All enterprises will experience the phases of the business life cycle as they grow, and meet different challenges that call for different financing sources. You don’t need to be in business for any length of time to get a small business loan – in fact, many businesses require financing before they can even start to operate.
Understanding the different stages of the business lifecycle will help you determine the type of financing that’s appropriate for each phase. It will also help you prepare for the obstacles that your business will need to conquer in order to succeed.
Inception or Seed Stage
At this stage, your bright idea is only a thought. Your main energies at this time will center on developing a commercially suitable product and creating a place for it in the market. The founder, his or her partners, and their friends and families will face hefty demands during this phase, and sources of funding will be haphazard.
In most small business inception situations, funding from external source(s) become a necessity, though a portion of the money may come from a businessperson’s personal savings. Government organizations, banking establishments, angel investors, and recognized venture capitalists are just a few of the external sources that small businesses can turn to for funding.
Startup or Survival Stage
The business is now fully set up, with plenty customers and the products and services to keep those customers. The chief objective continues to be survival since returns are not enough to fund business growth. The entrepreneur continues to be very much involved in the daily operations of the business.
Online services such as Lendio have become a popular alternative to just heading down to the bank. Another highly effective but often overlooked way to raise money for businesses in the startup stage is product presales, or selling products before they launch. Other, more common sources of funding include home equity loans, selling assets and other possessions, and credit cards.
The business now begins to earn profits. It has adequate capital to either remain with the same pace of growth or invest in further business opportunities. The business may invest in people development and team building as some of their emphasis areas at this stage, but these initiatives are propelled by the vision and personal ideals of the entrepreneur.
Financing and delegation become key concerns at the takeoff stage. You may need a small business loan to fund your growth, and you will also need competent management to see the business through this pivotal stage. This is the stage where you must decide whether to sell your business at a profit or continue on to become a big business.
At this stage, Lendio and even the Small Business Association (SBA) will be able to help take your business to the next level. You can view the different SBA options on the Lendio website, and Lendio will also help you determine which option is best for you.
Your business has taken off and is now at the top of its industry. Funding requirements at this stage would be for expansion into new markets, and for the development of new products. Your business will now be too big to exploit the traditional small business loan options, but will find it easier to get funding from large banks and financiers.
As you can see from this article, each business goes through different stages in its development, and as the business grows, its financing needs will change. Lendio is here to assist businesses at all stages, and will direct them to the resources that best match their funding requirements. Visit www.lendio.com now, and get the help you need to take your business from where it is now to where you want it to be.