Finance your small business

0
31

If there is a logical reason why your business fails then it is because of bad financing or other reasons can be a gap in the way you manage or plan your operation. It has been observed that people might pay attention to planning and manage but the financing they ignore. This is something you don’t have to do because financing is something you don’t do once. In fact, you continue to do it throughout your business life whether you are expanding or modernizing or even buying stationary for your business. What you need to understand is how to use your capital in a better way. One wrong decision can cause the fall of your business.

The first thing you need to analyze is whether you want to get financial assistance from outside resources in the form of loans. If you really run out of capital and you are sure your business really needs expansion or improvement then you should decide whether you should delay the operation or whether you should enter into external financing.

If you believe that getting external financing is something you cannot survive without then you need to understand the existing finances.

Equity financing: Equity financing is when you sell your shares and get cash in return. This is like selling half of your business rights in profits. You can achieve equity financing from various resources ranging from venture investors to even private investors. And the best regarding equity financing is that it will not act as a loan to you until and unless your partner decides to attract his investment.

Debt Financing: Under the debt financing you get a loan with a guarantee that you will pay back the money. Guarantees can be in the form of guarantees that are submitting your property papers, inventory or equipment to the lender until you do not pay the whole amount. If you cannot pay a lender having full rights to your collateral asset.

These are the two types of finance that you get on the market. Now let’s discuss the sources from which you can reach the loan.

The first and prominent place you need to consider while thinking about external financing is family or friends. If the amount of capital you need is small and you believe it can be met by your personal resources then you must do it.

The second best choice you have is to consult with our small business administration for debt financing. SBA does not finance anyone but manages the lender according to your needs. No matter which market sector you are included in SBA will always help you.

Comments are closed.