Business Funding and financing is the course through which entrepreneurs arrange money for investment for business purposes. An investment can be used to start a new business or finance current activity in a business already well on its way.
There are Three Primary Purposes of Financing
- Funding a business startup
- Financing for the growth and expansion of a business
- Dealing with unforeseen financial encounters
Sources of Business Financing
- Self-Funding
- Giving up Equity
- Debt
- Business credit card use
- Small Business Administration loans
- Foreign investors
- Crowdfunding /Selling shares of the business
Are Business Funding Rules Good or Bad?
If you ever turn to economics, accounting, or managing the books in a business, there will probably be rules everywhere. Following rules in business are suitable for running a successful and growing company.
However, experience, seasonal forecasting, and judgment matter in running a successful business and producing result-oriented business operations.
If you ask a successful entrepreneur if he is a strict rule follower, the answer will be no. From a study conducted over 30 years and 12,686 Americans sample size, “Study finds successful entrepreneurs have brains and a history of risky behavior in their teens.”
7 Business Funding ‘Rules’ to Break
- Think out of the shell. Be rebellious. Being rebellious in business does not mean risking conflict in legal matters. It means to think out of the box. If the market is going down and the overall economy is falling, there is nothing wrong with taking risks and facing challenges. But be prepared and get ready before falling into any new challenge. Introducing a product with better taste, as demanded by customers in the previous survey, can be risky. Still, those who do not try new ventures do not get new experiences and better outcomes.
- Be risky in business. If your current growth rate is not up to the mark, there is no harm in being risky and going over new horizons in business. Those who do not take risks do not reach the skies. Large corporations often start with the least capital investment and a small-sized business. Invest money in new ventures and put your efforts in fully. Even if the business goes into recession, it might rise again after using effective strategies.
- It is a wrong assumption if you think your previous business history must be spotless in financial bookkeeping. Investors are often not interested in previous failures, but they are interested in your new ideas and new business plans.
- It is not true that 100% of online lenders are spams or scams. Though many can be, not all are. There are registered tools to find and meet online lenders. Look for reasonable interest rates and determine when the loan must be paid back.
- It would help if you always had a confirmed and high-profit-yielding business plan to meet lenders. This is, again, a wrong assumption. It can be true from some lenders’ point of view. But many are just available to lend money and receive it back with some interest.
- Do not go for too much of a loan to show you need considerable investment capital for the business. This is not the right thing to do. Lenders often have no concern with how large your business is. They are lending money to get more.
- Fail harder. No one in the world has ever failed in their lifetime. Never fear failure. You fall, and you rise again. That is the real success.
Conclusion
We are taught thousands of rules during our coursework when studying business and financing. Accounting consultants and economists always explain the rules to run a successful business with an upsurge in growth.
However, how to fund your business is not always by a perfectly rule-abiding procedure. Use skills, be risky, gather experience from the past, and take challenges to ensure successful business funding and growth. Sometimes, breaking the business funding rules ensures better entrepreneurship than sticking to the rules that books tell.
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