Financing Your Growing Small Business

Financing Your Growing Small Business

By:


If your business has a good record, there are several sources of funds out there for you. But in the start-up phase of your small business, lets say your print online shop, your personal funds and borrowings will almost be your major capital. Almost all the equipment like the printer, papers, packaging and even your graphic artists doing your custom printing service, the funds are more likely to come from family and close friends. Ordinarily, there is no substitute for putting your financial assets on the line in starting your own business. Aside from your personal capital and those borrowed from your family and friends, here are other outside sources you may want to consider:

Trade Credits. Trade credit is an excellent way to finance inventory. If you use discounts wisely, it can be very economical. New equipment may be financed on an installment basis or by leasing from the supplier. This way, you can have new equipment for your operations that you can pay on terms that is convenient to you. You can also budget your companys existing funds for other important operating costs.

Banks. Establishing and maintaining good relationships with your bank will assure ready access to short term funds and even term loans of up to five years. These will usually have to be secured by existing business assets. Your need for bank loans should be anticipated well in advance. You should assess bank services and select the bank you have to deal with before opening your doors for business.

SBA (Small Business Association). For instance, your custom printing service becomes in demand in the market and you already have plenty of customers patronizing your service, it is a sign of growth. The more your business grows, the more employees and equipment is needed; which then would require more funds. Continued growth of your business will require you to consider long-term financing. Loans from SBA, SBICs and SBDCs are available. Equity financing may become necessary with growth to prevent burdening the cash flow of the business with fixed repayment expenses. SBICs and BDCs, and venture capital firms can supply this form of funding. But theyll certainly want a well-balanced management team guiding a rapidly growing business and selling unique products or services.

The cost of obtaining capital must be weighed against the benefits. Loans must be repaid- interest and capital- out of business earnings. But make sure they will not affect your ownership interest in the business, unless things go wrong. Not that they will impair your flexibility in making decisions that affect your business operations. Balanced financing and priority-first policy must be strictly observed to avoid financial problems in the long run.

One of the most difficult strategic decisions youll have to be concerned with is the long term financing. This usually boils down to whether or not you want your company to grow. If you do, youll probably have to sacrifice some of your ownership and control in the business. And your entrepreneurial flexibility may be diminished. Youll have to reexamine the reasons you went into business anyway. It may be possible to stay small and remain profitable. If your firm grows too large to suit you, it may be better to sell out and start another business. This will very likely be your course if your dominant need is for achievement through entrepreneurship. Bear in mind that surviving business growth will require you to develop skills beyond those of what it takes to be an entrepreneur.

About the Author:
For comments and inquiries about the article visit Print Online and Custom Printing



Article Originally Published On: http://www.articlesnatch.com


Tags: ,

|

Loading...
Related....
Videos...

Recent Advertising Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Site Navigation:

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.