Finding various ways to fund your SME

Understanding business finance options can be confusing. There are two main parts to financing small businesses.

Equity Financing or Debt Financing

There are some common ways you can fund your business: Personal Investment, Angel Investors, Government Assistance, Commercial Bank Loans, Financial Bootstrapping, or Buyouts.

Venture Capital and Angel Investors seem to be a romantic solution to your finance needs, but they can come at a cost. Not always financial. These companies are looking for a return on investment. The funders want to get their money back and then some. They are often expecting a 10x return. The directors will usually have input in how your business is managed and run, expenditure, and additional loans you want to take.

Government assistance can be a worthwhile avenue to pursue if you can qualify and jump through the hoops and red tape.

Failing in a business where you have accepted funding can be detrimental to your future options. Again, it is not a free lunch but can substantially impact your business in the future.

Bootstrapping your business usually is how entrepreneurs grow their business initially. Not spending money on high salaries, DIY marketing, and getting staff to multi-task while the business grows is useful to eliminate debt. This is definitely the long way around the mountain.

Buyouts can work if you want to ensure the business remains open, but you give up some equity. Partial or full buyouts may require the owner to stay in place for some time post the buy-out. So make sure you read the fine print.

Alternative Options

Using finance houses like Bizcash can enable you to continue owning and running your business. Remaining in control of your business, with minimum interruption and input from an outsider.

They provide you with the finance facility to grow and expand your business without giving up equity, shares, or control of the company.

For more info on what Bizcash can offer you as a small enterprise, click here

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