Small Business Finance

Small Business Finance

Having a good idea to start a business is one thing, getting the required capital to finance the business is yet another side of the coin. If you are interested in propagating your small business venture, you need to learn how to go about financing the business.

Money indeed answers alot of things. In business you need cash to make it work. However, many entrepreneurs make the mistake of thinking that money is all they need. You may have the money but wrong investment approach will make such funds disappear into the thin air. The next thing is that you are back to level 0. Hence, it is very vital for you to learn the secrets in small business finance. 

Bear in mind that business is warfare. You need the right weapons to make it work. Finance is indeed one major weapon you must engage in taking your small business venture to the next level. 

Now, get the point. There are some principles you need to engage in small business finance. Here are some tips to help you.

  • Be Mindful of the Sources for your Seed Capital:

Knowing where to obtain the funds or seed capital you need to take off your business is very vital. You need some capital to start the business. You also need some cash to keep it going until it begins to yield returns. Now, when it comes to sourcing for the initial capital; look inwards first. Do not begin to consider external avenues first. This is because most external sources where you can get capital usually demand you return the money with interest. Even, when you get some capital from close family members, if care is not taken, they will even ask you to sign an agreement. So, the very first thing to do is to check how much capital you can generate on your own. You may need to sell some of your properties especially those of them you do not actually need at the moment. Check how much you have in the bank. Just make sure you’ve exhausted your own avenues. You can start the business with such funds and grow from there.

Now, if you are not able to raise enough money on your own, look around and see if your family members can help you. Usually, you might have wealthy brothers and sisters who can assist. Good ones among them will give you some cash for free while others may require you pay back in due time. In any case, the risk is not much.

Now the third avenue to consider is to look in the direction of angel investors. In the UK, angel investors are affluent individuals who are ready to invest in return for shares in your business venture. However, your business must have the potential to survive the hard times. Most angel investors are very careful when it comes to investing their own capital. They too are in business and you will have to sign some agreements with them. Again, you need to pay back a certain amount according to your agreement with the angel investor involved. In any case, such angel investors are usually preferred to banks and other lending institutions.

Fourthly, you can obtain loans or quality seed capital from banks and other financial companies. However, this is never easy. The process many times could be time consuming. Most big banks are not even keen in helping small business starters. They only help big companies, even at that, the process is always a long one. However, micro finance banks around can help you. Most of them have packages for everyone setting out to begin a small business venture. However, bear in mind that, the process is usually very time consuming. The bank official will first of all weigh your ability to pay back. In most cases, they will look for collateral from you – so if they feel based upon your credit score and income multiple that you will be unable to meet your commitments with them, you may never get the loan. This is actually the reason why you need to look at other basic ways to generate funds especially if you’re starting a small business. Going to banks should be your last resort.

  • Device avenues to finance the business in the early stages:

Once, you have got the small business off the ground, the next small business finance secret to use is to learn how to keep pumping in funds to take the business to the level of profit returns. Once you’ve gotten the required funds to take off, do not invest all of your capital to start off. You need to divide the money into some places. You use a part to start off and they keep some to water the business as you begin gradually. Never put all your eggs in one basket. If you do, you might lose all the eggs in an event of emergency. Hence, it is wise to keep some of the money in the bank. As the business grows, you need to re-adjust. You need to focus attention on the products or services that are fast moving. Once you discover the moving areas, invest more funds into that direction.

In all, you still need to use some funds and channel them into market research and analysis. Form time to time; go for business seminars, market surveys and other meeting that will help you develop new ideas to take the business to the next level. 

Over and above all, you must be financially intelligent. You must have a good financial record where you document all your financial endeavors. You do not use your business account as your personal one. Create a special account for the business and handle the funds separately from your own personal account. If you follow these principles outlined above, you are sure of building a small business that will stand the test of times. Your small business is sure to blossom within a small time frame and you will be smiling at your huge returns. Just make sure you discipline yourself and put into practices all you learn daily about small business finance.

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