If you want your business to bloom, you’ll need to invest an abundance of time, effort and, of course, money. Fortunately, there is a wide range of flexible finance options at your disposal that can prove to be a fantastic resource for the modern business owner.
The evolution of modern technology, combined with the rise of small businesses across every sector, has made today’s industries more competitive than ever. This revolution has not only created a need for entrepreneurial spirit and innovation but also for companies to get creative when it comes to exploring business finance options. In this post, we’ll take a look at a few funding ideas — from working capital finance to online crowdfunding — that can help your business grow into an industry leader.
Raise Money from Friends and Family
Asking friends and family for money is an age-old method of funding that can be highly effective for both personal and professional purposes. Although this may not appeal to some business owners (as it has the potential to cause friction if any issues arise), this method can be an effective way of raising funds quickly and avoiding the hassle of a bank loan.
A loan from family or friends may appear to be more casual than other business loan options. However, you must ensure the lender and lendee have a clear idea about every aspect of the lending process. The best way to ensure this is by putting everything in writing. Make sure any written agreement includes information such as the amount owed, any deadlines for repayment and if interest applies. No matter how close you are to the person lending you money, it’s best to treat the issue like any other business transaction.
Research the Various Business Loan Options from the Bank
When it comes to business finance, it’s always important to do as much research as possible and explore every resource at your disposal. Business loan options from a bank are a conventional and effective way for business owners to start, grow or maintain a company. There are many different types of loans, so it’s a good idea to shop around for one that suits your needs and financial capability. The latter is especially crucial for covering the cost of repayments.
If you’re a small business owner, you’ll find there are many types of bank loans that cater to the specific requirements of SMEs. It’s not a decision you should rush or commit to without appropriate consideration. So you should always seek the advice and guidance of an independent financial adviser to ensure you find suitable finance that your business can afford.
Working Capital Finance
A business’s working capital is the money required to cover the cost of day-to-day operations. Working capital is a consistent expense that adds up over time and will need to be paid for the business to operate. Flexible working capital finance provides you with an efficient way to cover these costs. It also ensures your company keeps suppliers and customers happy (see order finance and supplier finance) by ensuring all payments, products and services arrive on time. Prompt payments can help to build lasting, quality relationships with suppliers.
Working capital flexible finance is beneficial for new and established business owners. It offers an ideal solution for increasing your commerce capabilities, covering the cost of essential business expenses and investing more in business marketing.
Angel investors (also referred to as a seed investor, private investor or angel funder) are high net worth individuals who fund small businesses, startups and other entrepreneurial ventures — typically in return for a stake in the company. The funds they provide may be a one-time payment to get the business off the ground or consistent capital to carry the company through its early stages.
Although angel investors could be the entrepreneur’s family or friends, it’s not uncommon for company owners to pitch to outside investors. If you’re opting for the latter, it’s essential to prepare a pitch that thoroughly demonstrates why the business is a worthwhile investment. Rather than cash in on the latest fad, Angel investors are more likely to invest in something you are passionate about and have researched to establish as a viable venture.