Digital Marketing for SMEs: Business without boundaries

Information availability and decision-making is becoming increasingly dynamic in nature. This constant state of change has impacted customer expectations and many organizations are grappling to keep up. Amidst this chaos, a few companies have found opportunities and strategies to leverage this change.

Most companies which are successful in understanding and fulfilling new-age customers’ expectations have exponentially grown and created very strong value propositions and brands in the minds of the customers.
Some proponents of change defining the business ecosystem today are big data, cloud computing, mobile and content. Digital Marketing as a science, art or technique sits right in-between all of these factors. Is digital marketing complex and difficult to understand? Is it a type of marketing that only large companies with large budgets can afford to execute? Read on to find out.

In many ways digital marketing has democratized business reach to consumers. It has presented a level playing field for small and large brands alike. This is one platform where intellect and ingenuity trumps everything else.
Applications of digital marketing are aplenty – from exploring new markets to growing a stronger brand in existing markets, all in a budget that you can decide and control in real-time.

In this day and age, the question isn’t whether you should do digital marketing, but rather, the pertinent questions are “how” and “where to start from”. Following are 5 simple things small businesses can implement to mobilize their digital marketing:

1. Website for E-Commence and Product Catalog
A website is just like a salesperson. It may need attention and hand-holding early on, but over a period of time, it becomes independent, yielding a steady stream of income. Do bear the following aspects in mind while building your website:
• Does your website have all the information that you would like your customers to know?
• Does your website provide your contact details in case the customer wants to place orders or make enquiries?
• Is it easy for the customers to navigate and find information about your brand and products?
• Is your website persuading customers to take specific actions?
• Is it easy to update information on your website?
Once you have all the content ready for your website, you can use one of the many website builders to set-up the framework. Most of these builders offer plenty of templates and customization options. In case you plan to sell your products online, some of the payment gateway companies can offer to set up the infrastructure for free. Sounds complicated? It’s not. You needn’t be a software geek to implement a fully-functional website.

2. Create local awareness about your business
It is quite possible that some of your prospective customers, even though located very close to you, may have never heard about you. Even if they have heard of you, they will resort to searching information about you on the internet.
Facebook and Google provide you with options to create local awareness and an identity on the internet. You can even place your business on Google maps to help customers locate you. All of this at little or no cost.

3. Catalyze word of mouth with referral schemes
Very few marketing campaigns can outshout the voice of a customer operating as a brand ambassador. While social media can intensify word of mouth, it takes experimentation and genius to go viral.
Win-win referral schemes help you achieve similar results with greater certainty.
There are plenty of plug and play tools which can help set-up referral schemes, leverage your customer’s social network and give your brand a fair chance of going viral. You can track and manage these schemes on the go. Much like your website, these tools are very easy to implement.

4. Advertise on Digital Media
It would be wise to advertise online if a good portion of your customers reside on the internet. Digital advertising unlike conventional advertising is highly targeted and permits small spends. You can choose from promoting your brand in existing markets to exploring new opportunities in new locations, all at the click of a button. And the good news is, all major online advertising platforms provide advertisers with account managers to help them set-up and run marketing campaigns. If you are lucky, you may even find free coupons to run your campaigns.

5. Email-Marketing to connect with your customers
Emails are a very convenient and effective way of communicating to your customers. You can use emails to inform your customers about new products, features and offers. Free guides and manuals can help your customers use your product better.

E-mail provides for two-way communication; feedback enables you to know if your email was received with a smile or a frown.

Much like this blog, you will find plenty of guides, free tools and services that can help you execute digital marketing. It may be tempting to do all of the above or possibly more to join the digital business bandwagon, but begin by evaluating your options and strategizing accordingly. If executed well, one or two targeted options are likely to provide better results rather than a scatter-gun approach.

Hope these points demystified digital marketing for you. So go on, roll up your sleeves and get ready to build a business without boundaries.

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Samarth is a marketing professional with expertise in Digital Marketing. Lead generation, customer engagement & retention, brand building and people development are some of his areas of interest. During his leisure he likes hanging out with friends & family, riding his bike to nearby destinations (sometimes even without a destination), watching movies​ ​​and reading.

​Samarth is a Marketing Manager at Capital Float.​

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Why Merchant Cash Advance is an ideal finance option for SMEs

An increasing number of businesses in India, even the smaller ones, are beginning to accept payments for their products and services via credit cards. The acceptance of credit card payments is not only convenient but also a boon for these units, as the same can be used to get short-term funding or advances from funding agencies. A merchant cash advance, as the name suggests, is a cash advance to merchants against their future credit card payment receivables.

Merchant cash advance is a relatively new form of funding in India for small businesses that need fast access to cash and have an established credit card transaction history. Widely used in the US and Canada for several years now, this type of lending is a convenient and easy method of raising funds. It’s not really a loan, rather an advance payment against the future income of a business. Merchant cash advance loans are an ideal solution for small businesses and entrepreneurs who lack adequate organized funding and often resort to borrowing from friends, family or unorganized lenders. They are emerging as an optimum solution for meeting the funding requirements of businesses with a regular income received via credit cards.

SMEs and Funding Options

A majority of the small and medium enterprises (SMEs) today operate with cash cycles of 60 days or more, but options for getting working capital finance are severely limited. Although the SME segment plays a key role in India’s economic growth, these enterprises suffer on account of inadequate funding options and thus resort to high interest loans from the informal segment.

Recent years have, however, witnessed the development of innovative products by non-banking finance companies (NBFCs) and micro lenders to fill the funding gap in the SME segment. Merchant cash advance is one such product that aims to help small businesses garner the necessary working capital by way of advances against the future income of a business.

Merchant Cash Advance: A Simple and Convenient Product

A merchant cash capital provider would give you a lump-sum amount, which is paid off automatically when they take a percentage of your daily credit card receipts. Since the repayment is linked to credit card receipts, this funding option is suitable for businesses that have a significant portion of their income via the credit card receipts. These include restaurant owners, online shopping sites, merchants and service providers.

The rate at which repayments are made or the retrieval rate can vary from 5% to 20% of the credit card receipts of a business. This retrieval rate is decided on the basis of the amount of advance, the quantum of sales via credit cards and the repayment period. Another important feature of this type of funding is that repayment begins immediately after the receipt of the funds with the total duration of the advance ranging between 180 and 360 days.

The amount of advance that a small business can get is determined by its average credit card sales. A merchant advance provider generally reviews your income inflow over the past six months to determine the advance amount that you can get. The funds provider generally ties up with the credit card payment processors with a predetermined percentage of the merchant’s credit card sales being transferred to the lender directly. The time taken to repay this advance is dependent on the percentage of credit card sales being given to the finance provider. The higher the percentage, the shorter is the time it would take to repay the advance.

Why Opt for a Merchant Cash Advance?

There are several reasons that make a merchant cash advance a preferred funding option for small businesses with high credit card transactions. These include:

1. Easy to Apply: It is very easy to apply for a merchant cash advance. All you need to do is to fill an online application form and upload the required supporting documents like your tax returns, bank account statements and credit card processing statements.

2. Quick Processing: Fund providers like Capital Float that rely heavily on cutting-edge technology take a decision within a few hours and deliver the funds within a few days. This is highly beneficial for businesses that require quick cash to cover unexpected business expenses.

3. Perfect Credit Score Not the Criteria: A merchant cash advance is sanctioned solely on the basis of the credit card receipts of a business and their consistency, without assigning too much importance paid to the credit score of an individual or business.

4. Unsecured Loans: A merchant cash advance is an unsecured loan that can be obtained without mortgaging any asset. No collateral is required and the focus is the future income.

5. Flexible Repayment: Since the repayment amount is a specific percentage of your credit card sales during a month, you are not overburdened or under pressure to pay more even during a lean period for your business or when your business is going through a rough patch and the sales are not up to the mark.

6. High Limits: Advance fund providers generally offer a higher borrowing limit than banks since they take their decisions on the basis of your future income.

7. No Impact on Credit Report: Since merchant cash capital is actually a sales transaction, it does not get reflected in the credit record of the business or the business owner.

A word of caution before you decide to take a merchant cash advance for funding your working capital needs. The cost of this type of funding may be higher than the loans taken from banks because the repayment is dependent on the factor rate of your advance. This factor rate is multiplied by the amount of advance to derive the total amount to be repaid. You can reap the benefits of merchant cash advance loans to fund your working capital needs by negotiating a lower holdback percentage. Although this will increase the repayment duration, it will help you minimize the cost.

Oct 24, 2018

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Capital Float: Banker For Small Businesses – Livemint

Written by Shrutika Verma

Sandeep Bindra, the New Delhi-based e-commerce merchant who runs Pathways Marketing and Consulting Pvt. Ltd is the official distributor of consumer electronics brands such as Havells, Godrej, Usha and Symphony coolers for large e-commerce marketplaces such as Flipkart.com, Snapdeal.com and Amazon.in. Two months ago, Bindra ran out of money raised from family and friends and his pleas for debt for his two-year-old company were not entertained by any bank. “They (banks) ignored us as they do not consider companies that are less than three years old,” said Bindra. With the festival season round the corner, he needed immediate cash to sustain the fast-growing sales online. That is when Bengaluru-based start-up Capital Float came to his rescue.

Founded by Sashank Rishyasringa and Gaurav Hinduja, alumni of Stanford Graduate School of Business, Capital Float is a new-age lending solution that operates online and offers unsecured loans to start-ups, manufacturers and e-commerce merchants such as Bindra. Set up in 2013, the company has already lent to more than 70 borrowers and has disbursed over Rs.20 crore. Run by Zen Lefin Pvt. Ltd, Capital Float is modelled after Atlanta-based Kabbage, which recently raised $50 million from Japan’s SoftBank.

Hinduja, born and brought up in Bengaluru, initially joined his family’s garments business under Gokaldas Exports that was sold to private equity firm Blackstone in 2008-09. He later studied business management at Stanford where he met Rishyasringa. Rishyasringa, 30 looks after finance, business and product development while Hinduja, 32, handles sales and operations. Since inception, the company has grown rapidly and has attracted a total funding of close to Rs.24 crore from SAIF Partners and George Soros’s Aspada Investment. The start-up is drawing the attention of investors and small businesses as it offers fast, affordable and flexible working capital loans, an alternative to traditional lending institutions such as banks, chit funds and local money lenders.

Currently, it lends money to companies that are more than a year old. The amount of fund offered is between Rs.3 lakh and Rs.1 crore. Interest charged on the loan varies and is in line with banks and non-banking financial companies (NBFCs). Bindra, for instance, borrowed a sum of Rs.20 lakh at an interest rate of 18.5%.

Unlike traditional banks, Capital Float lends money to small businesses that might not have collateral, significant revenues or years of experience. But the company does not disburse loans blindly. It employs unorthodox techniques, including psychometric tests to run checks on its clients, gauages their social media reputation, and grills them on business decisions and entrepreneurial skills before lending.

According to Bindra, companies such as Capital Float take away the human element from the process of money lending and make it more data-driven with an algorithmic approach to evaluating whether the business can stand on its feet or not. “In India, a lot of access to finance is based on who you know and how good is your relationship with the branch manager of a bank,” says Bindra.

Agrees Mridul Arora, vice-president at SAIF Partners, “Lending is currently dominated by banks. However, the SME (small and medium enterprises) space is underpenetrated and given the demand perspective, a company like Capital Float has a huge potential.” Arora says online lending business makes economic sense too and counts Capital Float’s access to proprietary data from e-commerce companies as one of its strength.

Rishyasringa says the company started focusing on e-commerce as the sector was buzzing and banks failed to see the opportunity. Today, there are several thousand manufacturers who either sell directly to e-commerce portals or they sell on marketplaces. Capital Float tied up with Flipkart, Snapdeal and Myntra to meet their vendors and understand their requirements. Soon, the company realized that these small businesses were unable to grow because of working capital challenges. Today, Capital Float works with most e-commerce marketplaces and is also a part of Snapdeal’s Capital Assist, a service to provide capital assistance to small sellers.

“When we started digging into entrepreneur finance in India, the scale of the problem was staggering. Today, there is about $140 billion of formal debt provided to SMEs by banks and NBFCs but the unmet need is another $200 billion,” says Rishyasringa, who worked with consulting firms in India and in New York in the financial services and technology space before founding Capital Float

Rishyasringa calls it the “missing middle problem” that he and his partner are trying to solve in the country. “If you are a large or a mid-size corporate, banks will line up outside your door. If you are a rural farmer or artisan, the MFIs will queue up to lend you, but if you are in this missing middleRs.50 lakh to Rs.20 crore turnover range, then there are not many options available,” he explains.

Today, India has more than 30 million registered SMEs and about 35% of these are ineligible to receive any financing from banks or NBFCs. “They look at your financial statement and bank statement but there is lot more which can make these companies underwritable,” says Hinduja.

The idea to start Capital Float struck the duo during their second year at Stanford after brainstorming sessions with their professor and mentor Baba Shiv. “Nearly 10 ideas were shot down before Capital Float was conceptualized,” said Shiv, a director at the Strategic Marketing Management Executive Program at Stanford and an adviser on the board of several companies, including Capital Float. Shiv recalls how the two friends were close to developing something in the taxi services space when they discovered firms operating similar businesses.

The company today takes seven to ten days to approve a loan, which it hopes to bring down to three to five days soon. Companies such as Kabbage take only seven minutes to approve a loan in the US. However, Hinduja does not believe that a company in India can get there because of the risk involved and the lack of data available around a start-up or an entrepreneur.

To be sure, Capital Float is not the only firm in this business. It faces competition, albeit from smaller companies, such as Capital First, NeoGrowth Credit Pvt. Ltd and SMEcorner.in. A lean operation, Capital Float employees 30 people.

The company’s progress is hardly a surprise given the teamwork and similar passions of its founders. For a start, both swear by Jeff Bezos’s biography The Everything Storeas a life changing book. “We can relate to the book at professional and personal levels,” they say. Both want to get into politics at some point. “We want to solve the policy issues and see ourselves in some policymaking roles. We left the (Silicon) Valley and came to India to solve some of the problems people here face,” says Rishyasringa.

Between table tennis matches at their Bellary Road office in Bengaluru, the founders plan to make Capital Float similar to OnDeck Capital (scheduled to go public this month) or the San Francisco-based Lending Club which is all set to raise about $900 million in its initial public offering. The company is scheduled to begin trading on the New York Stock Exchange this week.

These companies not just provide short-term financing but also offer a lending platform to introduce investors and institutions to the ones raising money. “Right now, we are trying to prove to the market that we know how to lend money and we know where our mouth is but we are very quickly starting to convert ourselves into a platform and the pilots have already begun,” said Hinduja.

The question is, how long can the online money lending companies avoid competition from banks? “We are now competing with some of the banks that have realized that e-commerce is becoming an area where they need to get expertise,” says Hinduja.

Among established banks that recognize the trend are Yes Bank Ltd and HDFC Bank Ltd. Both lenders did not comment for the story.

“Companies like Capital Float will not be able to compete with banks at the pricing level whenever they jump into the game. But if these companies execute better and faster they can create a platform to work with banks,” says SAIF’s Arora.

News piece sourced from Livemint. Read the full piece here.

Oct 24, 2018

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What is Capital Float’s Pay Later?

Business owners frequently face working capital challenges. Supplier payments are a constant concern for SMEs. In manufacturing, trading and services, where lead times are significantly high, businessmen often finance operations by resorting to informal channels of credit. Traders who deal with shorter sales cycles tend to miss out on large orders as they are unable to pay their suppliers large sums of money to make bookings.

Capital Float’s Pay Later works exceptionally well in these cases. Pay Later carries a pre- defined credit facility which is unique to each applicant depending on various factors, for instance, industry the applicant operates in, scale of the applicant’s business and some basic financial metrics. You can make multiple drawdowns from the assigned balance and pay interest only on amounts utilized. By repaying the amount used, you reset the balance for further usage, making Pay Later a flexible, rolling loan product.

For example, if you’ve been provided a credit facility of Rs 1 lakh, you can make up to 4 drawdowns of Rs 25,000 each. Upon your first drawdown, you have a balance of Rs 75,000. You will be charged interest on the drawdown (Rs 25,000) and not the entire amount (Rs 1,00,000). By repaying the amount used, your balance will be restored to Rs 1,00,000.

With Capital Float’s convenient mobile app, you can use this zero-collateral loan product from absolutely anywhere. To make payments, all you need to do is take a photograph of the invoice with your mobile phone and upload it using our app. The vendor is paid on your behalf within 24 hours of the upload.

Features

Pay Later is an incredibly fast and paperless access to credit that works along the similar lines of a credit card. The functionality of this product as the name suggests – use the facility now and simply pay later. Following are the salient features of the product:

1. Get credit of up to Rs. 25 Lacs

With Pay Later, you are eligible for credit of up to Rs. 25 Lacs, which ensures that you’re never short of funds.

2. Easy, hassle-free online application procedure

The entire procedure will take just 10 minutes of your time. To get started, you can sign-up on Capital Float using your desktop, laptop, tablet or smartphone. Fill a simple online application form and submit the requested documentation to conclude the process.

3. Get approved in 3 days

Where traditional financial institutions take up to 8-12 weeks, we assess your eligibility and offer you a customized credit amount within 72 hours.

4. Convenient repayment at the end of 30/60/90-day loan term

Pay Later offers three flexible repayment plans that work in accordance to your business cash flows. You can choose to repay loan amounts at the end of 30/60/90 days from the date the loan is utilized. This way, you’re never bogged down by hefty monthly instalments.

5. Pay distributors/suppliers via Capital Float’s convenient mobile app

Make payments with just a few taps on your smartphone via our mobile app that you can download for free from Play Store and App Store. The payment is confirmed instantly, and reaches the vendor’s account in less than 24 hours.

Benefits

1. Zero-Collateral

Pay Later is a collateral-free loan product, which means you don’t need to pledge your property or assets to avail the loan. Your credit amount is determined by the potential and profitability of your business.

2. Flexibility in drawdowns:

Pay Later allows you to use a portion of the total amount any time you wish to. For instance, if you have a credit facility of Rs. 10 lakhs, then you can utilise the full amount or a fraction of it at any given time, depending upon your requirement. The user-friendly mobile app efficiently keeps track of your balance, so that you can manage repayments accordingly. You can also draw amounts as low as 25,000 rupees, hence making this product extremely convenient to use.

3. Interest applicable only upon drawdown

You’re required to pay interest only for the amount you’ve utilised and not on the entire credit amount assigned to you.

Click here to read about the features and benefits in more detail.

Eligibility and Documents

The eligibility criteria for Pay Later is extremely simple. All you need is a small list of documents at the time of application:

Eligibility

  • Applicant’s business to have at least 2 years of vintage
  • Applicant must purchase from a reputed supplier
  • Applicant must have 3 months of transaction data with the supplier

Documents required

  • Audited financials for the last 2 years
  • VAT returns and bank documents for the last 6 months
  • KYC documents of the applicant as well as the organisation

How to Apply

Applying for credit via Pay Later involves a simple four-step procedure. As long as you have a computer or smartphone and a good internet connection, you can apply from anywhere. Here are the steps involved:

  1. Apply & get empaneled

Sign up on Capital Float’s website to kick-start the procedure. Fill out the form with your personal and professional details, and click on submit.

      2. Upload the necessary documents

The next step involves uploading the requested documents. This includes business vintage of two years along with some basic KYC documents.

     3. Receive instant approval

Receive approval on your application within hours. In less than 3 days from the time of application, your credit facility will be set up for your use.

    4. Credit facility ready for use

Once your credit amount is determined, you can start using Capital Float’s mobile app to create tranches by uploading invoices and making vendor payments.

Fees and Charges

At Capital Float, we conduct business in the most transparent manner possible. Therefore, you’re only obligated to pay a processing fee of up to 2% for the loan. Rest assured, there are no hidden or pre-closure charges that pop-up during or after your application procedure.

Oct 24, 2018