How to Fund Your Business As You Grow

If you started your business, chances are you started it because you wanted to be your boss and had the passion and dedication to build something great. However, no empire is built in a day, and they all need money to grow and expand. It is virtually impossible to grow without money and for even the littlest decisions like bringing a prominent management executive onboard, you need money.

Here is a small list of funding options that might help you deal with the cash crunch in your company:

Bootstrapping

Self-funding is also called bootstrapping is quite an effective way of financing your start-up in the initial days. It is especially significant when you are just starting your business. Since first-time entrepreneurs usually have trouble getting funding without showing a foolproof plan for potential success, bootstrapping saves the day!

You can use your savings or can bring your family and friends on board to contribute. Raising funds through family and friends will be more comfortable due to fewer formalities/compliances. Moreover, there will be a lower cost of raising while family and friends might be flexible with the interest rate.

When you invest your own money, you are tied up with your business which the investors at a later stage may consider an excellent point for the business. However, you should remember that bootstrapping works only when the requirement is small, so if your business needs cash from day one, then you might need to consider other options.      

• Get Angel Investment  

Angel investors are persons with additional cash and an eager curiosity to invest in upcoming start-ups. They may or may not work in groups, but they collectively screen proposals before investing, and they may also offer advice and mentoring alongside capital. 

Angel investors have been the hand behind many success stories like Google, Apple, Yahoo, Alibaba, etc. This form of investing usually happens in a company’s early stages of development as angel investors decide to take more risks in return for higher rewards.

• Venture Capital  

Venture Capital is where the big bets are made. Venture capitals are professionally managed funds that invest in start-ups or companies with huge potential. Venture Capitalists come onboard with expertise, mentorship, evaluate, and assess where the business is head from sustainability and scalability perspective.

A venture capital investment may be suitable for small or medium-sized businesses that have grown beyond the start-up phase and are already creating good revenues. Venture Capitalists are keen on recovering their investment within a three- to the five-year time window.

They generally look for more massive opportunities that are stable with companies with a strong team of people and outstanding traction. You may have to give up a bit of control and accept mentorship from the capitalists. If you are in the growth stage and surpassed the start-up phase, then VC may be for you.   

• Business Incubators & Accelerators

If you have just set up shop or are in the early stage of your business, then you can consider Incubator and Accelerator programs for funding. Before we tell you more about business incubators and accelerators, let’s elaborate the difference.  

Incubators nurture the business offering complete shelter tools, training and network to a business. While Accelerators are quite the identical thing, but an incubator enables a company to walk, an accelerator assists a company in taking a massive leap.

These Incubator and Accelerator programs usually run for 4-8 months and need time commitment from the business/company owners. If you participate in these, you will also be able to make good connections with investors, mentors and other fellow start-ups.

Crowdfunding  

Crowdfunding is a modern way of funding a business as you grow. If your business has been gaining a lot of popularity lately, then this might be for you. It is like taking a contribution from more than one person at the same time. 

An entrepreneur can put up a comprehensive description of his company/business on a crowdfunding platform. The entrepreneur will mention the business goals, how he intends to make a profit, how much funding he requires and for what specific reasons, etc.

Then consumers can read all the information and donate or contribute money if they like the idea. This is more of helping businesspeople believe in with little contributions. Crowdfunding may even attract venture capitalist or angel investor down the line if you put efforts into it and help you market your business.     

Short term loans

If your business is well established, but you have a money crunch, then you can go for short term business loans. These can be paid back in monthly instalments with the high or low-interest rate depending on what you sign up for. You can also take out high acceptance payday loans from direct lenders to pay off imminent expenses.

If your business hasn’t been doing well, then you can easily take out these loans as they are high acceptance even with bad credit. You can back the money later next month on payday and then in monthly instalments.

There are plenty of ways of raising funds for a business or a company that has just started. Nevertheless, if you were in a position where you have to pay urgently then high acceptance payday loans, direct lenders would be suitable for you. However, high interest, they are a quick solution to an imminent cash crisis that can be quickly resolved with short term credit.