When running a small business, there are many factors to consider; you typically don’t have various departments (accounting, marketing, production, operations, etc.) that can ensure all things run smoothly – you have to take care of it yourself.
Most importantly, you have to guarantee there is enough funding to ensure that projects progress as planned. As a small business owner, do you feel that you have your hands full?
So, what are the top small business funding solutions? Luckily, when it comes to funding and cash flow, there are various solutions to help small business owners. Here are the top options when it comes to finding funding for your small business, as confirmed in the Fundbox Business blog.
Here’s a potentially tricky scenario: imagine you can land a large contract, but if you accept it, you’ll have to commit all your funds to that project. This will leave you with nothing for any other deals. Here’s where it gets tricky: it’s a great profit prospect, but the payment is only due after three months, and like all deals, there’s risk involved.
If you’re a small business owner keen to grow your company, what would you do? What are your options?
One option, of course, is to get a business loan. The problem with this is that you need collateral, or that you will at least have to put your personal name on the line (as is the case with a personal loan). It’s possible, but not ideal, and it also takes time to secure the loan.
This is an excellent option, although there’s a tendency for complications. It might also take longer than you’d hoped to generate sufficient funds, depending on the amount you require.
Personal and private sources
Some people consider this a last resort solution, while for others it’s the first choice for financing. Many entrepreneurs have kicked things off or got over a sticky patch thanks to short term lending from family and friends. And you could also consider taking on a business partner willing to invest in your company, or seeking an angel investor in the short-term.
Factoring is a process in which you sell the invoice issued to the customer to a third party for a reduced price (usually 85%). The third party will then be responsible for collecting the value of the invoice, while you can focus on business as usual – with the cash in hand. You don’t get the full amount, but you have the big contract without the big risk.
Given the typical options, most small business owners would go for factoring because it allows the business to grow and thrive. It allows progress – without risk. A winning combination!