How to Finance your Business

If you have a growth company with continually increasing needs for a capital or even setting up a new business venture, you may find it a challenge to obtain capital to finance your business.

Your possible sources of funding can either be internal or external. If you are starting a business, you will most likely use internal funds such as personal savings to finance your company. But if you are already in the expansion stage, you should be tapping more external financing in the form of debt or equity.

When borrowing money or raising funds from investors, you need to consider the 3 important factors that could affect the viability of the financing package, namely time duration, interest rate, and the management participation of the funds provider.

Say that you are considering whether or not to accept a short-term loan being offered by your bank. If you plan to increase your working capital requirements for your inventory, accounts receivables, or operating expense budget, this short-term loan might be appropriate. This is because this type of financing typically requires repayment of the loan within the next 12 months, so you can pay it back using profits derived from the business during the year. But if you are looking at financing capital expenditures, such as buying new machinery or opening new stores, you would need a loan that can be repaid over a longer period of time. This is because to pay back the loan, your business would need to accumulate enough profits for a number of years, which would normally be during the economic life of the assets you have purchased with the loan proceeds.

The Online Business

Doing business online is becoming an option for more and more merchants as they discover that it is an efficient, safe, and hassle-free way to market their products.

Online merchants are now fast turning cyberspace into an online shopping mall, selling most everything from t-shirts to cellular phones and concluding thousands of transactions in the relative ease and safety of their living rooms, office cubicles, o even of specialty coffee shops. This allows merchants to be not physically available to check everything because business can be done remotely. If you are planning of taking the online option for your product, here are some pieces of advice to get prepared:

1) Take a digital photo of your product and shoot from different angles (back, front, top) so that customers can see the different sides of the product.

2) Create a catchy title and include a label that contains all possible search words you can fit without being too long.

3) Set a price for the item.

4) Make a short description of your item with an accurate description of the dimensions of the product and its features, color, model, and make.