How Funding can Help a Small Business

Small businesses with limited cash often find themselves facing something of a conundrum. They need bigger premises, more staff, more equipment or more stock in order to take on new contracts, which will bring in lots of new revenue. However, before they can take on these contracts and generate this revenue, they need cash upfront to make all of the required improvements. The answer to this problem is funding, which can help to plug the financial shortfall.

A small business loan can help you to:

  • Employ talent. In many start-ups, there is one person trying to do everything by themselves. But to really thrive, your business needs specialists. For example, a marketing expert to properly promote your brand, or a sales consultant to help you bring home those big clients. While a loan isn’t usually used to pay someone’s wages, it can free up cash from other areas of spending (i.e. stock or equipment) that you can use to attract the talent you need to drive the business forward.
  • Buy equipment. If a new piece of equipment can help you double your productivity or vastly streamline tasks, this means far more revenue. Using funding to purchase it is a great idea, as the boost in revenue and productivity means it will pay for itself in no time.
  • Buy stock and fulfil more orders. If the potential is there to take on many new orders and contracts, but you’ll need a cash injection in order to buy the stock to fulfil these orders – it makes sense to use funding.
  • Move premises. Is your existing premises bursting at the seams? Would moving to a larger office space allow you to bring in more staff and equipment, to increase productivity and revenue? If the answer to either of these questions is yes, you can use funding to be able to afford the lease or purchase of a more suitable property.

Using funding to invest in these crucial areas of your business should soon start to show benefits, helping you to grow and expand your operation. However, it’s very important to be realistic, practical and cautious about how much you borrow and how fast you expand. Gradual and carefully considered expansion is often the best method to adopt.

Business funding

Types of funding

There are several routes you can go down to secure the funding you need for any of the aforementioned goals. You can use an ordinary small business loan or consider cash advance loans – or even go down the crowd-funding route.

Before you start searching for funding, it’s important to sit down and assess exactly how much you need and what you need it for. An investor or funder will need to see precisely how the money will be spent, how it will help the business and how the money will be repaid. In short, you need a solid plan in place for business growth.

It may be a good idea to seek professional financial advice, and to take your time considering your options before applying for funding.

Three Tips for Running Your Business on a Budget

Loans can be a great way to help your business get off the ground, but how can you keep things afloat if your budget is already tight? For starters, don’t panic. You’ve probably heard the statistics saying that if you’re a new business, you are more likely to fail than succeed in today’s economy. However, the U.S. Small Business Administration’s Office of Advocacy states that although business survival rates do go down over time, you have a 70% chance of making it through the first two years.

savings and budget
Image by 401(K) 2012 / Flickr

Know What You’re Spending

One of the most important things to understand is how much you’re spending, versus the amount of income that you’re earning. This sounds simple enough, but it’s not only about making sure that you’re working within your means. When you’re aware of your spending habits, you’ll be better able to see if there might be a way to cut your bills, too. Even if you’re able to reduce your spending by a few dollars each month, that can make a difference over time. For help, consider consulting with an accountant who specializes in the needs of businesses. Beyond helping you manage your money, a financial expert may also be able to reduce your tax obligations. Many businesses tend to dread each spring because that means it’s time to file their tax forms, which can cause a whole new headache. Think of your time with an accountant as a good investment. Although it requires you to spend some funds, that decision could pay off handsomely in the long run.

Don’t Procrastinate

When you’re first getting started, things probably feel like a whirlwind. As you go throughout the day and scramble to finish tasks, things might become disorderly, as well. Keeping everything organized does take a lot of time and effort. However, if you make it a priority, you’ll be able to control things before they get out of hand. There’s nothing worse than trying to find a sales receipt or document when you’re facing a deadline. Keeping things running smoothly while you’re on a tight budget will always be challenging, but you can ease the burden by simply being committed to staying organized.

Make Your Office Mobile

Thanks to advancing technologies, some people are truly able to complete their work from anywhere, whether that means a neighborhood coffee shop, or their bedroom. Statistics released last year by the U.S. Bureau of Labor Statistics reported that over 20% of people in the workforce completed at least part of their duties outside of a traditional workplace. At first, you might run your business entirely from your home, but even when the situation changes, there’s no harm in keeping things mobile as possible. Not only will this reduce your spending when it comes to renting a physical office space, but it could also cut down on the amount of absenteeism related to bad weather or traffic conditions.

Running your business on a tight budget doesn’t mean that you’re doomed to a life of constant challenges. However, you’ll certainly need to operate in a diligent way that lets you spot problems before they turn into large obstacles. This type of proactive attitude is a huge part of helping your business thrive whether you have billions in the bank, or just a few thousand.

About the Author: Shelly White writes for education blogs. If you’re interested in building your own business, consider learning more about getting an executive mba.