Ways To Finance Your Business.Finding the financing we need for our business has never been an easy task . There are several ways to finance a business, including.
Best Ways To Finance Your Business.
This does not mean that there is no way to find the financing that we are going to need. In fact, the instruments are there, you just have to know how to find the one that best suits your needs and approach it in the right way. If we were to make a ranking of these instruments, ordered according to the possibilities that they will finally finance us, we would find ourselves facing a scenario very similar to the one described below.
10. Request a loan from the bank
One of the idiosyncrasies of the Spanish business fabric, unlike other countries such as the United Kingdom, is the high dependence of business on our banking system. Going to the bank to request a loan has become the norm for years for more than 80% of small companies, compared to just under 50% who register their credit requests in other European countries.
Despite this, and facing the difficulty that many businesses currently have to finance themselves in this way, go to our “friendly banking entity” if our business idea moves in a traditional field (commerce, restaurants, services, etc.).
9. Exchange of services
The exchange of service or bartering involves reaching agreements with other companies in a relationship in which theoretically everyone wins. Although it is not a direct financing method, it is true that it helps reduce fixed costs and can sometimes represent very important savings for companies that embark on a relationship of this type .
On the negative side, dependency relationships are created and there is always the risk that one of the parties does not fulfill in the same way as the other its “part of the bargain”, a situation that can lead to unwanted conflicts.
8. Negotiate an advance
If we are lucky enough to find an important client before we even launch our product, we can negotiate with them an advance that allows us to finance the launch.
Having clients who count on us because of our image, the trust they have in us, the quality that we have demonstrated on previous occasions, etc. It is key so that some of the best can remain as clients for a long time, but that they can become a recurring way of financing our activities.
7. Incubators and startup accelerators
If our business model is comparable to a startup philosophy (intensive use of technology, scalable, etc.) it is likely that the place where we are most interested in being at first is an incubator or a business accelerator.
In the first, they will help us to translate our business idea into reality and in the second, we will have mentoring and probably external financing to be able to attack the market with certain guarantees.
6. Present the project to venture capital companies
If our company can demonstrate that it is scalable and that it can generate profits in the short-medium term, it may be interesting to start knocking on the door of certain venture capital funds.
The positive part of doing it is that in reality, they are companies that are used to risking and losing their investment because in reality they know that if one of their bets goes well, the benefit they will obtain in return will be enormous. The downside is that many venture capital firms are more concerned with the profit they can make from the sale or divestment of a business than the business itself, sometimes forcing founders to make decisions that they don’t really want. drink.
5. Present the project to a local Business Angel
Presenting our project to a local business angel is very similar to presenting it to a venture capital company . The main difference is that theoretically the investor angel has a social commitment to the community in which it is located. They tend to be successful entrepreneurs or investors seeking the development of entrepreneurs within their area of influence.
As such, they tend to have more “patience” with the projects you sponsor and are involved in a much more direct way in the development of the businesses in which they invest.
4. Start a crowdfunding campaign
The equity crowdfunding can become a great alternative when it comes to financing our company. It allows any small investor to bet on our company, backed by the transparency and generally quality of this type of platform.
In the last year, several interesting platforms have been presented in Spain that are committed to this route and we recommend that you read our article “The best equity crowdfunding platforms”.
3. Aid and subsidies
Although public administrations do not tend to directly finance business projects, they do implement different grants and aid that allow the financing (albeit a posteriori) of projects that meet certain requirements. Innovative projects that bet on new technologies , that want to internationalize or that represent a competitive advantage in any of the areas that the administration wants to promote at a certain time (such as renewable energies a few years ago) tend to benefit from this type of subsidy. .
2. Friends and family
Reaching out to family and friends has become one of the first options considered by all those who want to embark on the business adventure. Those known as “Friends Fools an Family” can give us the initial impetus we need to get our project started.
In our article “Friends Fools and Family: how to ask for money for our business” you will find the keys you need to know if you opt for this way of acting.
1. Boostrapping
Bootstrapping is a term from English that refers to starting something without resources or with very few resources. In the area of business, then, it means exercising some entrepreneurial activity with little or no capital, that is, undertaking only with the means available.
One of the biggest advantages of Bootstrapping is the risk , almost zero, since we will not owe anything to anyone and if we fail, we will not have lost too much, we can always try again.
Although it is a slow way to start, it may be the only way for many entrepreneurs. Emphasize that if you are successful you can get an invaluable experience , of great value that will affect many times in the services, products offered and work capacity
