Financing growth for your small business can be a tricky prospect – but for the vast majority of companies, it is critical. Without finding investment, you will struggle to get through tough periods, expand, or maybe even survive.
So, funding is essential for most – but where do you find it?
We’ve pulled together some ideas for you to get started with – read on and let us know your thoughts in the comments section below.
The easiest way to get started is to self-fund your business. Do you have savings put away that you could use to invest in growth?
You might have assets in your personal life or business that you could sell to free up cash, too. Or, you could use a credit card.
In the vast majority of cases, this type of funding will only give you a small amount of money. But, it might just help you start generating the profits you need to stimulate your growth.
Banks have been notoriously tight with their money over the past decade of so. But that’s not to say you shouldn’t try and get a loan from them, as they can be cheaper and have less impact on your business than other funding sources.
However, your interest rates will be dependent on your credit rating – and can be cripplingly high.
The chances are that you have friends and family who have savings. And, as everyone knows, interest rates are incredibly low at this point in time.
So, what if you offered them a more preferable rate of interest over the next five years? It would be more than their current rates, but lower than what you will be paying for a bank loan.
Everyone’s a winner, right?
There are many private investors out there – and in many different forms. Venture capitalists, angel investors, even crowdfunding – can all help. The trick is to make sure that you are appealing to these private investors.
As The Fortunate Investor points out, there are a few things to consider. Private investors want to minimize risk and build strong portfolios. Some will also need to be sure that they will get a return on their investment in the long-term. Others will be looking to maximize this over a shorter timespan – over 5 years, say.
The key to success in attracting private investment is to know how to push their buttons.
Finally, consider using invoice financing. You provide a service to your customers, and then give them an invoice. Instead of waiting 30-60 days for them to pay, you pass on your invoices to a financing company who pay you up to 90% of the money.
While you won’t make as much profit, you will get your money a lot quicker than through the traditional buy-and-sell route. You will make more sales because customers won’t have to pay right away, and the financier will guarantee you a set amount.
OK, so there you have it – a few clever ways of finding funding for your small business growth. Let us know how you get on!