Transforming a business into a viable proposition for growth is not something you can achieve without the right funding at your back. Of course, if you are looking for a traditional financing solution, one of the main hurdles to cope with is the cost of getting a loan from a bank or another lender. The good news is that there are other strategies and packages which can help to fund business growth. These can work without leaving you beholden to strict eligibility requirements or sizable repayments. Below are a few options, and what each has to offer enthusiastic entrepreneurs with a limited budget.
Getting outside investors onboard to provide the capital for your startup can be appealing. However, this requires some convincing from you. Additionally, you can get support and guidance from these seasoned pros. In a lot of ways, this could be the answer for any founder. Especially one who’s daunted by the cost of standard business loans.
The main thing to remember is that you’ll always be ceding control to the individual or group that gives you their financial backing. This is key when determining the value that private investors bring to the table.
While this might not matter much now, but it could come back to bite you further down the line. In particular when you realize that you don’t own a controlling stake in your company. Thus, it is difficult to take it in the direction you want to in the future.
If funding your firm with the help of investors doesn’t gel with your preferences or your plans for your business, then there are other types of financing to compare and contrast as well.
These are often referred to as non-dilutive financing. This is a reference to the fact that you can retain ownership of all the equity in the company, while still having significant capital. Thus, letting you fulfill your aims as an entrepreneur.
An example of this type of product is revenue financing. This bases the amount you receive on your projected revenues. The upshot is that you can upfront your revenue in anticipation of future performance. Therefore, you can invest this back into your business preemptively. There are payments associated with this, but, it does not leave your stake in the company compromised in the same way as working with the likes of VCs and angel investors.
Your ability to fund your own business endeavors will obviously vary a lot. It is a route that some will be able to take with more ease than others. It’s not only down to the extent of the assets you have at your disposal. You must also consider the degree to which you are willing to put them on the line to launch your business to the next level.
Parallel to this is the option to get financing for your business from people in your personal circles. For example, friends and family members. This could be worthwhile if you’ve got contacts who are happy to lend you money relatively informally. Ensure the terms are amenable to both parties.
There is the potential for problems to arise if the money they provide does not bear fruit. If your business stalls then it could create some painful social situations. However, if you manage it carefully, this can be one of the most affordable financing options of all.
The affordability of business financing solutions has to be a priority. Otherwise, the benefits you receive in the short term might be negated by the long-term costs of repayment.
You must make a decision that is right for your company and right for your circumstances. Therefore, you must think carefully and do your research to select the best financing solutions for your business.
