Your business may be small, but your startup and ongoing costs can be big. Luckily, it doesn’t all have to come out of your pocket right away. These tips for financing your small business will point out financing options and questions to ask yourself as you make your plan.
Identify Your Financing Needs
Simply put: how much money do you need?
If you’re starting an online boutique or shop on Etsy, your costs will be lower. However, if you’re looking for a storefront, you’ll need more money to secure that space. Write up a list of everything you need to get started, and tally up those costs before you ask for a loan or investment.
Consider Your Options
There are several ways to secure working capital for your small business, from traditional lenders to outside investors. Which method works best for your company’s needs?
- A small business loan is a good option for folks whose credit is in good standing. The SBA (Small Business Administration) will work with you to find a lender who’s likely to provide the capital you need.
- Venture capitalists are individuals looking to invest in new businesses. They’ll provide money in exchange for a seat on your board of trustees; they want to see a positive return on their investment.
- Crowdfunding is a popular way to garner startup money while also advertising your business. When you tell friends and family about your new business and they give money to your cause, you also build an initial customer base.
Work on a Budget
Your lenders or investors want to see that you’re putting their money to good use. Set up a strict budget that will encourage profit. Use that money to invest in growth opportunities and top-tier marketing and sales strategies.
When you stick to your budget and make your loan repayments promptly, you’ll also build a strong credit rating for your business. Good credit will help you take out larger loans in the future, should you need them.
While starting your own business can cost a pretty penny, you’ll earn that money back—and more—if you keep a sharp eye on your finances. Start your small business off on the right foot with these tips for financing your small business.
