Financing Your Business
Generally, business financing can take two forms: debt or equity. Debt means borrowed money. Equity involves giving up an ownership interest.
New businesses often need capital for the initial outlays prior to opening a business. A business might also need financing when they undergo an expansion or during peaks of a seasonal business.
Common sources of debt financing include:
- Vendor or trade credit
- Credit cards
- Family and friends
- Small Business Administration (SBA) Guarantees
- Leasing companies
- Customers or clients
- Specialist lenders
Equity financing sources include:
- Venture capital companies
- Private individuals
Regardless of the type of financing you’re looking for, the process of obtaining it is the same. Develop a business plan that addresses these 5 basic questions:
- What is your business proposition and how will you make it successful?
- Do you have the necessary experience and have you done your homework?
- How much money do you need?
- How will you spend the money?
- How will you pay it back?
The business plan usually covers a 3 to 5 year period and includes financial forecast. Financial forecasts are like weather forecasts-the farther out you go, the less reliable they become.
Insight can assist with putting together financial forecasts and business/financing plans. Because we’ve been practicing in this community for a long time, we have numerous referral sources for financing options. We are pleased to make introductions as appropriate.