It is no secret that as you grow your business, an influx of money is crucial to the running of your operation. As you begin to develop streams of revenue, you will undoubtedly have necessary expenditures, and sometimes it can feel as if you take one step forward and two steps back.
A full 30% of U.S. businesses fail within the first five years, and this can be directly attributed in large part to the difficulty in making enough to keep going. For this reason, we’ve provided a list of some things you can do to increase capital.
Make A Business Plan
Now, at first glance, it may not seem this will help you get any further in achieving your economic goals. The truth is, however, that it has been proven that firms without business plans lack the direction with which to reach their vision.
It may take a little bit of time, but when you have a well-crafted business plan, you can forge ahead through those tough times in pursuit of greater fortunes. It needs to include a market analysis and research about your competitors. Your five-year financial model is essential to keep yourself afloat in the long term.
As more and more companies establish an online presence, it positions them to have opportunities to reaching their fanbases more directly. Within this paradigm, it becomes possible to inspire people with the ideas behind your company.
There exist a variety of platforms on which businesses can crowdsource funds, and you can offer certain perks to those who buy in. This enables you to retain your independence, get others involved, and obtain the very necessary capital that you need to keep on going.
Angel investors are not the same as venture capitalists, though it is not uncommon for people to use these terms interchangeably. Sometimes, these agreements entail giving the angel investor a share of your equity, but this can sometimes be unloaded in the form of convertible debt.
Angel investors tend to be business owners themselves, and they have more of a human connection to the work that you do. They may also have advice and certain skills you can avail yourself of. In addition, they tend to be involved earlier in the process than a venture capitalist, and they may be able to approve your project without consulting with a group of advisors. This is another reason why creating a solid business plan is crucial.
Visit A Bank
A traditional loan is still one of the leading ways in which people receive needed funds. You may already have a relationship with your local financial institution, and this can help speed up the process. In addition, you can contact a plethora of other banks online.
Your business plan is also essential in either case, as it will explain all of the variables that show how you intend to pay back what you borrow. Set the amount you need, and do not go overboard. Your monthly payments being higher than what they need to be can make it hard to proceed in the future.
Add in interest payments and fees, and an unnecessarily large loan can set you back. It can also lead to a false sense of security that engenders overspending. Your collateral can be things that you own, such as equipment for your company, and if you’re not able to qualify as a company, you can also seek out credit on your own merits.
Fidelman & Co. specializes in management consulting, presentation advisory, and financial modeling. We focus on building businesses alongside entrepreneurs and investors. Contact us today for more information about what we can do for you.