Financing a Small Business

Jul 13, 2023

Starting a business from scratch is an exciting and exhausting endeavor; it is also an expensive one. Not only is adequate startup funding often needed, but the daily expenses of operating and the needed investments in marketing, advertising, and customer acquisition can all add up quickly.

Aspiring entrepreneurs access business funding from a variety of sources. The most typical include:

Small business loans

Business credit cards

Outside investor funding

Personal savings

Personal money is used to help fund the majority of small business ventures in the U.S. An estimated 77% of small business owners put in some amount of personal money to get their company started. When personal funding has been exhausted, many small business owners turn to loans, with the average small business loan exceeding $400,000. Good financial preparation can make all the difference in creating a profitable and thriving business.

Adequate financial preparation helps new businesses beat the odds

Approximately 20% of small businesses fail in the first two years, and only about half make it to the five-year mark. Many of the new businesses whose applications are submitted each year never even get off the ground. There are many reasons businesses don’t succeed, but the number one reason is financial failure. Failing to: raise enough upfront capital, generate sufficient revenue, stick to a budget, and properly manage the cash flow all block budding small businesses from the path to success.

While financing alone will not guarantee success, it is a huge part of creating a foundation for a thriving venture. A good product, an accurate assessment of the market, awareness of the competition, optimal pricing, targeted marketing, and a well-chosen location all play important roles, as well. But businesses that mismanage their incoming and outgoing money inevitably run out of funding too soon and never get to discover the true market potential of their product or service.

Some things small business owners must consider when funding their business include:

·       The cost of a loan

·       The interest rates on credit cards

·       How much money they can afford to invest

·       The break-even point that must be reached to keep the company afloat

Adopting financial management tools early on can help reduce the chances for businesses to face financial crisis. Online financial management tools are widely available to help new small business owners:

Set a budget

Your budget is your blueprint for spending and, while somewhat flexible, should be adhered to so that your cash flow stays consistent.

Track expenses

Know where every penny is going so that you can manage your finances and take advantage of eligible tax deductions for your business. Scanning and uploading receipts and important financial documents is a convenient and paper-free way to keep bookkeeping organized and to streamline account reconciling and tax prep.

Send and record invoices

Staying on top of your accounts receivable is vital for keeping the cash flow strong. Even a few late and outstanding payments can have a noticeable impact on your revenue.

Pay bills

Unpaid and late bills equal penalty fees and will eventually alienate your suppliers. Keeping your accounts payable up-to-date is essential for maintaining good business relations and keeping the daily operations going.

Manage payroll (if applicable)

Numerous online services are now available to help businesses of all size manage their staff by tracking hours and calculating necessary taxes and deductions.

Record and report financial transactions

Reconciling your accounts and analyzing your cash flow regularly are important components to good financial management for your business, and many accounting software products can assist you in getting the finances organized. Using programs that integrate with one another simplifies bookkeeping by reducing time, hassle, and error.

Online check printing is one of those services that can be adopted quickly and affordably to help streamline the bookkeeping and keep all bills and payments, including those for loans and leases, up to date. Checkeeper online check printing offers customizable, professional checks, automatic transaction recording, and seamless integration with the most widely-used accounting, payment, and payroll software programs. It also offers a full suite of check mailing options so that you can have your custom checks printed and mailed for you without a single supply needed.