How To Find The Money You Need To Develop Your Small Business



No matter whether you operate an internet based service from your bedroom or you have a small retail unit and employ two or three members of staff, there are two things that every small business needs to be able to develop and expand – time and money.

The first, time, is something that you can create yourself.  By reorganizing your calendar and pencilling in a few hours each week to be able to dedicate to business development, you’ll be surprised at how much you can actually get done with just a little planning and preparation.

It’s the second point, money, that most stumble on, as many small business owners often struggle to even withdraw a wage, never mind being able to look at utilizing money for development.

Leading many to simply stop and give up, living on the hope that the business will naturally develop itself, there’s a good chance that you would see some development without investing any money into business development, but aside from the fact it’s unlikely to be substantial, there’s a good chance it could take years to see even a minor development.

Therefore, it’s strongly recommended that you look at the possibility of investing money into your business and the following six options show you just how easy – and flexible – funding your business development can be.

1.  Save

The best way that you can fund any development of your business is to save and invest the money yourself, as it means that should things not go to plan, you have no worry of having to pay back the funds to another party.

Plus, it requires for next to no work to be carried out except for putting money aside, which means that your only barrier in receiving the money for your business development is how much you can afford to put away each month.

2.  Small business grants

In theory, small business grants should be the best way that you can fund any business development, as it’s money that you receive from an organization who don’t require for it to be paid back.

However, as there is often a substantial amount of competition for the grants – something which has increased in recent years as due to the economic climate, the number of grants has decreased – it can very often mean that it isn’t a viable option, as the time invested in applying for grants could often be better spent devoted elsewhere.

However, as grants vary from city to city, it’s always worthwhile asking your local government or business body to see what grants are available – if any – as it’s important to realise that they aren’t often heavily promoted and sometimes require for a little digging around to be carried out.

3.  Overdraft or credit card

For personal requirements, using an overdraft facility or a credit card isn’t generally advised as a way to raise funds, as the interest accrued on the money borrowed will often mean that it isn’t a financially viable option.

With many business overdrafts and credit cards, however, you may be able to take advantage of using them whilst accruing zero – or a minimal level – of interest, especially in the first few months of opening them.

Of course, this does mean that if you want to borrow the money for development reasons without having interest applied you may only have a few months to do so before you need to pay it back, but it’s definitely an option to consider.

4.  Small business bank loan

One of the more popular ways to finance business development, receiving a small business bank loan works in almost exactly the same way as a personal loan once you actually receive the money, but applying for it is slightly different.

For instance, rather than the bank simply determining how much money you can borrow on your income, depending on the amount of money required, they will very often ask for in-depth information on your business and it’s not uncommon for them to ask for a business plan – in fact, if the loan required is of a substantial size, it may be a requirement.

A lot of small businesses are put off applying for a small business bank loan, as they believe the process is too difficult for them to succeed at.  However, all you have to remember is that you have to be able to prove that the money you want is going to be put to good use and help with increasing the financial turnover of your business, therefore putting you in a better position financially.

5.  Family loan

The discussion on receiving loans from family members to fund the development of your business tends to divide people down the middle, with some believing it’s a great idea, as you can borrow money knowing that you aren’t going to be taken to court if you don’t pay it back in full by a certain time, whilst others are strongly against the idea, with their argument being that it can put too much of a strain on a relationship.

All you have to keep in mind when considering a family loan, however, is that you shouldn’t treat it any different to a loan from a bank.

You shouldn’t expect to receive the money interest free and no agreement should be verbal only, as this is where problems can arise.

If you can agree on a figure, as well as a level of interest that is beneficial to both parties and collate all of this together in a written contract, it will ensure that neither party is confused about the terms and that the loan can be kept separate from any personal relationship.

6. Angel investor

Simply put, an angel investor is someone who will provide you with the money that you need in exchange for a level of equity in your business.

The application process for angel funding can be difficult and daunting, as you will need to provide full and in-depth financial records for your company, as well as a detailed business plan and there’s no guarantee that you will actually receive any funding, irrelevant of how much work you put in.

Plus, having to release some equity from your business can be a difficult pill to swallow, no matter how much money you’re receiving in return.

However, if you can successfully receive angel funding, you will be able to benefit from the knowledge and experience of the angel investor, who will do their best to work alongside you to develop your business, as the more money that the company that they’ve invested in makes, the more money they make.

If you’re serious about developing your business, extra finances are almost always required.  You may not think that you have many options available to you, but the truth is if you can spend the time researching the funding avenues that you can take, it’s highly likely that you’ll be able to find the funding that you need in a way that’s suitable for you.

This post was originally featured on November 16, 2010.

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