3 Capital Acquisition Tips for First-Year Businesses

Every business needs capital of some kind to get off the ground. If you are running a freelance web design business, you will need a personal computer and copies of design software you need to develop websites. If you are running a more complex business, you may need to invest in much more capital.

Some businesses need hundreds of thousands of dollars in capital just to open their doors. You need to locate your resources wisely to make sure your business is set up properly, without over extending yourself.

Here are some tips to help you get the U need during your first year in business.

Pass on the non-essentials

Many business owners can’t resist the temptation to invest in fancy new tools. Unfortunately, if you don’t limit your capital expenditures to the essentials, you can easily end up in tens of thousands or even hundreds of thousands of unnecessary debt.

Before buying anything, you need to make a list of assets that you absolutely need. Limit your capital acquisition’s to these essentials.

If you run a restaurant and don’t offer deliveries, you don’t want to invest in a vehicle you don’t need. Wait until you expand and begin offering delivery services before buying one.

Choose the right financing plan

There are many ways that you can finance a business, but some are much more prudent than others. You need to consider your options wisely.

If you have your own cash, then financing capital on your own is the smartest thing you can do. Cash flow concerns are going to be difficult enough during your first year in business without having to make monthly loan payment you don’t need.

If you do need external financing, you have two options: taking on debt in selling equity. Whatever route you take, it’s important to choose the cheapest and most reliable financing arrangement possible, such as Rob Sinclair Equipment.

You don’t need to be a massive business to sell equity. You can do so through crowdfunding platforms. While this may sound like an appealing option, it’s severely limits your long-term profitability, since you must share revenue with others that have purchased equity.

Before assuming debt, you need to check the interest rates and lending terms. Here are some quick things to keep in mind:

· Many financing options have much higher APRs. If you use a credit card to finance your purchases, the interest rate can be nearly 20%. It is better to choose another financing option.

· Find out how flexible the lenders are. Some lenders may only give you the option to pay your debt once a month, while others let you pay every quarter.

· Make sure you know what the penalties are for late payments.

You will need to think these things through carefully.

Be smart about purchasing used capital

Sometimes, you can save a lot of money by buying used equipment. However, this isn’t always a great idea, because you may have to replace it in the very near future. Make sure you understand the expectations of obsolescence in your industry before skimping on buying new equipment.