Team Bio Series — Dan McAuliffe (Aspiring MacGyver)

Dan McAuliffe. Big Dan. Dan the Man. Danny-Boy. Dan-the-Destroyer-of-Worlds. Clearly, we’re still workshopping the nicknames here on one of our newest team members. Dan is the content strategist here at Merchant Maverick, a mostly thankless job given our historically laissez-faire attitude toward content creation. What makes Dan tick, other than SEO? Read on to find out.

Name: Dan McAuliffe

Title: Content Strategist

Hometown: Seattle, WA

Current city: Los Angeles

Education and background: I studied economics in school and have a degree in international business management.

Merchant Maverick department/specialty: Content strategy

Proudest professional moment: Convincing all my co-workers to jump out of a plane in a gambit to prove we’re not nerds to a client.

Favorite Merchant Maverick post/moment/opportunity: The best things are yet to come.

What do you do when you’re not working?: I like to listen to rap music outside wearing a big hat. Always haggling with the sun — “How much sun is too much?” — Still no definitive answer, but there’s a tan under every sunburn!

What superhero do you identify most with and why?: Lex Luthor. Seems like a cool guy. Kidding. Batman. His powers are business and technology.

Favorite 90s song: Big Pun – Capital Punishment

Favorite 80s movie: WarGames

What is your breakfast?: Eggs. If they’re fried eggs, there has to be toast to soak up the yolk.

What skill have you always wanted to learn?: I’m gonna go ahead and use “MacGyver” as a verb here

If you could live anywhere else in the world, where would you live and why?: I’d live on a large boat that changed homeports every month or two. What better way to see the world? But I’d have to do some big-time nature philanthropy to absolve myself from the eco-sins of yacht ownership.

Mac or Windows?: Been riding with Mac since before Nanosaur.

You’re given an unlimited budget at any retail establishment. Where do you go and what do you buy?: I’m coming for every single slide style sandal at Discount Shoe Warehouse.

So that’s Dan McAuliffe. He is a perpetually sunburned, sandal-wearing rap-enthusiast who likes runny yolks. And while we absolutely do not believe him when he demurs about not identifying most with Lex Luther, we hope he’s here to stay for a while, because we desperately need someone to MacGyver up a lasting content strategy for us. (Simply grow a mullet, and we will supply you with all the duct tape your heart desires.)

Interested in reading about other members of the Merchant Maverick staff? Check out our team interview series.

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Debt Service Coverage Ratio: How To Calculate And Improve Your Business’s DSCR

Debt Service Coverage Ratio (DSCR)

Applying for small business loans can be stressful. But it wouldn’t be so bad if you knew exactly what lenders are looking for, right? One of the biggest factors in lending decisions is your debt service coverage ratio (DSCR).

But what is the DSCR and how can you figure out what yours is?

In this post, we’ll cover everything you need to know about the debt service coverage ratio. We’ll teach you what a DSCR is, how to calculate your debt service coverage ratio, what a good DSCR looks like, how to increase your debt service coverage ratio, and more.

What Is The Debt Service Coverage Ratio?

The debt service coverage ratio (DSCR) measures the relationship between your business’s income and its debt. Your business’s DSCR is calculated by dividing your net operating income by your current year’s debt obligations.

The debt service coverage ratio is used by lenders to determine if your business generates enough income to afford a business loan. Lenders also use this number to determine how risky your business is and how likely you are to successfully make your monthly payments for the length of the loan.

Why Is The Debt Service Coverage Ratio Important?

The debt service coverage ratio is important for two reasons:

  1. It shows how healthy your business’s cash flow is.
  2. It plays a factor in how likely your business is to qualify for a loan.

The debt service coverage ratio is a good way to monitor your business’s health and financial success. By calculating your DSCR before you start applying for loans, you can know whether or not your business can actually afford to make payments on a loan.

A high DSCR indicates that your business generates enough income to manage payments on a new loan and still make a profit. A low DSCR indicates that you may have trouble making payments on a loan, or may even have a negative cash flow. If this is the case, you may need to increase your DSCR before taking on more debt.

In this way, knowing your DSCR can help you analyze your business’s current financial state and help you make an informed business decision before applying for a loan.

For lenders, the debt service coverage ratio is important as well. Your DSCR is one of the main indicators lenders look at when evaluating your loan application.

Lenders use the DSCR to see how likely you are to make your monthly loan payments. They also look at how much of an income cushion you have to cover any fluctuations in cash flow while still keeping up with payments. This ratio can also help lenders determine the borrowing amount they can offer you.

Here are some of the benefits of a high DSCR ratio:

  • More likely to qualify for a loan
  • More likely to receive an offer with better terms
  • Increases your chances of lower interest rates and a higher borrowing amount
  • Indicates your business can manage debt while still bringing in income
  • Shows your business has a positive cash flow

Unlike your debt-to-income (DTI) ratio, which is healthiest when it is low, the higher your debt service coverage ratio, the better. It is not uncommon for lenders to ask for your debt service coverage ratio from previous years or for up to three years of projected debt service coverage ratios.

How To Calculate Your Debt Service Coverage Ratio

The debt service coverage ratio differs from the debt-to-income ratio in another significant way — lenders don’t all agree on how the DSCR should be calculated.

Different lenders have different ways of calculating your debt service coverage ratio. Some lump the business owner’s personal income in with the business’s income; others don’t. We’ll teach you the most common way to calculate DSCR, but be sure to check with your potential lender for the most accurate DSCR calculation.

Most often, the debt service coverage ratio is calculated by dividing your business’s net operating income by your current year’s debt obligations:

Net Operating Income / Current Year’s Debt Obligations = Debt Service Coverage Ratio

But what is net operating income and how do you determine your current year’s total debt?

Net Operating Income

Your net operating income is your total revenue or income generated from selling products or services, minus your operating expenses. According to the Houston Chronicle:

Operating expenses are those directly related to acquiring and selling your products and services. Such expenses might include costs to make or buy inventory, wages, utilities, rent, supplies and advertising. Operating expenses exclude interest payments to creditors, income taxes and losses from activities outside your main business.

Net operating income is also sometimes referred to as a business’s EBIT (earnings before interest and taxes). To calculate your net operating income, use accounting reports to find your annual income and average operating expenses.

Note: Some lenders calculate your debt service coverage using your EBITDA (earnings before interest, taxes, depreciation, and amortization) instead of your EBIT.

Current Year’s Debt Obligations 

Your current year’s debt obligations refer to the total amount of debt payments you must repay in the upcoming year.

This includes all of your loan payments, interest payments, loan fees, business credit card payments, and any business lease payments. Tally up your monthly charges and multiply them by 12 to get your total year’s debt.

Examples

Now that you know how to figure your net operating income and total debt, let’s do an example using the DSCR formula from earlier:

Net Operating Income / Current Year’s Debt Obligations = Debt Service Coverage Ratio

Let’s say you’re calculating your debt service coverage ratio to see if you can take on a new small business loan to expand your business.

Say your business earns $65,000 in revenue annually but pays $15,000 in operating expenses. That leaves you with a net operating income of $50,000.

Now, let’s say each month you spend $2,000 on your mortgage, $400 on a previous loan, and $100 on your business credit card. That means you pay $2,500/mo on debt. Since the DSCR calculation requires the current year’s debt, we need to multiply our monthly debt by 12. That gives us a total of $30,000 in debt obligations for the year. Now, let’s plug these numbers in.

50,000 / 30,000 = Debt Service Coverage Ratio

50,000 / 30,000 = 1.666667

When you divide 50,000 by 30,000 you get 1.666667. Round this number to the nearest hundredth to get a current debt service coverage ratio of 1.67.

Now you’ve successfully calculated a debt service coverage ratio! Try plugging your own business’s numbers into the formula. And be sure to remember that this is only one way of calculating your DSCR. While this way is fairly common, be sure to ask your lender how they calculate DSCR for the most accurate ratio.

What Is A Good Debt Service Coverage Ratio?

So now you know how to calculate your DSCR, but you may not know what makes a DSCR good or bad. How can you tell whether your debt service coverage ratio will qualify you to take out a new loan or if it means you’re in trouble?

When it comes to DSCR, the higher the ratio the better. Let’s say your DSCR is 1.67, like in our earlier example; that means you have 67% more income than you need to cover your current debts. If you have a DSCR ratio of 1, that means you have exactly enough income to pay your debts but aren’t making any extra profit. If your DSCR is below one, then you have a negative cash flow and can only partially cover your debts.

Obviously, you don’t want a negative cash flow, and breaking even doesn’t quite cut the mustard if you want to take out a loan. So what’s the ideal debt service coverage ratio that lenders look for?

In general, a good debt service coverage ratio is 1.25. Anything higher is an optimal DSCR. Lenders want to see that you can easily pay your debts while still generating enough income to cover any cash flow fluctuations. However, each lender has their own required debt service coverage ratio. Additionally, accepted debt service coverage ratios can vary depending on the economy. According to Fundera contributor, Rieva Lesonsky:

In general, lenders are looking for debt-service coverage ratios of 1.25 or more. In some cases — when the economy is doing great — they might accept a ratio as low as 1.15, but in others — when the economy is tight — they may require a ratio of 1.35 or even 1.5.

FitSmallBusiness writer, Priyanka Prakash, notes that multiple aspects of your loan application can affect whether you are approved as well, not just your DSCR. Prakash says:

Your lender may be willing to overlook a slightly lower DSCR if other aspects of your application, such as business revenue and credit score, are very strong.

Be sure to carefully research each lender’s application process and qualification requirements before applying for a loan. Again, make sure you know how that specific lender calculates DSCR. This is important both for before you apply and after you are accepted as many lenders require you to maintain a certain DSCR throughout the length of your loan.

Most lenders will reevaluate your DSCR each year, but you may want to check your debt service coverage ratio even more often to make sure you’re on track to meet your lender’s requirements. If you don’t meet their DSCR requirements, they may say you’re in violation of your loan agreement and expect you to pay the loan in full within a short time period.

To be safe, it’s always best to know exactly what your lender’s policies are and try to keep your DSCR as high as possible.

Using DSCR To Determine Whether You Can Afford A Loan

Not only can you use your DSCR to check your business’s financial health and ability to pay its debt, you can also use it to determine if you can afford a loan and how big of a loan you should take out.

Let’s return to our example from earlier. Your business is trying to decide if it can afford to take out a business expansion loan. We calculated your current DSCR at 1.67, which means you have an extra 67% of income after you’ve paid your debts. This is well above the 1.25 DSCR mark, but it doesn’t necessarily indicate the size of the loan you can reasonably afford to borrow.

Take your annual income and divide it by 1.25 to figure out how much you can afford to pay back each year:

Net Operating Income / 1.25 = Borrowing Amount

50,000 / 1.25 = 40,000

In our example, your current year’s debt obligations were $30,000/year. From the calculation above, we can see that you can afford to pay up to $40,000 a year on your debt obligations. So, you can take on an extra $10,000/year in debt (because $40,000 – $30,000 = $10,000). That amounts to roughly $830/mo.

If you approach a potential lender knowing exactly how much you can afford to pay each month, you can avoid being pressured into borrowing more than you can afford.

If you aren’t comfortable with a 1.25 DSCR and would rather have a little more wiggle room, that’s totally fine. Don’t ever borrow more than you are comfortable with. The good thing is, you can use the debt service coverage ratio to see exactly how much you can safely borrow while maintaining your desired DSCR. Simply replace “1.25” in the formula above with your desired ratio to figure the payments you can afford.

How To Improve Your Debt Service Coverage Ratio

To increase your chances of getting a loan — or to maintain payments on your existing loan — you may need to improve your DSCR. Here are a few ways to increase your debt service coverage ratio:

  • Increase your net operating income
  • Decrease your operating expenses
  • Pay off some of your existing debt
  • Decrease your borrowing amount

To increase your net operating income, consider various ways to increase your revenue. Maybe offer additional services or goods or raise your prices. Try a new marketing strategy that brings in additional buyers or offer an extra incentive to existing buyers to make them purchase more goods.

Increasing sales isn’t the only way to increase your net operating income. A huge portion of your net operating income comes down to operating expenses. Cut back unnecessary expenses. Find ways to streamline your work processes and make employees more productive during work hours. Ask your existing vendors about discounts for buying in bulk. Maybe even consider eliminating products that don’t sell well or are too time-consuming and expensive to make.

Besides increasing your net operating income, a good way to lower your debt service coverage ratio is to lower your existing debt. Carefully evaluate your budget. Cut unnecessary expenses and allocate that money to paying down your debt instead. You can pay off your debt quickly using various methods like the debt snowball method or the debt avalanche method. Depending on your financial situation, consolidating your business debt might also be a good option.

Final Thoughts

For small business searching for funding, the debt service coverage ratio plays a huge factor in lending decisions. Lenders use your DSCR to determine whether you can afford to make regular loan payments and how much you can borrow.

But more than that, your debt service ratio is also a great tool for understanding your business’s financial health and cash flow. Your DSCR can show you both how much income your company has after debt payments and whether it’s financially wise to take out a loan. The higher your DSCR, the better.

As always, we recommend carefully evaluating your financial situation before seeking a loan. Calculate your DSCR, see if you can afford to take on a loan, and know exactly how you are going to use that loan before you borrow. With debt service coverage ratios, it’s more important than ever to carefully research your lender’s requirements as each has their own way of calculating the DSCR. And don’t forget to confirm whether your lender requires you to maintain a specific DSCR for the length of the loan.

Looking for good lending options? Our small business loan reviews cover both online lenders and major banks. To evaluate multiple low-interest lenders at once, it’s a good idea to use a free loan matchmaking service, often called a “loan aggregator.”

Merchant Maverick has partnered with Mirador Finance, a financial technology company, to bring you the Merchant Maverick Community of Lenders. By filling out one application, you can be matched to multiple potential lenders. Check your eligibility below.

Borrower requirements:
• Free loan aggregation service; requirements vary by area and lender.
Check your eligibility
Learn more about the Community of Lenders

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Debt-To-Income Ratio: How To Calculate And Lower Your DTI

Debt-To-Income Ratio: How To Calculate and Improve DTI

When applying for loans, we often worry most about our credit scores. Many people don’t realize that there’s another factor that lenders consider: your debt-to-income (DTI) ratio.

But what is the debt-to-income ratio, and why does it matter?

In this post, we’ll cover everything you need to know about the debt-to-income ratio. We’ll teach you what a DTI ratio is, how to calculate your debt-to-income ratio, what a good DTI ratio looks like, how to lower your DTI, and more.

What Is The Debt-To-Income Ratio?

The debt-to income (DTI) ratio is a financial tool used to measure the relationship between a person’s debt and income. The DTI ratio is calculated by dividing recurring monthly debt payments by gross monthly income.

When applying for a loan, lenders look at your DTI to see if you can afford regular monthly payments based on your income and to determine how much of a risk you are.

The debt-to-income ratio is primarily used when applying for personal mortgages (though some other personal loans depend on your DTI as well). For small businesses applying for loans, greater value is placed on your debt service coverage ratio (DSCR).

However, the debt-to-income ratio is still important for sole proprietors and freelancers in need of financing. Sole proprietors aren’t legally considered separate business entities and therefore don’t have a DSCR — this means lenders will look at your debt-to-income ratio when considering your loan application.

Why The Debt-To-Income Ratio Is Important

Your debt-to-income ratio is important for two reasons:

  1. It indicates how financially healthy you are.
  2. It plays a large factor in how likely you are to qualify for a loan.

Before applying for a loan, it’s important to consider whether you can actually afford one. By calculating your DTI ratio, you can analyze how much existing debt you have and whether or not it’s financially wise to take on more debt considering your monthly income. In addition, figuring out your DTI ratio will help you determine how much debt you can realistically take on.

If you calculate your DTI and see that there’s room to wisely take on more debt to purchase property or expand your business, awesome. If you have too much debt or too little income, taking on more debt might not be the right option — at least not until you lower your DTI. Knowing your DTI ratio before you even start talking to potential lenders will save you a whole lot of trouble.

For lenders, your DTI is important as well. Whereas a credit score shows how likely you are to make payments, your debt-to-income ratio shows lenders that you can afford to make monthly payments on a potential loan.

If your debt-to-income ratio is too high, lenders may reject your loan application because you’re too high of a risk. If your DTI is low, lenders are more likely to approve your loan because they trust that you will be able to pay back your debt.

Here are some of the key benefits of a low debt-to-income ratio:

  • More likely to qualify for a loan
  • More likely to receive an offer with better loan terms
  • Increases your chances for lower interest rates and higher loan amounts
  • Can potentially afford to take out multiple loans
  • Less stress and worry about if you can make your monthly payments

For small businesses, your personal DTI also has a role to play. While most predominantly look at a small business’s debt service coverage ratio (DSCR), many lenders also evaluate a business owner’s DTI, both to affirm your trustworthiness and to ensure that you can personally guarantee your business loan if no other collateral is provided.

The bottom line? The DTI is incredibly important for individuals and business owners alike.

How To Calculate Your Debt-To-Income Ratio

To calculate your debt-to-income ratio, you’ll need to divide your total recurring monthly debt payments by your gross monthly income. The DTI is always expressed as a percentage. This is the DTI ratio formula:

Total Monthly Debt / Gross Monthly Income = Debt-To-Income Ratio

But how do you determine your total monthly debt and gross monthly income?

Total Monthly Debt

Your total monthly debt includes all of your recurring monthly debt payments, such as mortgage payments, car payments, student loans, credit card balances, etc.

To tally your total monthly debt, add up all of the minimum payments on your monthly debt. For example, if you pay $100/mo on your credit card, but only have to pay a minimum of $25/mo, use $25 when adding your total recurring monthly debt.

Gross Monthly Income

Your gross monthly income is your total monthly income before taxes. You can calculate this a few ways. If you get paid on salary, use this formula to determine your gross income per month.

Gross Monthly Income = Annual Salary / 12

If you get paid hourly, first multiply your hourly wage by the average number of hours you work each week. Then multiply that number by 52 to get your annual gross income. Divide that number by 12 to get your monthly gross income.

Be sure to include all forms of monthly income in your gross monthly income calculation.

Examples

Now that you know how to figure your total monthly debt and your gross monthly income, let’s do an example using the DTI formula from earlier:

Total Monthly Debt / Gross Monthly Income = Debt-To-Income Ratio

Let’s say you’re trying to use your DTI to see if you qualify for a mortgage. You pay $300/mo for your car and $200 on student loans for a total monthly debt of $500.  Your monthly gross income is $3,500/mo.

500 / 3,500 = Debt-To-Income Ratio

500 / 3,500 = 0.142857

When you divide 500 by 3,500, you’re left with 0.142857. To turn this decimal into a percentage, simply move the decimal point two places to the right and round to the nearest tenth. This gives you a current debt-to-income ratio of 14%.

Now, we’ve successfully figured a DTI ratio! Try putting your own financial information into the formula.

What Is A Good Debt-To-Income Ratio?

You now know how to calculate your DTI ratio, but how do you know what the DTI ratio means? Is your DTI good or bad?

When it comes to DTI ratios, the lower the better. A low DTI indicates that you can comfortably take on a loan and make your monthly payments, which means you are more likely to be approved by lenders.

A higher DTI indicates that you may struggle to cover monthly payments, making it more difficult to qualify for loans.

While accepted debt-to-income ratios vary by lender, generally a DTI of 36% or lower is considered a good debt-to-income ratio. Many lenders will finance (up to) a 43% DTI. If your DTI is higher than 43%, you may have a hard time getting approved for a loan. You should consider lowering your DTI before applying.

Again, this will vary by lender. According to Lending Tree:

While the mortgage industry has specific guidelines that most lenders will adhere to, other types of loans are less regulated and largely leave the decision in the hands of the lender.

Mortgage lenders often stick to the 28/36 rule (they’ll lend you a loan so long as your DTI is below 36% with no more than 28% going toward the mortgage). Other types of loans may not be so dependant on these numbers. Some lenders may grant funding to people with a DTI of 43% or higher, albeit with less favorable terms and rates. It all depends on the lender and the type of loan you’re applying for.

For this reason, it’s important to research each lender’s specific qualifications and strive to keep your DTI as low as possible. This will both increase the likelihood of getting approved for a loan and give you peace of mind about your financial health.

Using DTI To Determine If You Can Afford A Loan

Not only does your DTI tell you if you can afford a loan, it also helps determine how big of a loan you should take out.

For example, let’s return to our example from earlier. Remember, you were trying to qualify for a mortgage loan. We calculated your current debt-to-income ratio at 14%.

If you want to keep a good debt-to-income ratio, you don’t want your total DTI ratio to exceed 36%. That means a potential mortgage can take up 22% of our total debt-to-income ratio (36 – 14 = 22).

We can now use this number to determine the size of the mortgage loan payment you could afford each month. Simply multiply your total gross income by 22%. (To convert the percentage into a decimal, move the decimal point two spaces to the left.)

3,500 x .22 = 770

If you want to stick to a 36% DTI, you can afford to pay $770/mo on your mortgage while still making your other monthly loan payments and covering everyday expenses.

If you approach a potential lender knowing exactly how much you can afford to pay each month, you can avoid being heckled into borrowing more than you can afford.

How To Lower Your Debt-To-Income Ratio

By now, the importance of a low debt-to-income ratio has sunk in. The real question becomes: how can you lower your DTI? There are several ways to lower your debt-to-income ratio:

  • Increase your monthly income
  • Pay off some of your debt
  • Decrease your borrowing amount

Increasing your income is a good way to lower your debt-to-income ratio, though this option doesn’t always seem achievable. Consider asking for a raise or starting a side hustle to bring in more additional income.

Decreasing your debt is another viable option. Carefully evaluate your budget. Cut unnecessary expenses and allocate that money to paying down your debt instead. You can pay off your debt quickly using various methods like the debt snowball method or the debt avalanche method. Depending on your financial situation, consolidating your debt might also be a good option.

If you’re applying for a mortgage loan, you can also make a larger down payment, which will lower your monthly payments and, in effect, lower your DTI.

Final Thoughts

The debt-to-income ratio is important for individuals, sole proprietors, and small businesses alike. Your DTI ratio is a big decision-maker for lenders. But more than that, calculating your DTI can help you analyze your financial health, determine whether taking on more debt is right for you, and help you pinpoint how much you can afford to borrow.

As always, we recommend carefully evaluating your financial situation before seeking financing. Evaluate your DTI, consider where you want to be financially, and know exactly how you would use a loan ahead of time. Once you’ve done this, evaluate all of your lending options before making a decision, so that you can get the best terms and rates. Merchant Maverick’s small business loan calculators can be a great resource when you start looking at individual loan products.

Looking for good lending options? Our small business loan reviews cover both online lenders and major banks. We’ve also reviewed lines of credit and MCAs, though you should think long and hard before taking out a merchant cash advance. If you’re just starting out, you might want to consider taking out a personal loan and using it for your business.

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Loans For Freelance Businesses: Your 13 Best Options

loans for freelancers

Freelancer. The very word evokes freedom (and lances). If you’re a self-employed freelancer, I’m sure I don’t have to lecture you about the perks and drawbacks of running a freelance business. You probably enjoy the independence — the feeling of freedom that comes from choosing your own work assignments and making your own financial choices without a boss looking over your shoulder.

However, you’re probably less than thrilled with the difficulty of getting a small business loan. It’s not easy for any business to qualify for a loan from a big bank these days, but it’s all the more difficult for a freelance business. Most banks see sole proprietors as a lending risk, as you are personally liable for all losses and debts your freelance business incurs. Plus, your entire business is dependent on your good health and ability to work.

For these and other reasons, many freelancers would benefit from exploring alternate means of financing. Thankfully, many different types of financing are available from online lenders. When compared with the big banks, online lenders tend to be somewhat more relaxed in their eligibility requirements. But while you may face fewer hurdles regarding your credit score, annual revenue, and time in business, online lenders usually charge higher interest rates than bank loans. That’s the trade-off you accept in exchange for the convenience and less stringent eligibility barriers of online lenders.

Let’s explore the main categories of financing available to freelance businesses and the top reputable lenders that offer loans within each category. Note that many online lenders offer more than one type of loan, so if I list a lender under a particular loan category, that doesn’t mean they don’t offer other loan products!

Personal Loans

Freelancers will find it difficult to get a business loan, whether from a bank or an online lender. In fact, this goes for most young businesses, freelance or not. Lenders of business loans closely examine your business’s revenue, net income, debt-to-asset ratio, business credit, and collateral, and only the most profitable and well-established businesses tend to qualify.

Personal loans are different. With a personal loan, the lender assesses your credit-worthiness, not that of your freelance business, though you will have to disclose the fact that the loan will go towards supporting your freelance business. However, whether or not you qualify for a personal loan will mainly depend on your personal credit score, credit history, source of income, and debt-to-income ratio. Borrowing amounts are also less than with business loans. Typically, the maximum borrowing amount for personal loans is $35K to $50K.

I’m going to walk you through some of the top online vendors of personal loans. But first, here are some links to articles we’ve done on using personal loans for business expenses.

  • The Merchant’s Guide To Personal Loans For Business
  • Top Personal Loans For Business Compared

Upstart

Borrower requirements:
• Must have a personal credit score of 620 or higher.
• No time in business or revenue requirements.
Visit the Upstart website
Read our Upstart review

Upstart is a great personal lender for the freelancer whose credit might not be stellar. In contrast to the personal lenders who scrutinize your credit score/history and finances to the exclusion of all else, Upstart takes a broader view of your earning potential by considering factors such as your employment history and education. You’ll likely still need decent credit to qualify — your credit score must be 620 or higher — but it’s good to see a lender whose conception of credit-worthiness isn’t quite so exclusionary.

You can borrow a maximum of $50K (in most states) from Upstart — more than with many competitors. As far as Upstart’s terms and fees go, the APR ranges from 7.73% to 29.99%, term lengths are for three or five years, and there’s an origination fee of up to 8%.

Overall, Upstart is a top-rated personal lender with a relatively progressive lending ethos. Check out our full Upstart review and Upstart’s website using the links above.

Lending Club

lending club logo
Borrower requirements:
• Must have a personal credit score of 600 or higher.
• No time in business or revenue requirements.
Visit the Lending Club website
Read our Lending Club review

Founded in 2006, Lending Club was one of the first non-bank online lenders to come upon the scene. They remain one of the most popular online lenders out there, as their rates are competitive and their loans are relatively easy to qualify for. What’s not to like?

For personal loans, Lending Club’s maximum borrowing amount is $40K. The APR ranges from 5.98% to 35.89%, term lengths are for three or five years, and there is an origination fee of 1-6%.

Lending Club has lent money to countless people in its decade-plus in business. To learn more about Lending Club, links to the company’s website and our Lending Club review are posted above.

Prosper

Borrower requirements:
• Must have a personal credit score of 640 or above.
• No time in business or revenue requirements.
Visit the Prosper website
Read our Prosper review

Another pioneer in the online lending industry is Prosper, founded in 2005. As with the previous lenders listed, Prosper offers personal loans you can put towards your freelance business.

Prosper offers fixed-term loans with lengths of three or five years. The company’s APRs range from 5.99% to 35.99%, which includes a closing fee of 0.5% to 4.95%, and the maximum borrowing amount is $35K. You will need a credit score of at least 640, however.

Check out our Prosper review at the link above if you’re intrigued. Afterward, visit Prosper’s website and see what kind of rates you can get compared to the other personal lenders I’ve mentioned.

SoFi

sofi logo
Borrower requirements:
• Must have a personal credit score of 660 or above.
• No time in business or revenue requirements.
Visit the SoFi website
Read our SoFi review

SoFi describes itself as “a new kind of finance company.” Short for “social finance,” SoFi offers free career coaching and financial advising to all members. SoFi’s loans are quite flexible in comparison to the other personal lenders listed here.

SoFi’s maximum borrowing amount of $100K is remarkably high for a personal loan vendor, and term lengths run from three, five, or even seven years. With fixed APRs from 5.49% to 13.49% and no origination fees, SoFi’s flexible personal loans are quite competitively priced indeed. On the other hand, SoFi’s borrower requirements are a bit more stringent than those of the other personal lenders listed here, plus the loans are slower in coming — after you’re approved, it can take up to 30 days for you to get your funds.

Visit the above links to read our SoFi review and check out their website to see what they can offer you. Remember, with lenders, as with life, it pays to comparison shop!

Lines Of Credit

Many online lenders include lines of credit as part of their product offerings. If you own a credit card, you’ll understand the concept of a line of credit loan. You’ll get access to a certain amount of funds, and you can draw upon these funds at any time while paying interest only on what you actually borrow.

Lines of credit actually tend to be less expensive than credit cards. Moreover, the repayment terms usually differ.

I’m going to list some lenders offering business lines of credit, but first, here’s further information about this common loan type.

  • The Merchant’s Guide To Line Of Credit Loans

StreetShares

Borrower requirements:
• Must be in business at least 12 months with a revenue of $25,000 per year (sometimes StreetShares will make exceptions for high-earning businesses at least 6 months old).
• Must have a personal credit score of 620 or above.
Visit the StreetShares website
Read our StreetShares review

StreetShares is an online lender offering lines of credit along with traditional installment loans and contract financing. While StreetShares was founded by veterans and takes pride in catering to the particular needs of veteran-owned business, any business owner can use StreetShares to take out a loan — including freelancers!

Take note of the requirements listed above, as there are revenue/time-in-business requirements to be met. As for the lines of credit themselves, the maximum amount you can borrow is $100K, but the amount of the line of credit you can actually get will depend on your revenue. The more you earn, the more you can borrow. All things considered, StreetShares’s borrower requirements for a business line of credit are not terribly onerous.

The draw term length for a StreetShares line of credit is 3 to 36 months, the APR range is 7% – 39.99%, and there is a draw fee of 2.95% each time you draw from your line.

BlueVine

bluevine logo
Line of credit borrower requirements:
• Must be in business at least 6 months with a revenue of $10,000 per month.
• Must have a personal credit score of 600 or above.
• Lines of credit are not available in all states. See full review for details.
Visit the BlueVine website
Read our BlueVine review

Founded in 2013, BlueVine is an online lender that offers both business lines of credit and invoice factoring (more on that later). Let’s examine their lines of credit.

While the amount you can borrow will depend on your revenue, BlueVine’s maximum borrowing amount is $200K. Term lengths are for 6 or 12 months. APRs range from 15% to 78%, and there is a draw fee of 1.5%.

Along with the borrower requirements listed above, note that BlueVine lines of credit are not available in all 50 states.

Invoice Factoring

Invoice factoring is a way for B2B businesses to maintain a consistent cash flow by selling their invoices, at a discount, to factoring companies in exchange for cash upfront. It’s a way to even out your cash flow when you have clients who take their sweet time paying their invoices.

Invoice factoring has some complexities to it, so if you’re thinking it makes sense for your freelance business, I highly recommend reading our explainer article on the subject.

  • A Basic Introduction To Invoice Factoring

Fundbox

Invoice financing borrower requirements:
• No specific time in business, revenue, or credit score requirements.
Visit the Fundbox website
Read our Fundbox review

Founded in 2013, FundBox offers an invoice financing product called FundBox Credit. Invoice financing is very similar to invoice factoring — the difference to the borrower is that you must make payments on your loan on a weekly basis, not whenever your customer pays their invoice.

Fundbox Credit will hold great appeal to many freelancers due to its relaxed eligibility requirements — you don’t have to meet any time in business, revenue, or credit score threshold! However, you are required to have been using compatible accounting or invoicing software for at least three months, or a compatible bank account for at least six. See our Fundbox review for details.

Fundbox Credit lines are offered up to $100K, the term lengths are 12 or 24 weeks, and there is an advance fee of 0.4% to 0.7% per week when you make your weekly payments.

Riviera Finance

Invoice factoring borrower requirements:
• No specific time in business, revenue, or credit score requirements.
• Best for B2B and B2G businesses.
Visit the Riviera Finance website
Read our Riviera Finance review

Founded all the way back in 1969, Riviera Finance is no newcomer when it comes to invoice factoring. Riviera Finance offers non-recourse factoring, which means you won’t have to repurchase an invoice if a customer goes bankrupt.

While Riviera Finance is a real-world meatspace lender with 20 offices throughout the U.S. and Canada, you can nonetheless apply online to use their services.

Riviera Finance offers contracts that run anywhere from month-to-month to 12 months long, and the credit faculty size runs from $5K a month to a whopping $2 million per month! Check out the links above to learn more about Riviera Finance.

P2P Loans

P2P (peer-to-peer) lending is a lending model employed by many online lenders. Instead of borrowing from a central banking entity, your loan application is instead approved by a banking platform to go live for online bidding, where everyday investors who like the cut of your business’s jib can invest in your business.

Small-time investors can be risk-averse, so freelance businesses with bad credit may have difficulty securing the needed financing. Nonetheless, you’re still more likely to be approved for a P2P loan than a bank loan.

Many online lenders of personal loans and other kinds of loans are P2P lenders. In fact, of the lenders I’ve mentioned thus far, Upstart, Lending Club, Prosper, and StreetShares are all P2P lenders!

Microloans

Microloans are small loans — under $35K but typically in the range of $5K to $10K — offered at low interest rates. Microlenders typically focus on marginalized groups that face difficulties getting a loan elsewhere. As such, they are a solid option for women and minority freelancers seeking smaller loans, though any freelancer can take advantage of the generous terms offered by microlenders.

Kiva U.S.

kiva logo
Borrower requirements:
• No specific time in business, revenue, or credit score requirements.
Visit the Kiva U.S. website
Read our Kiva U.S. review

Kiva U.S. is a remarkable microlender in that not only are there no revenue, credit score, or time-in-business requirements to meet in order to qualify, but Kiva U.S. loans carry no interest or fees whatsoever! Pretty cool, eh?

With Kiva U.S., the only requirement to get a loan is that you run a business and that you put your funding towards your business. You can take out a Kiva U.S. loan for as much as $10K or as little as $25. Yes, that’s 25 dollars. Your APR will be a big fat 0%. Term lengths are for 6 to 36 months.

Does this sound too good to be true? Well, keep in mind that Kiva’s application process is significantly longer than that of other online lenders. The process can take up to two months. For more information, check out our Kiva U.S. review and Kiva U.S.’s website at the links above.

Accion

Borrower requirements:
• Requirements vary based on location — see full review for details.
Visit the Accion website
Read our Accion review

Accion is a nonprofit microlender that also happens to be one of our highest-rated lenders, period. Their reputation, customer service, and financial education programs are all top-notch. While Accion’s loans aren’t “free” like those of Kiva U.S., Accion is an excellent funding option for the freelance business owner.

Borrower requirements vary by location, so you’ll need to visit Accion’s site at the link above to see just what is required of you to get an Accion loan. Credit score requirements vary from 550 to 575, and you must demonstrate that you have sufficient cash flow to repay the loan.

While Accion’s loan offerings vary by U.S. state, you can borrow as little as $300 to as much as $1 million (and yes, it would be a stretch to call that a microloan!). APRs generally range from 7% to 34%, and you may need to put up specific collateral in some situations. Check out our full Accion review above for more details, then head to Accion’s website to see what specific offerings are available in your area.

Crowdfunding

Crowdfunding is an excellent way for freelancers in the creative industries to get funded by those who enjoy their work. Note that while P2P lending is sometimes referred to as debt crowdfunding, the kind of crowdfunding I’m talking about is rewards crowdfunding in which backers support you financially and get exclusive access to your work in return. It’s not technically lending, as you don’t have to pay back your backers!

Of course, running a crowdfunding campaign will require much more of your time and energy than a loan application, so know what you’re getting into. Below is a basic primer on running a crowdfunding campaign. (Note that I mention debt and equity crowdfunding in that article — I’m not focusing on those here.)

  • Crowdfunding For Startups: 8 Tips You Should Know Before Launching

Kickstarter

Campaign requirements:
• Must offer rewards to your backers.
Visit the Kickstarter website
Read our Kickstarter review

Founded in 2009, Kickstarter has become synonymous with crowdfunding. With over $3.6 billion in funding sent to creators and entrepreneurs, Kickstarter is the largest commercially-focused crowdfunding site in existence. If your freelance business is devoted to making creative works, Kickstarter is a great way to raise money for a big project.

Kickstarter requires all crowdfunding campaigns to create something that can be shared with others. There’s no limit to the amount of money you can raise on the platform. Your funding campaign can last for up to 60 days (though Kickstarter recommends 30-day campaigns), and Kickstarter will take 5% of what you raise as a platform fee. An additional 3% + $0.20 per pledge goes to the payment processor.

One thing to keep in mind with Kickstarter is that in order to collect the funds at the end of your campaign period, you must reach or surpass your funding goal. Fail to reach your funding goal, and you get nothing — no soup for you.

Check out our Kickstarter review at the link above if you’re interested, then cruise on over to Kickstarter’s website.

Indiegogo

indiegogo
Campaign requirements:
• Offering rewards to your backers is strongly recommended.
Visit the Indiegogo website
Read our Indiegogo review

Indiegogo is a crowdfunding platform that caters to a similar audience as Kickstarter — creative and tech projects and the backers who love them. Initially founded as a funding engine for independent films, Indiegogo soon expanded their mission, offering crowdfunding for a wide variety of commercial purposes. However, Indiegogo differs from Kickstarter in a few key ways.

While Kickstarter pre-screens campaigns for suitability before letting them campaign, Indiegogo serves all comers — just sign up and get started (though this doesn’t mean there are no rules to abide by). Another difference is that you’re not actually required to offer rewards to your backers. However, as you can imagine, you’re probably not going to raise much money if you offer people nothing, so I don’t recommend doing that!

Another difference with Kickstarter is that when you run an Indiegogo campaign, you can choose to employ the keep-what-you-raise crowdfunding model in which you keep whatever you raise at the conclusion of your campaign regardless of whether you’ve met your funding goal. Indiegogo is more flexible in its terms than Kickstarter.

Fees are largely the same as those of Kickstarter — there’s a 5% platform fee and a 3-5% per pledge payment processing fee. Check out the links above if you’re interested in Indiegogo’s crowdfunding model.

Patreon

patreon
Campaign requirements:
• Must offer rewards to your backers.
• Funding is ongoing on a per-month or per-creation basis.
Visit the Patreon website
Read our Patreon review

Patreon differs fundamentally from Kickstarter and Indiegogo. Instead of campaigning for a fixed period of time for a single project, Patreon lets you crowdfund on an ongoing basis. You can just keep creating on your own time schedule. Your patrons (assuming you attract some!) sign up to support you either on a monthly or per-creation basis. It’s a great way for freelancers to monetize their creative output indefinitely, not just for one specific project.

Patreon is generally more relaxed in the sort of campaigns it allows than Kickstarter or Indiegogo — you can probably get away with producing “edgier” content than with the other two. As for fees, Patreon takes 5% off the top, with payment processing fees coming to approximately 5% as well.

Final Thoughts

Life’s not easy for the freelancer. With all the other challenges you face, securing the funding you need can seem like an insurmountable hurdle. Thankfully, there are many viable funding options out there for the freelance business owner determined to make it work.

Be sure to explore multiple options in your funding quest so you can weigh each option on its relative merits. Now go forth and let your freelance flag fly!

The post Loans For Freelance Businesses: Your 13 Best Options appeared first on Merchant Maverick.

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Easy Accounting Software For Small Businesses

Easy Accounting Software for Small Businesses

If you’re reading this, you’re in the market for a simple accounting solution. Maybe you don’t know anything about accounting and need a program that’s easy to learn. Or maybe you’ve been using Sage or QuickBooks Desktop Pro and are tired of the confusing accounting lingo.

The good news is that accounting doesn’t have to be difficult, and neither does finding easy accounting software. Thanks to the Cloud, there are plenty of full-featured, capable accounting programs that are easy to use and can help small business owners gain control of their business’s finances.

In this post, we’ll cover the top seven easiest accounting software programs. Each program on this list is easy to use and makes learning how to manage your accounting a breeze. We’ve included options to fit every budget and multiple business types.

Each program is ranked by how easy it is to use, how well the software is designed, and how quickly it can be mastered. Read on to see which is right for you!

1. WaveEasy Accounting Software For Small Businessses

Wave (see our review) is an eminently easy to use accounting software — and with a price of $0, it’s easy on the budget as well. Excellent customer support, competitive pricing, and great features have earned this software 4.5/5 stars on our site.

Best For…

Small businesses on a tight budget that still want strong accounting capabilities. Ideal for Etsy sellers and micro businesses.

Wave Pricing

As we mentioned earlier, Wave is free, no gimmicks or strings attached. With a Wave account, you get access to all Wave features and unlimited users. The only extra costs to be aware of are payroll and payment processing. Read our complete Wave review for all of the pricing details.

Wave Features

Wave is well-developed software that even rivals some paid programs in terms of features. This app is incredibly easy to navigate, and the learning curve is minimal, making it a great choice for business owners with little previous accounting experience. The software covers all of the accounting basics including invoicing, expense tracking, accounts payable, bank reconciliation, and more.

Easy Accounting Software for Small Businesses

Wave also has several unique features. In Wave, users can separate personal and business expenses, which is ideal for freelancers or side hustlers who don’t have a separate business bank account. Wave also offers Lending by Wave, which helps business owners gain access to capital through a partnership with OnDeck (see our review). Learn more about this financing option in our post Lending by Wave: Everything Small Businesses Need to Know.

Other features include:

  • Item management
  • Reports
  • Receipts
  • Contact management

Wave doesn’t offer as many integrations as its competitors; however, it does have a Zapier integration, which connects Wave with over 750 third-party apps. Besides Zapier, there are only three other integrations. (The Etsy integration makes Wave a great choice for Etsy sellers in need of simple accounting.) Wave also has several mobile apps.

There are a ton of customer support resources that make the software easy to learn. Only payroll users have phone and chat support, but Wave’s support team answers emails quickly and there’s a thorough help center with how-to videos.

The only downside to the software is that there is no project management feature and time tracking is limited to payroll users. There also isn’t a true inventory feature. If these features are integral to your business, you’ll have to use an integration. Or you can take a look at one of the other options on this list.

Takeaway

If you’re looking for an affordable accounting option, it doesn’t get better than Wave. With positive customer reviews, excellent customer support, and a well-organized UI, it’s no wonder this free accounting software is so popular. It’s easy to jump straight in and start using Wave, even with little previous accounting experience.

To learn more, read our full Wave review or sign up for an account to test the software yourself. You’ve got nothing to lose — after all, it’s free.

Read our full Wave review

Visit the Wave website

2. Zoho BooksEasy Accounting Software For Small Businesses

Created in 2011, Zoho Books (see our review) offers unbeatable invoicing and strong mobile apps. In fact, recent updates have put Zoho Books on par with QuickBooks Online in terms of features, but with better customer service, cheaper pricing, and a more user-friendly UI, Zoho Books is a great option for small businesses.

Best For…

Small businesses in need of strong online accounting, affordable pricing, and good invoicing. Ideal for international business.

Zoho Books Pricing

Zoho Books offers three affordable pricing plans ranging from $9/mo – $29/mo. Each plan comes with basic features and unlimited invoices. The larger the plan, the more contacts, users, and advanced features you’ll have access to. Read our Zoho Books review for the details.

Zoho Books Features

Zoho Books has an impressive number of features. With good customer support and a well-designed UI, the software is easy to use and learn. The software has all of the features you’d expect from a fully-developed accounting solution including invoicing, contact management, expense tracking, time tracking, inventory, project management, and even tax support.

Easy Accounting Software for Small Businesses

The best part about Zoho Books is its invoicing offerings. Zoho Books offers 15 customizable invoice templates, a client portal where customers can pay invoices directly online, recurring invoices, and the unique ability to encrypt invoices. There are also many automations that make it easy to invoice customers, like the ability to autoschedule invoices to be sent at a later time. In addition, you can send invoices in over 10 languages, making Zoho Books a great choice for international business.

You’ll find these key accounting features as well:

  • Accounts payable
  • Charts of accounts
  • Bank reconciliation
  • Fixed asset management
  • Reports

Zoho Books offers 30 integrations, including 12 payments gateways options and a Zapier integration that connects Zoho Books to over 750 other third-party apps. Zoho Books also has easy accounting apps that are highly developed and praised by existing users.

Zoho Books is known for great customer service. Phone support and email support are both available. Representatives are generally helpful and quick to respond to questions. The majority of customer reviews are positive, and users especially like the level of support they receive.

The only drawback is that Zoho Books has no payroll feature. You’ll either have to find a payroll integration or opt for a different software.

Takeaway

With almost as many features as QuickBooks Online, Zoho Books is definitely a contender worth considering. The software is easy to use and its invoicing features are unbeatable. Great customer support, a good number of integrations, and international features are also perks of the software.

If Zoho Books sounds like it might be a good choice for your small business, start a free trial or read our complete Zoho Books review to learn more.

Read our full Zoho Books review

Visit the Zoho Books website

3. ZipBooksEasy Accounting Software for Small Businesses

ZipBooks (see our review) is an up-and-coming accounting software that was launched in 2015 and offers a free accounting software plan. The software may be new, but it has already mastered simplicity. ZipBooks is one of the easiest accounting programs out there, and with a free plan, unlimited users, and ample automations, it’s not hard to see why this software gets 4/5 stars.

Best For…

Small businesses in need of affordable, strong accounting. Ideal for business owners with little previous accounting experience.

ZipBooks Pricing

ZipBooks offers three pricing plans ranging from $0/mo – $35/mo. Each plan comes with unlimited invoicing and unlimited users, which is almost unheard of (especially for the free plan) Each pricing level adds more features. Read our complete ZipBooks review to see which plan’s features suit your needs best.

ZipBooks Features

ZipBooks offers a good number of features that are easy to use and has one of the most attractive interfaces out there. The software’s design is simple and intuitive, using automations to save you time. The UI is even color-coded to make navigation a breeze. ZipBooks offers the basics you’d expect from accounting software, including invoicing, contact management, and expense tracking.

Easy Accounting Software For Small Businesses

One unique aspect of ZipBooks is that the software takes the data you input and uses it to provide helpful business insights, including a business health score and business recommendations specific to your financial situation.

In addition, ZipBooks offers:

  • Time tracking
  • Project management
  • Reports
  • Category tracking

ZipBooks only comes with eight integrations, so if you’re looking for ample add-ons, this may not be the software for you.

If you’re looking for good customer support, ZipBooks has you covered. Representatives are quick to respond to questions. Phone support is available for the paid plans. Other support options include email, in-software chat, a knowledge base, and a blog.

Before purchasing ZipBooks, there are a few potential drawbacks to consider. Compared to the other choices on this list, ZipBooks has very limited invoicing and only a small number of accounting reports. There also is no item or inventory feature. Despite these shortcomings, ZipBooks receives many positive customer reviews.

Takeaway

If you’re looking for easy accounting software, ZipBooks is hard to beat. With a great design, good learning resources, and ample automations, ZipBooks does everything it can to make accounting simple.

If ZipBooks sounds like a good fit for your business, use the free plan to take the software for a spin. Read our complete ZipBooks review to learn more.

Read our full ZipBooks review

Visit the ZipBooks website

4. FreshBooksEasy Accounting Software

FreshBooks (see our review) is invoicing software with a few bookkeeping tools tossed in. Although it’s not true “accounting” software, we kept in in the mix because it is incredibly easy to use and free of accounting jargon.

Best For…

Small businesses looking for strong invoicing and basic bookkeeping but not a full accounting software.

FreshBooks Pricing

FreshBooks offers three pricing plans ranging from $15/mo – $50/mo. Most features are included in all plans, so each larger level mainly adds more billable customers.

FreshBooks only supports a single user (additional users cost an extra $10/mo each). Read our full FreshBooks review to learn more.

FreshBooks Features

FreshBooks has always been easy to use, but a recent redesign has made the user experience even simpler and the UI more attractive. Setup is simple and the software takes very little time to learn. In terms of features, you’ll find invoicing, expense tracking, contact management, and more.

Easy Accounting Software For Small Businesses

FreshBooks offers two customizable invoice templates and a client portal where customers can pay their invoices directly online. One of the coolest features in FreshBooks is the ability to chat with your customers directly on their invoices.

Other features include:

  • Project management
  • Time tracking
  • Reports

FreshBooks offers 60 integrations, which is significantly more than most invoicing programs. There are also mobile apps available.

FreshBooks has great customer support. Representatives are friendly, helpful, and quick to respond. There is phone support, email support, a help center, and several other resources to help you learn the software.

For the most part, FreshBooks receives positive customer reviews; however, there are some recurring complaints.

In addition to not being true accounting software, FreshBooks only supports a single user — and this invoicing software is already more expensive than most accounting software. Instead of purchasing additional users, you’d get more bang for your buck by choosing a full-fledged accounting program (or a less expensive invoicing program like Zoho Invoice or Invoicera).

Takeaway

While FreshBooks isn’t accounting software, many small businesses are able to look past the lack of double-entry accounting because the software is so simple and easy to use. This easy bookkeeping software is ideal for small businesses that only need to send invoices and track expenses.

If the simplicity of FreshBooks sounds appealing to you, take the software for a spin with a free trial or read our comprehensive FreshBooks review to learn more.

Read our full FreshBooks review

Visit the FreshBooks website

5. QuickBooks Self-EmployedEasy Accounting Software for Small Businesses

QuickBooks Self-Employed (see our review) is tax software designed to help freelancers with basic bookkeeping and tax support. While QuickBooks Self-Employed isn’t exactly accounting software, it offers easy bookkeeping and tax support for freelancers.

Best For…

Freelancers, contractors, and other self-employed individuals needing basic bookkeeping and tax support. Ideal for managing estimated quarterly taxes and maximizing deductions.

QuickBooks Self-Employed Pricing

There are two pricing options for QuickBooks Self-Employed. There’s a $10/mo plan that includes all of the software’s features. Going with the $17/mo plan adds a Turbo Tax integration, so you can easily file your self-employed taxes.

QuickBooks Self-Employed Features

QuickBooks Self-Employed is well-organized and easy to use. The features help simplify estimated quarterly taxes and allow freelancers to manage their expenses and track their deductions.

Easy Accounting Software For Small Businesses

This software also makes it easy to separate personal and business expenses, which is ideal for freelancers who don’t have a designated business bank account. LIke Wave, QuickBooks Online also has a built-in lending feature called QuickBooks Capital (see our review) that helps small businesses manage gain access to working capital to manage their cash flow.

In addition, QuickBooks Self-Employed offers:

  • Invoicing
  • Fixed asset management
  • Schedule Cs
  • Tax checklist

QuickBooks Self-Employed offers a small number of integrations, but the Turbo Tax integration is the best part of the software by far. This integration makes self-employed taxes a breeze and makes it easy to file taxes online.

Unfortunately, QuickBooks Self-Employed is known for poor customer service. With no phone support and limited additional resources, it can be hard to find help, though the company is working to improve this. There is a live chat feature, a redesigned help center, and a small business resource center with helpful business advice.

While QuickBooks Self-Employed is a great option for managing your federal taxes, our one concern is that the software lacks state tax support. This means you’ll have to find another way to file state taxes.

Takeaway

If you’re a freelancer looking for a way to manage your finances and taxes, QuickBooks Self-Employed could be a good option for your business. The software is easy to use and comes with good mobile apps for quick access to your data.

To learn more about this software, read our complete QuickBooks Self-Employed review. If you’re already convinced, sign up for a free trial or start using the software today.

Read our full QuickBooks Self-Employed review

Visit the QuickBooks Self-Employed website

6. SlickPieEasy Accounting Software For Small Businesses

Founded in 2015, SlickPie (see our review) is an easy-to-use accounting software that has already received positive customer reviews and press coverage. Like Wave and ZipBooks, SlickPie offers an impressive free plan and a beautiful interface.

Best For…

Small businesses on a tight budget in need of basic accounting features and bookkeeping automations.

SlickPie Pricing

SlickPie offers a free plan and a paid plan which costs $9.95/mo. Both plans come with basic features and unlimited users. The main difference is the number of invoices you are allowed to send. Read our complete SlickPie review for all of the pricing details.

SlickPie Features

As we mentioned earlier, SlickPie is easy to use and offers several automations to help save you time and energy. There are a few occasional navigational difficulties and the organization could be improved, but overall the software is simple to set up. Features include invoicing, expense tracking, contact management, accounts payable, and more.

Easy Accounting Software for Small Businesses

One of the coolest features is SlickPie’s MagicBot, which is a data entry tool that automates your receipts. When you take a photo of your receipt, SlickPie will automatically gather the information from the photo and enter the data for you.

Here are some other features found in SlickPie:

  • Chart of accounts
  • Item management
  • Reports

SlickPie only offers three integrations, which might not cut it for many small businesses.

This app does have good customer support, however. Emails are responded to incredibly quickly. There is also phone support and a helpful knowledge base. SlickPie receives positive customer reviews, especially where support is concerned.

There are a few limitations to consider when comparing SlickPie to the other options on this list. While SlickPie is still easy to use, the software is difficult to navigate at times. There are also no project management or time tracking features. Unlike the other options, SlickPIe does not have mobile apps.

Takeaway

SlickPie is simple accounting software with basic features and a few promising automations. However, its limited automations, missing features, and occasionally unintuitive organization may rule this software out as a viable option for some small business owners.

If you’d like to learn more, read our complete SlickPie review or see the software in action for yourself by signing up for a free account.

Read our full SlickPie review

Visit the SlickPie website

7. QuickBooks OnlineEasy Accounting Software For Small Businesses

QuickBooks Online (see our review) is a fully-featured accounting software program that is generally easy to use. With 200+ integrations, strong mobile apps, and tax support, it’s no wonder this software receives 5/5 stars.

Best For…

Small businesses looking for a full-featured accounting solution that is relatively easy to use. Ideal for businesses with five users or fewer (though you can add up to 25 users for an additional cost).

QuickBooks Online Pricing

QuickBooks Online offers three pricing plans ranging from $15/mo – $50/mo. The larger the plan, the more feature you have access to and the more users you can have.

Payroll costs an additional $39 – $90/mo (plus $2/mo per employee). Read our full QuickBooks Online review to learn more and to see if Intuit is running any sales promotions.

QuickBooks Online Features

While this cloud accounting software is not quite as easy to use as the other options on this list, the trade-off is more advanced features. Set up is a bit involved and the organization is occasionally difficult to navigate, but compared to other big-name programs like Xero, Sage, and AccountEdge Pro, QuickBooks Online is a piece of cake.

Easy Accounting Software For Small Businesses

QuickBooks offers double-entry bookkeeping and strong accounting features like bank reconciliation, accounts payable, reports, and a chart of accounts. You’ll also find invoicing, expense tracking, time tracking, project management, and more. In terms of invoicing, QuickBooks Online offers the second best templates and automations (with Zoho Books being the first).

Other features include:

  • Class tracking
  • Client portal
  • Tax support
  • Contact management
  • Budgeting
  • Inventory

With over 200 integrations, QuickBooks has more integrations than any other accounting program on this list. This includes 15 payment processing options and great mobile apps.

As we mentioned earlier, QuickBooks has been known for poor customer service in the past. Recently, QuickBooks Online has made great strides to improve their customer support. While the company still has a ways to go, phone response times have greatly improved and a redesigned help center makes it easy to find assistance.

Takeaway

While QuickBooks Online may not be quite as easy to use as the other options on this list, this online accounting software might be a good fit for businesses looking to get the most bang for their buck in terms of features.

Read our comprehensive QuickBooks Online review to learn about all that this software has to offer, or sign up for a free trial to see for yourself.

Read our full QuickBooks Online review

Visit the QuickBooks Online website

Final Verdict

Any one of these simple small business accounting software options will allow you to easily manage your business’s finances and balance the books, no matter what level of accounting experience you bring to the table. Ultimately, the decision will come down to your budget and the features your business needs.

Want a good double-entry accounting solution that’s more robust than the options we discussed above? I suggest trying Xero, Sage, AccountEdge Pro, or QuickBooks Pro. These apps aren’t quite as easy to use as the seven programs in this post, but they come with far more advanced features. If you need higher-level inventory management, payroll software, or a more refined method to track bank accounts, credit card payments and/or credit card charges, you’re going to be better off with one of these solutions. Conversely, for small business owners who are in the market for something very simple and don’t want to pay anything for an accounting app, we’ve compiled a list of the best free online accounting software programs out there.

If you need more help deciding, read the Complete Guide to Choosing Online Accounting or 20 Questions To Ask Before Choosing Accounting Software. And don’t forget to download the Beginner’s Guide to Accounting — in this free ebook, we make accounting simple and teach you everything you need to know without the confusing accounting jargon.

As always, let us know if you have any questions, and happy hunting!

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What Is Waterfall Project Management?

It should come as no surprise that there are several methodologies out there for managing projects. Likewise, with different priorities, goals, and habits, it should make sense that different project management apps exist to meet the needs of those varied methods. The most basic, traditional, and universal of those methods is Waterfall project management.

In the tech world, Waterfall is seen as something of a pariah. Newer, shinier, sexier options have eclipsed the old school methodologies and left them behind. But just as old muscle cars still have proponents who insist they are way better than those new-fangled electric cars, the Waterfall method is still considered completely valid, even superior in some fields. But what is it? What are the advantages and disadvantages of using this most traditional of project management styles?

Looking for project management software? Check out our quick comparison chart of the top project management apps on the market today.

What Is Waterfall Project Management?

When you think of working on a project, you likely think of that project in terms of the Waterfall method. You come up with a concept, do some research, build a model, test it out, and put it into production. The whole thing is linear, simple, and makes sense, at least on the surface.

The idea is that once your idea gets going, it continues through until brought to completion. I can think of many a school project completed in this fashion, and it gels well with what you expect when working on a project

In contrast, Agile methodology has taken the tech world by storm in the last decade or so. Rather than thinking of projects as purely linear, those working in an Agile mindset allow for iteration upon iteration at every step of the project. This allows for rapid development of multiple versions of a product, each suited to a slightly different set of variables.

Unsurprisingly, Agile has found a perfect fit in the software industry as the cycle of testing, implementing, redesigning, and iterating makes sense in an app-driven world. But the Waterfall method, while less and less common in Silicon Valley and among tech startups, is still a mainstay of manufacturing and other, similar industries. To understand why, let’s take a closer look at the advantages of Waterfall project management.

Advantages Of Using Waterfall To Manage Projects

Waterfall’s linear nature fits nicely in any industry where change is difficult to implement once a project has begun. With software, your product is line upon line of computer code, but industries like construction and manufacturing find it exceedingly difficult to change details of projects once they have been physically put together. For example, once a part has been milled from a block of solid aluminum, it is tough to just…put some of the material back.

This is just one of many reasons why Waterfall management might make more sense for your business. Others reasons to use Waterfall include:

  • Allows more multitasking
  • Rewards thorough pre-planning
  • Intuitive and approachable

Basically, Waterfall rewards those who approach it seriously but also have three or four projects going at once. For that reason, it is important that every part of a project be immediately discernable at a glance. Where Agile may have a bewildering maze of iterations to wade through for project managers, teams working a Waterfall approach know exactly where the project began and exactly where it will end.

Disadvantages Of Waterfall Methodology

Of course, the reverse of many of these is true as well. If you are on a team that intends to devote itself to a specific and single project, it may be more advantageous to take a rapid, open-ended approach that will allow a product to be created early in the process and then refined over time. As mentioned above, this is most possible in the software world, where developers continuously tweak, update, and redesign as they go, sending improvements out to users over time. However, a form of this thought process can be seen in the car world, where each model year brings some refinements and changes.

Waterfall doesn’t handle that level of flexibility well, at least not in the short-term. Additionally, you may experience some of these other drawbacks:

  • Delivery happens at the end of the process, not before
  • Once the process is started, it is hard to change course
  • Most variables must be known early in the process

Again, certain industries will find these disadvantages no trouble at all. If you feel like you can handle the lack of flexibility and are fastidious in your preparation, Waterfall will likely be rewarding for you.

Final Thoughts

When it comes right down to it, there is absolutely nothing wrong with Waterfall project management in the correct context. This most traditional methodology is time tested and proven to get results consistently. So if you are in manufacturing, construction, or any similar industry, you probably should be using it.

Fortunately, since Waterfall is kind of the OG project management method, nearly every app out there will be entirely serviceable for you. My personal favorites include Redbooth (read our review), Teamwork (read our review) and Clickup (read our review).

We’ve written in-depth reviews of the major cloud-based and on-premise project management apps on the market today, whether you’re using Waterfall, Agile, Scrum, or some combination of the three.

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Simple Email Marketing Best Practices Every Merchant Should Know In 2018

At the outset, email marketing can seem like an overwhelming prospect. There are so many things to do — building your subscriber base, designing attractive messages, tracking click-through rates, following anti-spam laws, and more than anything else, writing actual emails for your readers. The good news is that these jobs don’t have to be your responsibility alone. Nearly all email marketing software options available today come with some form of automation, allowing users to create pre-made email campaigns and messages and automatically send them when certain conditions are met.

If your time is being consumed with email work, you aren’t getting the most from your software. There are several email marketing best practices you can employ to make your life easier.

Let’s dive in and explore some ways you can make your email marketing app do the work for you!

Level 1 Automation: Welcome Messages

If you are thinking of email marketing purely as a newsletter service that will send out updates to subscribers, I want to encourage you to expand your thinking a bit. Yes, you can use your email service provider (ESP) to write and send newsletters, but most email marketing software can be and do so much more! To move out of the newsletter comfort zone, let’s take a look at one of the most basic forms of automation that comes standard in nearly every app out there: welcome messages.

The idea here is simple. As soon as an interested person creates an account or joins your mailing list, they get an automatic message from you welcoming them to the group. It’s a great chance to introduce yourself, tell them more about your work, and win them over with general charm. Is this email marketing tactic a bit basic? Sure. But it is also a great opportunity to win the loyalty of customers from the outset. (You can also get pretty creative with your welcome messages if you want to spice things up.)

Automated welcome messages come standard with such industry leaders as MailChimp (read our review) and Emma (read our review), but you can also find it in simpler ESP’s like Mad Mimi (read our review). Basically, in a world dominated by AI and machine learning, it would be a surprise if an email marketing developer did not include this capability in their app. But where do we go from here? Further up and further in!

Level 2 Automation: Abandoned Cart Notifications

The next level of automation in email marketing is conceptually quite similar to the welcome message but involves a bit more set up. This email marketing strategy is only useful if you have an online store. If you do run an online store, you are almost certainly familiar with the frustration of abandoned shopping carts. Most of the time, those customers never return to buy their goods and pay you some hard-earned cash. But this is an area where your ESP can help you out. Automated abandoned cart reminder messages!

The gist of this feature is that your ESP keeps track of all the customer activity in your eCommerce store. When someone on your email list adds an item to their cart and then leaves, it will send a message out reminding them about your product. Some email marketing software providers allow you to set up a whole yes/no chain of possible emails, tracking click-through rates and offering discounts, special offers, and more as an enticement to return. But all operate on the basic principle of keeping a digital eye on your customer and sending tactical pre-determined prompts to (hopefully) bring them back into the fold. As a committed internet shopper myself, I can attest to the effectiveness of this strategy!

Though many ESPs offer this level of automation, I have been most impressed by Emma, which I mentioned earlier, and GetResponse (read our review). Both offer advanced chain-of-event automations designed to bring customers back to your store over the course of several interactions, all of which are handled automatically.

This is pretty advanced stuff, but it’s time to take this thing to the top.

Level 3 Automation: Dynamic Content Creation

The highest level of automation available in email marketing is what several ESPs term “dynamic content.” The idea behind this is that you sit down and create a wide spectrum of content, attach a definition to each type, then allow your ESP to sort out the best way to deliver the content (in the form of emails) to individual subscribers. Obviously, you will need to spend some significant time creating compelling content (and strategic subject lines) for advanced email campaigns in the first place, but the upshot is that your customers and subscribers will get customized, personalized messages tailored just for them. Your open rates will be so much better if the folks on your email list are receiving high-quality, custom content.

The ability to create dynamic content is considerably less common in email marketing software than either of the prior two forms of automation. Notable exceptions include the ever-present Emma, as well as Active Campaign (read our review). Keep in mind, though, that dynamic content is often locked behind a paywall: you need to subscribe to top-tier payment plans in order to get access to it.

Final Thoughts:

When using email marketing software, the goal is to save time, not waste it. Fortunately, most ESPs offer some level of automation. Knowing what your software can do is key to saving as much time as possible. Whether you are starting with simple welcome message emails or working all the way up to dynamic content, a little effort spent on email marketing best practices at the outset will pay off in the end, saving you time while your email software does the work for you.

Want even more advanced email marketing tips? This article explores 40 ways you can write better emails. ESP blogs can also be excellent resources for detailed email marketing tactics. MailChimp has written a comprehensive email marketing field guide, and Constant Contact has written a complete guide to becoming a better email marketer.

Looking for a good ESP for your business? Our independent email marketing software reviews explore the pricing, customer service, features, and integrations of all the top ESPs. For a quick overview of the industry, check out Merchant Maverick’s email marketing software comparison table.

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International Shipping: Global eCommerce Rates And Shipping Carriers

There’s a whole world of business opportunities out there. I mean that literally. The entire planet is available to buy your products and services, and if you’re only selling domestically, you’re only tapping into a very small portion of it.

Perhaps you’re feeling the need to make a change. Maybe a few customers have reached out to you, asking if you could send your products internationally. Or perhaps you’re just looking for a new way to expand your business.

The global marketplace is awesome, but for eCommerce sellers, there is one major drawback: international shipping can be incredibly complex.

As an online seller, you already know that fulfilling orders within the States is hard enough. Now you have to deal with all the complexities of shipping, plus the added challenges of customs, duties, and international taxes.

In this brief guide, we will present a few of the initial steps you should take to start shipping internationally. We’ll go over the basics of shipping costs, shipping rates, and the shipping carriers you should consider. Keep reading to step into the world of international shipping.

How To Ship Internationally (From The United States)

This is why you’re here: to learn the basics steps of international shipping. Let’s get started.

Select Your Destination Country/Countries

As much as you’d like to ship your products across the entire world, for many merchants, major global expansion is not an immediate possibility. The best advice when it comes to international selling is to start small and gradually build.

As you choose your destination countries, you’ll need to keep in a mind a few factors. First, consider your current customer base. Who is buying your products now, and who has asked to buy your products from elsewhere? You should also factor in site translation and payment processing options. After all, international customers will need to read and understand your site and submit payment information for this all to work.

Evaluate Shipping Regulations

Next, you’ll need to decide which products to make eligible for shipping. Some of this may be based on logistics (it may, for example, be more trouble than it’s worth to ship a sofa to Guatemala), but some of it will also be based on product restrictions.

Each country has its own list of regulations regarding what can and cannot be imported and exported. Some of these restrictions may be surprising to you (for example, you are not allowed to send smoked salmon to Australia or playing cards to the Philippines).

Take a look at which products cannot be exported from the US on MyUs.com and USPS.com. Then, head over to this useful tool from the UPS to check the import regulations for your destination countries.

Learn To Manage Customs Forms

Filling out customs forms will soon become a part of your everyday life if you dive into international shipping, and you want to do it well. Take a look at general customs information from the US government, and then learn from Stamps.com’s advice for filling out a customs form.

Something to consider: Many shipping software solutions (like Shippo and ShippingEasy) include features for auto-filling these customs forms. If you aren’t using shipping software already, we absolutely recommend you take a look at a few of our favorite.

Decide On A Shipping Carrier

For many merchants, this step is the hardest. International shipping rates are complex, and what’s right for one shipment may not be right for another.

There is no one-size-fits-all solution for shipping (domestic or international), and your shipping strategy will need to be flexible in order to be cost-effective.

We’ll discuss shipping carriers more a bit later, but first, let’s take a look at the costs you can expect as you enter international shipping.

International Shipping Costs To Consider

Shipping internationally inevitably comes with a bit of sticker shock. You may be used to the cost of shipping domestically, but all the extra expenses of international shipping can be overwhelming.

In order to ease some of that shock, we’re doing a quick breakdown of the added expenses you can expect. One key thing to keep in mind: Many of these expenses will be the customer’s responsibility.

  • Duties: Also known as tariffs, duties are customs charges on incoming shipments. Duties vary in price, depending upon the sending and receiving countries and the contents of the package. Paid by the customer.
  • Tax: Additional value added tax (VAT) or general sales tax (GST) charged by the destination government. Paid by the customer.
  • Fees: Some countries charge additional fees for processing packages through customs. These fees are in addition to duties. Paid by the customer.
  • Higher Shipping Rates: Shipping across longer distances comes with, of course, higher shipping rates. And not only are you shipping further, but also you’ll be shipping by air, and airmail comes with its own expenses. If you’re currently using UPS or FedEx, you’re already paying fuel surcharges for your ground shipments. International air shipments can come with slightly higher fuel surcharges. Take a look a UPS’s fuel surcharge rates (updated weekly) and FedEx’s info on fuel surcharges.

Make sure you clearly communicate these additional expenses to your customers. If customers refuse to pay the necessary fees, you may lose your product or have to pay to return it. Write a clear international shipping policy, and display it prominently on your checkout page.

Beyond the monetary costs of international shipping, another expense to consider is the time and effort required to make it all work. Make things a little easier with this pricing calculator from MyUS.com and Shipping Easy’s international seller’s shipping guide.

International Shipping Rates By Carrier

As we’ve said before, international shipping rates vary widely depending upon the product, the package dimensions, the destination country, and the shipping carrier. So, it’s impossible to summarize shipping rates, but I can provide you with a few helpful resources to calculate those rates for yourself.

Here’s a summary of the most popular shipping carriers, along with links to resources for each one:

Public Carriers: USPS & International Carriers

The United States Postal Service (USPS) is a public carrier, which means that some shipping expenses are subsidized by the government.

Many merchants find the USPS to be the cheapest way to ship domestically, and some say it’s the cheapest way to ship internationally.

When you ship this way, the USPS will deliver your package to the public carrier in the destination country. The public carrier in your destination country (such as the Canada Post or Royal Mail) will then deliver your package to your customer’s doorstep. Beware, this exchange can slow the shipping process a bit.

To calculate estimated shipping rates, take a look at USPS’s resources.

Private Carriers

While the USPS passes shipments onto the next public carrier, private carriers handle a shipment from start to finish. Because one carrier manages the entire shipping process, there tends to be more security in the process. The private carrier is responsible for your package, and you’ll have just one service to contact if something goes wrong.

Here are the three most popular private shipping carriers:

FedEx

FedEx ships to 220+ countries and territories, and they offer freight shipment options as well as international package delivery options. Look into your potential expenses with FedEx using this rates calculator or by taking a look at FedEx’s overview of rates for international shipments.

UPS

UPS is another reliable international carrier. UPS manages a huge shipment volume, shipping 3.1 million packages and documents internationally each day! With UPS, you can ship to 220+ countries and territories, including every address in North America and Europe. Check into UPS’s brief guide, How to Ship Internationally, as well as their landed cost estimator, which includes price estimates for factors such as duties and taxes.

DHL

DHL is a private carrier that specializes in international logistics. They employ over 350,000 individuals in over 220 countries and territories. And beyond their regular international shipment options, DHL offers a special service for online sellers: DHL eCommerce. This service is intended for high volume shippers (those who send over 50 packages internationally each day), so it may not be the service you use initially. However, DHL eCommerce is a good logistics solution for those who meet the requirements. To learn more, take a look at our blog post on DHL eCommerce and visit DHL’s webpage.

A Great Alternative: FBA Export

If you’re an Amazon seller, you have another option available to you. Instead of choosing from the carriers I listed above, you can let Amazon handle international fulfillment on your behalf.

FBA (Fulfillment by Amazon) is Amazon’s in-house warehousing and fulfillment program. For a fee, you can send your products to Amazon’s many warehouses and have Amazon’s employees and robots pick, pack, and ship products for you. And with FBA Export, you can start sending those products to over 100 countries.

In order to use FBA Export, all you have to do is enable export functionality on your FBA account. There are no additional fees for merchants who are using FBA Export to ship their Amazon orders internationally. However, merchants who want to use FBA Export to ship products from their own online site will have to pay some additional fees. This type of warehousing plan is called Multi-Channel Fulfillment or MCF.

The great thing about FBA Export is that Amazon will handle all of the complexities related to international shipping. They will identify which of your products are eligible for export and fulfill your international orders. They also manage import duties and customs clearance for you.  Your customers will pay the shipping costs and customs duties, and all you have to do is determine which products you’d like to exclude from the program.

If you’re already selling on Amazon and using FBA for your fulfillment, FBA Export is an easy solution for your international shipping.

Final Thoughts

If you’ve been considering international shipping, now is your time to act. You now have all the resources you need to assess your shipping options and decide what’s right for your business.

So, dive deep into your store’s analytics. Find out which products you should start selling internationally and which countries might want access to those products. Pick out a shipping carrier (or two), check into customs, and get shipping!

The post International Shipping: Global eCommerce Rates And Shipping Carriers appeared first on Merchant Maverick.

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Stripe VS Square

Stripe VS Square
✓ Products and Services ✓
✓ Compatible Hardware ✓
✓ Fees and Rates ✓
✓ Sales and Advertising Transparency ✓
Customer Service and Technical Support ✓
✓ Negative Reviews and Complaints ✓
✓ Positive Reviews and Testimonials ✓
Tie Final Verdict  Tie
Read Review Read Review
Visit Site Visit Site

Overview

Spend a little bit of time reading up on Stripe (read our review) and Square (read our review) and you’ll start to see the similarities. They’re both giants in the payment industry, media darlings that have transformed the way people pay for things and the way merchants accept payments. They’re both on the leading edge of technology and rely heavily on machine learning to drive their payment processing systems.

Most importantly, both Square and Stripe offer huge assortments of commerce tools that make it easy for merchants to run their businesses. With the various APIs and integrations available, there are almost limitless possibilities for creating a custom system with everything from invoicing to email marketing and more.

But that’s where I stop pointing out the similarities. Once you get past that point, it becomes harder to draw apples-to-apples comparisons because Square’s offerings are much more varied. Square really is an all-in-one processor that can handle in-person and eCommerce payments, as well as inventory management, customer databases, and more. Stripe is more limited to eCommerce, both for websites and for mobile apps, but it has powerful tools for global enterprises, subscription-based businesses, and other online companies.

To keep things fair and within a manageable scope, we’re going to limit the scope of this comparison to each companies’ online and mobile commerce tools. That means, for the most part, we’re not going to look at mPOS apps, POS integrations, appointment booking, or email marketing…except to say if you need them, Square is the better choice.That also means we’ll be ignoring Stripe Atlas, the company’s service for helping international merchants establish themselves in the US.

If you want to sell online and Square and Stripe have made your shortlist, you should start by asking yourself some questions:

  • What features do you absolutely need? Which features aren’t essential, but would be very nice to have?
  • What percentage of your transactions are from outside the US?
  • Do you have a developer or advanced coding knowledge yourself?
  • Do you have limited tech knowledge and need an easy solution?
  • Are you looking for specific integrations?
  • What industry is your business part of?
  • How advanced are your subscription tool needs?

Once you have the answers to these questions, you can sit down and look at each company in more detail. Read on for our comparison of Stripe vs. Square!

Products & Services

Winner: Tie

It’s so important to have a list of must-have features before you set about choosing any sort of payments or eCommerce software because you don’t want to make the decision and then find out that you’re missing a very important function. But it’s also important to think about where you want your business to go and what tools you want to invest in as your business scales up. If you pick the right service, it could mean you never need to switch. But if you don’t think about growth, you may wind up having to make a complicated switchover later in the future once you’ve outgrown a solution.

The good news is that for the most part, Stripe and Square are both very good solutions that scale up as a business grows. It just comes down to in which direction a business wants to grow.

Square Tools and Services for Online Merchants

Square initially stood out among mobile competitors by offering a free webstore to its merchants. Since then, the company has branched out considerably to include eCommerce integrations as well as developer tools. For a more in-depth review of all of Square’s offerings, check out our full review.

  • Online Store: Square’s free online store is very basic. There are only four templates to choose from, and you can only customize portions of the site (such as filling in your business name and address in the footer) in addition to loading your products. This is not a good solution for anyone with a large and diverse inventory, especially if your shipping costs vary significantly or if you’re looking for a particular visual aesthetic.
  • eCommerce Integrations: When you first take a look at Square’s eCommerce offerings, you’ll see that Square very conveniently groups everything by a merchant’s level of technical expertise. I think this is a really helpful approach.

    The easiest integrations are listed on the site and Square lets you know that you can choose from an assortment of templates.

    The intermediate level includes eCommerce integrations that require a bit more work and technical knowledge to get set up.
    Square’s list of integrations includes some of the best shopping cart options, and the list keeps growing. That makes me happy, but if your preferred integration isn’t on the list yet and you do have the technical knowledge (or an eager developer on your payroll), there are more tools at your disposal. You can check out the list of Square integrations in the app marketplace.
  • Developer Tools: Square’s dev tools make it possible for you to create almost any custom integration you could need. For eCommerce, there are two APIs, Checkout and Transactions.  Square Checkout is a premade form that can be dropped into a site with minimal fuss. Using Checkout means merchants are eligible for some perks, like next-day deposits and chargeback protection. The Transaction API, combined with Square’s payment form, is more customizable. Square has other APIs to handle other aspects of commerce, but you’ll find that Square doesn’t readily support in-app payments.
  • Dashboard Reporting: Square’s reporting tools are fairly advanced, especially for a company that started as an mPOS. They’re very popular with merchants who want to know what’s selling and how much they’re processing and need standard business data. The dashboard is actually quite intuitive, as well. However, Square doesn’t allow for a huge amount of customization in reports unless you get into the Reporting API, which allows you to create real-time notifications using webhooks.

Additionally, Square offers the following tools:

  • Advanced Inventory: Square will reconcile online and in-person sales and give you an up-to-date count on your inventory, including low-stock alerts when you hit a specified threshold. Plus, you can bulk upload products and generate SKUs, create variants, and more.
  • Fraud Protection Tools: Square uses machine learning to analyze transactions and identify and flag possible fraudulent transactions.
  • Customer Database: Save customers’ contact information and build a database with records of their purchases so that you can market to them later.
  • Invoicing: Create invoices from within the Square dashboard or from within the mPOS app. Square also allows customers to store their cards to automatically pay invoices (using this Card on File will cost you a bit more). You can also create recurring invoices. However, if you want extensive subscription management tools, you’ll need an integration with a service like Chargify, which will add to your costs.
  • Free Virtual Terminal: If you want to process payments over the phone or you don’t have access to the mPOS, you can use Square’s virtual terminal. Transactions will be processed at the manual entry rate (3.5% + $0.15) rather than the eCommerce rate, but the solution is PCI compliant and is designed for regular use.

All in all, while it’s worth noting that Square really is an omnichannel solution for merchants who want to sell anywhere without needing to build a complicated system of integrations. But it has some shortcomings, especially for digital merchants. Subscription tools are nearly nonexistent, and fraud protection doesn’t compare to the tools Stripe offers. If you want advanced, custom reports, you’ll be better served by Stripe. However, Square’s tools and overall design are incredibly easy to use, especially for business owners who don’t have a lot of technical expertise or a large budget to hire someone. And it has very strong tools for merchants who sell physical products in particular.

Stripe Tools and Services for Online Merchants

Stripe has earned its name as a developer-friendly option, but you can also integrate with a host of third-party apps to accept payments with ease. The company focuses on internet and mobile commerce, but developers have extended Square’s power to include mobile payments and more. Just take note, there’s no free storefront option here. For a more detailed look at different features, check out our complete Stripe review.

  • eCommerce Integrations & Plug-Ins: Stripe outclasses Square in terms of shopping cart integrations by virtue of sheer numbers. In addition to integrations with major eCommerce software providers, developers have created an assortment of plug-ins for businesses operating on WordPress, Magento, and other websites. If you’re not really sure where you start, you might end up doing a lot of research to decide the best course of action, but you can at least take heart in knowing that there’ll be something that will meet your needs. You can check out the full list of eCommerce integrations on Stripe’s “Works With” page.
  • Developer Tools: Stripe is much loved by developers for its flexibility, its extensive documentation and its support for multiple programming languages. Its APIs allow you to create invoices and subscriptions along with many other features.

    Stripe Elements will let you create an entirely custom form with pre-built components; Stripe Checkout generates a pre-built form you can just drop into the site with a few lines of JavaScript. With Stripe, it’s very easy to accept payments on a desktop computer, a mobile site, or within a mobile app. Stripe now even supports 1-touch payments on mobile
  • Stripe Sigma: Stripe offers your standard user dashboard with some general sales reports at no charge. But if your business is heavily data-driven, Sigma’s customizable reporting is the perfect solution for you: you can generate reports based on SQL queries. This is pretty cool, and it’s a great way to make sure that anyone on your team can get the reports they need without creating an information bottleneck. Pricing is based on a sliding scale rather than a set additional monthly see.

Stripe’s additional tools include:

  • Stripe Billing: Stripe’s subscription tools are industry-leading, with the ability to charge clients based on a recurring quantity or metered usage, to set free trial periods, and much more. You can also create invoices or set up recurring billing tools. However, new businesses will pay a small additional charge per transaction to use these tools.
  • Stripe Radar: Stripe makes a big deal of its fraud monitoring tools, bundled under the very-apt name Radar. The system uses machine learning and a host of criteria to analyze every transaction and decide whether it is legitimate or possibly fraudulent. Radar also lets merchants set custom criteria for rejecting transactions and review flagged transactions to decide whether to accept or reject them.
  • Marketplace Tools: Merchants who want to operate a marketplace can use Stripe to build the platform. Stripe’s marketplace tools are grouped under the moniker “Stripe Connect.”
  • Multiple Currency Displays & Dynamic Currency Conversion: These tools are a major reason why Stripe is such a powerful tool for global businesses. Whereas Stripe will automatically convert transactions to USD (usually at the cost of a fee to the cardholder), Stripe will allow you to display prices in local currencies based on where the customer is located. Stripe then automatically converts them for the merchant, charging a small markup over the exchange rate. This makes a business more appealing to international customers.

There’s no doubt that Stripe is very powerful. It can handle all sorts of payments, from digital subscriptions to retail goods. It’s one of the best solutions for global businesses with its currency tools. But it does have some limitations. If you plan to sell across multiple channels, there’s no option for in-person payments unless you have an integration like Flint Mobile (read our review), but it’s still more costly than other mPOS options. There’s no virtual terminal, either. While Stripe does allow you to manually enter a transaction if all else fails, it’s a last resort rather than a tool to be used on the regular because of PCI compliance issues.

Stripe’s inventory tools aren’t on the level of Square. They’re powerful, but if you want advanced inventory management, you’ll need to tack on an integration. I also don’t think that Stripe’s inventory tools are even half as intuitive as Square’s. But I think part of that is Stripe’s focus on online payments and tools for digital merchants, compared to Square’s omnichannel approach.

All in all, it’s really hard to say one of these companies is inherently better than the other. Both have a good assortment of integrations for shopping carts and other tools, though Stripe has a greater number of supported integrations. If you want ease of use, especially if you sell physical goods,  Square is the standout option. But if you need flexibility, robust tools, and advanced data, Stripe is the better choice. So it ultimately comes down to your business’ needs.

Fees & Rates

Winner: Tie

I am happy to say that pricing for both Square and Stripe is mostly straightforward:

  • 2.9% + $0.30 per online card transaction

There are no monthly fees, no monthly minimums, no statement fees. That’s very nice to see.

I do want to point out that Square charges different rates for its card-present and keyed transactions (2.7% and 3.5% + $0.15, respectively). However, invoices process at the same rate as eCommerce transactions unless you’re using Card on File, which process at the keyed transaction rate.

Square also has no chargeback fees, which is very unusual. Not only that, but the company has rolled out Chargeback Protection, which will cover the actual chargeback costs on qualifying disputes up to $250 per month. This doesn’t apply to merchants who use the Transactions API, but it is available for those who use Stripe Checkout.

You can get volume discounts if you process above $250k per year AND have an average ticket size exceeding $15. That’s a mark in Square’s favor for large businesses. However, nonprofits don’t get any sort of special discount, which you can often find with other processors.

Stripe’s pricing has become a tiny bit more complicated. In addition to card transactions processed at 2.9% + $0.30, you can also accept ACH transactions for 0.8%, capped at $5 maximum.

The base fee per transaction is simple. And for each chargeback, Stripe will assess a $15 fee, unless the chargeback is decided in your favor. In that case, you’ll pay absolutely nothing.

Stripe’s subscription tools, lumped under the name “Stripe Billing” along with invoicing, will cost you a small percentage fee (between 0.04% and 0.07%) on top of your transaction.

Existing Stripe merchants are grandfathered out of this new pricing. Large businesses will actually pay the higher 0.7% markup, but it seems Stripe has compromised by offering lower transaction fees.

You’ll also pay a monthly fee for access to Stripe Sigma. The cost is a sliding scale based on the number of transactions you process each month, which is a great way for very small businesses to still get crucial data. But for a company that built its reputation on not charging any fees beyond transaction processing, it’s a little bit disappointing to see that model disappearing. You can estimate your cost with Stripe’s tool.

Stripe does offer enterprise pricing for very large businesses, and some nonprofits may be eligible for a special rate. Stripe doesn’t make any promises about nonprofit pricing apart from “let us know and we’ll see what we can do.” So you shouldn’t assume it’s guaranteed.

With Stripe, you may also be able to negotiate for micro-transaction rates. Whereas per-transaction fees like the $0.30 Stripe and Square charge can eat up fees from small transactions (less than $10 in particular), micro-transaction rates typically include a higher percentage and a lower per-transaction fee that can save merchants money. This is ideal for anyone who sells digital goods and other low-cost items.

Because it’s something offered as part of a custom package, Stripe may not offer this deal to everyone. If you’re unable to get a micro-transaction plan from Stripe, it might be worth looking at a third option — PayPal (read our review) — instead. The 5% + $0.05 fee could save you quite a bit of money in the long run.

All in all, Stripe and Square are fairly evenly matched in pricing. Some merchants might enjoy the lack of chargeback fees and included chargeback protection that Square offers. But Stripe might be a bigger draw for other companies, despite the additional charges for using its subscription tools or Sigma reporting.

Contract Length & Cancellation

Winner: Tie 

Both Stripe and Square offer pay-as-you-go processing with no locked-in contracts or early termination fees. It really is that simple. Stripe will even help you transfer your customer data to another processor in a PCI compliant way.

If you’re using any of Square’s monthly services in addition to eCommerce processing, you can get a free 30-day trial, and then if you choose to continue with the service, you can cancel at any time. Square doesn’t bill annually for those services the way many SaaS providers do. (Conversely, you also don’t get any discounts for paying annually, either.)

Sales & Advertising Transparency

Winner: Tie 

One of the reasons I like pay-as-you-go processors is that they are, on the whole, very upfront and transparent. They tend to not have extensive sales teams, and if they do have a sales team, they’re all in-house. They’re very clear about their pricing and terms, and they’re applied fairly to all merchants.

Square and Stripe both fit this pattern to a T. You won’t see reports of misleading sales pitches or rates not as promised here, which is always nice to see. You can find Stripe’s terms of service on the site, both the general user agreement and the Stripe Payments agreement. Like Stripe, Square has separate agreements applying to general use, payments, and other services. I do recommend you be cautious and check that your business doesn’t fall on either list of “prohibited businesses,” because that’s an easy path to account termination.

Overall, I’m really happy with both companies in this category, and you shouldn’t have any worries about whether you’re being told the truth or whether you’ll pay what you were quoted.

Customer Service & Technical Support

Winner: Square

I think it’s fairly clear that Square outshines Stripe in terms of its customer support — both in quality and in the number of channels available.

Square offers merchants phone and email support, as well as an extensive knowledgebase. That’s pretty typical of any processor, but on top of that, Square operates the Seller Community, a community forum about all-things Square.

 

You can get answers from other Square merchants as well as from Square support reps. It’s a pretty powerful tool. But on top of that, Square’s team monitors Stack Overflow for questions about Square products and responds to them.

And that’s not even talking about Square’s dedicated Twitter support handle (@SqSupport), or the developer portal and documentation.

I can’t say that Square customer support is all sunshine and rainbows, because I do see customer complaints about the quality. However, without a doubt the biggest complaint about the quality of customer support comes from merchants whose accounts have been terminated. In that case, Square cuts off access to phone support and will only communicate via email. This is unfortunate and I don’t know if it’s actually a good solution. But I am sure part of the reason to reduce the odds of a customer support rep saying something they shouldn’t, and to prevent support resources from being tied up dealing with complaints from terminated merchants whose accounts won’t be reinstated.

Stripe is more limited in its support options. Its primary support channel is email. However, Stripe also operates an IRC Freenode chat (#Stripe) that developers may find useful. There’s no dedicated social media support with Stripe, but you can follow the general @Stripe twitter feed.

Stripe also maintains a self-service knowledgebase, though I don’t think it’s as extensive or detailed as Square’s. But I will say that Stripe’s documentation is pretty legendary, and so it’s going to be one of the best resources you can get.  You can also find questions about Stripe on Stack Overflow, but I am not able to ascertain whether Stripe’s team is active on the forum at all the way that Square is.

I do see comments from merchants that the support is pretty good. But I also see a lot of complaints from frustrated merchants about the lack of phone support. That complaint has actually become one of the biggest marks against Stripe. I’ve seen one mention that Stripe might be rolling out phone support to “select merchants” (presumably high-value clients). However, take this with a grain of salt. I wasn’t able to verify it through any sort of authoritative source.

Negative Reviews & Complaints

Winner: Tie

As far as complaints go, the single biggest issue for both Square and Stripe is a common one:

  • Account Holds And Terminations: This is unsurprising (understatement of the year, right there) because it’s a common issue with any third-party processor. Because these payment systems are usually open to almost anyone right away and they are all lumped into one large merchant account, there’s a greater risk that some of those accounts will be terminated for risky behavior. There’s very little scrutiny done before a sub-account with one of these processors is approved, which stands in contrast to merchant accounts, where the processing company will do a lot of underwriting and investigation before approving your application. Both Square and Stripe use a lot of machine learning to analyze transactions and flag suspicious behaviors. This potential for account holds or terminations is universal — you will encounter it with any third-party processor. If you want to avoid it, your only alternative is to seek out a traditional merchant account.

The other big complaint that I see with both is also a pretty common one:

  • Poor Customer Support: If I’m honest, reports about the quality of customer service conflict. But because of how common the complaints are, I’m listing it here. With Stripe, the most common issues are the lack of phone support and slow response times for email. With Square, a lot of the complaints about poor customer service come from terminated merchants, but I’ve seen a few complaints about slow or unhelpful email responses.

Additional frequent complaints about Stripe include:

  • Lack Of Fraud Protection: I want to be clear: Stripe does have fraud management tools and a system to help merchants fight chargebacks. But I have seen complaints from merchants who don’t think these are adequate. Chargebacks are not settled by Stripe, so there’s not much the company can do beyond pass the requested documents on. But for fraud prevention, merchants need to make sure they have the appropriate tools enabled.
  • Not User-Friendly: There’s a lot of testimonials from users (especially developers) who really like Stripe and find it simple to set up. There are plenty of others who disagree with that idea. I’m inclined to think most people with a decent technical backing will get along fine with Stripe, but for some people, especially those with less technical knowledge, it’s not going to be a good choice.

For Square, there is one other common complaint:

  • Lack of advanced features: It’s not that Square doesn’t have enough features, or that it’s missing anything important. The complaints about Square often focus on the lack of very particular advanced features that you typically find in full-scale POS systems. In this case, I think Square’s lack of extensive subscription tools would fit the bill. Some merchants have been upset for quite a while over the lack of Cost of Goods Sold (COGS) reporting. Square added this feature with its Square for Retail app, but not for online sales or its free POS. Square has some very powerful reporting tools, but in the end, they won’t hold a candle to Stripe’s Sigma offering.

I think, yet again, that the two companies are pretty evenly matched in this category. The largest complaints are identical, and that’s because they’re the same complaints we see with third-party processors. To be entirely honest, poor customer service is a common complaint across the entire payments industry. It’s frustrating, for sure. But you can take steps to better inform yourself — read our article on how to prevent holds, freezes, and account terminations. And please take reports of poor customer service with a grain of salt, because I see conflicting accounts there.

Positive Reviews & Testimonials

Winner: Tie

As media darlings, both Stripe and Square have gotten lots of press. They’re both lauded for the way they’ve transformed payments.

I usually feel a little bit silly comparing two businesses in this category because it almost feels like a bit of a popularity contest. But in this case, we’re dealing with two companies who have both gotten a LOT of positive press over the years, not to mention high-profile clients. And the bits of each service that merchants love most are pretty similar, too.

Square merchants love how easy the service is to use. And I tend to agree — Square is one of the most intuitive options out there as far as payments and using the dashboard. Merchants also really like the predictable pricing and lack of fees. Other than that, the integrated invoicing feature and the seamless omnichannel commerce experience are big draws.

Stripe also wins merchants over with its pricing, and its tools are very much loved by developers. While if you don’t have a lot of technical knowledge, Stripe may feel foreign to you, developers say it’s incredibly easy to use. Also on the dev side of things, it seems like the quality of customer service is great, even if business owners don’t always like the lack of phone support. And unsurprisingly, merchants really seem to love Stripe’s robust subscription tools. The predictable pricing and lack of monthly fees are also appealing.

Final Verdict

Winner: Tie

Stripe and Square have some very important core similarities: they’re both third-party processors with an assortment of tools that allow merchants to sell online. Neither one is suited to high-risk industries, and there’s a lengthy list of businesses neither company can work with. But despite that, both Stripe and Square offer tools that cater to a huge assortment of industries. They’ll both grow with your business, making it easy to scale up.

But despite their similarities in terms of business model, it’s also pretty clear that what each company does best is completely different.

Square is a spectacular all-in-one processor. You can sell in a store, on the go, and online and get all of your information and payments and orders collected in one simply, intuitive dashboard. There’s a huge array of add-on products that allow you consolidate a host of business functions under one name, and they’re guaranteed to work together perfect. eCommerce support is really the newest branch of Square’s offerings, and it’s a work in progress as the company establishes more partnerships and integrations with other major players.

If you have limited technical knowledge, Square is going to be much easier to get started with and to navigate through the different features. It’s free advanced inventory tools are also very well suited to retailers and other businesses that sell primarily physical goods.

Stripe focuses only on Internet payments (both on the web and in-app), but its tools make it possible for businesses to cater to customers all over the globe. The international appeal — from the local currency displays to the sheer breadth of payment methods accepted — make it clear that Stripe is already a global player.Not only that, but with Stripe’s APIs and documentation, a savvy developer could create all kinds of payments platforms for a business. Business owners who don’t have a developer on staff, and who don’t have a lot of technical knowledge themselves, might struggle with understanding how to use Stripe, especially if you want to do anything more than integrate it with some sort of shopping cart software.

You also get a far more limited scope of features. There’s no native support for omnichannel commerce. No mPOS app, no POS integration to support card-present pricing, no invoicing. If you need more than online payments on a regular basis, Stripe isn’t a suitable choice. But if that’s all you need, Stripe isn’t just a good option — it’s one of the best out there, period. If your business has a global reach, again you’ll find that Stripe once again tops the lists of best solutions.

I’m not comfortable saying that one of these solutions is better than the other because it really comes down to what your priorities are. Do you need something easy to use? Do you want to embrace multiple sales channels? Or are you limited to online sales and want best-in-class tools to reach a global audience, manage subscriptions, and even drive mobile commerce? Square can get the job done, and it’ll be the easier solution, but Stripe offers far more tools.

Sit down, think about what features are absolutely mandatory for you to have — and then look at which ones you’d like to have, but aren’t necessarily required. From there, it should be fairly clear which solution is right for you! Don’t forget to check out our complete reviews of Stripe and Square for more insights into how they function.

Have questions? Leave us a comment and we’ll help! Have experience using either of these tools? We’d love to hear from you.

As always, thanks for reading!

The post Stripe VS Square appeared first on Merchant Maverick.

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How To Use GoFundMe To Fund A Business In 8 Steps

go fund me for business start up

With over $5 billion raised on the platform since its inception in 2010, GoFundMe has a reputation for helping to cover the costs of personal emergencies in a world where most of us are just one missed paycheck away from ruin. But while the company has become synonymous with charitable crowdfunding, you might not realize that GoFundMe can be used to fund a business as well. Want proof? Here are the categories you can choose from when creating your GoFundMe campaign:

 

go fund me for business

Now, don’t get me wrong: If your entrepreneurial venture is a high-tech startup with exponential growth potential, or if you’re creating the next tabletop gaming sensation, you’re going to be better off going with a more commercially-oriented crowdfunding platform like Kickstarter (see our review) or Indiegogo (see our review), or perhaps one of the new equity crowdfunding sites that have popped up in recent years.

However, for the right kind of startup business — preferably one with a local/community focus and with a compelling story to tell about overcoming adversity — GoFundMe is an attractive fundraising option. One big reason? GoFundMe charges no platform fee to individual campaigns launched from the US, UK, and Canada. The typical crowdfunding site takes 5% of what you raise.

I’ll give three real-world examples of people using GoFundMe to fund a business and finding success.

  • Two Detroit students raised $3,000 to fund their socially-conscious waffle cookie company
  • Owners of a San Francisco restaurant raised $50K to get out of debt
  • A veteran raised $2,000 to start his own motorcycle repair shop

Read on for the eight steps you should follow to get money from GoFundMe to start your own business.

1) Make Sure Your Business Is Right For GoFundMe

Before you go about using GoFundMe to start a business, consider whether your startup is a good fit for GoFundMe. Many of the startups currently using crowdfunding to great effect are in industries that thrive on platforms like the aforementioned Kickstarter: makers of apps, gadgets, and games who typically don’t have an offline presence in the form of a restaurant or shop. Likewise, Patreon (see our review) has become a leading crowdfunder for podcasters, musicians, graphic artists, and other creatives whose work is easily disseminated online.

Crowdfunding with GoFundMe is a different matter, however. Donors tend to contribute to GoFundMe campaigns not to get in on the latest tech trend or trendy tabletop game, but to make a positive difference in the life of people in need or to benefit their community as a whole. Look at the sort of businesses that have had successful GoFundMe campaigns and you’ll note that they typically feature some combination of a) a business that has a positive impact on public life in a community and b) an entrepreneur/business owner with either a sympathetic and compelling personal story to tell or a mission related to charity or social justice.

If neither a) nor b) applies to you and your business, you’d be better off seeking funding from one of the other crowdfunding outfits I’ve mentioned. If at least one of the two does apply to your efforts, you stand a decent shot at making GoFundMe work for your business.

go fund me for business

2) Develop A Business Plan & A Realistic Funding Goal

Have a business plan ready before you start publicly campaigning for money. In particular, make sure you set a funding goal that you expect to actually be able to meet. Define exactly what it is that you plan to do with the money you expect to raise so that in the event you reach your funding goal, you know what to do next.

Of course, all the best-laid plans on Earth won’t help you if you don’t actually raise any money. One way to increase your chances of crowdfunding success is to offer cool rewards to people who donate to your campaign.

3) Offer Multiple Reward Tiers

Remember when I said that GoFundMe donors are motivated mainly by the desire to do good? This may be the case, but you’re still competing for the limited attention of donors with all the other campaigns listed on the site. This is when rewards come into play.

With GoFundMe, as with Kickstarter and many other crowdfunders, you can offer multiple levels of rewards to those who contribute to your campaign. This means that you can offer increasingly higher-value rewards to people who donate larger amounts of money. My advice would be to take advantage of this crowdfunding feature and offer multiple reward tiers to your would-be donors. Give people a reason to feel invested in your success!

While branded trinkets and t-shirts might draw some people in, rewards that give people a taste of your product or service are even better. Offer discounts, coupons and/or gift cards for whatever you have to offer. Get people in the habit of frequenting your business and they’ll be more likely to give you their business on an ongoing basis.

4) Refine Your Campaign Pitch

When creating your GoFundMe campaign page, you’ll obviously want to make it as appealing as possible.

  • Post A Fun Campaign Video: Keep it to around two minutes so you don’t lose viewers’ fickle attention, but don’t be afraid to show a personal touch, as people prefer authenticity and humor to slick sales pitches. You should at least allude to the personal challenges you’ve faced in growing your business. After all, this is GoFundMe, where tugging at the ol’ heartstrings is expected.
  • Make Your GoFundMe Campaign Page As Attractive As Possible: Use high-resolution images to promote your campaign. Preferably images that feature both you and your place of business. Remember: the personal touch is key.
  • Write A Descriptive Title: Try to summarize what your campaign is all about with one phrase. Don’t just write “Business Needs Help” — that doesn’t tell anyone anything or capture their interest. A good, catchy title can help distinguish your campaign from the thousands of others like it!

5) Seek Support From Friends & Family Before Launch

Not to diminish the importance of marketing your campaign to the public at large, but your most important source of support is likely to be your personal network: friends, family, co-workers, acquaintances, etc. Not only are they likely to contribute a significant proportion of what you raise, but it’s essential to secure their support before your campaign goes public. That way, when you launch your campaign, strangers who come across it won’t see “$0” as the amount raised. Success breeds success, and it’s easier to attract public support when you’ve already secured a decent chunk of funding.

You can have family members donate anonymously if you don’t want people knowing how much of your support comes from relatives!

6) Market Your Campaign Via Social Media & Email

To build buzz around your GoFundMe campaign, you’ll need to market it on your social media channels. Use Facebook, Twitter, Instagram and the like to spread the word about your story and your campaign. If you can, try to collect the email addresses of those interested in your campaign in order to build a mailing list in which you can give updates on your business’s progress and whatever other behind-the-scenes material you like. You can use services like MailChimp (see our review) to keep your followers updated with attractive template-based emails in which you can detail your progress.

Try to develop some press contacts as well. This way, when you’re ready to launch, you can alert them ahead of time.

7) Keep Everybody Updated After Your Campaign Launches

There’s a reason it’s called a campaign — you have to work hard to keep the contributions flowing! The uncomfortable truth is that most crowdfunding campaigns, whether they be for business or personal causes, don’t reach their funding goals. If you want to beat the odds, a compelling story and a nifty video won’t be enough. You’ll need to work on your campaign continuously as if it were your job.

Once your campaign is in full swing, keep everyone informed with frequent updates. Don’t just post updates to your GoFundMe page — make sure to send out updates through all your social media channels as well. Go ahead and get personal with your updates. Don’t just rattle off a list of statistics. Document your continuing personal involvement in your campaign for business funding. Be sure to respond to anyone with questions about what you’re doing, both on your GoFundMe page and on social media.

8) Stay Engaged With Your Backers Post-Campaign

Let’s say you overcome your challenges and meet your funding goal. Fantastic! Now, what are you going to do with the contacts you’ve made, the followers you’ve attracted, and the mailing list you’ve started? If you want your business to thrive, you won’t just let them drift away.

Consider an email drip campaign to keep your contacts appraised of your latest doings and to offer special promotions. Stay active on the social media channels you used to such great effect during your campaign. Maintain the relationships you developed with your first customers, as these people will be your most important evangelists, spreading the good word about your business and the friendly, personable owner who treated them so nicely.

In this lonely, atomized world we unconscionably created, people long to experience community. Provide them with one, and they will reward you.

Final Thoughts

Crowdfunding is hard. As I mentioned at the start of this article, most crowdfunding campaigns fail. There’s a reason why crowdfunding hasn’t solved the problems of startup undercapitalization or bankruptcy-inducing medical expenses. However, if you prepare beforehand, build a community of supporters, and approach the task like a job, you’ll greatly increase your chances of success when using GoFundMe to start a business.

Check out the links below to learn more about GoFundMe.

Read our full GoFundMe review

Visit the GoFundMe website

The post How To Use GoFundMe To Fund A Business In 8 Steps appeared first on Merchant Maverick.

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