The corporate world has never been more saturated than it is today. According to Statista, Apple makes 961.3 billion USD in revenue. But, this doesn’t mean that all other businesses operating in the world are facing sunshine and roses.
Instead, businesses are facing a very tough landscape — one of the biggest hurdles that companies face when trying to grow their cash flow issues. You can dream of creating the best product and having the best marketing campaign for it. But, if you don’t have the money for it, your business can never grow.
As per CB Insights, over 30 percent of businesses fail due to money issues. If you are a small business, the first battle you have to fight is about money. Once you get your budget sorted, only then can you grow your business.
Here are some of the best sources available which help in effectively growing any business.
Using existing resources smartly
When people think of funding sources, they tend to think of external options. However, before you jump into researching, which outside funding resource is best suited to your needs, firstly, you need to take a step back and see if you even need external funding, to begin with.
Gauge if you can make use of a bootstrapping strategy instead. Bootstrapping calls for making use of existing resources that a business has. While this method may extend your achievement of business growth, it does ensure that you don’t lose out on the profits generated later on.
Because by generating money from within, you don’t have to give any control to investors or banks. The more share you have of your company, the more share you will have of the profits it generates.
Using existing resources include making use of your funds from the saving account. It also involves only spending as much as your current cash flow. Moreover, rather than hiring the best professionals from the beginning, bootstrapping calls for doing various parts of the job by yourself.
Once your clientele increases and money starts coming in, you can then invest in hiring more human capital and outsourcing different tasks. For small businesses, bootstrapping is a great way to maintain control and not invest more than what can be given back.
For business owners who don’t have enough personal finances to ensure the smooth operation of their company, another popular funding option is taking traditional bank loans.
Banks offer various types of loans. This includes both short-term and long-term loans. Regardless of where your business is situated, banks of the given area will be able to help you out. For instance, in Amarillo Texas, Amarillo Federal Credit Union Loans are of great help to business owners.
However, one thing about traditional bank loans is that banks do not easily approve of them. If your business doesn’t have enough cash flow to repay both the principal amount and the interest, your loan won’t be approved.
In case of low cash flow of your business, you might be asked to leverage your assets. This can include your home and other similar collateral. Whether or not you wish to link your business to your business loan is a decision you will have to make. It is often advised not to go down this road.
Traditional bank loans are also available in the community and local banks. Here, the chances of approval are higher.
One of the best funding source to grow your business is by seeking help from angel investors. Angel investors refer to those individuals who provide capital to the business in exchange for a stake in the company or equity.
You might wonder, why would someone wish to invest in a company they have no knowledge about? Well, most governments of the world offer tax benefits to investors — this helps in reducing their risk.
From the business owners’ point of view, getting funding from an angel investor is much preferred than seeking help from a bank. This is because, in this method, the funding is easier to get. The process is much faster.
However, finding an angel investor willing to provide fund you require is not easy. You must deliver a solid pitch to them and also cater to their demands of wanting a say in how the business runs.
The only downside of this method is the amount of funding the business receives; you will lose a given percentage of equity of your business. The more equity the investor has, the more power they have over critical decisions and operations.
Business Credit Cards
Business Credit Cards are often used to grow businesses. Credit cards generally feature a high-interest rate. But, depending on the credit score you have, you can qualify for lower interest rates as well.
Hence, if your business is owned by a sole-proprietor, using both a business credit card or a personal credit card, might be a great way to fund your business. On top of offering fund, business credit cards also deliver extra perks like points.
Moreover, using a credit card for finding also allows you to track the expenses of the business easily. By giving each of your employees a separate card, you can further simplify the accounting process of your business.
However, remember that such credit cards are merely a short-term funding solution. While it can help a business grow in its initial days, it can’t be used for long-term financing.
Ending Thoughts: The best source depends on where you stand
A good number of funding sources available for businesses. Which of them is the best for you depends on what stage you are in.
Are you a start-up? If so, you might want to begin with personal finances to test the waters.
Have you migrated to being a full-fledged small business? Here, an angel investor or business credit card might be able to help you out.
In case you are now a large-scale enterprise, traditional bank loans might be the ideal solution.
Know where you stand and decide on your funding options accordingly.