Business Finance – Climbing the Funding Ladder
22/02/2012 Leave a comment
Most of us have been there……You have a small business that wants to grow but you don’t know what form of funding is most appropriate given the size and maturity of your business, many questions typically spring to mind:
- What is the cheapest form of funding?
- Which funding is easiest to obtain?
- Which funding is the quickest to obtain?
- Which funding requires security and how much?
- What are the potential consequences of obtaining certain funding?
Over the next few weeks we will be taking a close look at the funding ladder and what funding is available and appropriate for businesses of different sizes and at different stages of development.
We’ll use the funding ladder as a tool to help understand the different forms of funding and we’ll start right on the bottom rung.
The funding alternatives above don’t necessarily have to happen in that order of relevance or importance but this is typically the way these are viewed.
The funding options we will consider will include the following:
- Crowd Funding – this relatively new area of e-commerce is one of the fastest growing industries and can be used for creative, charitable, community and commercial projects to raise project funding.
- Grants – There are many local, state and federal grants available and we will look at some of the most popular.
- Angel investors – How do they make their investment decisions, how many pitches are successful, what are the consequences of bringing on an Angel investor.
- ASSOB – The Australian Small Scale Offerings Board, a great way of raising investment form sophisticated investors.
- Venture Capital and Private Equity – what type of businesses are they looking for, what expertise can they bring to the table, what is their investment criteria?
- Trade Finance – using your working capital more efficiently to better manage your cash flow.
- Bank loans – what is more appropriate, overdraft or term loans and how do they work and what security is required?
- ASX/NSX – the pinnacle of capital raising, listing your business on one of the stock exchanges in Australia and the impact this will have on your business in terms of more onerous corporate governance requirements and being in the spotlight.
So what funding options have you tried and what has worked or not worked and why? Over the next few weeks we’ll try and help you get some clarity around the above issues for your business.
Contact Lattice Capital on email@example.com for more advice on raising capital.
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