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Traditionally, women are paid less than men but also women entrepreneurs often times have difficulty finding funding for their startup business. Women only see about 80 to 85 percent of approvals for a loan and only earn 7 percent of venture capital investments overall.
Companies that seek financing to maintain and grow their business will look to traditional unsecured bank loans first because that is the more budget friendly form of borrowing available. However, many small businesses are growing fast, do not have a lengthy track record, or do not have a sufficiently high credit rating.
Congratulations! You have been approved for funding. So, what is next? You might have an overwhelming desire to spend it on whatever you want but it is important that you are responsible with your money and following a spending plan that you laid out in your business plan if your business is to survive its critical early years.
When you apply for a business loan at a large bank, often times small businesses get declined. Thousands of requests for business loans are declined every weekday in the United States. The odds of a startup business getting a loan from a large bank is not very favorable. This because large banks are mostly focused on sourcing and scaling loans over millions of dollars, cross-selling products to their customers, and driving down costs through standardized operating procedures and technology. The good news though is that there are community lenders available to help small businesses.
It is a lot of hard work to secure venture capital funding and there are several reasons why you might want to avoid it. If your market is big enough that you can generate a ten-fold increase in investment within a decade, then you are a good candidate for venture capital funding. Start looking for funding elsewhere otherwise.
Financial contingency planning is a must for businesses no matter what stage they are in. If you are pre launching or have been in the market recently, a contingency plan might not be the first thing on your mind. However, it is important that you think about unexpected situations that can occur because it can interrupt the launch of a new business or disrupt normal operations. If you do not have a contingency plan, the unforeseen events can be harmful to the health of your business, potentially leading to insolvency before a startup is even off the ground.
More than 30 percent of businesses say that late payments are impacting pay for the team, investments for the company, and relationships with suppliers. It can affect the cash flow of a business when customers do not pay their invoices on time and can even affect their ability to survive.
Whether you are seeking funding to grow your business or not, startups and high-growth businesses can learn a lot from angel investors. If you pitch to them but get turned down, you can learn from their feedback which will be really valuable in helping you think about what changes you need to make to meet your funding goals.
Your business needs funding, but you might not want to turn to traditional banks and lenders. One option to consider is to ask friends and family to help fund your startup business. Many new business owners bootstrap or self-finance their business but it does not mean that every entrepreneur saves up their own money, opens a line of credit, seeks a loan from the bank. Sometimes for some people it makes more sense to simply ask friends and family to help.
When an entrepreneur starts a new business without outside investment, experts call it bootstrapping. Bootstrapping is building a company from personal finances or from the operating revenues of the new company. The term bootstrapping is also used when someone uses borrowed money backed by their own personal assets, so they keep the entire risk and the entire ownership.
