Big Things Entrepreneurs Forget About Financing
You’ve started a business, you’re making money, and all is well. So why would you need to think about financing, right? This is a common mistake that first-time businesses owners make — only thinking about extra cash when they’re running low.
As Eyal Lifshitz points out in his recent article in Entrepreneur many business owners don’t realize that being proactive and thinking about financing before they need it could benefit them greatly. For one having extra capital will allow you to focus more on running your business instead of watching the numbers. Additionally you’ll have more time to assess all of your options instead of taking a bad loan as a last-ditch effort.
Speaking of options small business owners now have more than ever. In addition to an increase in the number of outlets for loans, thanks to online and alternative lenders, entrepreneurs also have choices when it comes to different types of financing. For example, if your business isn’t in need of cash at the moment but you want a safety cushion, you might consider a business line of credit that you can access whenever you need. There are also options more limited in scope such as invoice factoring that may be worth looking into as well.
One thing that might worry newer entrepreneurs about taking on loans or other forms of business financing is the cost. However it’s important to not only look at the cost of a loan but the return on investment you’ll get from it. For example, if you’re looking at purchasing a new machine that can produce your product four times faster, you would want to take that added efficiency and labor cost savings into account when deciding whether it’s worth financing the purchase. All too often business owners actually leave money on the table and do themselves a disservice in an effort to prevent “wasting” money on interest.
When it comes to business financing it pays to plan ahead. By taking the time to research all of your options before you need them you’ll be able to find the best financing choice for your small businesses. Additionally be sure to keep in mind the ROI you’ll get from a loan instead of letting the costs alone dissuade you.