On 3rd October, 2012 during the presidential debate small business and the financial policies in order to make them survive the economic calamities have been the center-point of the discussion. Both President Obama and Presidential candidate Mitt Romney have stressed that small businesses are very crucial for generating jobs. So, both of them have promised better governance in order to assist these ventures run their businesses without incurring huge debt and prevent them from opting for debt relief programs like consolidate credit card debt programs.
Consequently, these steps will increase the employment rate of the nation. In that case, small business entrepreneurs who are seeking to float a venture of their own must learn the basics to raise investment funds and manage them effectively.
Sources of start-up funds
Following are the conventional sources of start-up funds used by up and coming entrepreneurs:
SBA loans – This is the abbreviation of ‘Small Business Administration’ loans. SBA approved 61,689 loans that amounted to $30.5 billion in the last fiscal year of 2011. The government backs near about of 85% of the SBA loans; hence the lending institutions are more willing to fund start-up ventures than they would in the case of established ones.
Angel investors – Several high net worth individuals with personal assets worth billions of dollars also act as lenders. They provide financial support to the start-up ventures in exchange of a share in the company’s profit.
Bank loans – Financial institutions across the country have played a very important role in uplifting the emerging entrepreneurs. They had always been a good and reliable source for start-up funds. However, due to continuous recession many of the big banks have tightened their purse for small businesses. In that case, people can always approach community banks for the funds.
There is no doubt that raising funds for a small business venture is an uphill task, however, it is equally tough to manage those funds competently and avoid piling up debt. So, small entrepreneurs must also have the knowledge to manage their company’s finances smartly.
Business finance management tips
Here are some of the smart ways to spend money and avoid debt:
Avoid lavish interiors – Entrepreneurs should suppress the lure of keeping lavish and high end furniture in their office during the initial days of the business. Instead, they should opt for used furniture in order to lower the capital investments. Moreover, they can also work with furniture lending firms and get office furniture on rent.
Utilize credit card discounts – There are several ways to applaud the efforts of the employees as well as save money on their perks and commission. Entrepreneurs can gift their best performing employees free theater passes and provide them with a free tour to the nearest theme parks or getaways.
Through the above steps entrepreneurs can save hundreds and even thousands of dollars over time. This will help them to keep the company’s finances under control.