As a business owner, there can be a number of outside factors that prevent you from taking your idea to the next level. One of the biggest limitations that many business owners face is that they do not have enough capital to carry out their plans.
Running a business is a costly venture, especially once it begins to grow. You may find that you will need to borrow money or tap into outside resources to leverage the necessary capital to keep your business’s growth on track.
Anytime you borrow money there is an inherent risk you are taking. Not paying back a loan can have detrimental impacts on the future success of your business, as well as your personal finances. Being cautious about borrowing money is a good idea, but you should never let fear prevent you from taking the leap to growing your business.
In this piece, we will highlight what you can do as a business owner to safely borrow money. So without further ado, here are the 5 reasons why you should not let fear get in the way of your business accessing outside capital.
Modern Lenders Provide Better Loan Terms
The business lending landscape has undergone numerous changes over the past ten years or so. The evolution of Fintech, combined with the growing lack of trust amongst corporate financial institutions, has opened the lending landscape to new changes.
In the past, businesses were forced to handle all of their financials through traditional avenues. These traditional financial institutions include large national banks, local banks, and credit unions.
With more businesses searching for other lenders to work with, it paved the way for new online lenders to come into the lending space. These alternative lenders can provide the same small business loans that traditional banks do, but with the power of technology, they can offer more accurate loan terms and quicker financing. Just because these lenders are online-based does not mean that you do not meet with a real person either. Each of these online lenders will have virtual financial experts that will be able to mull-over all your financial data and concerns to draft up the best loan payment plan for both you and the institution.
When choosing a financial institution to work with, make sure that you do all your homework before settling on one. Different lenders may offer different capital products. Depending on the situation you find yourself in, there may be certain lenders that make more sense for you to work with than others.
New Money Will Open Opportunities
Change is something that most people fear in one way or another. The fear of change can often paralyze a business and force them to remain put, instead of pursuing new, lucrative opportunities.
The money gained from taking out additional financial assistance can seem scary at first, but the opportunities it unlocks should empower you, not bring on fear.
As you gain the access to capital it will unlock the ability to carry out tasks that will help your business grow in the long run. A few things to consider using your new funds on are:
One of the best ways to grow your business is through marketing. Marketing can get pricey quickly though, so oftentimes for small businesses, budgets are too small to have great impacts.
Using the funds from a loan can help you increase the marketing output of your business in a few ways. One way is by investing in gear and equipment for the department. Editing computers, professional cameras, and marketing software can all cost a pretty penny, but the money from a loan can help offset the initial startup costs.
Besides that, leaning on an outside agency or consultant for help is a great way to improve your marketing efforts. Check out some of the done for you marketing services we offer to give you an idea of what we could for you. If you are in need of any digital consulting services, contact us today to see where we can help you!
As your business grows, you will likely need to loosen the reins on the control you have over each department. To do this, you will need to hire some additional help to manage departments and tasks.
Creating just one position can cost a lot of money. From the recruiting stage to onboarding, there will be many costs along the way. This does not even account for the yearly salary that you will need to pay said employees. The funds you gain from a loan can all be used to drive forward your hiring efforts, without affecting the bottom-line of your business.
Business Loans Allow You To Remain in Control of the Business
Besides business loans, angel investors are becoming an increasingly popular way to gain access to a large amount of business capital, but it will come with a cost.
If you have ever watched the hit show Shark Tank then you will be familiar with how angel investing works. Essentially, you go to a group of investors and pitch why they should invest in your business. The catch is, unlike with a business loan, the money here will come with strings attached. These investors will want a stake in the business, meaning you will be giving up equity control for this money.
While there are certainly pros of going through the angel investor route, the inherent risk you take with other business capital solutions, such as business loans and lines of credit are much less. Even when going through large banks, the terms of investing will be much more owner-friendly than that of an angel investment.
Third-Party Financial Tools Can Help you Budget Effectively
Whenever you take on any sum of money, there will be some fear in place that you will not budget it correctly. An influx of cash is exciting, but that excitement can get you into trouble if you don’t think critically about how you are going to use it over a period of time.
Luckily, even if you aren’t a budgeting or accounting expert, it doesn’t matter as much anymore due to the fact that there are countless accounting platforms out there that can help you balance your books.
If you aren’t already familiar, you should look into incorporating accounting software into your business. The earlier you do this the better, that way all of your historical financial records get tracked from the very beginning. This will help you better visualize how financially healthy your business is.
Using these systems will only improve your odds of receiving accurate funding, as you will be able to pull extensive financial information for any lender you work with. Being able to receive the correct amount of money should ease any concerns you may have with taking on outside assistance.
Outside Assistance is Always Available
Any business owner should know that they are never alone in their journey. It can feel like the only one who cares about the success of your business is you, but that is not the case. There are plenty of organizations that would invest time and effort into helping your business be a success.
So, if you want to take on a loan, but are still unsure of who to go through, what to apply for, and how you will pay it off, we recommend that you find your local Small Business Development Center (SBDC) to leverage outside assistance.
The SBDC is a nationwide network of development centers specifically designed to assist small business owners through any stage of their business’s journey. The SBDC offers both paid and free resources.
To get started we recommend that you set up an introductory meeting with a business consultant to go-over what your business does and how you want to move forward with your business. Discuss the fact that you want to learn more about business loans. The consulting team should be able to give you the tools necessary to dispel any fears you may have about taking on an outside business loan.
Having the knowledge and support from the SBDC will help you get the perfect capital solution for your business.
Good Luck this Year!
As you look to scale your business amidst economic uncertainty, being as in-tune with your business finances as possible will only help you be more calculated when taking on an outside risk.
As always, if your business has any need for digital marketing services, feel free to contact a member of the Watchman Advisors team today!