Financing in business is the most fundamental factor that is mulled over by anyone who is running a business or wants to start one. As much as the success of a business depends upon the planning of ideas and their strategical application, the actualization only comes with the proper financing. Usually, there are two case scenarios, among others, in which financing for your business takes a proportion of a problem that needs a solution; a) you are raising a capital for a new business and do not have sufficient financial backup; or b) you are having hard-time maintaining the cash flow of a pre-existing business. Be that as it may, there are a number of solutions through which you can remedy your financial stringencies or crises, however varying they may be in their respective circumstances.
Here some of the best financing solutions for your business
Equipment financing mostly applies to the scenario when one is starting a new business. Every business has its own requirements of assets or equipment, which are essential not only for its start-up but also for its sustainability. Assets, therefore, work as a de facto engine. Business equipment financing allows you the purchasing, or more appropriately, borrowing of the required hard assets for your business via loan or lease. Equipment financing comes with a number of variations to meet the specificities of your needs. Sometimes you only need a piece of equipment for a particular period of time, in which going for a lease, as opposed to a loan, is a better option as in lease you are able to rent whatever you need from a vendor in return for monthly payments. You can even get a newer version of equipment by trading in your older one. On top of that, there’s no down payment or collateral involved
Friends and Family
This is the most instinctual solution and a surrogate first-aid for a business in need of financing. Borrowing money from your friends and family is the friendliest source to turn to. Although this is highly idiosyncratic to the wherewithal of an individual’s situation, if the situation does meet the criteria, then friends and family can be a great help. Unlike a loan taken from a financing company or bank, you don’t have to pay the added interest nor have to be on the tightrope of your deadlines. Grant, loans can have the potentialities of making up for a big sum of money in short period of time, but at the same it’s the one source against one problem, whereas your family and friends make up for a number of sources against one problem, depending on how many people you are able to borrow from.
Although discouraged for those staring a new business, a bank loan can be very helpful and oftentimes one of the few sources that can provide potential great financing for your business. This is because if you have solid collateral to put on stake, then a bank loan, however risky it may sound, can provide an instant remedy to your financing problems. That being said, you can take a long-term view of your business and see that if you can save enough to use the amount as a stand-in for your actual collateral, which is a far less risky way of dealing with things. Not to mention, small business loans, as opposed to conventional ones, can be acquired without collateral. There’s also added advantage of tax benefits on small business loans as well as longer time repayment and lower interest rates so that you have a less hard time in making up for whatever amount you have borrowed.
The approach of crowdfunding can be the widest when it comes to raising funds for your business, but by the same token, it also requires more effort and planning. As the name implies, with crowdfunding you basically raise the amount of money with the help of your friends, individual investors, customers, family and other variants such as social media and marketing campaigns; this is reaching out towards a larger landscape of raising capital vis-à-vis manifold stances. Since you are setting out to attract a large crowd to invest in your cause, crowdfunding is only possible when you have great business plans or venture and are able to distil its ideas with credibility and trustworthiness.
This is very situation-specific. If your business has high growth potential, then chances are that investors will reach out towards you to help propel your company’s startup. This voluntarily helps your bigger business counterparts: venture capital, in which investors are usually investment banks, bigger companies doing similar business, or other financial institutions that are willing to invest in your enterprise in return for the potential payoffs that they see in the future. Of course, such an approach is risky for both the investor and invested, for it’s not always likely that high growth potential business will always succeed, but the help acquired can be a great solution for your business to expand. It is also important to remember that venture capital does not always provide monetary help, sometimes it can help buy the required assets or provide vendor financing. Be that as it may, venture capital is a great financing solution for any new business out there.
Starting up a business or maintaining one can be difficult if you are running short on your financial resources. Given the demands of the market and personal circumstances, you are very much made to engage in an entrepreneurial culture. This is because, at the end of the day, a business is a little more than the sum product of investments and its potential outcomes, so the stronger your investments will be, the stronger results your business will bear. And for all of the investments out there, the first one starts with financing your business. These financing solutions, therefore, are some of the best that are commonly perpetuated for raising capital for a business.