A notion of starting own business is great. Unfortunately, an idea is not just enough for fulfilling it, you need capital too. Funding your business may be hard i.e source funds. One thing that every aspiring Entrepreneur should understand is the reality is far away from your idea and the way you think you could raise the funds. There will be many commitments once you start with your business. One thing is clear that you need capital to maintain your day to day operations. And here are some ways how you can fund your business.
1. Bootstrap your fund
In the idea/experimental stage, use your own financial resources, such as money from a savings account or careful use of personal credit cards. Wise deployment of these precious dollars is critical.
2. From Friends and Family
If you don’t have your own savings or credit cards – or you do, but your growing business needs additional funding – all is not lost. Consider inviting family and friends to invest in the company with the understanding that their money may not be returned. In most cases, these friends and family are investing in you, not your business. Both parties should think of this investment as a grant with no strings attached. If the enterprise succeeds, a reward to these risk-takers would be a nice gesture.
3. Business Loans
Taking a business loan is also a good option, this will provide you with funds from banks that can be used to establish and run your business. The borrowed amount can be repaid through EMIs in a particular period of time.
If your business has already started making money then it will be quite easy to qualify for a small business. However, you are yet to start a business the lender will ask you for your business plan to know your business potential which further indicates your repayment capacity. Giving collateral or guarantor against your loan also increases your eligibility.
If you have a tech start-up, you can look for crowdfunding. This is because you need more capital to hire qualified staff, to get a corporate office space, and to fulfil many more requirements like this. A crowd-funding is the one which can help you afford all of these.
You can go to any trusted crowdfunding platform and post about your business there, or you can directly start looking for the investors through the crowdfunding platform. Contact investors and try to convince them to invest in your business. Make a sound business plan showing all the potential growths, challenges and strategies to defeat those challenges. Including these points will give you a realistic plan and will attract more investors.
5. Get Angel Investment
Angel investors are one with surplus funds and a keen interest to invest in upcoming start-ups seeing the profit-making potential.
They also work in groups of networks to collectively screen the proposals before investing.
Angel investors have already helped many start-ups to stand and then grow further, this includes companies such as Google, Yahoo, Alibaba and many more. For the investment, the investors generally want up to 30% equity. They prefer to take more risks in investment for higher returns, hence to get more funding, angel investors are better than business loans from the banks.
If you want to grow, you probably need outside sources of capital to fund your business. If you bootstrap and remain without external funding you can’t grow fast and may be unable to take advantage of market opportunities. There are many funding options available, you just need to give some time to analyze your requirements and then the funding options. Go for the one which suits best to you.