Like companies all over the UK, Gloucestershire businesses are feeling the pinch amidst rising costs. From energy bills and fuel to water rates and National Insurance hikes, companies are facing increased expenditure that’s putting profits at risk and making it hard for smaller firms to continue trading.
In a bid to stay afloat, many businesses are trying to seek funding, but what options are available? Read on to discover four ways that companies seek funding they need to cope with increasing costs:
1. Unsecured Business Loans
Applying for a loan seems like an obvious solution for businesses that need extra cash, and an unsecured business loan is one of the easiest ways to secure funding. With no need to provide company assets as collateral, an unsecured loan can be arranged quickly. And it is available to businesses of all sizes.
Furthermore, an unsecured business loan can be used for a variety of purposes. This makes it an attractive option for companies that are dealing with spiralling costs and limited cash flow.
2. Selling Shares
If you’re a director of a limited company, selling shares in your business could be a viable way to generate some cash. People often sell shares to family and friends when they set up a limited company, for example.
Of course, you’ll want to ensure that the business is properly valued. This is so that you obtain the right level of investment. In addition to this, it’s important to protect your interests and determine if you’ll retain ownership and decision-making power if you’re going to sell shares in your company.
3. P2P Lending
Although P2P lending is a relatively new form of business financing, it can provide a solution for companies that are seeking extra funds. Instead of borrowing from an established bank or loan provider, applicants borrow funds from individual lenders.
If you want to borrow £10,000, for example, you might have 10 or 15 lenders to repay. Each of which will lend you a smaller amount. However, P2P lending is relatively new and interest rates can vary dramatically. So be sure to do your research before deciding whether it’s the right option for you.
4. Venture Capital
Venture capital is another way of attracting financing. But you will need to provide an equity stake in your business in return for the investment.
Venture capitalists usually invest in companies with a high growth potential. So if you’re planning to scale your business or the market looks promising, finding a venture capitalist could be an effective way to access the funding your need.
Coping with Rising Business Costs
Securing additional financing is one way for businesses to cope with rising costs but reducing your expenditure can help to mitigate the impact too. By finding cheaper suppliers, switching energy providers, or reducing your workforce, for example, you could save a considerable amount and reduce your overall operating costs.
With the right cost-saving analysis and external funding, businesses can overcome the ‘cost of doing business’ crisis and find effective ways to maintain their profitability.