Running your own business comes with its fair share of challenges but none are as hard as finding money to run and grow your business, especially in a sluggish or a rigid economy. We strongly believe that a well-funded business has a much better chance to thrive and grow which is why we’ve compiled a list of 8 financing approaches that’ll help you find the money you need for your next business-related purchase.
1- Apply for a Small Business Loan
Securing the necessary funds for your business is now easier than ever thanks to the wide variety of small business loans available today. Between short- and long-term business loans, secured and unsecured ones, and even traditional and online loans, the possibilities are endless. When comparing different loan options for funding your next business purchase, we recommend choosing a fixed-rate loan over a variable-rate loan because the latter type can add unexpected expenses on your business. This way, you can buy the tools, equipment, and materials you need without incurring additional debt.
2- Get a Personal Loan
While pretty much all business loans depend on the credibility and strength of your business, personal loans depend on your personal creditworthiness and your current financial state which is why getting a personal loan can be easier for small business owners and young entrepreneurs who haven’t established a strong credit history yet.
3- Use Your Credit Card
Using your credit card to make the purchases necessary for your business’s smooth operation can be a quick and seemingly simple solution. However, using your credit card to fund your business can significantly impact your credit rating if you fall behind on your payments. On the other hand, when used responsibly, a credit card can give you the cash flow you need to get your business out of the occasional jam.
4- Create a Crowdfunding Campaign
Crowdfunding is an easily-accessible way to finance the next purchase you need to get your business off the ground. There are several different types of crowdfunding available including donation, rewards, debt, and equity crowdfunding. Between all these options, you should be able to find the right type of crowdfunding campaign that will suit your business needs.
5- Invoice Financing
Invoice financing is a quick and flexible financing solution where a company can sell its unpaid invoices at a discount to get cash. It’s often used by business owners who have poor credit and it’s also quite popular in industries like clothing manufacturing, printing, and construction, where a company will typically get paid after filling large orders.
6- Find an Angel investor
Angel investors are wealthy businessmen and women who’re looking to invest in a new business idea that has the potential to make them even wealthier. To win over an angel investor and convince them to fund your next big purchase, you have to show off your strong business and interpersonal skills while demonstrating a deep understanding of the market and the competition. You’ll also have to present them with an impressive marketing strategy and a solid sales plan.
7- Pursue a Grant
Governments usually sponsor grants to help support small businesses and startups. While these grants typically only offer a small amount of money, they’re still an option worth pursuing. Before applying for a government-sponsored program, you need to be well-prepared because getting a grant usually comes with a lengthy application process that requires extensive research and serious dedication.
8- Ask Your Family and Friends
Borrowing money from your family and friends is one of the well-known ways to finance a small business in its early stages. However, when your loved ones become people you eventually owe money to, you’ll risk jeopardizing many of your cherished personal relationships. To avoid that, you need to consider the logistics of your arrangement. Are you offering shares in your company? Is this a loan? If so, how much is the interest rate? And when should they expect to be paid back? Think about what you’ll offer them in exchange for their investment and present them with a solid business plan to show that you’re taking this arrangement seriously.
You don’t necessarily have to struggle to come up with the money you need for your business expenses. Nowadays, business owners have a multitude of financing resources at their disposal and the 8 tools above will point you in the right direction. So what are you waiting for? Go ahead and choose the one that fits your business needs and your financial situation and, sooner than you think, you’ll have the funds you need to run and even grow your business.