Do you have plans to expand your company?
Your business plan might be ready, you have new products and/or services lined up, and you have created buyer personas to attract the right market segment for your offerings. These are vital to the success of your planned expansion; however, financing your business must be a priority to achieve your objectives.
You have a number of options when it comes to financing your business.
One of the most common ways to get financing is to apply for a bank loan. Banks have been around for centuries and can provide you with the amount you need to cover your expenses when you grow your business. However, they have rules and qualifications you need to meet before they approve your application. Your credit score and history are important factors when they assess your business. They want to be sure you can pay your loan and its interest within their payment terms. They might reject your application if your credit history and score are below their threshold. Your chances of approval increase when your company has been in your niche for years and generates substantial profits.
You can fund your business’ growth using investments and profits. However, this strategy carries several risks because you might incur more expenses than you like. If you miss your target budget, your financial position might deteriorate. This results in fewer options, long-term debt, and stunted expansion. Financing your business with your own cash displays your capacity to maximize the cash you have. Reducing expenses and generating profits while growing your company are determining factors when you decide to borrow money from investors, banks, and/or a government grant. Track the factors that affect your budget and identify ways to manage a positive cash flow when you use your own resources for growth.
Microlenders are a viable option when it comes to financing your business. These lenders can offer a microloan. They lend less than US$50,000 to businesses. That might just be the amount you need to fund your expansion plans. A microloan is an alternative if you think you don’t need a large amount of money from a bank or other traditional lenders.
Grants from the Government
Reach out to your local government. They might have programs that can fund your business. Some of the factors they use when providing grants are the type of business, niche, and the financial situation of an applicant. Identify the documents you need to submit and the requirements you need to meet before sending your application. The grant you receive provides you with the extra cash you need.
You can sell your outstanding invoices to a factoring company to get additional financing for your expansion plans. These companies usually repay 75% to 90% of the worth of an invoice you sell. Once payment has been made in full, factoring companies repay the balance after they subtract their fees. This is different from a loan because they don’t consider your credit score in their review. A factoring company assesses your customer’s credit score because they want to know if they have the financial capacity to pay on time.
Interested investors can finance the growth of your business if they like your plan and they believe you can achieve the goals you established. Look for them in your community and business groups online or on various platforms. Make your pitch to potential investors which include feasibility studies, a concrete and achievable business plan, products and services you want to offer, planned campaigns, and other details you need to convince them to finance your company.
Look into Crowdsourcing
Crowdsourcing has become a popular option for entrepreneurs who want to tap into an unconventional pool of financers to fund their expansion plans. Post your plan online and use platforms that specifically allow you to solicit money from potential donors. People will pledge various amounts from sometimes as small as $10 or more than $1,000. You’ll get resources from multiple sources through the platform you posted your business pitch on. Crowdsourcing has its pros and cons such as if people believe in your plan and think that your idea is feasible, they can donate a large amount. One of its cons is that you must convince possible donors to pledge the amount you need.
Borrow from Family and Friends
Your family and friends can provide you with the financial support you need. Approach them with a clear plan on how you can make it into a win-win situation. Offer a percentage of sales or a business partnership for the financial assistance they provide. This incentive increases their engagement and may convince them to lend you the amount you need. Document your agreement and have everyone involved sign it.
Look for Online Creditors
Financing your business is a difficult task but borrowing from online creditors can alleviate your financial burden. The approval or rejection of your loan application relies on your credit score and history. Both are important factors in the decision of a creditor. Online creditors don’t follow the same strict rules as banks when screening applicants. Look for an online creditor you can trust. Choose one that has verified good reviews from previous and current clients. Learn more about their requirements and assess your company’s financial ability to pay the loan on time.
The creditors mentioned above are your possible alternatives in financing your business. You’ll need additional resources to achieve your growth goals without sacrificing present profitability. The extra funds you borrow provide your company with some financial flexibility. You can get a loan from more than one source. Combine the cash you receive to attain your target amount.
We at Robookkeeper can assist you in updating your accounting books before you post your business plan online and pitch to your potential creditors. We provide quality outsourced bookkeeping services. Focus on making your company attractive to investors while our team of experienced and certified accountants do your bookkeeping and accounting for you. They can identify errors in your books and make the necessary corrections. Error-free books allow you to create financial reports and use updated data when you make a business proposal.