Freedom in Finance: Strategic Budgeting for your Small Business

While new business ideas prosper, finding the proper financing to bring them to execution is hard to find. The challenge is that new businesses conventionally have less of a performance history and limited assets to grow their business, which makes it more risky for the investor.

Managing cash flow is one of the most challenging parts of being a business owner. Correctly learning how to budget can help you overcome this. Here are 10 strategies for gaining financing for small businesses and what to look for once you find a suitable partner. This will help any entrepreneur lessen the risks by creating a workable budget for the business.

1. Maximize and boost your personal investment. 

Any finance partner will look to confirm and certify that you have invested a significant amount personally before they will offer any additional debt financing. Many typically won’t finance a startup venture unless they are proposing asset-based financing.

Always keep some of your profits in reserve to cover emergencies. Work out a spending budget that spends less than you expect to make. Even if you are operating a small business from home, do not pay yourself all of the business profits monthly. Instead, work out a realistic wage for yourself and pay it regularly as part of the budgeted expenses of the business. If your sales are greater than you anticipate in one month, don’t be enticed to splurge in the next month. Keep to your written budget and keep the additional profits separately. Through this, if the sales fall unexpectedly in one month, you’ll have reserve funds available to cover the deficit.

2. Be well-defined and sharp about the type of financing you need.  

With so many diverse financing prototypes available, you must specify what you need for your business. What amount of money do you need and how much time do you have to get the funding you need? Is it equipment financing? Is it working capital financing that can be used for general purposes? These answers will help guide your search.

3. List down all your vital expenses. 

Vital expenses acquired in running a business include wages, taxes, rent or mortgage payments on the business property, and operating expenses such as power, water, Internet and telephone bills. You may also have legal obligations that acquire a cost, such as registering your business name. When you estimate your initial startup costs, include all the crucial expenses for the first six months, as this will give you some time to get your business up and running.

4. Don’t choke and block your cash flow. Create a realistic cash flow projection. 

After you have the cost of capital determined, see what fits your budget and then look for reimbursement options that fit comfortably within your cash flow capacities.

5. Comprehend and control your borrowing capacity. 

Finance companies would love to see that you are maximizing the capital to grow your business and not constantly refinancing debt. They also like that you are clear in how much you can afford to borrow.

6. Use specific measures when searching online. 

Searching the right keywords will help narrow your search for providers. Looking for small business loan is very broad, so use specific terms like small business financing.

7. Find out the cost of capital. 

Ask prospective providers about the cost of capital and compare quotes. Having multiple selections will give you leverage in negotiations.

8. Always think long-term. Never settle for less.

Look for longer term financing possibilities that keep your repayment costs lower in the short term and give you time and money to invest in your business for the long term.

9. Consider flexible daily repayment plans. 

The fewer sales you have on a particular day, the less funding a company will gather. This works very well for seasonal businesses that boom in the summer but slow down in the winter.

10. Determine if a fixed micro repayment plan works for you. 

For some, a business loan that permits you to repay a smaller amount daily, instead of a large monthly payment is simpler and easier to manage. Nevertheless, if your sales are low on certain days, it may be challenging to cover repayment.

Always remember that when it comes to new business financing, it’s not “one size fits all.” Many companies will need to have several financing options in place. The strategy is to obtain and develop the right type of financing at the right time and with the right providers.


Photo credits to Top Rank Blog.

Freshest delivers business growth

See how Freshest can help your company find the right audience to increase sales and performance!

Get started
More about

Camille Jacinto

About Camille Jacinto

Jack of all trades. Interested in MAFIA: Music, Arts, Film, Independence and Anything Intellectual. Currently writing for an events and advertising company.