Home > Resources > Blog > ARE YOU INVESTING IN YOUR BUSINESS ENOUGH?

ARE YOU INVESTING IN YOUR BUSINESS ENOUGH?

SME Finance

by
admin

Posted on
Jun 08, 2017

ARE YOU INVESTING IN YOUR BUSINESS ENOUGH?

This blog is in regard to the small businesses who are confused whether to invest more for expansion or not, so we will give insights which will encourage the reader to go for loans via FlexiLoans.

“Are we investing in our business enough?” This is a question that plagues most small businesses. There is only one right answer to that and it is to invest as much as you can! Usually, businesses tend to refrain from raising capital as running a business with your own funds is considered to be good business sense but there are exceptions. For businesses that are self-funded, profits belong solely to the owners. However as soon as you get investors in the form of banks or lenders, the game changes. Whilst banks are not interested in sharing the business profits but instead in their monthly interest payments, equity investors will take a share of their profit.

Nonetheless, most small businesses cannot grow without the support of external funding and as long as the business is 50% funded by your own capital you have a healthy debt to equity balance. The key is to ensure that the owner puts the borrowed money to good use. Most online retailers need external funding to fund their working capital as their money might be stuck in the goods being displayed on the online platforms. Some retailers might also need equipment financing so that their new machinery can help produce more goods efficiently and thereby increase their growth.

Thus a small business owner or trader should invest as much of his own funds into the business as he can without putting his financial security at risk and can then borrow money to make up for the shortfall of funds. Thus when an owner borrows after having his own skin in the same, an investor is also prepared to back them strongly.

Thus for small businesses looking to meet the high festive demand, their cash flow can be eased out with access to seasonal inventory loans. In case of facing a working capital crunch, an online trader can also have access to a working capital loan on a digital lending platform. As long as the money is borrowed with a repayment plan, this money invested in the business is always a positive step in the direction of taking the business to the next level.

Investing in your business in the long-term sense is always an advantage as eventually, your money begins to make more money. With each successful business cycle, if the business is sustainable to pay the owners and the employees their dues and generate sufficient profits, the growth curve is indicating upward and is a positive sign. Therefore investing in the business with own funds or an unsecured business loan or a collateral free business loan, if the returns are good, is always a positive step for a business owner. Eventually, when a good business cycle occurs, this investment will always give multifold returns.