Small Business Owners Flock to Business ‘Accelerators’

Small business factoring clients may be interested in a controversial new style of financing and consulting that the invoice factoring experts at The Factoring Blog recently came across in The Wall Street Journal: Start-Ups Crowd ‘Accelerators’.

Small start-ups in particular have been applying in droves for “seed capital and advice” from brand-new business “accelerators”.

There are more than 200 of these 12-week “boot camp” programs available worldwide. They each offer their own degrees of “funding and one-on-one mentoring to help develop their businesses.” In return, the accelerators receive 6% stakes in start-ups they take as clients.

The model has its critics. Without question, credibility is a key factor in determining an accelerator’s effectiveness, and given the novelty of these programs, that quality may be hard to come by.

According to this article in The Wall Street Journal, many question “whether some of the programs… have enough access to the right mentors and investors to boost an entrepreneur’s chances of success.”

Often, accelerators’ services can lead business owners toward “false hope,” instilling quixotic optimism, rather than encouraging bold realism. It is often outside of their incentive to prime businesses for success. Businesses at risk become a mere liability on an accelerator’s spreadsheet.

According to the Journal, “If an accelerator gives $25,000 in capital to participants, takes a 5% equity stake, and graduates 40 companies in a year, he says, it can break even if just one gets acquired for $20 million.

Factoring asks for no share in your business’ equity and makes no effort to leech on your success. Small business factoring offers no false promises; it simply offers fast access to the money you and your associates have already earned. Credit is not taken into account, nor is the very structure of business model. Your business is yours to run, and accounts receivable factoring can fit seamlessly into your daily operations.

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