Of the many thousands of new business startups every year in the US, 50% of them fail within the first 12 months. One of the main reasons for this is cited as being underfunded, where businesses do not make profits quickly enough to keep the business going. Any company takes time to get off the ground, and many lost business have brilliant ideas that, with the proper financing, could have been a huge success. Don’t let this happen to your business. Whether you are a new startup or an existing business that wants to expand, there are a few ways to raise the money you need, and here are some tips to achieve them.
When starting a small business from home, the first place most people think of approaching for borrowing money is their bank. They know your financial situation better than anyone but will make you jump through hoops to give you a loan. They will want things such as a cashflow forecast. This is usually for the next 12 months and involves you estimating what your income and outgoings will be for that period. As it is an educated guess, the figures do not mean a great deal, but for some reason, banks love them.
They will also want accounts for the business and may well ask you to use personal assets, such as your home, for security. If you are thinking of borrowing from your bank, you need to be well prepared for everything they will ask for.
Modern lenders tend to have a more realistic approach to business loans, especially where small businesses are concerned. They will look at your ideas for making money online and take account of the fact that you may not have too many overheads if you start off by working from home. They are more concerned that you have your profit margins right, but that is simple to see if you use the online profit margin calculator at Oberlo.com to determine if you will make money online. This will allow you to look at your gross and net profit margins, and this information is good for you to know as well as to give any prospective lenders.
Modern lenders also tend to be more flexible with their repayment methods, letting you make payments daily or weekly rather than trying to manage one larger monthly payment.
The alternative to both of these more formal lending methods is to try and raise the money you need from friends and family or to consider private investors. This can work in many different ways, but you need to be aware that people who invest in a business sometimes look for a percentage of it in return. This may suit what you are doing, but it can also cause problems if they start to interfere in the way you are running the business because they now own a share of it.
Every business owner is different, just like the needs of each company. Only you can decide which is the best way to raise the finance you need, but do not let your business fail for the want of a bit more cash.