Hello, and welcome back to Write Away, the blog for small business owners, freelancers and anybody who is thinking of jumping into self-employment.
This time we look at funding for small business, an important area for any business, but it is also a big decision, borrowing money, to try and grow your business to take it to the next level.
There are many businesses who are either lucky enough to generate enough profit, or cash, to not have to worry about raising funds from external sources, but they would be in the minority, particularly amongst new businesses, for whom cash flow can be hand to mouth, and reliant on customers, big and small, paying on time.
For these businesses, they often only have enough cash to cover their outgoings or to invest in further stocks to continue trading, so expansion, for instance investing in new or bigger premises, or purchasing additional vehicles or machinery for the business, is often put on the back-burner, because of a lack of funds.
However, being in this situation doesn’t mean you shouldn’t look for other ways to grow your business, and external funding can be a good way of doing this.
Deciding to seek funding is a decision that should be approached with caution and treated like any other business decision, but there are a number of options to consider.1. Traditional bank loan – this will require a good business plan and any bank will go over this in detail, and apply certain lending criteria when making a decision
2. The Bank Referral Scheme – this is a government backed scheme for small businesses that have been refused funding by the major banks
3. Alternative Sources of Finance – one example of this would be the recent growth in businesses raising money through crowdsourcing, where a business pitches it’s growth plans / idea to the general public, in the hope of many of them investing small amounts – this is often in return for a share in the business – but it can be a very quick and effective way for raising money.
There are many resources online that look at the subject of raising finance and considerations, I have included a link below to one of these below (SMEInsider), who have a handy checklist of things to consider before approaching anyone for funding.
Investing more money to grow your business can be an exciting, and daunting time, but exploring all of your options before taking the plunge is a must.
I hope you’ve found this post informative, I’d love to hear your comments on your experiences of obtaining funding, until next time……