Do you own a business? Importance of Funding
Many dreams to start a business but don’t have an adequate amount of funds, so the dream remains as a dream. Business is nothing but a platform for the exchange of products or service with respect to money or any other service but starting a business is a huge decision because we invest lots and lots of money in it.
The main motive of a business is to delight the customers and try to acquire more customers along with a proper plan and strategic management. According to Michelle Dipp, a life sciences investor and venture capitalist, “There must be an appropriate vision or goal for starting the business. If you plan to pitch to investors, you must understand that investors don’t just put money on products, they invest in the future. The best way to foresee the future is through company’s vision or goals”. Like humans, the business also undergoes various stages such as:
This stage is the starting stage of any business. Here the businessman or the entrepreneurs need to define the pathway like where they want to take their business after a certain period of time. This is one of the crucial stages. The budding stage defines the initial stage of the business. The businessman needs to water it every day with efforts, hard work, and other factors to make it strong day by day.
The growth stage is otherwise known as Survival stage for the business. The times come when business face cut-throat competition from the competitor, here the team should perform really well and generate their unique selling proposition.
In the maturity stage, the growth of business tends to be in the break-even point, no profit no loss. Here a new strategy should be implemented, and business should re-enter with new product and service so as to earn a profit and acquire customers.
In this stage, business is in the position of winding- up. The ideas don’t work, the customers are retained by the competitors, or maybe they don’t have funds for further proceedings.
Be it a start-up or a renowned business; there comes a certain period of time where every business requires funding or loan. Various business websites and vendors provide funding and loans for starting a business.
There are various types of investors like angel investors, venture capitalist, personal investors, peer to peer investors, etc. The investment can be a purpose for assets, capital, furniture, etc. Financing is required in every arena like employee’s salary mostly running the payroll, maintaining the inventory, etc. A business owner or entrepreneurs fear from borrowing money, so they start and accelerate the business but due to lack of lump-sum amount they need to shut down the same.
What are the necessary points which should be taken care of while searching for a funder or a lender?
Terms and Condition
When an investor invest in your company, he/she will obviously enter into the contract with certain terms and condition, make sure you have properly read out all the conditions and have made all the points clear and the agreement is made in a way that both the parties are mutually benefited.
Make sure you are aware of the history of the investor
Partnering with someone is a big decision, make sure you have proper communication regarding the same. Try to understand what all other companies in which he/she has invested are? Was the investment for a short period of time or a long period of time? Why the contract got over? What is the type of industries he/she has invested?
You can check out with this popular financial institution https://www.libertylending.com/ to get funds for your business quickly.
What is important?
To maintain the working capital
The foremost important part of a business is to maintain and keep consistency in respect to capital. The working capital includes furniture, employees’ salary, office equipment, and other administrative responsibilities. If the business is in the mode of expansion, it will require extra workforce and space and this will increase cost and if the business is in the constraint of only loss, this will require amount and can be raised considering market trends.
Recovery or meet the accident expenses
Accidents can happen at any time or any moment like fire in the building or certain asset brokerage or short-circuiting. This will again incur a cost. No doubt there is an option of business insurance but this will just help in making the burden less, but still cash flow is required. Consider a factory outlet where workers are always prone to accidents, machines often break down, this needs proper care and safety measures, and these factors cannot be fueled without money.
Maintaining a relationship with Key account manager
Every firm requires a key account manager for the investor, to hire an experienced professional so that investors can be backed-up for the same. Key account manager helps in maintaining a good relationship with clients helps you in financial terms and helps in accelerating the growth of the business as well.
Introducing a new product
New product development is usually becoming forte for the firm. But product development again requires huge money because it will involve testing, workforce planning, digital marketing service, etc.
Sometimes when the business is growing at a faster pace and is able to acquire the customers, and the team decides to expand in different corners of the cities or PAN India, money is the first and foremost thing which will be required for the various purpose for financing, increasing the inventory, etc.
There various companies which undertake projects on a contract basis or cloud software, basically here the companies tap the investors known as crowdfunding.
Business is an ongoing process. Funding can be required at any point in time, but finding the correct and appropriate ways of funding and finding the investors must be chosen wisely. There is a big market of investors and loan providers, but everyone cannot be trusted. Firstly, understand the benefit of funding; what are the risk involved along with the Pros and cons of funding. Why is the investor interested in your company? Most importantly make your strategy strong so that the funds are used in a smart way, and you incur profit from the same. Funding can be on the basis of profit sharing as well.