If there is a logical reason why your business fails then it is due to poor financing or other reasons can be a gap by means of managing or planning your operations. It has been observed that people might pay attention to planning and management but it is the financing they ignored. This is something you don’t have to do because financing is something you don’t do it once. Even you keep doing it throughout your business life whether you are expanding or modernizing or even buying stationery for your business. What you need to understand is how to use your capital in a better way. One wrong decision can cause the fall of your business.
The first thing you need to analyze is whether you want to get financial assistance from outside resources in the form of loans. If you really run out of capital and you believe your business is in desperate need of expansion or increase then you have to decide whether you have to delay surgery or whether you have to step into external financing.
If you believe that getting external financing is something you cannot survive without it, you need to understand the type of finance.
Equity financing: Equity financing is when you sell your shares and get cash in return. It’s like selling half of the right of your business in profit. You can achieve equity financing from various resources ranging from venture capitalists and even private investors. And the best about equity financing is that it will not be considered acting as a loan against you until and unless your partner decides to take his investment.
Debt Financing: Under debt financing you get a loan with a guarantee that you will pay back money. Guarantee can be guaranteed I.e. Submit your property, inventory or equipment to the lender until you don’t pay the entire amount. If you cannot pay the lender has full rights to your collateral assets.
These are the two basic finance types that you get on the market. Now let’s discuss the sources from which you can reach a loan.
The first and foremost places you need to consider while thinking about external financing are family or friends. If the amount of capital you need is small and you believe it can be fulfilled by your personal resources then you have to go for them.
The second best option you have is to consult with our small business administration for debt financing. SBA does not finance anyone but regulates the lender according to your needs. No matter which market sector you include SBA will always help you.