Every business needs some form of financial security no matter how long or short it has been since the time of its foundation. For startup companies, finding the seed money is the primary challenge in jumpstarting a product of service distribution.Startup financing has become a growing market with some companies offering business funding solutions to small business owners.
Many people are realizing the benefits of becoming financially secure amid a rebounding economy. Some of them, like Kimberly Palmer, are relying on the Internet to become more in control of her financial needs.
In an article, Palmer enumerated the ways on how setting up an online small business could be a wise investment and a source of income aside from having a full-time job. The idea of having a fallback plan when it comes to earnings could also be applied to businesses. Companies should find ways on how to augment their income and not solely depending on one source.
There are many different kinds of business financing models that not just involve the mere acquisition of cash loans and capital financing. Schemes such as business equipment leases are a great idea during times when funding is scarce but loan applications are very unlikely to happen. This strategy may even become a long-term deal to provide a continual flow of supplementary income for businesses.
As for loans, there are many variations for this type of business funding. Bank loans are the most common form, especially to startup businesses, but the chances of securing one proves to be difficult given the current economic landscape in the banking industry.
Banks require you to have a track record of your profitability, which means they can be sure about your ability to pay off the money you’re borrowing from them. Unlike investors, they’re not interested in what your business may or may not achieve in the future. Most banks simply rely on historical evidence of a business or a person’s financial capability.
Speaking of investment, kicking off your startup business may benefit from its different forms, including angel investors. This type of investors are specifically ideal for new companies. Yahoo! Inc. and Google are some of the former startup businesses that depended on angel investment during their early stages of development.
If all of this is still not an interesting option for you, then borrowing money from friends and family will surely help your venture. While there are certain advantages of acquiring loans from your loved ones such as no-interest payments and contracts, ensuring that the relationship is unblemished is also crucial.CTC Consulting | Harris myCFO Managing PartnerDebra Doransuggests business owners to ensure a continual and open line of communication to prospective lenders among family and friends to prevent any misunderstanding.
A regular update given to them on the business’ progress will also be an important factor in maintaining close ties, said Doran. While it is important to create a sense of security for your business, pinpointing the right types of financing is a paramount task.
