Where to Acquire Extra Sources of Funding for Your Business: Your Ultimate Guide
As your business grows, your needs grow as well. You may need bigger premises, for instance, to receive an even greater amount of customers. Or you may need better – and higher capacity – equipment, a larger staff, and more supplies to suit the higher demand for your products or services. Whatever it is your business needs as it grows, you should make it a point to have the extra funding available to support it. So the big question now is: where do you get the extra funds you need for your business?
Sources of funding for your business enterprise
Your own profits
Of course, as any successful business owner will tell you, you need to invest a certain portion of your profits back into your enterprise in order to have the extra funding you need. But this is often not enough, as you still have to contend with other business expenses such as rent, utilities, the salary of your workers, and the other incidental and miscellaneous expenses of running your enterprise.
The selling of shares to external investors
One option you have when it comes to extra funding sources is to sell shares to certain external investors. But this entails a bit of work, as you have to make an effort in piquing their interest, bringing them in, and explaining what your business is all about. Investors will also need to know the value of your business and how much its value could increase when these shares are bought. In essence, you have to provide your prospective investors with a clear and comprehensive financial report and model where it shows how your enterprise will profit from the extra funds and where it will be used, and how the initial and increased cash will affect your business cash flow.
Take advantage of a business loan
Another alternative you have in order to increase your funds is to acquire a business loan. There are plenty of business loans UK business owners can access, and many small businesses are thriving in communities across the country thanks to them. But when thinking of acquiring such a loan, you have to plan your finances carefully and make sure you will be able to make the repayments on the loan in due time. The good thing about business loans (especially those from independent financers and not banks) is that the terms of repayment are often flexible; leaving you with options for 6-month, 12-month, or even 18-month repayment installments, so you can plan your business finances accordingly. One tip: if you have only been operating your business for a year or less, your best option is to apply for a loan from a loan provider other than a bank, as banks often require a few years of operation to approve a business loan.
Loans from friends and family
Of course, as a last resort, you can always turn to friends or family to extend you a loan. Whilst friends and family can be a good funding source, you have to be careful that your borrowing does not affect your relationship with them. Treat loans from friends and family as a business transaction so that you will not be tempted to delay your payments (or even leave the loan unpaid).
With an extra source of funding, you can help your business grow by leaps and bounds as you do not have to worry about where to get the additional cash you need to invest in better products and services, better staff, better premises, better equipment, and more.
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