Craig chats with wealth adviser and former client Guy Church about budgeting, profitability, growth and more as a nudge for other small businesses to have confidence when considering finances.
Business finance can be difficult to understand because many elements work together to manage your money. Let’s break down all things financing and discuss credit cards, credit scores, funding, budgeting and more.
Learning to manage money in your business sets you up for growth because you can take control of cash flow and take risks that will help improve your profitability.
Credit Cards: Building Trust With Your Bank or Credit Union
Let’s begin with credit cards, the most challenging tool for most people. Credit cards will help you to build trust and creditworthiness with your financial institution. There is such a thing as good debt. However, they can also tempt you to overspend, creating bad debt. The best way to use a credit card is to borrow a set amount and pay it off as you go. This practice allows you to leverage what you borrow to help establish your business without incurring a mountain of bad debt.
Funding Your Business Through Grants and Loans
Whether from a grant or a loan, funding is best defined as money an organization or financial institution provides for a specific purpose. If you run a nonprofit business, you could be eligible for grants from companies like Google. These grants open new doors, allowing you to expand your footprint and attract new clients. As a business owner, consider grants a growth strategy to level up and invest in innovation.
When borrowing from a financial institution, research the loan terms properly so that you are paying less interest. The best way to set yourself up for a loan that works for you and not against you is to have a stellar credit history and a mutual relationship with your banker. A good relationship with your banker and financial adviser ensures they have your best interest in mind.
Debt Versus Equity Financing: The Pros and Cons
Another important topic when financing your business is debt and equity financing. Both are viable options for getting funds for your company or small business.
Debt financing involves borrowing money from a lender that will be repaid later. This funding method allows you to own your business fully and gives you more access to cash. However, this lending style usually requires collateral if you can’t repay what you borrowed. Make sure to consider interest rates when looking for debt financing.
Equity financing is another good option when financing your business. This method involves selling off shares of your company to gain investors, which may help you in the long run. By cultivating a network of investors, you can access their advice. This method has some notable disadvantages, however. By selling shares of your company, you lose partial control over decision-making.
When looking to finance, the best thing to do is get advice from a financial adviser to pick the most suitable option for your business based on size and goals.
Glint Advertising is a small but mighty business committed to serving its audience at the highest levels and pursuing longevity. We have these discussions often and outside of strategic planning sessions.
