One of the biggest challenges aspiring entrepreneurs face is looking for capital to start a business. When savings aren’t enough, who can you turn to to kickstart your venture?
Here are five effective ways to finance a small business that you can consider
Take a Personal Loan
Getting a personal loan for business is a smart strategy, especially if you wish to launch your startup immediately. First-time entrepreneurs can choose from BPI Family Ka-Negosyo, BDO Small Business Loan, and Metrobank SME Business Loan for short- and long-term lending.
SSS Members, on the other hand, should consider SSS Business Loans. Choose a personal loan with low interest payments and flexible payment terms.
Use a Credit Card
Credit cards are extremely helpful when starting a small business. Be smart about it, though. Pay your credit card bill every month and don’t go over the limit to avoid penalties. Use your credit card as an extension of your cash flow.
You can use it to purchase furniture, appliances, as well as store and office supplies. Also, always check for credit card deals to earn discounts and rewards you can use for business. Pick the right card and dedicate it to business-related purchases.
Pitch to Investors
Working with an investor poses many advantages. Of course, one of the greatest pros is that you receive the funding you need for your business. Another is that you get the opportunity to work with a partner who can guide you throughout.
Pitching to an investor, however, requires plenty of work. Here are the things you need to prepare:
- Business plan
Your business plan should give the investor a comprehensive look into your soon-to-be company. Include important details such as the basic business concept, your business strategy, products and services, target market, employees, and financing needs.
- Pitch deck
Your pitch deck is your business plan but in PowerPoint slides. Use it during your business presentation and ensure that it looks professional by using the right fonts, design, and information.
- Financial overview
A financial overview should answer the following:
- How much money do you need for your startup business?
(Provide exact figures, not estimates.)
- What is your expected revenue?
(Present a timeline that shows how much you could earn in x months/years.)
- How long do you need funding?
(6 months? 1 year? It all depends on your business expenses.)
Consider DTI Grants
The Department of Trade and Industry (DTI) offers funding to small businesses through their Micro, Small, and Medium Enterprise Development (MSMED) plan. The MSMED focuses on four business areas with Access to Finance (A2F) as one of them.
Entrepreneurs can receive P5,000 to P100,000, depending on their proposed business plan. To apply, simply go to a DTI office or visit their website.
Crowdfunding is anin the business industry. Entrepreneurs can use crowdfunding sites such as Kickstarter, GoFundMe, and Indiegogo to ask people and organizations for money in exchange of a product or service.
Donations are also welcome and can be in small or huge amounts of money. Pebble Time is one of the most successful crowdfunding campaigns to date, with 78,741 backers who invested a combined amount of $20,338,986.
Before putting up a business, plan and secure all of your finances first. Whether you choose to take a personal loan, use a credit card, or try crowdfunding, you need a spending plan and a source of financing that will support your business from the start. Be wise about money to prevent shortages and bankruptcy.