Whether at the very beginning of building your brand or when your startup is growing into a small business, a point will come when you need financing. There’s nothing wrong with needing money in the business world. In fact, raising capital from outside sources is considered a smart move, helping your company grow beyond your means and reach its full potential. But, if you’re worried about getting into debt, are there ways you can finance your business without it? Let’s take a look.
Remember That Debt Isn’t Always Bad
If you’re scared of debt, it might be time to change your mindset. Debt in the business world isn’t always negative, and most of the big brand names we associate with great success have been — or still are — in debt. Taking out a loan can help you fund growth whilst staying in control of your company and prevent you from having to tap into your balanced cash flow.
But, it is important that you remain in control of the loans you have and know the difference between good and bad debt. Be sure that you’re able to meet your regular repayments and, if you can, pay back more than the lender asks you for every month. Don’t get sucked into a vicious cycle of using debt to pay off your debt, which never ends well.
Hire a Financial Advisor
Getting a financial advisor is always a good idea, regardless of your financial situation. If you do opt for a loan, meet with yours beforehand to ensure you end up with good debt rather than bad debt.
Financial advisors can aid with many other things, too. In fact, by being clever with your cash flow and cutting costs, they can prevent your need for a loan all together. Sometimes all you need to do is be smarter with the money you have, and an advisor can do just that. Team up with a financial expert as early into your business as possible to create solid, stable accounts from the get-go and reduce the likelihood of getting into debt as your company grows.
Personally Fund Your Business
A lot of modern startups are funded personally by the CEO — or CEOs. If you can gather the funds yourself and avoid having to take out a loan, your business will be in a far better financial position. Of course, this may be a slight risk for your own finances, but if you’re going to bet on anyone, bet on you!
There are a number of ways to personally fund your company. If you’re over 55 and have a mortgage, a home equity loan is a fantastic (almost debt-free) option. As Online Money Advisor explains: ‘Taking out equity release essentially means borrowing the equity you’ve built up in your home through paying off your mortgage. You can release it as a cash lump sum, small instalments or a combination of both.’ But the really interesting thing about this loan is that you don’t have to worry about repayment plans. Instead, you’ll only have to pay back the money when you sell your property, making it a stress-free, risk-free way to access funds quickly.
If you’re worried about debt against your business, you could also take out a personal credit card or bank loan. If you ever miss a payment, your company won’t be affected and your brand’s reputation remains intact.
Look For Investors
Many businesses rely on investors to fuel growth. If you’re looking for debt-free financing, reach out to your contacts to see if anyone would like to invest in your brand, offering you money in return for a percentage of your company’s profits. Ask family and friends before reaching out to others in the business community via platforms like LinkedIn.
You may also find crowdfunding to be beneficial. This financing strategy involves pitching your business plan to the public and inviting them to invest if they want to see it come to life. In return, you offer them a stake in your company, or another perk, such as free products or services. It’s a fantastic way to quickly raise funds, but with many other brands trying to do the same, you have to have a strong USP that your audience engages with.
Angel investors are another option. Unlike other investors, these outsider individuals are more inclined to fund startup companies or those in the initial stages of growth. Again, their money will be offered in exchange for equity in the company, but if it fuels a rise in profits then it’s a no-brainer!
Final Words
Finding money to keep your company moving forwards isn’t easy, especially if you don’t want to accrue debt. However, it isn’t impossible. Hopefully, these tips have given you a better idea of the options available to you, and you can go ahead with a plan to help your company thrive.
