In this article, I discuss with you the right time to seek funds for your business and why you should seek funds at that time. But before that, let’s take a quick recap on what business funding is – its advantages, and challenges.
What is a Business Fund?
A business fund is money an entrepreneur raises or which is provided to an entrepreneur by the government, an organization, friends, or family to start or grow his business. Business funding is the act of providing funds to support a business.
Advantages of Funding Your Business.
The advantages of funding your business are countless but I have a few to share with you today. First, funding your business will increase your capital. Business funding gives you chance to advertise your brand the more and make your products more unique and sophisticated. It helps to increase your profits margin. With business funds, you become more dominant in the market space.
The Challenges In Acquiring Business Funds.
Like is often said, whatever has an advantage does not come easy. Most of the time, some challenges go with it but your capacity to surmount these challenges make you the hero. There are many challenges you might face in trying to get funding for your business For instance, if you self-fund your business and the business fails, you will be left with nothing as you have invested virtually all your money into the business.
Another challenge is that if you receive the fund from your family members or friends, it might affect your relationship with them as some of them might brag or show off to others about the help you got from them, which you may not like. On the other hand, if you receive the fund from a bank or any credit institution and you failed to pay it, the bank will not end it well with you.
By now I think you have a basic knowledge of what business funding is – its advantages and the challenges that come with it. So let’s start our main discussion!
When is the Right Time to Fund Your Business and Why Should You Fund Your Business at Such Time?
Funding your business at the right time will make it boost while funding it at the wrong time will cause your failure. Before telling you the right time to fund your business, here are a few tips to help you decide if it’s the right time to fund your business or not.
- At what stage is your business right now?
- What type of fund are you trying to get?
- What are the available means of getting funds?
- Are you going for angel funding or Venture Capital (VC) funding?
- What is your conscience telling you?
If you ask yourself these questions and you feel that you are fit to fund your business, here are the best times to do so and why you should do so:
(1) When Starting Your Business.
After settling on what business you want to venture into, getting some funds to kick-start it won’t be a bad idea. Although most entrepreneurs self-fund themselves at this stage, you can still seek funds from family and friends to support it.
Why you should fund your business at this stage?
Funding your business at this stage will help you to make a good startup at the foundational stage of the business. With self-funding capital, you will start a well-established business and even if the customers do not show up as you expected at the initial stage of the business, you and your business will not go under pressure for fear of lack of money to pay back to creditors if you loaned or borrowed the startup capital.
(2) When Your Stock is Low.
Once you notice that your shop is getting empty and you don’t have money to buy products and restock, you should seek funds from family, friends, or the banks.
Why you should seek a loan at this time?
Well, you simply don’t have enough savings to take care of this, that’s why! If you had, you wouldn’t reach out for help. So, you should seek a loan at this time because your business is on the verge of failing! Yeah, since your stocks are down and you don’t have enough capital to buy new ones, your shop will be empty, and hey! Customers don’t like empty shops; they want to see your shop full of products.
(3) When there’s Competition in the Market.
This is a highly crucial time to fund your business! When everyone is perfecting their brands, making their business unique, and doing a trendy advert, you can’t stand there looking at them. You too must join the moving train and beat the competition to its game! Therefore, get some funds and boost your business. It’s very necessary to do so at this point.
Why You Should Fund Your Business At This Time?
Well, if you fail to fund your business at this time, you’ll be out of fashion and I guess you know what this means for your business. You know, your competitors are doing all that they can to make sales. Join them too!
Do adverts from Pay Per Click (PPC) Ads, TV commercials, banners, posters to social media advertisements. Do promos if possible and don’t forget to improve the quality of your products. In short, do everything that will make you to stand out from the crowd! To do this, you need money!
(4) When You Want To Expand.
If you have been thinking of how to expand your business and reach more clients, then funding it for expansion is what you should consider doing. For example, Mr. A sells men’s wears with a single shop in Port Harcourt. As time goes his business grows and he wants to open another branch in Lagos, he will surely need some money to do this. He’ll need money to rent or buy a shop, buy products, hire an apprentice, and gets a manager; you know he can’t be in two places at the same time. If he calculates it, he might see that opening that shop in Lagos can affect the one in Port Harcourt. Therefore, to prevent failures, Mr. A can go for a loan if his savings won’t meet his business expansion needs.
Why you should fund your business at that time?
Failure to expand your business at the right time might reduce your motivation. Another thing is that People like buying from big businesses; if they see that you have different branches in different places, they see you as a big brand and tend to patronize you over others. In fact, they can refer others to you because they trust your products and services.
(5) When The Market Is Not Favorable.
This is happening at this time, after the COVID-19 lockdown, the market has been unfavorable to many businesses across the country and the world at large. Many people used their business capital to cater to themselves during the lockdown and the inflation rate is high now.
As such, many people have/are thinking of abandoning their businesses but this is not the right option! The right option is to seek funds or liquidate your assets. To liquidate your asset means to sell off physical assets and convert them to money (liquid).
Why you should seek a loan at this time?
As a business owner, if you think you are not doing well, you should think of how situations will be if you abandon your business. At a time when the market is favorable, what you should do is to seek more funds, improve your business, and be patient. Remember, the patient dog eats the fattest bone.