial middlemen. Likewise, smaller banks and money transfer institutions.

    Decentralized systems were primarily put in place to eradicate exorbitant fees associated with transferring money across borders.

    Cutting them out completely undoubtedly renders them redundant. It is therefore pertinent for them to innovate their products in order to open up sufficient job position.

    Read more about the effect of Cryptocurrencies on the banking sector here

    Recently, Malta’s finance minister whilst in a private interview during a Blockchain Conference, echoed this. He said that the advent of cryptocurrency has changed financial middlemen into traditional “photo developers”.

    “I can see this, just like in photography when you could tell that […] those who process the photos will lose their jobs; a lot of financial intermediaries will be facing the chop in the not too distant future,” says Edward Scicluna.

    The good news for governments will be that the trend shows that the jobs created will surpass those lost.

    Be proactive and skill yourself accordingly or get the right personnel who can quickly adopt some of the mentioned skills so that you do not fall behind!

  • Bitcoin – the new (digital) Gold?

    Bitcoin – the new (digital) Gold?

    Bitcoin (Crypto in general) is here to stay and every day, financial institutions, celebrities, and artists are endorsing it. It also has intrinsic value otherwise companies (incl. Microsoft) accepting it as payment for goods and services are either ballsy or just plain stupid!

    Read more via Food for thought…

  • Accountable Supervision

    Accountable Supervision

    Leadership values are not only confined to the running of a political campaign, party, or country for that matter, however, like in any venture that has an objective and deals with human beings – it forms the backbone of a successful business.

    Consequently, what leaders such as CEO of Tesla Elon Musk, for example, say or does, have a positive or, in the recent unfortunate case, a negative impact on the shareholdings of his business.


    The share price can decline sharply and worse yet, it can lead to the exit of senior staff members and thus undermining the business, its leadership values, and objectives.


    This why it is critical for companies to adopt the right practices and responsible leadership to enable them to address both internal and external issues affecting them.


    This is even most relevant when dealing with a company that has a multinational operational facet such as the Murray and Roberts Group – a South African company that operates in a global setting.


    This specific multinational company was used in a case study for a research paper because it is firmly entrenched in the construction and engineering industry.


    More specifically, they service the global natural resources market sectors of underground mining; Oil & Gas; Power & Energy.
    Such a diverse set of operations requires a varied set of objectives spearheaded by a solid leadership path.

    A new model of leadership

    We have covered the topic of Emotional Intelligence before. It now surfaces again within a brand-new leadership model known as the ARCHES model.
    The name derives from a key characteristic of the physical structure of an arch and its durability.

    Coupled with its diversity in models and materials and its depiction as symbols of triumph, it represents an apt analogy of what responsible and effective leadership should be.


    The model was especially derived by an academic* for a syndicate group assignment and is based on six key characteristics that should be imparted in a leader.


    An effective and responsible leader is one who is attuned to their followers, responsive, possesses the necessary competencies, serves with humility, is ethical and adopts a sustainable approach to leadership.

    A leader who possesses all these attributes is one who can rise above adversity and lead their followers in a way that promotes innovation, motivates, develops skills, promotes personal growth, and encourages improved performance.

    B.Moyo

    Application of the model

    ARCHES

    The model defines attuned leadership as the act of being self-aware, informed, and aware of the environment in which you exist – servant leadership.


    Employees should be encouraged to take responsibility for their actions because responsibility and effectiveness are complimentary. The demise of US energy company Enron, for example, was due to a failure of management to execute communication-based responsibility, internally and externally.

    A volatile, uncertain, complex, and ambiguous environment in which a business operates can result in many potential projects not coming to fruition.


    In such an environment, leaders that are attuned, responsive, and possess the right competencies can expert power as their way to influence followers to exhibit the same traits.


    Referent power develops out of admiration of another and a desire to be like them. Expert power, on the other hand, is a person’s ability to influence others’ behaviour because of recognized knowledge, skills, or abilities.
    This requires the leader to have a tolerable level of humility.

    This is defined as a personal quality reflecting the willingness to understand the self (identities, strengths, and limitations). That combined with a purpose in the self’s relationship with others.


    Once again, the emphasis on Emotional Intelligence coupled with traditional leadership competencies is needed to steer multifaceted companies.

    Even more so when dealing with diverse cultures and work ethics across borders and continents.

    Direct consequences

    Being the largest employer in the locality directly implied that Murray and Roberts had to be consistent with the idiomatic Zulu expression of “Umuntu ngumuntu ngabantu”. This means: I am because you are, you are because we are.
    Good leadership in the Ubuntu philosophy is based on the engagement with communities and defines a well-led organization.


    Not paying attention to ethical issues surrounding a community or the environment can have an adverse effect on your values. This would also affect your staff and the image of the company you steer.


    A bitter consequence of the failure of ethics was evident in the $4.2m (64.1 million ZAR) fine to the said company. This was for its involvement in sector collusion related to construction projects for the 2010 World Cup.

    Concluding remarks

    Finally, a practical leader will also consider any upcoming projects with the lens of understanding the environment that surrounds them to incorporate the concept of sustainability.


    These traits might sound like they need to be learned but most should be already ingrained or come naturally to you or your leaders.

    If not this is not the case, you need to quickly install the right personnel with such to help steer your business enterprise or economy for that matter, to success.

    *This blog post contains excerpts and is derived from a master’s research paper. It was conducted by Bonnie Moyo for the Rhodes University Business School.

  • Modern-day Profit Hunters

    Modern-day Profit Hunters

    Dealing with Cryptocurrency has its interesting dynamics. There are, however, many hidden facets making it still a mystery to the masses. Not knowing about it makes you prone to, get rich-schemes or outright scams.

    We are all by now aware of the mania caused by the soaring prices and then, the subsequent decline that followed early this year.

    What we don’t pay attention to, however, is just how complex it is to physically “acquire” and store these Cryptocurrencies.

    Mining coins can be described very basically as the process where users “or miners” become part of a Cryptocurrency network. This by making hardware (processors & graphics cards) available to support that specific network’s operations.

    As a miner, you contribute towards the working of the Blockchain. The technology requires millions of calculations to validate transactions into what are known as public ledgers.

    Click here for more about how the Blockchain works.

    There are three main ways to mine these coins but we will not be highlighting them in this post. The matter to be covered here, however, is the business aspect: how the Blockchain has created a new line of commercial entities and ‘profit-takers’.

    These modern tech “enterprises” offer you a specific or cluster of altcoins and tokens as a reward for helping them maintain their Blockchain.

    Sounds like a win-win situation right?  Or is it?

    Mining is hard

    If you have actually looked into the methods of mining, you will discover that only those with high-end hardware are able to produce enough energy to power the Blockchain. This is called “hash power” or “hash rate”. This is kind of like horsepower for cars, but for PC processing.

    There are sites that illustrate how to calculate potential profits such as one conveniently called ‘what to mine’.

    The opportunity cost of operating the customized computer systems (known as Mining Rigs), will have to be offset with the cost of acquiring hardware such as the Antminer S9i. Then there are energy costs associated with running the rigs for long periods of time.

    Your profit would, therefore, be the balance of the costs versus the revenue involved in mining coins.

    The mining profit = revenue (quantity multiplied by the price of the coin in local fiat currency). Then subtract the cost of the mining devices + annual electricity costs (measured in local currency per KWh).

    The problem with going at it alone is that it is very hard to break even. You are also faced with a conundrum:  the more powerful your hardware is, the more electricity it consumes.


    It also takes a lot longer to acquire the coins which you are awarded by the respective blockchain network after successful hashing is completed.

    To make it worth your while you would hope that the coin you mine’s market value exceeds the costs of the monthly/annual electricity bill.

    Value proposition

    There a now hundreds of these so-called Crypto/Tech companies spurting up by the day. Their modus operandi: to relieve you of the burden of the high electricity and hardware costs. This in exchange a monthly or once-off fee.

    In return, they promise to mine coins and provide you with daily or monthly profits. They can do this because they presumably have more powerful mining setups and therefore, larger economies of scale.

    Some of these establishments use big rooms, whole buildings or even warehouses to run thousands of mining rigs throughout the year.

    The payments you make supposedly help them with maintenance costs and pay for the said electricity bills. They are also usually stationed in countries where the cost of electricity is very low.

    MiningCosts

    You are likely to, however, run the risk of dealing with the occasional Ponzi-scheme – setup.  Such companies dive at the opportunity to swindle those not familiar with Blockchain and Cryptocurrencies.

    By dazzling you with the price increases and potential astronomical returns, they take your money and make a run for it!

    You can also ponder, it is incredibly difficult and expensive to mine Bitcoin these days. If these setups are actually just people who have already made their millions from acquiring Cryptocurrency.

    The acquisition naturally, would have been when they were dirt cheap, and are now offering the residue to make more profit off unknowing investors.

     

    A working example

    How it would work is: let’s say you owned 100 Bitcoins mined in 2010 for the opportunity cost of $100 each (cost of electricity).  You then sold half at the height of the Crypto ‘bull-run’ in January 2018 when they were worth $19 000 each.  You would have been $945 000 richer.

    So, with almost a million bucks in the kitty and another 50 units of coins (which would be now worth a lot less); the natural inclination would be to look at ways to make the extra coins ‘work for you’.

    And what better way than to be your own boss and head a Crypto company! You can with your new setup, sell off the residue of Crypto coins in bits for profits in cash.

    This is likely what some of these companies offering you coins for an opportunity to get Bitcoins. This under the false pretence of partaking in a ‘mining operation’. Meanwhile,  in reality, the actual mining probably took place almost a decade ago!

    All in all, do stay alert and do your research before parting with your money to join a mining pool or Crypto investment scheme!

  • BTC running low on battery?

    BTC running low on battery?

    bitcoin-1813505_1280.jpg__740x380_q85_crop_subsampling-2
    Good explanation of what the declining BTC dominance means for other Alts

    On August 11 2018, the Bitcoin dominance level (market share) touched 50% for the first time in 2018. However, the move didn’t come amid a Crypto market rally. In fact, the cryptocurrency space has been in free fall until mid-August, moving in a sideways trend since then.

    Read more via BTC running low on battery?

  • Financing your Small Business

    Financing your Small Business

    When considering small business financing, it is important to understand all your available options. If not, investors can easily take advantage of you and offer unfair terms.

    So before raising any money, find out if using equity, debt, or convertible debt financing makes the most sense for you to grow your business.

    Equity

    Raising capital through equity is popular, if not the most popular choice, for entrepreneurs to pursue. Investors buy stock (or shares) in your company, giving them a financial stake in the future success of your business.

    How It Works:

    • You set a specific Dollar/Euro amount for what your company is worth.
    • Based on that valuation, investors agree to give you money in exchange for a certain percentage of your company.
    • Investors receive compensation based on the percent of stock/share they own once you sell the company or go public.

    Pros:

    • All your cash can go toward your business rather than loan repayments.
    • Investors take on some risk and don’t have to be paid back until you’re doing well.
    • Investors often have valuable business experience.
    • Since investors have a financial stake in the success of your business, they are motivated to offer sound guidance and valuable business connections.

    Cons:

    • Selling shares of your company will make it very difficult to get them back.
    • You will also most likely lose control of part of your board to your investors.

    Debt

    Debt-based fundraising is the form of small business financing that most small businesses end up choosing, according to Fundable. It is also the easiest to understand. Money is loaned to you with the agreement you’ll repay it over time with an established interest rate.

    Get a quick loan for your business here: N26_banner-320x50-EN

     

     

    How It Works:

    • You borrow money with an agreement to pay it back with interest within a specific time frame.
    • You will also have to offer your lender some form of collateral, which are liquid assets you will give up if you cannot make your loan payments.

    Pros:

    • You will raise capital much quicker than with equity small business financing. This is especially true of smaller cash amounts.
    • You can keep 100 percent ownership of your company, along with 100 percent of its profits.
    • Interest payments are tax-deductible.

    Cons:

    • You must be completely confident you can make your loan payments in cash each month. If you don’t, lenders can make you sell your business in order to get their money back.
    • Interest payments can become one of your largest business expenses.
    • Commercial lenders will demand small business owners to personally guarantee the loan and offer personal assets as collateral. This even if your company is structured as a corporation or limited liability company, according to Forbes.

    Convertible Debt

    A convertible debt small business financing structure is a mix of debt and equity financing. The money raised is considered a loan, but at some future date, the loan can convert to equity if the lenders so choose.

    How It Works:

    • You will negotiate an interest rate to pay back the loan. This will also be the interest rate for those lenders who decide not to convert any debt into stock.
    • The details concerning how lenders can convert the debt into equity are negotiated at the time of the loan. For the most part, that means agreeing to give lenders a discount or warrant on an upcoming round of equity fundraising.
    • You will also set the valuation cap, or maximum company valuation, at which lenders can convert debt into equity. If investors decide not to trade in their loan for shares at this predetermined valuation level, they can no longer do so at a future date.

    Pros:

    • Transaction costs are low and the process moves quickly.
    • If you don’t want to set a company valuation, which involves a lot of uncertainty and risks for new startups, a convertible debt structure for small business financing makes a lot of sense, according to Covestor CEO Asheesh Advani.
    • Using convertible debt protects investors from dilution in future financing rounds.

    Cons:

    • Investors are uneasy about giving money without knowing the exact share of a company they will own. You might have to offer steep discounts on equity in order to get them to agree to the terms.
    • You may be forced to set a valuation before you are ready in order to avoid unaffordable loan repayment expenses.

    In the end, it’s best you make your final choice, based on which of the mentioned options works best for you, not just now, but in the immediate future.

    Read more: about other investment methods.

    This article was originally Written by Alex Liu and published on UpCounsel

    UpCounsel is an interactive online service that makes it faster and easier for businesses to find and hire legal help solely based on their preferences.
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