Tips to Get the Funds You Need When Running a Business
So, you have got an idea of opening your own business. Sometimes people are nurturing this plan for years, and sometimes the desire overtakes you suddenly. And you cannot stop thinking about it.
If you have available funds or a source of stable high income, then there are no problems with investments in starting a business. But what if your pockets are empty? Though you still cannot give up an idea of a startup project. Where to get money for a business? There are several options for further actions.
1. Friends and relatives
It is usually the first idea that comes to mind when you find yourself in a financial deadlock. Ask your close friends and family, perhaps one of them is ready to provide you with an interest-free loan for the long term. You may even borrow from several people at once. But you should gradually cover all the debts when your business becomes self-supporting and starts to bring profit.
If you decide to borrow money for business from friends and relatives, follow these rules not to ruin your relationship:
Do not be afraid to give a receipt, even if we talk about a very close circle of people. Do not mix up friendship and business relations.
Carefully agree on the terms of money return.
Be sure to settle debts with everyone who helped you, even if things do not go so well as you hoped.
This approach means launching a business without external help or capital or starting from scratch. Such start-ups finance the development of their company through internal cash flow and carefully monitor their expenses. Bootstrapping is customer-focused, not investor-oriented. And this feature increases the chance of startup success.
This method boosts your business in the shortest terms, but it will fail without careful budget planning.
Using your own funds is one of the best options for starting a business. There are several ways to accumulate initial capital:
● Save a certain amount of your monthly income;
● Offer your property for rent;
● Sell unnecessary things.
3. Find an investor
When there are no funds for the project and there is a worthy business idea, then you can try to look for an investor. In this case, a certain percentage of the income will go to the investor. This is one of the safest ways to open a business, but also the most difficult one.
If the investor gives money for business development then be prepared that the investor will actively participate in the affairs of the company and control the budget.
You should also take into account that every investor will ask for a business plan for your startup.
Attracting investment is a step towards opening a serious business, so without entrepreneurial experience, it is better not to consider this method. But if you are not a business novice, an investor is the best option from the list.
4. Look for a partner
Try to find a partner among your acquaintances. It is very difficult and sometimes impossible to borrow a decent amount from friends or relatives. Make a list of people who may have the necessary finances, ring them up offering a business meeting.
When someone gets interested, offer a percentage of the profit in your business in exchange for borrowed funds.
You may place an ad regarding business cooperation on Internet sites or newspapers. It is important to have a ready-made concept, a business plan and the ability to convincingly present your idea. Anyway, new acquaintances with other entrepreneurs is already a significant result.
However, when deciding to start a business with a partner, do not forget that you will get only half the profit. And if there are more participants, then, accordingly, the piece of cake will be even less.
5. A small business loan
You can always borrow from a bank to start your own business. But always remember the following rules:
Carefully study all the options, get a loan with the lowest interest.
Do not consider your only accommodation as collateral.
Note that you need to take the amount that would be sufficient not only to start a business but also for at least 3 months of performance.
It is still suggested to accumulate at least 50% of the required amount before starting a business. It is difficult to progress if you have to for several years repaying debts to the bank.
Bear in mind, you will have to return a loan to the bank, even if your project fails.
So, today there are plenty of ways to find money to create your own business. A business opens up many advantages, but it is always a risky adventure. Anyway, this challenge is worth trying.