Here are some tips you can use to strengthen your financial game for your small business - from crowdfunding to building your credit score.
Look into alternative ways to fundraise for your business
Whether you’re not about banks on principle, or whether you’ve been burned by banks in the past when seeking out loans for your small business, there are other options you can consider - and some might even help you grow beyond the loan!
One such method is debt crowdfunding - that’s what Honeycomb does. We’re kind of like the grown-up version of Kickstarter. People can invest in your business in the form of a loan, which you pay back plus interest. So, you get the benefit of building community relationships with your customers, and receiving the cash that you need to grow at the same time!
Know your credit score - and work on building it!
You’d be surprised how few people know their credit score, and how important it is to getting funding for your business. Most lenders consider a score around 640-700 to be good to lend to.
You can build your credit score by creating credit relationships with your suppliers and vendors, and paying them back in a timely manner. You can also establish a business line of credit with your bank. Having a diverse range of credit activities is a great way of building your credit.
Craft a business plan
Having a business plan is a must if you’re going to try and get a loan from pretty much everywhere. While a bank might expect a detailed plan that’s dozen of pages long, at Honeycomb, we only really need 1-2 pages, as long as you can tell us who you are, how you’re planning to grow your business, what you need to get there, and how you know it’s successful. Check out this blog post for more details on how to craft the perfect business plan!
Evaluate your business’s profitability
There are different metrics you can use to figure out whether your business is profitable - and knowing this is also rather important when you are seeking out loans or investors. Lenders and investors want to know that you’re profitable, and that your profits are increasing. To evaluate your profitability, you can first look at your operating expenses. Your net profit is going to be revenue minus expenses. Then, you can get a bit more complicated. How about your gross profit margin? From that, it’s your sales revenue minus cost of goods sold - this tells you how much profit you get from your product alone.
Consider new payment streams for your business
One way you can increase the amount of revenue going into your business is by considering new payment streams. Maybe you’re cash-only right now - what’s stopping you from getting a point-of-sale system that processes credit cards? Have you considered a money-sharing service like PayPal or Venmo? Making it more convenient for your consumer can lead to more sales in the future.
Whatever your next move is, move with your community by your side
With a Honeycomb Credit crowdfunded business loan, your neighbors, family, friends, and customers can invest in your business’s growth, and receive a return on their investment. For you, that means you get the capital you need at a fair price, and get strengthened customer loyalty in the process. Fill out the form below to get more information about crowdfunding with Honeycomb Credit.