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Need Money Quick?
4 Options to Small Business Owners
As a small business owner, you've probably experienced both feast and famine. Sometimes cash is tight. And while the hope is that the lean periods just pop up once in a while, sometimes you'll need a small (or large ) extract of cash to keep pushing ahead.
The Need For Green
There is a very fine line you have to walk when climbing. If you expand too fast, employ too many employees, and purchase surplus stock, you could deplete your financial resources and crash. But if you don't take any chances or prepare your business for growth, you won't be able to answer in an efficient fashion once you finally get the big break you've been waiting for.
"Contrary to conventional wisdom, the most dangerous time for entrepreneurs isn't when they begin from scratch but when they scale for growth," professor Daniel Isenberg told the Harvard Business Review. "When you are a startup, there is relatively little to lose, mistakes are fixable and also a little bit of cash and a cohort of committed colleagues can go quite a distance.
"But when you unexpectedly accelerate and grow, whatever your institution's age, things get hot really quickly, largely because your need for cash stinks immediately."
As Isenberg points out, the very best thing you can do for your company is be prepared. You need to consider how you'll finance expansion well before you start scaling. This ensures you'll establish the ideal base, and it can help you facilitate growth without prematurely investing in resources and resources that you can't utilize. Thus, what, exactly, can you really do when you are ready and want money to expand? Listed below are four choices.
1. Online lenders
Should you need a sizable loan, you will still need to go through a traditional bank or lender. But if you need only a modest amount of money, online lending msy be the best way to go. As a result of new technologies, online lending has become faster and more efficient. A solid entrepreneur may reasonably expect to receive financing in a few hours of calling an internet lender -- and the prices can be surprisingly aggressive.
2. Personal installment loans
If you're really in a rush and need some quick money, a personal installment loan might be the way to go. A creditor only checks your credit rating and processes your request. In most cases, you can find the cash -- that can vary from a few hundred to a couple million dollars -- over 24 to 48 hours. Personal installment loans - also known as payday advances - are typically paid back on a fixed schedule over a period of a couple of months or years.
3. Line-of-credit loans
One of the most useful loans for developing small businesses and startups is the line-of-credit loan. With a credit line, your company gets approved for a certain amount of money for a specified period of time -- typically one year. Should you will need the cash, you simply withdraw on the line of credit as if it were money in your bank. If you don't need it, then you can leave it and avoid paying interest. This form of loan delivers the very best of both worlds when you aren't certain how much you will need, or when you are going to need it.
4. Receivable financing (factoring)
One of the classic ways of financing a growing business involves selling your accounts receivable to a financial institution (frequently known as a factor). The factoradvances some of the receivables -- probably 75 to 90 percent of the value -- then holds on to the remaining portion. The benefit of receivables financing is that you're able to get cash fast, without endangering orders or cash flow. It is a fantastic alternative for businesses that have orders coming in, but do not have the money to fill these requests.
It is fine to trim the fat.
"Some creators think that scaling only involves growing up and outward. However, as your company grows, you might find items that no more function, departments that are no longer desired and staff members which don't gel," entrepreneur Sujan Patel has written in Entrepreneur.com. "Slimming down those items that are not functioning is an important part of building toward things which are. As you scale your business, don't be afraid to cut back fat so that your company may grow effectively."
Scaling for growth demands patience, diligence and foresight. Not only do you need to eliminate the parts which are weighing you down, however you also have to think about how it is possible to add invaluable assets. As you push your company forward, consider financing early and frequently so that you have the financial resources to take chances and take challenges when they appear.