When companies are low on funds, whether in start-up mode or a few years in, they start searching for alternative ways to improve their cash-flow. One of the most common ways to gain a little extra moolah is through small business loans.
The drawbacks to these loans are interest and collateral. Many businesses don't realize there are alternative ways to fund their compaines, with less risk and potential debt.
The drawbacks to these loans are interest and collateral. Many businesses don't realize there are alternative ways to fund their compaines, with less risk and potential debt.
The organic craze has everyone in a tizzy. People all over the world are incorporating the organic lifestyle into their everyday routine via food, household products, clothing and a number of other sources. Now there is even a way to extend it into business with a little process called Bootstrap Financing.
Bootstrap financing is defined as "the process of growing a business more or less organically, without using significant outside sources of capital," by Steve Martin author of Instant Profits: Making Your Business Pay. It's not only a great technique for start-up companies, but for small to medium sized businesses in need of financial aid as well.
Under the term Bootstrap Financing there are five main types: Trade Credit, Leasing, Real Estate, Customers and Factoring.
- Trade Credit focuses on a vendor agreement allowing your company to receive goods and generate cash before your payment is due.
- If the funds to make a large payment on space or equipment are not available, leasing is a great solution in lieu of making large purchases.
- Companies that hold real estate may be able to borrow against, rent or refinance to make the most of existing assets.
- A customer is permitted to write a letter of credit, stating they will buy X amount of products from you, and in turn suppliers will allow you to purchase materials to manufacture the products using the letter of credit as collateral.
- Companies in need of immediate cash can take part in factoring, the process of selling accounts receivables for a percentage of the actual cost.
These procedures allow businesses to use what they've got to get ahead and leave loans as a plan "B". While there is nothing wrong with borrowing money, we have all done it once or twice before, there is a great satisfaction that comes with being debt free and doing it yourself.
To explore your financial and factoring options please contact us or visit our web site. We would love to help you explore alternative options for funding your company.
Contact us to open a dialog about your company's needs.
No comments:
Post a Comment