The reading level for this article is All Levels
Need money? Crazy question, isn’t it? Money’s the fuel that drives our business engines. Mix it with your entrepreneurial drive and the spark of your vision, and you can really turbo-charge your business — launching it or growing it bigger than before.
Only problem is, the money to grow — to expand your premises, to hire hot talent, to increase inventory, or seize any number of opportunities — isn’t always easy to access. The banks — well, enough said. One great source is government funding, but we devote coverage to that throughout this publication. What about other creative ways to secure financing? That’s the subject of our new series.
Financing 101
Lesson 1
Why it pays to look close to home
Fact is, you may already be sitting on all the money you need. Or you might be able to take advantage of hundreds of alternate ways to get it. In this series, you’ll discover how a $150 classified ad can attract investors worth hundreds of thousands of dollars, how suppliers can help you launch a product, how you can use your downtime to finance growth, and a lot more.
First off, why is bank financing so tough to get? Well, here’s how the bank thinks. It takes the same administration to give a large business a $300,000 loan as it does to give your small business $30,000. Frankly, you’re not really worth their time. And if they do consider loaning you money, they want collateral — equipment or land that your business owns. Maybe even your house.
The trick is to divide and conquer. When you have a group of small amounts of money from different sources, no single investor can shut you down. Reduce the risk, and you’re more attractive to investors and banks. In fact, the banks might actually come calling on you.
You can usually reduce the need for financing before you even start. There’s money hiding in your inventory, your employees, your customers and your suppliers. It’s in your receivable, in resources you have but don’t use completely. And it’s in the goods and services you can provide others.
We’ll start showing you how to access all that hidden money in the next instalment, Capturing your cash flow.
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