If you have any startup plans, you need to understand that there are many roadblocks for you on the way. One of the factors that will prove significant in the success or failure of your business startup is how you finance your business. Regardless of the technological evolution, you have seen when it comes to business. You cannot ignore the factor of finances for the business. If you have planned to start a new venture, the money factor will be involved at some point as you plan to expand your operations for the welfare of your business.
It is a huge challenge for entrepreneurs to raise venture capital for a business plan. Venture capital usually becomes a roadblock for the initial phase of your business operations and the personalization of your products and service ideas. Even though you aim to make your business financially strong, you must have done your calculations initially. As a business owner, you must know the amount of money you need and note the approachable resources. Once you have broken down all your financial calculations, you will find it easy to sustain your business in the long run.
Strategies to Finance Business
1) Personal Savings
If we were to recommend the best way to finance a business, we would suggest you do that from your own respective personal savings. If you intend to start a new business for a long time, you could have made some savings for your particular initiative. The savings could be coming from your freelance business or can even be the earnings of your spouse. Regardless of what the intention is, people tend to make some savings for tremendous opportunities like this.
If you want to finance your business through your savings, it is essential to make savings on your budget plan, and what better way to do that than by relying on Strikingly? Strikingly provides a cost-effective approach to establishing a business website without investing time or effort, let alone money. Once you are part of our free plan users, you will be allowed to create a primary business site containing all the fundamental features and content related to your business.
2) Relatives and Neighborhood
If you think your savings aren’t enough to finance your business, you can consult with your relatives and neighbors. Regarding a business plan, networking is critical and plays a huge role in creating a suitable environment for your business operations. As a business owner, you must ask yourself some of the following questions for your business efficiency
- Do you have a personal network?
- Do you have a professional network?
- Have you been networking (if you are a freelancer)?
- Are your friends your colleagues when they meet you at your office?
- If you have a network, what kind of people are associated with you?
After your savings, the best way to finance your business is by borrowing money from your relatives. Regardless of what your background is, there are always some of your companies or relatives that are powerful financially. You can talk to them about your business idea. Even if they don’t like your idea, there is no harm in asking about money once and trying your luck. If your best friends are happy to support you financially, you won’t even have the pressure of getting quick returns because they won’t set any strict timelines.
3) Bank Credit
It is not surprising that when you think about the best ways to finance your business, you immediately think about the bank and your credit card. In today’s day and age, we can safely say that banks are the best asset when financing a business. We went with family and personal savings because they don't make you invest that much energy compared to bank credit. A loan is considered the primary bank form for current and old business organizations worldwide.
No matter how great a business budget you make, there is always a chance that you will ask for a loan at some point during your venture. The only setback regarding bank credit is that the bankers will demand collateral from you. Moreover, you would also have to deal with their interest rates.
4) Partnership
Many business people confuse the meaning of partnership and networking. Even though there are overlaps between the two terms, the partnership allows you and your one or more partners to access the company's management. Furthermore, they will manage a particular business plan's profits, losses, debts, and liabilities. If you have the will to expand your business through the available sources, you may get to know how to finance a business.
If you don’t have enough money to start your business plan, you may have to talk to some of your partners to finance your business. A partnership is only finalized when there is an agreement, allowing all the mentioned parties to manage the enterprise as per their understanding. Apart from that, there could be limitations in the partnership where the personal assets of the individuals are protected and won’t be used to pay the business's creditors.
5) Money Lenders
Money lenders can be classified as one of the most challenging ways to finance your business. We have included this point in our list because it is used by many business models and enterprises worldwide. Money lenders are defined as the group of people that have access to a large number of funds. They provide business owners with high-interest rates, which can be used to improve the financial condition of your business.
If you are considering money lenders for your business's financial factor, you must understand their terms and conditions. For example, if you are delaying their payments in installments or putting them in a situation where they shouldn’t be, there could be a case when they start threatening or abusing you. This approach is so risky because money lenders even have the capacity to draft the signed agreements if you don’t meet the demands of their terms and conditions, which may result in you losing your business altogether.
6) Investors
Even though money lenders can put your business plan at risk, there are certain angels in the system that can help you earn a great deal of profit. If you find people interested in financing a business, they will likely make you sign a strict agreement. People who make you sign these agreements with the hope that you will earn huge profits through your business can be classified as angels.
These investors will help to finance your business because they have a solid financial background and may even like your business idea. However, they would demand ownership of your business or company. The ownership status of your company depends on the agreement you potentially sign with them. Even though it is not as risky an approach as going for a money lender, it is not safe. Therefore, you mustn’t get distracted once your business starts making money.
7) Venture Capitalist
Venture capitalists are defined as a group of people or a community with a pool of funds to start a new business venture. They will only finance your business if they visualize that it has the potential to explode in the market. You can only expect them to finance a business if it is guaranteed to generate large volumes of returns.
As you can imagine by now, they will never prioritize small business startups whose scope cannot be measured or identified. It is a good idea to consider venture capitalists for financing because they may even give you specific money without the obligation of return. This means that there are huge chances for you to get bank credit or a loan as the bankers would see that your company has huge equity.
8) Trade Credit
Trade credit is one of the most underrated ways to finance your business because it allows you to agree with your suppliers. As part of the negotiation, you will pay for the raw materials they will supply at a future date. This means you get the stock from the suppliers first and only pay them when you have sold that stock to your customers and collected payment from them.
If you have a business or an eCommerce website on Strikingly, you must make life easy for your customers in the checkout process. Therefore, we provide you with a feature of multiple payment gateways, which allows you to deliver payments as per your currency. You can convert the demanded fee as per your currency and deliver it through PayPal, Stripe, or the other available gateways.
Conclusion
As an entrepreneur, you can only finance your business if you have made your calculations correctly. If you are allocating most of your funds and savings to a business, you have the margin to make up for the financial costs in other aspects, such as marketing.
The best way to make your business come full circle is by building a professional website on Strikingly. By creating a top website, you will not only be able to make savings on your budget, but it will also help you meet your business objectives.
