Some people dream of becoming entrepreneurs, but are too worried where or how to finance their dream business – that is, where they have to go and look for it. If you are one of them or even engage in business for years now, here is the choice for your finances.
1. Personal savings. You will most likely use this as a source of your capital because this is the easiest way to finance your business.
2. Borrow from friends or family. This is clear.
3. Loan. Bank institutions are willing to help provide business with finance. When you think of borrowing funds from investors or loan institutions, many considerations must be given to the factors included in the financing agreement: such as the duration of loans and interest rates. Let’s say you choose a short-term loan. They deserve to be used when you want to grow your working capital requirements such as accounts receivable and inventory. However, if you are considering buying new furniture and equipment or opening a new store, you might want to take a long-term loan because you can pay for a longer time.
4. Selling assets that have been idle. This may be in the form of an old machine or equipment and maybe other forms of property. They may be old and may have slowed down your business operation, but if they can still be used, you might also sell it.
5. Rent or rent. Rent a certain space or area in your building. This is also a great way to finance your business.
6. Equity financing. You issue ownership of your equity with ordinary use of shares. What’s good about this option is that the capital you borrow is free of interest and you don’t need to pay it back. However, your investor will be the owner of your business part time and may have an influence on you and about how to manage business.
7. “Angel”. This is actually people who just want to help you. They are actually a mysterious person. Maybe they see something good in your business. Some people create them as “donors”.
This is the source of financing your business. There may be other ideas out there, so it’s better to explore and know some of them.
If you want to track your finances to where they come from or where they are spent, check your cash flow statement. Using a cash flow statement, you can budget your money about what you have to spend. You can make opinions or evaluations for certain operations – that is, whether your business gets or not. Possible prediction of your company standing in the future can also be made. The limitations of the cash flow report occur when, for example, you are usually more cash in hand, but still generate a large net income or vice versa. This can happen when there are more receivables (or credit) than cash