Got a big idea that you are ready to share with the world? Prepared to launch your start up and make some moolah? However, before you can make some moolah, you need access to capital for investment purposes.
If you belong to the rare yet fortunate group of people who already has enough cash to commence on his commercial journey, then great! However, if you are like the rest of us and need to raise funds, then let us help you out.
No idea where to start or which doors to knock? Don’t worry, your dream is not destroyed. You may have to work at that soul-crushing corporate job a bit longer, but you will manage to get out of it.
There is only one thing you need (besides access to funds of course): the ability to believe in your own competence and capability. Hold yourself up to a higher standard than ever before and strive to make your dreams a reality.
First thing is first, to kickstart your business of the ground, you need cold, hard cash and lots of it. Do your homework first, craft up a business plan, lock down a partner for additional advice and then take it to the next level: meetings with investors.
How do you convince the investor to allocate his hard-earned money to you? What makes your idea special? These are some of the questions you may have to answer when you apply for a business loan.
Types of funding
Broadly speaking, there are two classes of funding you can consider for your start-up.
- Debt-funding: As the term suggests, this is a loan format where you have to pay the loan service provider back. An additional amount is usually taken on in the form of interest charges that go along with the principal amount. It can refer to the volume of debt you have racked up on your credit card bills or the loan you have chosen to take out from a bank.
- Equity funding: Raising funds via an equity option means that you are essentially offering a slice of ownership percentage to the investor in question as per the current market value. This is the preferred medium for investors. Of course, you have to demonstrate that you are a valuable investment and worth the money. After all, there is no such thing as a free lunch.
Now the question that arises is: how do you get actual funds for your start-up? Read on to learn what kind of multiple sources you can tap into within your own network.
Business Loans for Small Medium Sized Enterprises
As stated earlier, loans are one alternative funding methodology you can go for. There is a whole world of loan service providers out there – just waiting for you to find the right one.
Traditional financial institutions such as banks have stringent criteria and checks to conduct before approving a business loan. History has been a witness to their reluctance to issue loans to companies that are just starting out in their respective fields. This may be a challenging route to go down. Of course, there are other alternative classes of finance available to you.
You will surely find a to get your money but a severe word of caution: read the fine print thoroughly and never sign anything without reading it. Contemporary finance entities tend to be predatory in nature with the ultimate objective to make maximum profit on their bottom lines. You do not want to be their prey. Check out TopLoanCompanies.com for such listings.
Social Circle: Family and Friends
We do believe in the saying to not mix business with pleasure. However, if the dynamics of your family allow it, then go to them as the first or secondary source of funding. It will be much easier persuading your uncle or your father to give you a loan than it would be to an investor as your relatives and friends will support your dream – not want to help kill it. They will definitely be more willing to help you out.
Strap up those boots and take a few pounds notes out from there! That is the concept behind the word “bootstrapping”. You invest in yourself and use your own money to launch your start up business. It could come from your savings, your monthly income, interest loans, credit cards, inherited assets or any other form of income.
Go and obtain a free credit card report card to understand and appraise your fiscal condition. It will help you answer the question of whether you are in the financial position to fund your own idea. The disadvantage, as with most entrepreneurial ventures, is that you could be personally liable and in a lot of debt if your start-up business doesn’t take off. But hey, you are worth the risk! It is an investment in yourself after all!
Whilst this may not sound encouraging as you are dreaming of working for yourself, flexible hours and being your own boss – you have to be practical. The fact is that perhaps you are earning enough money to pay your bills, support your family and live a good lifestyle.
Our suggestion is to keep that ongoing and not give up your day job so as to have more flexibility in financing options and decisions for your start-up. All good things come to those who wait!
Are you a whiz at social media and know how to engage your followers whilst increasing exposure and getting more individuals on board? If yes, then board the crowdfunding train.
You will have to break through the clutter and noise to attract your target market’s attention and explain why you deserve their money instead of other companies competing for the same position.
Want some copy written on your website? See if you (assume you are a website designer and developer) can barter some copywriting with a potential freelancer in exchange for creating or updating his website. This is the concept behind trade equity funds.
It is not a sustainable kind of funding as you will need cash at some point but is a good way to help you get your business started and operational in its preliminary stages.