Starting a business can be hectic especially if you don’t have enough money to get going. Although you may be stressed about where to get the money, there is no need for you to worry. There are different ways you can raise capital for your startup.
It is advisable for you to study your business plan and the different ways of funding in order for you to come up with the perfect one that will fit for your business. Sometimes there is no perfect approach and you may need to have two or more different option. And of course every one of those options of funding has its advantages and disadvantages. You need to be sure of what you are willing to forego and what options are realistic your business.
1. Personal Savings
You can call it bootstrapping if you must. You fund your business without any external financial help. However, building a business based on personal finances is not only challenging but quite a financial risk. The business is likely to grow at a slower rate than if you had additional funds to boost the process. The advantage in the long run is you won’t have to worry about credits and paying back loans. You won’t have to give away equity at an early stage either. You can always get external investment at a later stage.
2.Family and friends
Apart from the moral support that friends and family give, you can get financial help from them too. They know you well, and if they believe in your business idea, and your vision, and they know you can do it, then they will be willing to chip in. You can negotiate the lending agreement, advisably seek legal advice so that neither party suffers as a result. You can pay back within the stipulated period once the business pick up.
3. Loans from banks and financial institutions
You will need a solid business plan and profitable business projections including a clear plan on expected inflow and business activities. You will of course need to have personal assets as guarantee or collateral for the loan. The advantage however is that you won’t have to give up a part of your business. You need to however understand the terms and conditions of loaning of every financial institutions. You can decide to only seek out those that are in line with your business objectives and the terms and conditions you can handle.
You can get grants from the government, industrial associations and non-governmental organizations. You can visit their websites or offices to get better information concerning each source. There are those institutions that only fund small businesses and even that at particular stages. So you will need all the information you can get. In most cases grants do not cover the full amount required for startup. The amount they give is meant to complement the cash you have. You will need to market your business idea and the benefit of the business to the society if necessary. You can partner with higher learning institutions and other NGOs to increase your chances of credibility.