Turning an idea for a business into a real big business is impossible without financial aid. There are several sources of seed capital – we talk about the benefits and risks of each. However, these tips are for general awareness to make you realize the importance of finance in the business and the pockets where you can arrange finance for your business expansion.
Furthermore, you must be wondering about the guarantee or mortgage of your physical assets; funding with an unsecured loan is far much safer than the conventional loans. Here, the lenders concern with the creditworthiness instead of your physical assets.
From several ideas and tips to arrange your financial aid for business growth, we have compiled some of those tips:
Investing your personal funds is the slowest path of business development. However, slowly does not mean bad. By investing in your business only your own money, you can carefully plan the steps and expenditure of resources. In times of crisis, there are no loan payments that would aggravate the situation. Personal reliability on yourself is the main advantage of funding your business. If you do not have enough money, think about how to save or how to compensate business with a small investment. You also can ask for financial aid from your loved ones. Here are a few ideas based on the experiences that drastically expand the businesses:
a). Describe benefits first then money:
To make customers attracted to buy a product or service, prove their usefulness first. Most of the businessmen share their experience that their clients were willing to pay after they realize how important the product or service is for them.
b). Expand staff gradually:
If it is not possible to hire 15 people at once, the first plan for the business in a way that works out with 2-3 employees. Gradually, with the successful running of business and revenue generation, you would be able to hire more.
c). Review your business plan
If you understand that there is not enough start-up capital for everything that you have in mind, the business plan is probably unrealistic or based on incorrect calculation.
Cooperation with an investor is a risk. Finding the right one takes time, and agreeing on conditions requires diplomacy. Otherwise, you can lose control of your own company at the negotiation stage. Nevertheless, reaching an investor is an effective strategy that can also expand your business exponentially. The main thing is to discuss the legal nuances and come to a compromise with a patron partner.
To attract investors, demonstrate product strengths and prove that the company is capable of making a profit. Feedback from first customers, successful cases and thoughtful presentations will help.
In the early stages of project development, look for not just an investor, but a business angel – a person who can invest not only money but also expert knowledge and experience. This can help take the company to the next level.
Find out which funds and organizations support small businesses in your industry. Like investors, organizations are ready to help the business at the initial stage, if it is good.
Many start-up entrepreneurs and small businesses are afraid of loans, considering them unprofitable, risky and avoid them. Their main argument includes a high-interest rate, due to which you return more than you borrowed. As a result, such businessmen are looking for partners to open a joint project. In this case, depending on your business model, you can take a loan from the banks or funding institutions; both work well as shared by leading businessmen. However, such organizations have their own scale of measuring the credit and assessing the client.
Crowdfunding or public finance
Crowdfunding institutions raise funds to launch specific projects. Appeal to the public for funding is a way not only to get money but also to indirectly assess how interesting the product seems from the public side and how convincingly it is presented. Using crowdfunding, the company sets the amount to be collected and the time period by which this must be done. There are 4 fundraising models:
a). All or nothing
If the amount is not fully received as intended, the money is returned to everyone who supported the project.
b). Leave everything collected
After the deadline is over, the company receives money and utilizes it for a project, whether the required amount is collected or not.
c). Crucial moment
The company receives money upon reaching a specific date or part of the amount.
d). Eternal financing
The fundraising ends when the amount is fully collected, regardless of the original terms. Crowdfunding allows you to attract not only the internet users but also the audience of the largest international forums. As practice shows, for creative projects in the field of art, cinema, literature, media or music, crowdfunding according to the “Leave everything collected” is a good model.
State and regional support
If the business does not meet federal funds requirements, seek regional or state help. Look at the regional websites of the Ministry of Economic Development for information on financial, property support, grants, and loan guarantees for enterprises from various industries.
What else can the state help?
Subsidize interest rates on loans:
Enterprises of most industries can rely on the state to compensate for part of the interest paid on loans and leasing agreements.
Reimburse training costs for the employees with the help of NGOs:
For the costs of training and education for employees, you can also get compensation in some cases – up to 50% of costs.
Partially offset technology implementation costs:
Reimburse part of the cost of the purchase of equipment and technology as a subsidy.
Compensate for participation in exhibitions:
For participation in federal exhibitions, a number of regions return to companies up to 100% of the funds spent. For all such ideas to expand your business with less expenditure of money, you should seek detail information on each one of these parameters.
We hope that you enjoyed our article and in the near future you will be able to find financial aid for your business. Apart from the above-mentioned ideas, you can also seek financial aid from private financial institutions for your business growth. However, the same words I would reiterate that such private financial institutions consider you if you have a high credit score and also charge you high-interest rates.