When it comes to gaining funding for your business there are a number of different places and avenues that you can approach but the one that you actually choose to use will be based on your business needs. Some examples of the places that you can turn to in the hope of gaining the business finance that you need are bank loans, family/friends, credit cards, overdrafts and investors. These are only a handful of the finance options that are open to both start-up businesses and established businesses; however in some cases many businesses often choose to use a combination of many different sources of finance in order to cover all of the expenses.
It can easily be said that many new businesses will exhaust the internal financial resources which are needed and used to get your business off the ground during the initial start-up phase. It is because of this that new businesses will then seek additional capital in order for them to continue to grow. The statement it takes money to make money is also never more relevant than it is when it comes to small businesses. This is due to the fact that every small business needs money to get started, operate and expand as well as to grow.
If you are a start-up business and you are at the point where you require outside finance you must clearly identify the purpose of your business finance. The start-up finance that you gain for your business is generally acquired so that you can gain assets for your business. These assets are used to help your business achieve its profit making objectives.
When you start to look for ways of raising business finance you should have calculated roughly how much money you are going to need in order to cover all of your business start-up expenses. By doing this you have a better chance of getting the business finance that you want and that you require. Once you have gained a rough estimate of how much money you are going to need for your business start-up in order to get your business off the ground you can start to think about the various avenues that you are able to approach as a way of securing your business finance.
However when it comes to business finance there are only really two words that you need to consider, these are debt or equity. Debt finance, for example, comes in the form of bank loans and credit cards. Debt finance is money that is lent to your business. It will cover all of your business costs but you are required to pay it back. You will have to repay debt finance on a monthly basis with added interest. Before you agree to take out debt finance it is important that you are able to keep up with the monthly repayments. To find this out you should investigate your expenditure and ensure that you will be able to keep up with the payments sufficiently.
The second word that you need to know is equity. Equity finance is money that is invested into your business for a share of your business. You don’t have to pay this money back at any point within your business but it does mean that you lose an aspect of control over your business.
Within every business there are five main components that are needed in order to ensure that your business operates successfully. These components are Personnel, Equipment, Housing, Products & Services and probably most importantly Capital. Without capital all of the other components wouldn’t exist within your business.