Finding any sort of funding for your small business in this economic climate can be a hard thing to accomplish, whether you are looking to expand or get some cash to get through any difficult financial times. As an entrepreneur, you will face many challenges and getting some well-needed funding for your business will be the biggest challenge of them all.
When you are running a business you will need cash for things like buying inventory, hiring staff or maintaining your office, each one of these aspects requires a huge amount of cash.
Unless you are wealthy or you were left with an inheritance from a family member, you will probably have to work hard to find different means of funding to convert your idea into a successful business or to run your small business properly and effectively. However, there are many ways other than simply getting a personal loan from a bank that will help you run your small business with an iron fist and with great effectiveness. Whenever an entrepreneur thinks about ways to fund their small business, they think about going to a bank and getting a personal or a business loan, but that is not the only option they have at their disposal.
Things like a fast capital merchant cash advance is a great substitute to a bank loan. If you are a small business owner then you don’t have to worry, as today we are going to share with you 5 affordable funding options to boost your small business. These 5 options are listed as follows;
ASK FRIENDS AND FAMILY
Asking your friends and family for funding is the most common way to secure some well-needed cash for your small business, but when you decide to turn your family and friends into investors, you risk the chance of ruining your relationships with them. A mistake that entrepreneurs often do, is approaching their loves ones without a proper business plan. To avoid this issue, you should hold a meeting with them where you can explain proper financial projections and explain how and where their money is going to be invested. You should also give them proof of when they will see their cash again. This will avoid any personal relationships from getting destroyed.
When you go about everything professional it will give off a vibe that you are serious about money and you are ready to put in the time and effort to return your friends and family’s money with some profit. Another thing to consider would be to decide whether you are giving away equity in return for money, or you are just asking for a loan. Offer a strong business plan so that your friends and family cannot refuse you for the funding that you need.
Crowdfunding is a great option if you want to raise some quick cash for your small setups. Crowdfunding is used by hundreds and thousands of people to fund a small business or an idea to wish to pitch to the whole world. You will usually have to set a goal for the amount of money you wish to raise in a certain period, let’s say, 2000 dollars over 50 days. Your family and friends, and even strangers from around the world, will then use such a site to give their money to your small business or idea.
With a credit card, there is always a heavy risk if you decide to use it. If you fall back on payments, your bank will impose huge fines and fees on you which will be difficult to pay off.
A good idea would be to apply for a corporate credit card. Even if your business is small and you don’t have the required documented profits, you still might be eligible for one. This option is still better than taking out your credit card and maxing it out. There are a few things to consider when you are using a credit card to fund your small business. Credit cards have huge interest rates if you decide to use them for funding a business and these interest charges can pile up over a while if you do not pay them. Furthermore, if the balance you carry goes over 30% of your credit card’s borrowing limit, it can lower your overall credit score.
Angel investors can also be used to fund and boost your small business if it is stuck financially. Angel investors are people who provide finances to a business that they think has a chance to prosper in the future, with the expectation they will reap the rewards of any profit that the business might bring. The best-case scenario is that an angel investor is going to bring much-needed experience and expertise to your company that can help boost your sales and profits. The worst-case scenario would be that you might end up clashing with the angel investor which could prove detrimental for your small business.
Your job is to be clear and transparent about your business’s financial situation and profit projections to avoid any type of clashes between you and them. It is a great way to fund your business if you don’t want to get a simple bank loan.
USE PERSONAL SAVINGS
If you don’t feel comfortable bringing in investors, be it angel investors or friends and family, a good idea would be to tap into your savings. This way you will avoid the hassle of dealing with other people and you will have no one to answer to regarding money.
The biggest risk you run through this type of funding is that you might end up wasting and losing cash that you saved up over a long time for emergency purposes.
THE FINAL WORDS
Whether you are a small business owner or a start-up, you are going to need cash to run day to day business operations. Whatever way you use to fund your business to boost sales and profit is totally up to you and it is a decision you will have to make with many things in mind. Bring in the wrong type of investment and you risk the chance of losing your small business and running it into the ground. Today, we have shared with you 5 affordable funding options that you can use to fund your business, it is a good idea that you consider them.