Financing a small business used to be a somewhat straightforward process. However, things seem to be more challenging these days, with many entrepreneurs being unsure of which way to turn to realise their ambitions.
Moreover, help seems to be in short supply in recent times. Some local councils even failed to hand out the small business grants that firms were promised. Under a tough economic climate and
However, it could be said that certain companies can succeed more greatly during times of strife. If they fulfil a real market need during these crucial junctures, they’ll be seen as not only survivors but reliable fighters too.
Therefore, it’s still a good idea to try and finance your small business in 2022. You just need to remember that the rulebook has changed and that some solutions may be better than others. Read on down below for our insights.
Use Your Emergency Funds
Small businesses aren’t always new businesses. If you’ve been running a humble SME for some time, then by now, it’s to be hoped that you accumulated emergency funds over the years.
As you go into 2022, you may need to be content with your SME processes a while longer. The key is to do as much as possible with the little you have and be frugal across all aspects of business spending. After that, the money you save can be fed back into the business more proportionately over a long-term period.
You may have dipped into your emergency funds already after the tumultuous events of the past year. Nevertheless, you still need to maintain your savings goals to keep the ball rolling. Aim to cover many months of expenses at any given time. You can open up a savings account here to help things along and build interest on your emergency funds.
Remember that if you do seek financial help, there could always be a waiting period for one reason or another. Whether it’s checking credit scores or investors deliberating over whether to offer you funding, your small business needs to be sustainable during these periods. Try not to underestimate the importance of these responsibilities.
There may be a temptation to resist dipping into your emergency funds. It may be a matter of pride, or perhaps what constitutes as a business ‘emergency’ is largely up for debate in your company. Nevertheless, revisiting the emergency funds you’ve amassed so far is the first crucial step you should take in financing your firm.
Reconsider Help From Loved Ones
When financing a small business, many people turned to family and friends to get things off the ground. They’d use their relationships as leverage, taking advantage of the confidence and support they had long been receiving.
However, many people have struggled financially during the coronavirus pandemic, and people’s finances may not be what they once were. Job losses have been prevalent, and many people have settled into backup careers to put food on the table.
Not only this, but it’s highly unlikely many households will fully recover into 2022. The economic devastation is likely to be long-lasting too, and it may take some time before any of your personal connections are willing to support you financially in realising your dreams.
You should try to be understanding of these circumstances. After all, nobody owes you anything when it comes to financing a business anyway. Refrain from burning any bridges, and should their fortunes change over the next few years, perhaps your loved ones would be willing to offer some support then.
While many people have suffered financially in recent times, not everybody has. Moreover, if certain people are passionate or moved enough about an idea, they may still be willing to invest in your enterprise.
After all, many firms turned to crowdfunding opportunities simply for a better shot at surviving the pandemic. If you’re hoping to finance a small business in 2022, your initiative will need to really stand out from all the others imploring for help and support.
A standard call to action won’t suffice here. Instead, you need to market your efforts effectively. That means taking to social media and ensuring as many people view your business proposals as possible. Develop a website, create SEO optimised blog content, and generate excitement around your crowdfunding campaign.
You should also provide data and forecasts that favour your business proposal. People aren’t always trusting of everything they see on the internet for a good reason. Therefore, providing some real facts and figures that support your ambitions might be enough to get people on board with your ideas.
Keep in mind that crowdfunding can be a sensitive thing. Some entities look down on it as somehow being ‘cheating’ or ‘exploitative’. Whether they’re jealous or not, your business needs must be genuine and legitimate before your approach the public for funding. Otherwise, a PR disaster is surely waiting to happen, and your firm may not always recover.
Contemplate A Small Business Loan
Flexible funding is always the best for entrepreneurs. It eases the pressure and lets them know that options are always available.
For example, there are unsecured and secure business loans. That way, you can opt for smaller amounts with higher costs and shorter repayment terms or go for a larger loan and offer an asset as security. You can also look into asset finance and peer-to-peer loans amongst a plethora of other financing options.
Many alternative finance companies and non-bank lenders will offer small business loans in some circumstances. Therefore, you should try to stay hopeful here, even if you’re struggling with a bad credit score in recent times.
Get a free quote for a small business loan today and benefit from the perks on offer. A wide variety of funding options are available here, with each differing in structure and repayment requirements. Apply with Capalona in minutes and get your quote in as little as 48 hours. They will help you find the best loan for your circumstances.
Companies need to be as dynamic as possible, especially when it comes to financing. Knowing that you have quick access to this type of funding could revitalise your confidence levels and motivate you to succeed as well. The resources are there, and support services will help you access them.
So far, you may view your business as being highly important only to yourself, your colleagues, or a select group of customers. However, the work you’re doing could hold greater significance to more people than you might think.
In these situations, you may be eligible for things like innovation funding. To secure this, you need to make an application to the government, which will then assess your firm’s worth on a larger scale. They could fund any number of things, from research and product development to the final phases of testing your idea.
To have this type of backing must be a huge confidence booster. After all, it essentially validates your work to the highest level possible and informs you that what you are doing carries enormous potential. All type of business financing is highly useful, of course, but government-backed funding may just legitimise your operations in an exciting new way.
Research Growth Programs
Some regions of the UK have specially designed growth programmes that reward expanding businesses with capital. If you have ambitions to increase the size of your small business in 2022, these resources could be a viable option.
Capital grants support expansions projects that create jobs. These opportunities are often confined to certain regions in the UK, such as the Leeds City Region, which encompasses areas like Bradford and Wakefield. A business could receive between £10,000 and £100,000, with a three grant option existing that rewards £250,000 over three years.
It’s worth researching the availability of these programmes further for your own peace of mind. You can also contact the relevant team of advisors to discuss your eligibility. If your considering relocating your SME, basing yourself in an area where financial help is more prudent could be a good idea as well. As with all the help listed so far, the viability of this support depends on your circumstances.
Furthermore, you could also research the businesses that have signed up to these schemes and prevailed. Could you share in their optimism? Did they spend the money wisely, and what on? Collate these insights and study them with your colleagues.
Approach Venture Capitalists
Not every small business wants to remain that size forever. Some seek to grow faster than others, in which case alternative financing methods may be more fruitful.
Venture capitalists are investors who contribute a more significant sum of money to your business goals. After that, they get some equity in your firm, aim to create a quick investment opportunity by causing your company to surge in growth.
Moreover, venture capitalists are not investors who lurk behind the scenes. Many firms strike up fruitful working relationships with these entities, with some entrepreneurs even being guided and mentored by them. Giving up some of your company’s equity may seem unsettling at first, but you can add more experienced and wise voices to your firm’s infrastructure if you do this.
Because venture capitalists are typically veteran investors, they are individuals you will need to impress greatly to succeed here. A professional demeanour should be maintained at all times, and you should conduct plenty of research into their background to get a read on their needs and wants. Then, you can start tailoring your firm’s processes to answer those demands. Approach them prepared and focused and avoid wasting their time wherever possible.
Think About the Far Future
Many small businesses think and operate from moment to moment. As they have limited resources at the best of times, there’s often little room to consider anything else but what the next few hours, days, or weeks might bring.
However, if you’re looking for ways to finance your business in 2022, this mentality will need to change somewhat. A single year might seem like the briefest window in the business world, but your decisions and strategies during that time will carry over into subsequent years too. Though you’re funding your small business for 2022, you’ll also be laying the foundations for 2023 and beyond too.
Your financial planning should account for all the plans around growth you’re seeking to accommodate. Don’t shy away from your ambition. You can always develop contingency plans alongside – the important thing is to give yourself plenty of scope to operate within.
You may be used to being the primary decision maker for your business. That being said, certain colleagues may have a say in matters too, especially when it comes to the company’s spending practices.
If you have accountants, recruiters, and HR staff, their decisions will be extremely weighted when it comes to costs. It could be a good idea to provide them with training solutions, whether to teach them budgeting techniques or to refresh their existing skillset. Staying sharp here will never be a waste of time and certainly never a waste of money.
Of course, workers can still waste money without being directly responsible for financial strategies. Insufficient workplace practices can result in wasted time and lost revenue too. Others may accidentally access sensitive data, or worse, lose it to prying eyes. In the end, everybody needs to understand how costly their professional decisions can be.
There’s no use exploring financing options for your firm if irresponsible colleagues are bleeding the business dry and plunging it into disrepute. If word of these antics reaches the buying public, investors will quickly be turned off from working with you too. Run a tight ship here – everything depends on it.
As you can see, there are many things you should know when financing your small business. Moreover, some of the solutions listed above will speak to you more than others do. Nevertheless, it’s imperative to keep your firm’s needs in mind as you push forward. Think about which funding options will resonate with you and your colleagues most, and make sure each strategy is a concentrated effort at improving your company’s prospects.
WRITTEN BYSerena K. Johnson