Small business owners must wear several hats, from managing sales to overseeing customer interactions. However, finances and cash flow continue to be a major worry for every small business owner. Because these are the things that can make or break your business. Around 50% of small businesses see inflation as a big challenge because it affects their finances.
Getting financing for your business can solve a lot of the challenges you might face along the way. However, for most small business owners, funding is an unchartered territory. This can be because they are new to the business domain and might not have a lot of technical know-how.
Similarly, business funding is a big problem for Hispanic businesses and start-ups. According to recent reports, Hispanic businesses only receive 2% of venture capital funding and they also struggle more with receiving loans than non-Hispanic businesses.
This is why, as a small business owner (dueño de negocio), you need to have an idea of all the ways you can get funding to help your business (negocio) sustain. This blog will tell you all about that.
Why is Funding Important for Your Business?
If you do not have a chunk of cash lying around, you need financing for your business to upgrade your operations. Financing can do a lot for your business, especially in the beginning when your profit margin is thin or non-existent.
From setting up office space and hiring a team to subscribing to all the business management tools, every feat requires money (dinero) in the beginning. Moreover, unfortunately, everything costs a lot. Even if we are talking about business internet, it also consumes major budget of a business.
Getting an Internet service can be a big overhead for your business. But most small businesses save costs by getting residential internet in the beginning. Cox offers both business and residential internet service along with 24/7 support Cox en español and alta velocidad Internet.
Keeping in mind all the business needs that need financial assistance, funding matters a lot in the beginning. Here are all the reasons why your small business needs funding.
- It Lets You Upgrade Your Business Processes:
There comes a time when business owners need to hire professionals instead of doing everything on their own. However, that means increasing their payroll.
If your business has access to funding, you can hire professionals right away and improve your processes from the get-go. For instance, having marketing and sales professionals do their jobs instead of doing yourself means increased leads and conversion rates.
- It Gives Access to Working Capital
Every business needs access to cash to keep running things smoothly. This cash is your working capital and prevents you from running into trouble. Having business funding lets you have access to working capital, which lets you run things smoothly in down seasons or when sales are low.
- It Allows You to Expand Your Operations
Growth is sure to come by if your business is doing well but that also means it is time to scale your operations. However, scaling up requires expanding your business operations which is bound to put a dent on your finances. If you do have access to enough funding, then you should expand your business, without affecting your revenue and profits.
Type of Business Funding You Can Get
- Bank Loans: Bank loans provide access to various types of loans like equipment financing business lines of credit. These have an interest rate tied to them. However, it is hard to get bank loans as they require perfect credit scores and collateral.
- Crowdfunding: Through this process of funding, you can get money from a group of random people online. As an unconventional method, it is a great way to get money if you don’t want to pay high interest rates. It has many subcategories, each with its own pros and cons. To get crowdfunding, you can sign up to crowdfunding websites like Kickstarter and Kiva.
- Angel Investment: This is when you get wealthy businessmen to invest in your business in exchange for equity or a partnership. You can get angel investors when your business is in an early stage where risk and potential profits are high. You can visit websites like AngelList, SeedInvest, and Golden Seeds to find potential angel investors.
- SBA Loans: The U.S. Small Business Authority is your best bet at securing loans at good interest rates in a risk-free manner. It takes loans from specific financial institutions and provides them to you at a guarantee. However, these loans are somewhat hard to qualify for. However, SBA is known to support Hispanic small businesses as well.
- Venture Capital: this is a huge business loan given out by a group of investors. But this is for businesses with huge growth potential. So, you can get venture capital only if the investors see growth potential in your business. Plus, you get the capital in exchange for giving up your business’ equity and some control.
These are some of the common loans you can get for your business. But there are other private options as well like grants for minority businesses or even women-led businesses that have quotas for Hispanic businesses.
One major thing to know about business funding is that it is either going to put you in debt or make you give out a share of your business in the form of equity. The choice (elección) is yours to make.