Invoice factoring in Utah is pretty common. With our state being one of the leading destinations for companies looking to relocate, factoring is a valuable tool for managing cash and funding business operations. But if you are looking to establish a new startup in Utah, this particular tool will not be immediately available. You have to start generating invoices before they can be factored.
The hardest part of establishing a startup is often securing enough funding to keep the business going until it starts making a profit. Rare is the business that shows a profit after the first month. Depending on the sector and the type of business, profitability could be months or years away. Entrepreneurs need to have enough funding in place.
If you are thinking about starting something new, invoice factoring might be in your future. It won’t be a tool you can use to secure startup financing. But there are plenty of other options.
Bootstrapping is the most fundamental form of business financing known to humanity. What is it? It is the practice of funding your business by way of your own assets. Perhaps you have a savings account, a retirement account, and a home with decent equity. You also have a few credit cards with low balances. All these things can be combined to raise startup funds.
Many small business owners have completely funded a startup with nothing more than bootstrapping. But that’s not the case in every case. Some types of businesses require more cash upfront than others. If bootstrapping covers all your costs, great. If not, you may have to combine it with other options.
2. Small Business Loans
A more traditional funding route is the small business loan. You go to a local bank that provides loans underwritten by federal and state programs, asking for as much funding as you can get. Note that results vary. Some entrepreneurs find it extremely difficult to get small business loans until their operations are up and running for a time. Others seem to walk in, sign a few documents, and walk away with a check.
The one thing nearly all small business loans have in common is their limits. In other words, it is highly unlikely that you would be able to fund your entire business exclusively with a single bank loan. Even multiple loans might not be enough.
3. Investor Financing
When combining bank loans and bootstrapping still isn’t enough, entrepreneurs can turn to investor financing. There are multiple possibilities here, including:
- Angel Investing – Angel investors are those investors who offer the earliest stage 1 financing. They are often the first investors to get on board.
- Equity Investing – Private equity investors sometimes provide stage 1 financing. More often than not though, they are reluctant to get involved before stage 2.
- Peer-to-Peer Funding – Although peer-to-peer platforms are not as popular as they once were, they are still out there. Peer-to-peer funding is private funding involving a transaction between borrower and private lenders.
If investor financing still isn’t enough to keep a startup going, it is time to look at personal investments. These are investments made by family members and friends. Similarly, crowdfunding is considered a form of personal investing. It is yet another option.
Financing a new startup isn’t always easy. Most entrepreneurs need to combine multiple funding options to get it done. But once a new Utah startup is generating revenue, invoice factoring is on the table. As a new business owner, keep FastFactr in mind when invoice factoring becomes one of your funding options.