Financing a business isn’t a walk in the park by any means. In fact, if it was, then more people would be doing it. In order to get your business successfully off it’s feet, then it’s important you’re doing everything right to finance it properly.
There are a number of areas you’ll need to cover when financing a business and this guide is here to help. Here are five things to know about financing a business.
Have a business plan with a financial forecast in place
Firstly, a business plan is essential and a necessity for any serious business venture. The business plan is put in place to showcase what the business is all about, as well as it’s goals and objectives for the foreseeable future.
It’s also important to consider a financial forecast that you can project the potential earnings you’ll make as a business in the first year and beyond. This is important to have because clients and investors alike will want to see these forecasts before investing their money into your business.
You’ll want an emergency savings pot
An emergency savings pot is something that you’ll definitely want as a business because it helps you in a scenario where the company has a rainy day – or month perhaps.
There are always going to be dips in the business where some months don’t perform as well as others. It’s necessary to have a healthy cash fund and flow so that your business can self-support itself during those months that aren’t as fruitful financially as you’d hope they’d be.
Know which lenders are the best
There are lots of lenders out there, which is something you want to be mindful of when choosing your financing. From lenders that allow no documentation loan options to those that have hidden fees and extra charges to their lending agreements.
An alternative way to finance your business is through cash advances. Cash advances are a form of short-term, unsecured borrowing for businesses. Companies like Swiftfund allow small businesses to repay the loan every time a sale is made via debit or credit card.
It’s important to do your research thoroughly and to pick lenders which are the best for what your business needs. The last thing you want is to get yourself into a situation where you are struggling to pay the lender back.
Have a good accountant
It’s absolutely crucial that you have the right people in the financial team of your business. Even if you’re a singular entity within your startup business, make sure you have a good accountant you can outsource. Having a good financial team or accountant will help ensure you pay the right taxes and make the best decisions for your business.
They’ll also ensure you’re making the right decisions on any financial obligations you undertake from hiring a new staff member to cutting budgets to your departments.
Don’t let one person make all the financial decisions
Finally, make sure that you’re not letting just one person make all the financial decisions. Have a hierarchy in place that ensures sign offs for big expenditures.
These finance tips are going to help your business thrive and stay in the black. It’s hard for a business to survive past it’s first year financially so make sure you get past it with these tips.