If you have a business you undoubtedly want it to reach new financial heights. When it comes to business you want to feel as if you are climbing Mount Everest without having to go through too much of a rocky path. The only way to do this is by making sound financial decisions.
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If your small business is doing well, you might be thinking about how best to expand from where you are. Whether you want to open a second site, expand your product range with private label products for small business, or take on more staff, expansion can be pricey but can be worth the investment. If you’re ready to grow, but aren’t sure how to finance this growth, try some of these ideas.
Look for specialist financing. There are companies out there that offer finance options for specific industries, such as medical finance companies that will lend money to medical professionals to expand. This sort of funding can be used towards expansion or new office space to help you improve.
Get a loan through the bank. There are plenty of loans available to business owners. Most business owners know about the loans available to get their business started but don’t always think of this kind of option when they’re trying to expand. If your finances are in good order, a loan could be a smart way to find the money to help you.
S out angel investment or venture capital. Angel investors are people who invest in new or growing businesses, generally in exchange for capital. This money can be very important for a business that is stuck at a smaller size and needs assistance to expand. Just make sure you’re happy to offer capital or shares in your business. To secure this kind of funding, you will need to have a strong business plan to show how you plan to achieve the growth you’re aiming for.
Explore crowd-funding. Crowd-funding can be very successful for business with a loyal customer base. Businesses like BrewDog have raised millions to help them to grow their businesses. Crowd-funding works by offering incentives and rewards to the public who buy into different levels of support. You could offer everything from free merchandise to shares in the company.
Apply for a government grant. Some governments and other organizations offer grants and other options for finance that won’t leave you with debts to pay afterward. Most grants are intended for new business, rather than established ones, but there are some options out there if you keep looking.
Ask friends and family for loans. Shorter-term loans from family and friends are simpler to manage, as there’s no bank to deal with, no complicated terms to meet, and usually lower rates of interest. If you do choose this option, make sure you legally lay out the terms of the loan, especially when agreeing on the terms of repayment. This reduces the risk of causing arguments later on if one of you feels the other is taking advantage.
Use your overdraft. If your bank has a generous overdraft option, then this can be a potential option for short-term borrowing. Just be aware that an overdraft can come with large interest fees, so it could end up costing you more cash in the long-run. This is a better option for smaller amounts of money, for example, to fund marketing campaigns, but is a poor choice for larger amounts for expanding to a second site.
When you’re in the process of launching your own business, financing options can be sparse. For solo entrepreneurs, independent experts, or even freelancers, applying for a commercial loan is not an alternative. Money-lending institutions are more likely to consider established companies that have shown they can successfully generate an income. Newcomers who don’t have the backing of an investor or an income-generating history are not going to be lucky in their loan applications. Therefore, self-funding strategies are the way forward to finance your first business.
Unfortunately, self-funding can also be the quickest way to build up debts and put yourself in an uncomfortable financial position. Ultimately, when there is no commercial lending available, you will need to apply for a personal loan or additional credit. What this means is that you are forced to use your own finances to support your business, which can be risky. But there are some simple tricks you can use to ensure self-funding strategies don’t drag your credit score in the red.
Self-funding through credit
While funding your business through personal finances and credit can put you at risk, it is also a valuable lesson in strategic awareness. Indeed, you know that you need to design a simple but effective growth strategy to build up momentum in a short period. From a business perspective, self-funding makes you more focused and determined to succeed. While it doesn’t mean your company will hit the ground running, it puts you in a stronger position to make better decisions and work harder. Additionally, it forces you to prioritize money-making tasks over design and culture development – which need to evolve organically in the business.
Streamline your expenses
There’s no secret: If you’re going to pay for your business from your pocket, you need to make sure you’ve got your expenses under control. Things couldn’t be simpler when it comes to budgeting for your ins and outs. Firstly, you want to make sure you can address all the necessary expenses, from monthly rent to energy bills. Secondly, you need to focus on how you can cut down on those mandatory costs WITHOUT losing your comfort. While it may not seem much, something as simple as switching for a cheaper car insurance contract could free up some money and let you repay your self-funding credits more easily. In short, keep your eyes open for grocery vouchers, new energy providers, insurers, etc. that let you pay less for the same thing.
Reduce unnecessary costs
Once you’ve tackled the necessary expenses, it’s time to focus the next chapter of your budget on unnecessary costs. From buying a cup of coffee every day at your local coffee shop to investing in new fashion items, learning to save money on coffee, fashion, or anything else forces you to think creatively. You may not be able to accumulate huge savings. But you will tap into your unused creativity and self-reliance, which you can repurpose to build momentum in your business.
Self-funding is no guarantee that you can become a successful entrepreneur overnight. However, it gives you the key to unlocking your talents as a creative thinker, a strategist, and a budget ninja. You have to learn fast when you can only count on yourself!
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