It is interesting to see the economy growing at its present rate, despite the recent uncertainties and some of the changes happening on the market. Small and medium businesses are catering to more customers and manufacturing more products to sell. Home businesses are on the rise too, especially with online commerce giving businesses access to millions of customers from around the world. Experts believe that this type of steady growth will remain sustainable for five to ten more years, creating the perfect environment for businesses to expand.
Economic growth and business expansions come with their own challenges. Not all businesses can take advantage of the growing demand and increasing sales channels available. Most of these businesses are suffering from cash flow problems which prevent them from taking orders or expanding their production capacities. The good news is, there are options to consider under most circumstances.
Taking It to the Crowd
Crowdfunding is very popular these days, especially with websites such as Kickstarter and Crowdsource creating platforms for inventors and investors to meet. Crowdfunding is a great financing option to consider when you’re trying to launch a new product on the market. There have been some incredible ideas transformed into products that customers have purchased in the millions over the years; there have been a lot of epic failures as well.
Crowdfunding depends on two major factors: credibility and trust. First, you need to be seen as a credible entity before the crowd – the people on the other side of the screen – start to consider investing in your new product. This is done by building a strong online presence and maintaining a positive track record.
Older businesses, especially those who were first established online, tend to have the ability to develop strong credibility faster. New startups, on the other hand, must rely on the people behind the brand to convince the audience that they are capable of transforming their brilliant ideas into products. Then comes the second ingredient, which is trust. This is built on a plausible product concept and a good marketing campaign. For the product to receive funding from the crowd, it needs to be presented correctly.
Lean on Old Invoices
While crowdfunding is presenting the perfect solution for businesses trying to launch a new product, it is certainly not the financing option you can rely on when you need to fill gaps in your business cash flow. Conventional loans are still seen as the financing options to go for in these circumstances, but we all know how difficult finding – let alone taking out – an affordable loan can be.
Businesses who can’t rely on conventional loans are now turning to accounts receivable financing. As the name suggests, accounts receivable financing or AR financing uses old invoices that are due soon (or overdue) as collateral for an affordable loan. The system is designed to allow businesses some flexibility when managing their cash flow. Instead of having to reject orders due to a lack of cash, business owners can now choose AR financing to finance their next projects.
Leaning on old invoices brings another added benefit: you now have the financing company helping you collect. Some AR financing options also come with specialized teams that will help maximize (and speed up) the payments of old invoices. Add the fact that most invoice factoring clears within 24 hours, and you have the perfect solution to cash flow issues.
This last option is one that a lot of entrepreneurs don’t really consider: government grants. There are a lot of government programs designed to help businesses in various fields grow and develop new solutions. These grants are relatively easy to get too, as long as you are willing to meet the requirements. On top of that, the grants are not loans you have to repay, but instead funding for solutions that can help improve society as a whole.
There are several common things you need to do in order to qualify for a grant. For starters, your business needs to have a good business plan and a potential product that can help solve a big problem. If you’re developing a replacement for plastic bags, for instance, you can apply for an environmental grant and get the funding you need to complete the R&D and start production.
All of these financing options have their own advantages; they are suitable for specific circumstances. Nevertheless, growing your business and accepting more orders should not be difficult now that there are more financing options available to you at all times.