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By Isla-Rae Flores
Running a business is expensive. It often feels like there aren’t enough funds to keep up with your business needs as they grow over time. Unfortunately, this is one of the main reasons small businesses close their doors within the first five years of operation.
To avoid this unsettling statistic, it’s best to approach your funding strategically. Below you can find a few unique ways to make the most of your limited business budget to continue growing your small business.
Reevaluate your current budget
First, reference the budget you originally created in your business plan. Now that you’ve been in business for a while, are there areas you accounted for that don’t require as much funding as you initially planned? If so, create a new, more accurate budget that better fits your spending needs.
Similarly, scan for areas where you are overspending on your business. Create a strategy to scale back on overspending and utilize the money you will save for other expenses. While this may cause some minor inconvenience as you cut spending, in the long run, your business will grow and provide you with a larger budget to work with in the future. Pulling back on unnecessary spending is one of the easiest ways to make the most of the budget you currently have to work with for your business.
Consider increasing your prices
As an independent small business owner, you can’t afford to undercharge for your products and services. Be sure you are making the maximum amount of income that makes sense for your offering in order to increase your income and overall business budget.
As apprehensive as you may feel about increasing the price of your products, you can do so in a way that makes sense for your customers and products. Reevaluate the price of materials and what it actually costs you to create a product. It’s likely the cost of materials has increased (as just about everything has) due to inflation. This warrants a price increase.
If you offer services, consider the amount of time you spend on providing your services. Do you find that you are working around the clock to get the job done? Try out a time tracking tool or project management software to more accurately track your time spent on various projects. If you find that you spend more time than anticipated, you may need to change the way you charge for your services.
Seek responsible funding options
Sometimes, no amount of reworking your expenses and income can make up for the financial need you have to grow your business. In that case, seeking funding from outside res is necessary to help you achieve your growth goals.
The downside to receiving outside funding is the debt that can quickly build up and put you in a worse financial situation than you were in before. Instead of taking out a loan without doing any research that could leave you with debt and outrageous interest rates to repay, seek out more responsible options that can put you on track toward your goals for growth without setting you back.
A line of credit for small business owners fits perfectly into this category, as you can control exactly how much debt you accumulate and are responsible for paying back. A business line of credit works like a credit card, where you are given a spending limit and are only required to pay back what you spend. In addition, interest rates on this type of credit line are much lower than on a business loan or personal credit line.
Another sensible funding option is a grant. There are plenty of local and national grants available for small business owners that only require an application to be considered. While it is not guaranteed that you will be given the grant you apply for, it can’t hurt to give this option a try as it is essentially free money that you can use to grow your business. Sometimes, there are grants available to marginalized groups who may be at a disadvantage when it comes to starting a business. If you find that you may fit into one of those groups, you may have a higher chance of receiving grant funding for your business.
Growing your business on a limited budget is possible! By reworking your existing financial practices, combined with external funding, you can take your business to the next level in no time.
Isla-Rae Flores enjoys researching and writing about some of the most common issues small business owners face and wants to make owning a small business easier and more accessible for all.The post How to grow your business on a limited budget first appeared on Succeeding in Small Business.
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