Before starting any business, it is vital to give sufficient thought to funding and resources for running that business. Finance is one of the most important aspects of establishing a stationery business and without proper amount of money required; you will not be able to have a proper setup that can lead to good return on your investment.
Most businesses require some kind of initial capital for covering important things like inventory, marketing, physical facilities, incorporation expenses etc apart from buying materials and setting up.It is important to know if you need a short term loan or a long term one and how quickly will you be able to repay it. It is also necessary to know if you need all the money at once or in installments over a period of time.Knowing the answers to these crucial questions will help you select a financing option.
Ways to Finance Your Stationery Business
There are various options to be considered for financing your stationery business startup. They include:
Debt Financing
In this case, you borrow the money with an agreement to pay it back in a particular time frame at a fixed interest rate. You owe the money whether your venture succeeds or not.
Equity Financing
In this type of financing, you sell partial ownership of your business in exchange for cash. The investors take the risk in case the business fails and they lose their money. But if it succeeds, they typically make much greater return on their investment than interest rates. Equity financing is far more expensive if your business succeeds, but far less expensive if it isn't.
Friends and Family
They are the best source for both loans and equity deals. They are typically less stringent regarding credit and expected return on investment. You can structure the deal with the same legal rigor you would with anyone else or it may create problems down the road when you look for additional financing.
Credit Cards
They are a great for cash flow if you use them for this purpose and not for long-term financing. Keep one or two cards with no balance on it and pay it off every month to give yourself a 30 to 60 day float with no interest. Low introductory rates on some cards make them some of the cheapest money around and they can be used for financing a small stationery business. If managed the right way, they're extremely effective way to run a business.
Bank Loans
Bank loans come in all varieties, from microloans of a few hundred dollars, typically offered by local community banks, to six-figure loans by leading national banks. They are easy to obtain when backed by assets such as home equity or an IRA or third-party guarantors such as government-sponsored SBA loans or a cosigner.
Leasing
Leasing is the best way to finance your stationery business if you need big-ticket items such as shop equipment or even computers. Your supplier or agent will help you explore this option as each company has different terms and conditions for financing.
Angel Investors
They fill the gap between friends and family and venture capitalists who rarely even look at investments below $1 million. Get help of a savvy financial adviser to structure a deal that works out best for you and your business.
Private Lending
They are the best option when banks refuse a loan.Private lenders seek the same information and conduct similar due diligence as the banks, but they specialize in an industry and are more willing to take on higher-risk loans if they see a business potential.
