Funding is the fuel that powers a business
Purchasing assets are highly crucial for expansion plans
I’m sure many of you own a small business. Don’t you feel that your little initiative requires funding to grow? Have you ever thought of opportunities you are losing due to a lack of funds? It is said – ‘Funding is the fuel that powers a business,’ and business drowns in a sea of debt without proper funding. If you’re confident and you know the business model inside and out, you could fulfill your dream through funding easily. Through this article, I would try to throw light on why funding is imperative for the growth and success of your small business.
Why funding small business is important?
Funding for sufficient working capital
Working capital or day-to-day running cost is a crucial aspect of any company’s financial health, be it big or small. Mainly for small businesses, especially those that do not have enough working capital or cash flow can have a severe impact on its future. That is why many businesses choose to apply for external funding to create enough working capital to fulfill their growth ambitions.
Funding for purchasing assets
Purchasing assets are highly crucial for expansion plans to grow your small business. You may often require purchasing assets such as new machinery to make new products or scale up production, office and IT equipment for increased productivity of office staff or vehicles to increase the capacity of your existing fleet. There may be enough cash to cover working capital expenses, but funding may be required to cover the purchase of new assets and allow further expansion of the business. An asset funding loan is hugely helpful in distributing the costs of acquiring a new expensive asset. The fixed monthly repayments and loan terms from 6 months to 5 years can help you to make the most of available funding opportunities, to grow.
Growth funding for small business
If you’re ready with the plans to take your business to the next level, funding enables you to execute your business plans effectively. If you want to increase sales, or expand your product or service range, or move into new premises, or hire more employees, or grow out of the country or want to meet the rising cost of materials, inventory, supplies, or other essentials for your growing business, funding can definitely help. Growth finance enables you to take advantage of new opportunities and fulfill your ambitions into reality. If you can manage working capital, external funding may become the support you need to grow. As many of these loans come with fixed monthly repayments spread over the term of the loan, you can easily plan your business finances.
Funding for restructuring debt
The funding also helps to restructure your company’s debt by consolidating your borrowings and reducing costs to make your finances more manageable for your business. Funding for debt restructuring can make financial planning more manageable by reducing the number of monthly repayments as well as reducing your total monthly repayments. Refinancing existing company debt helps in the company’s growth by freeing up cash to utilize it for working capital and expansion.
Funding for start-ups
Small businesses that are still in the start-up stage need funding to get off the ground. It is not always possible for the owners to self-fund the company to profitability, and therefore they have to seek external funding. Many options are available for external start-up funding, such as funds from venture capitalists, bank loans, equity investment from a business angel, crowdfunding, business loans, Government schemes, funding grants, and borrowing from family and friends. However, start-up funding can be challenging to secure as finance providers will require lots of information, including a detailed business plan.
Funding is essential for innovation
Funding is vital for small businesses to bring in innovation. Small business owners would always like to innovate. BMO Wealth Management report reveals that 60 percent of small business owners never apply for funding for innovation. As per the report, innovation drives businesses of any size to achieve financial success. Along with the latest development of digital technology and advancement in smartphones, apps, artificial intelligence, and social media, small businesses have to implement the newest innovation as quickly as possible.
The real innovation allows for small businesses to create new products, services, and marketing as well as other ways to reach an increasing number of consumers. It not only adds to the improved external capabilities but also makes internal teams more productive.
Funding to achieve the financial objective
Every small business or start-up has financial business goals to hit. Therefore funding is essential to attain the goals. This funding process should take place on time that you can easily plan financial tasks in a simple way.
Removing obstacles from the path to success
Every small business needs to ensure that its growth is free of hindrances. It can be assured by funding and utilizing funding properly. There are also specific fund-raising programs that are aimed at raising and managing funds of small business and are intended to remove all the financial blockages from the path of success of these businesses. However, they should be monitored at regular intervals.
Matching business standards and market competition
Currently, the level of competition in the market has increased manifold. Thus, for every business and especially for small businesses, it has become essential to match the standards of the business world. Therefore, funding activities should be undertaken to improve the overall standards of business. Proper funding allows the business to attain the level according to the current level of competition in the corporate world.
Funding for business stabilization in an economic downturn
Funding should also be utilized to stabilize the business. If you can smell hard times for the economy in general, move quickly to funding to obtain a cash cushion before it’s too late because during the “Great Recession,” availing business loans for small businesses becomes harder than ever.
Lastly, do not forget about catastrophic events, one of which you are facing right now is, of course, COVID-19. It is taking a toll on small businesses. Although there is insurance cover for most, you have to bear premiums, deductibles, and salaries, and there needs to be enough money for that. If you can anticipate the risks, go for funding at the earliest to be capable of recovering your losses at the most.
So, why not start from today itself!
That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.
(About Author: Arindom is a professional writer, editor, blogger and a member of the International Association of Professional Writers and Editors, New York. A management postgraduate in finance with extensive industry exposure, he is associated with many reputed global online magazines and publications as a regular contributor. He loves to help his readers writing highly informative and well-researched investment-related content to make informed decisions.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of organization)