7 Easy Ways to Raise Working Capital for Your Business

According to recent data, India is currently home to 38 unicorn startups with a valuation of over USD 1 billion. To harness the growth of such businesses, the Indian government has also launched the ‘Startup India, Stand-up India’ initiative.

Such lucrative schemes indicate a positive time for new and old entrepreneurs to boost their firm’s growth. This can include buying new equipment, expanding trade, restocking raw materials, hiring staff, etc.

One of the most important factors that contribute to the effective functioning of a business is maintaining a healthy working capital ratio. This can be facilitated by availing a backup like working capital finance. Here are some avenues that would help an entrepreneur to raise the operational costs without affecting the business’ functioning.

Avenues that help in raising working capital for a firm

1. Angel investing

The first step toward raising capital is looking for a trusted source. One can find reliable ways to generate funds like angel investments. As the name suggests, these influencers are blessings in disguise who invest in startups and new businesses with potential. However, before meeting these individuals, one should have a proper business plan in place. These investors are professionals who form a group to scrutinise an applicant’s background and reliability. Researching the types of working capital would also facilitate better ways of borrowing.

2. Cloud funding and crowdfunding

Cloud funding is a smart way of gathering working capital for a business through the power of the internet. Several investors look for new business plans and ideas that show potential. One can also opt for crowdfunding to avail funds from a group of small business financiers.

They also help with marketing and promoting ideas in the media to attract more investors, which is how working capital helps businesses stay agile. Typically, these advances are equity or debt-based, as mentioned on the lending website. One can also find rewards in exchange for investments and better opportunities to reach out to a pool of investors.

3. Partners and venture capital firms

The next best way to gain working capital finance for business is to meet a strategic partner. They usually align their resources to help other businesses. These partners own the right over the company. There are also VC or venture capital firms that offer small business capital for the preliminary stages of operation. Such a mode of financing is ideal for start-ups who do not possess a considerable business vintage to raise funds from financial institutions.

4. Collect payments on time

Collecting payments with caution is a smart way to manage working capital for manufacturing business or respective startups. Usually, most firms work on a credit cycle that allows companies to purchase goods from sellers on the promise of repayment after a certain time period.

Similarly, the business also sells products to a client who shows reliability. However, there are chances of debt or cash inadequacy from the creditors’ end. To avoid these issues, a business should maintain a systematic payment regime and keep a tab on the creditors.

5. Employ inventory management

Businesses should also maintain a good inventory to improve their working capital. In this regard, calculating how much working capital their businesses need will enable owners to keep track of their raw materials and finished goods.

Furthermore, smooth working capital management will also help businesses fulfil client requirements on time. This would again enable them to receive payments on time.

6. Look for alternative funding

Individuals can opt for alternative funding such as business loans to maintain the working capital balance. These loans can be easily availed as they require fulfilling simple eligibility criteria and minimum documentation.

7. Offers on advances

Eligible borrowers can look for lenders giving pre-approved offers which aid in a smooth and hassle-free sanctioning of a business loan. Bajaj Finserv is one such NBFC that provides pre-approved offers on multiple financial products such as professional loans, personal loans, business loans, etc. Check your pre-approved offer by entering information such as name and contact information.

These are some of the smart ways to generate working capital finance from reliable sources. However, individuals must try to maintain integrity when availing of credits from lenders. This includes timely repayment and maintaining a good credit history.