The Advantages of a Shelf Company

Some Things Get Better with Age

You’re feeling good, you’ve rolled out the business plan, you’re partners are in with you, and everybody’s jazzed because it’s time to incorporate and move into the next phase of owning a business. But wait a minute, your accountant advises you that based on your company’s current credit rating you’re not going to be able to secure the type of loan you’re going to need to get things up and running.

“Why not?” you ask.

“Well, in order to get the kind of loan you’re looking to secure from the bank, they want to make sure that your company has more of a history of good credit.”

“But we’re brand new. What do we do?”

The answer is: don’t panic.

One option that is worth investigating could be investing in the purchase of a “Shelf Corporation”. Also known as an “Aged Corporation”, a shelf corporation is a corporation that has been around for a while, but just hasn’t been doing very much of anything.

How it Works – The Delicate Art of Credit Chemistry

To say that a shelf corporation has been doing nothing would be misleading. Like a fine wine it has spent time in the cellar patiently waiting for its moment to be corked. Most shelf corporations were designed and setup with the sole purpose of being launched at a later date and what transpires between bottling and the moment it is poured can be profound when it comes to a balance sheet.

First, by purchasing a shelf corporation, the relationship your company establishes with the bank is like one between good old friends. Right away they can see that your company has been around for a while and that you have a good credit score which makes them more trusting of your ability to pay your loan.

Second, much of what was required to start a company has already been taken care of. All of the basic ingredients have been blended together and it’s simply a matter of customizing them to your needs. A lot of the red tape that can potentially delay a start up is already taken care of.

Third, even if you are effectively getting your business off the ground today, depending on the shelf company you buy, you can literally say you’ve been in business for as long as the business has been in existence. Contracts that you may wish to bid on may require that a bidding company need have been in business for a minimum amount of time which would have otherwise have excluded you from bidding on the contract. With the years of experience you’ve gained through the shelf company, no one need be the wiser.

Finally, you can even merge your existing company with your shelf company as a means to facilitate building business credit.

Things to Consider

Remember, a lot of the heavy lifting has already been done for you and there’s a cost that comes with that. Like a good scotch, the price goes up the longer it’s aged. Sure the cost of the shelf company may be higher, but it also has a longer established history and that can go a long way.

Also keep in mind that before it becomes yours, a shelf company is literally a product on a shelf. There are lots to choose from so it is still important to do your research and find one that’s right for you. Not all shelf companies are created equal either. It’s important to get detailed information about the shelf company before you buy one.

Many companies that offer standard business registration and incorporation services also offer shelf corporations as well, and can help guide you through the process of determining what’s right for you.

For more information on buying a shelf company, please visit CorporationCentre.ca.

Customer Red Flags to Watch Out for

If you are in business, you know that you have to constantly be on alert on all fronts. You try as hard as you can to plan and operate your business with clear guidelines. Sometimes, though, all the planning cannot prevent the unexpected. Many business leaders will tell you that the problems from outside are the biggest challenge.

In order for you to operate, you count on suppliers for goods and services. Your cash flow is dependant on timely payment by your customers. Any disruption from your suppliers or customers can be harmful to your operations. Continued disruption can become fatal. However, by being vigilant and spotting the early warning signs of potential problems, you can avoid trouble before it happens.

Keep abreast of a customer's payments. If the payments start becoming delinquent on a regular basis, they may be in trouble. Don't wait, though, until they stop paying. Open up a dialogue early to help you collect payments while their doors are still open.

Another warning sign is commonly known as nit-picking. You owe a customer a small credit and they refuse to pay their large bill until the credit is received. This stalling tactic should indicate to you that all is not well, as they could obviously just deduct the credit and send the balance. Perhaps, the customer suddenly begins sending you the balance in several payments, without consulting with you. Your early warning signal should be blaring loudly.

Have you noticed that there has been a large turnover of employees at your customer or supplier? Is this a sign that the passengers are jumping ship before it sinks? When you called to speak to someone over there, the usual perky, friendly reception was replaced by a rather laconic, curt reply or a disinterested, half-hearted response. Be on the alert and assess the situation carefully. You need to protect your interests.

Keeping one step ahead of the storm can be your best insurance plan.

Incorporate in Canada with CorporationCentre.ca
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Do I Need a Business Plan?

A business plan sounds like a complex study. In some cases, it may be. But, the question is asked if every business truly requires a business plan?

The answer to that question is "yes", more often than not. A viable business, rather small or large, should make use of a well-designed business plan at some point in time.

Starting at the time when the business is still but an idea, a business plan is an excellent way to organize ideas. It allows you to create a filing system in which the various cogs and wheels begin to come together into a working machine. Long before you begin actually getting the idea off the ground, your business plan allows you to draw a picture of your idea – so to speak – and stand back to take a look if there are any mistakes or problems. Also, none of us are perfect. Especially if we are dealing with a complex idea such as a new business, it is best to have others review our concepts. Your business plan is an excellent way to allow others to help you develop your thoughts and use their feedback to improve what you have begun.

As your business begins taking shape, you will need the business plan to help interest possible investors. Your bank may wish to see the plan when you begin discussing credit with them. Perhaps you have decided to take in a partner. The business plan will be dissected at your meeting. The business plan is the blueprint of your business. It should accurately describe the concept. It will discuss the goals, milestones, financing, cash flow, staffing, and virtually every aspect of your business. It is the theoretical side of the entity. Also, a good business plan should be updated as the business begins operating, especially in relation to financial projections.

Invest the time to write a proper business plan. It is an investment that will have a guaranteed positive return.

Here is some business plan software to get you started.

Incorporate in Canada with CorporationCentre.ca
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Obama and Small Businesses

In his recent State of the Union address, U.S. President Obama presented a bold, economic initiative to help bolster his nation's struggling economy. Obama proposed making $30 billion available to small community banks so that they, in turn, can make these funds available in the form of credit to small businesses.

From a patriotic standpoint, Obama is worthy of praise in his concern for small businesses, part of the backbone of America. From an economic standpoint, many feel he has missed the boat.

Many bankers and economists agree that the problem in the U.S. economy is not the lack of credit but the lack of demand by small business and consumers. Simply put, Americans are not interested in borrowing money at this point in time. Unsure of their country's economic future, Americans prefer to save rather than spend. Herein lays the problem for small businesses. Their market has shrunk, due to fewer customers. As a result, they cut costs by hiring less and purchasing less from suppliers. At the end of the chain are the businesses that face closure. In order to keep afloat, these businesses attempt to obtain credit to pay their bills. But, these are the high risk customers that the banks don't want. The banks want the solid customers who can repay their loans. After all, banks make money from repaid credit, not defaulted loans.

At this point, the only banks that would require funds from Obama's $30 billion are those holding problematic loans, and they probably won't qualify. Bank regulators are examining records with magnifying glasses. High risk banks will most probably fail, rather than receive federal relief.

Maybe Obama should re-direct his funds. Stimulus funds need to get into the economy right away. Rather than strengthen the banks that are in trouble, strengthen the small business sector. When consumer spending is stimulated, the wheels of the economy will be oiled and the system will move forward.

Incorporate in Canada with CorporationCentre.ca
Click. You're incorporated ®