The correct choice of financing sources for a company is crucial to ensure its development and growth.
Depending on the stage of the life cycle in which a company is, different types of financial sources should be considered. But, it is not easy to identify which financing source to choose.
So, in this article we are going to summarize the different sources of alternative financing that best adapt to the possible stages of the life cycle of a company. Keep reading!
Most recommended sources of financing according to the moment of growth of your company
The different types of financial sources must meet the needs and adaptability of the company's life cycle. Since the goal is not just to survive, it is also to grow..
1st stage: Sources of financing for a company in Introduction
This stage is characterized by the beginning of the operation of the company. In these first moments of constitution, sources of financing are needed to start the activity, in addition to own resources and financing from family and friends.
The main source of financing for a company in the Introduction stage are the Business Angels, an alternative solution made up of people who, in addition to investing their own capital, provide knowledge and experience for the proper start-up of the company.
Also, in recent times, the equity crowdfunding where a multitude of people finance your project, becoming beneficial shareholders of your company.
In addition, of these two sources of financing, in previous Alter Finance posts we have talked about alternative sources of financing for startup.
2nd stage: Sources of financing for a company in Cgrowth
In this second stage, the company already has consolidated clients and has demonstrated the viability of its model. But, you need to break even and finance growth.
Among the alternative sources of financing for a growing company, the following stand out:
- Obtain financing through unsecured loans such as venture capital Or it would be possible to enter a venture capital fund.
- debt funds either direct lending; a tool whose purpose is to grant loans to companies that cannot meet the requirements of the banks or that need greater flexibility in payments.
- Public aid or ICO loans, if you want to know more we recommend the article.➡ Everything you need to know about ICO loans.
3rd stage: Sources of financing for a company in Maturity
Maturity is characterized by increased competitiveness and entry barriers. For maintain the success achieved, the efficiency and the added value in your products or services.
These strategies to improve facilities, products or services can be financed with:
- Leasing: It is a good source of financing based on rent, for companies that want to acquire real or personal property for a period of time, without the need for a large initial investment.
- Renting: It is a lease of some type of movable property, for example machinery. Although, Leasing for more than the life cycle of the product would be a mistake.
4th stage: Sources of financing for a company in Declive
If your company has not managed to stay competitive in the previous stage, it will reach this last phase of the life cycle of a company. The decline is marked by some high fixed costs, loss of customers and declining sales.
However, there are still financial resources that can help you avoid falling into the dreaded settlement:
- Stock financing: It is useful when the company has paralyzed stock and needs to release it to obtain liquidity.
- Factoring: a very practical option that helps companies advance the collection of pending invoices before the due date.
- Confirming: This financial tool can be used to maintain the image and reliability of the company. It consists of helping the company to face the payments that they have pending with their suppliers.
Alter Finance, experts in alternative financing sources for companies
As you can see at each stage your business faces different challenges. So, a key element is to choose the sources of financing for a company taking into account its needs, studying the risks and costs that derive from these alternative sources of financing.
And you, what kind of financing do you need? Consult with us without obligation. We offer you individualized and personalized advice to find the most advantageous sources of financing for your company.