As a Management Accountant, I work with hundreds of small businesses who are constantly seeking ways to increase cash flow and funding for their business. I work with businesses to increase cash flow, margins, ratios, and percentages on a daily basis. When companies need to expand operations they often seek for more funding. We call this the growth stage.
If your business is a start up company in a growth stage and you are seeking to obtain grant money and funding for your business, here are six ways to obtain grants and funding for your business in 2013.
- Bootstrapping – Personal saving and credit cards are often used when a new business has just been founded. At this stage a company is not considered a start-up company but rather a newly founded entity. Businesses should focus on turning their business into a profitable entity.
- Family and Friends can grant money or funding for your business. When a company has reached a certain level of competency and family and friends can see that the company has been successful at growing the business, they may be encouraged to support your business idea by funding the business if they believe in the owner(s) of the company. When family and friends grant funding, they should only do it knowing that they are taking a risk that they may not get paid back. There should be no strings attached.
- Online Crowdfunding is a great way to raise funds based on crowd participation. Crowdfunding is allowed under the JOBS Act; it allows for a wider pool of small investors with fewer restrictions and is ideal in the early stages of a business.
With online crowdfunding, people, groups, networks and communities pool their money together to raise funds to support what they value. They may support a company with a new patent idea, an artist seeking fan support, an independent filmmaker, communities seeking funding for a disaster relief effort, a political campaign, to increase awareness about a marathon for breast cancer, technology companies that have developed a new software for gamers, and for families who have a child that is dealing with a possible terminal disease or that have been abducted. Additionally, they may also fund businesses.
Here is a list of 10 crowdfunding websites:
- Business Grants are another source of funding. Alan E. Hall, the founder of GrowAmerica has provided a long term source for grant funding. Businesses compete for thousand of dollars a year in which funds are granted to businesses that have the best business plan and structure for true growth and job creation.
Participants seeking grant funding will register for the SPRINGBOARD Competition. To register, go to www.GrowAM.com. The business plan must include market research, market demand, a five year financial growth projection, financial statements, employment growth projections, plans for expansion, a use of funds statement, knowledge of a patent if any, a description of the management team, and a two page executive summary. For assistance with your business plan, contact www.TheProfitExperts.com.
- Angel Investors can provide another source of income for companies who have met a level of consistent sustainable growth. They may invest anywhere from $50,000 to $500,000 or more to businesses who need more funding to grow their business to the next level.
If your business meets their requirements, angel investors will hold a meeting. The goal of this meeting is to gather as much information, data, and research about your business as possible to decide if this is a real or serious proposition.
Angel investors will always take time to do their due diligence before making a decision. Angel investors become real partners with your business at this point and they may exchange funding resources for ownership equity in your business or for convertible debt.
Angel investors are now part of the management team and act as business advisors and mentors. Angel investors may provide more funding if the business continues to grow and expand.
- Bank Loan/Venture Capital – Once you have been in business for several years with proven stability. A business may need funding to purchase more assets, or to expand into a new office, or to purchase more equipment.
Banking institutes will require several years of financial statements on both the business and the business owner. They will also look to secure any collateral to protect their investment.
Businesses build relationships with their banking institutions over a period of time when they open a checking account, a merchant account, and use credit cards. This gives the bank a history of a businesses financial interactions and their ability to pay off the bank loan.
Companies who are growing fast and need venture capital funds to enter into new markets may be funded several million dollars to help them expand to meet hyper market growth demands.
Venture capitalists will conduct research and collect data to check the viability of such an enterprise. At this point venture capitalists are seeking to sell it to gain a substantial financial return for the entrepreneur and its limited partners.
Those seeking for a grant or funding for their business that need assistance with a written business plan, financial reporting, and/or financial loan packaging can contact the author Shannon Beck, President and CEO of Professional Accounting Solutions, Inc. at www.TheProfitExperts.com.Contact Us Today!