The modern world technology and resources have blessed the entrepreneurs with enough sources of raising start-up funds. No matter what filed you have an interest on, there are plenty of scopes to do it. Hence is not a difficult task to build the initial business capital of a company. In case of a small scale business, an entrepreneur can start his business with self-owned capital also. Today, however, raising initial funds for business is not a task but raising funds when required and spending it wisely to maintain smooth cash flow in the organization is an enormous task.Hence it is rightly said that not only earning money is art but spending money is also an art which not many have!
Yes, business does require a start-up capital, but the need does not end here. Business is always unpredictable, and you never know how much money you will need when! Hence to accelerate a strong business still be ready with back up funds or at least be prepared with the means to raise funds whenever required.The following are the phases when your business might need extra or urgent fund requirements:
The launch of a new product:
The market and customers are demanding, and people keep demanding for new and improvised products.Even if the customers are not in need of new products to survive competition and show the variety of your products an entrepreneur needs to keep bringing new products or variations in its primary products.In case of launching a new product, an entrepreneur will require a considerable amount of funds for the research and development, marketing,making charges,raw material cost, etc. of the new product. There are several parameters in launching a new product in the market, and an entrepreneur should always be prepared to bare all the expenses related to it.
High-end marketing and advertising:
Today marketing is not just limited to printing banners or television advertisements. All the leading companies in the market are rigorously working on various marketing and advertising strategies. In order to make your product known in the market one needs to do high-end marketing of its products and services. For this purpose many times entrepreneurs need to spend millions to survive in the market. These days’ paid social media marketing is much in demand, and the social media marketers demand a massive amount for the same.
Buying high-quality software/ machinery:
At the initial level necessary machinery or computer software is enough for business but as a company grows the need to have high-quality assets such as machinery and highly developed software increases. The investment in best quality machinery and software will give you better returns in the future, but for the initial purchases and installation, entrepreneurs have to invest a considerable amount in the same.
Dealing with unexpected losses:
Business is prone to risks and uncertainties; hence you never know when you will have to face substantial unanticipated losses due to several reasons such as recession,natural calamity, fire, etc. In such cases, insurance can help but insurance is subjected to several clauses, and it is not necessary that you get paid back for all your losses in business.
Hence dealing with fund requirement in various phases of business could be difficult and challenging. The following are ways in which entrepreneurs can raise funds during such situations.
Offering new shares:
By offering new shares to the public or investors, a company can get instant capital through the value raised from these shares. The no. of investors is also increased, and even the risk can be now divided accordingly. The offering of shares can be divided into several forms first is offered for sale wherein company shares are provided to the general public to buy IPO is an example of it.The second is rights issue wherein the existing shareholders are given an offer to cash new shares as per their proportion of current shares in the company.
Making use of sinking fund and other company investments:
Sinking fund is maintained by every organization wherein a certain part of the business profit is saved in this fund to save for future losses. Also, companies make investments in several other things and have many retained earnings. When the company is in need of such extra funds, it is advisable to make use of money from such funds.
Applying for loan:
In case, if there are no other means of available options for entrepreneurs, theycan opt for a business or personal loan for the required amount. Today, many banks and online platforms such as provide easy and quick loans to entrepreneurs. If an entrepreneur is sure about future profits and on-time repayment of the loan when applying for a personal loan is a good option.
One of the means to save money or generate money is by following cost-cutting. Ideally, cost-cutting should be followed from day one of business unless you have surplus profits. Through cost-cutting, you can save up on many miscellaneous expenses which are not that important, and by cutting those expenses, your business will not be affected. The staff reduction is one of the harsh ways of cost cutting of a company.
One of the best ways to raise instant funds is by selling assets. Selling assets gives you immediate cash, and the process does not require much time or documentation. To sell company assets or personal assets is, however, the choice of the entrepreneur. Selling assets is however not advisable as assets once lost can take even years to buy new ones. But if the assets are not of much use to the company or the entrepreneur, then he can go ahead with the decision of selling it.
Hence, business always demands a regular cash flow and entrepreneurs always cannot stay dependent on investors or business profits for the same. Maintaining adequate future funds or a handsome amount regularly in the company’s sinking funds is a must as during tiff situations they boon the business requirements.
John Bell is an experienced and skilled business consultant and Financial Adviser. He helps clients both personal and professional in long-term wealth building plans. During his spare time, he loves to write on Business, Finance, Marketing, Social Media. he loves to share his knowledge and Experts tips with his readers.