Starting a new business has never been easy. A new business venture will always require time, money, and hard work. Having a business can be stressful since it demands the majority of your time in order for it to grow.
It can be more intimidating when you have a phenomenal team you’re working with but you’re still struggling financially. Either you need financing for business equipment or to buy office space, so read on to discover helpful ways on how to fund your small business.
Have a sound business plan
Before anything else, your business should have an impressive business plan. There are many benefits of having a well-thought-out business plan especially if you’re a small business owner.
A great business plan will assist you in attracting potential investors and help you receive business loans.
Receiving finance isn’t the only reason why your business would need a business plan, a business plan will ensure that you and your business partners focus on your business’s goals and make sound decisions. Make sure that your business plan can be used as a tool to promote your business.
Ask your friends and family for assistance
Receiving money from your close relatives or friends is another route to take when needing business funds. However, as much as your family and friends would love to help, you should understand that they might refuse to finance your business. If you need a small amount of money to boost your cash flow they might agree, but if you’re in need of a large sum of money, it could cause problems within your relationship.
It’s never a good idea to mix business and your personal life together, and not being able to pay back a close family member or friend can put a dire strain to your personal relationships.
Find yourself an investor
An angel investor can be a good way to finance your business. An investor is someone who has money that they aren’t using and are willing to finance your business. With investors money, you’re able to grow your business or raise your start-up capital.
Angel investors are normally family and friends willing to help you, or someone you might know that is wealthy and is interested in investing in your business. It’s important to remember that most of the time investors will want to be a part of your business.
Unlike a lender, you won’t have complete control of your business because chances are your investor might want to have an input on how you run your business or certain decision-making.
If you were planning on running your business alone then you might want to reconsider this option.
The South African government offer funding to businesses, and receiving government funding is a great thing with both small and medium businesses being able to benefit from this grant, by helping them raise their startup or even expand their business.
Government grants have other benefits for small businesses, I like that fact your business isn’t liable to repay the loan money and the loan amount doesn’t accumulate interest. However, because it is a government fund, and there are many business owners who need funding, therefore, there will be strict criteria.
Another trouble with government finance is that it usually takes a while for you to get financing. This would be a problem if you needed the money immediately or when you have a crisis. As much as government loans seem like a good idea for small businesses, it requires maximum effort and patience.
Going to a lender
The last option for you to get funding is going to a financial service provider. With the economy, it’s hard for people to grow their business in South Africa. It’s hard enough to get an investor or a business grant so going to a lender might be the best option for you. If you’re in need of business finance there are many lenders who are willing to help small businesses.
There are many business loans that are offered by lenders. Lenders have different types of financing for various business sectors, such as equipment, vehicle financing and leasing.
When approaching a lender it’s always helpful for you to know how much you need and why you need it. Being prepared is a great way to increase your chance to receive funding. The documents you need are:
- Contact and address details of yourself, your business partner, and shareholders
- Details of what you need the loan for, how much you need to lend, and the supplier you’re buying from
- Your business income statement and your balance sheet