A significant number of brilliant people who would have become successful entrepreneurs fail to actualize their goals due to lack of capital. Money is, without a doubt, the bloodline of any business. The painstaking yet thrilling adventure of turning a concept into a revenue-generating venture needs some money to start. Recollecting these funds is often easier said than done. So, how do you finance your baby business and watch it grow to stand on its feet?
An excellent place to begin your journey is sourcing funds from your personal accounts, also known as bootstrapping. First-time business owners usually have rough time sourcing funds without anything tangible to show to potential investors. You could ask close friends and relatives to fund you under reasonable terms to start your company.
2. Consider Bank Loans
You’ve probably been building some credibility with your banker. It might be a good idea to approach your banker for a loan to start your business. Apply for personal bank loans that come with relatively lower interest rates than commercial loans and credit cards. If you’ve almost cleared mortgage loansand you have some equity in your home, you could borrow money against it. Review the terms and conditions governing the home equity loan to ensure you are making a rational decision.
3. Look for an Angel Investor
Angel investors are business people with excess funds who take a keen interest in investing money in potential ventures. Apart from providing funds to businesses that please them, they may offer business mentoring as part of the funding procedure. In return, you will give up a percentage of the business equity or pay back the money at an agreed interest rate.
4. Venture Capital
Similar to angel investors, venture capitalists are firms that channel funds to businesses that show some sign of success and profitability. In exchange for the funds provided, you will offer equity stakes at your business as some form of security. In most cases, venture capital firms fork out money with the hope that their shared equity stake will amount to something profitable and later cash out during an Initial Public Offering or when sold to a larger enterprise.
5. Business Loans From a Microfinance Provider
If your banker cannot provide a personal loan or is somewhat inadequate, you still have an option. Microfinance providers offer financial services to individuals who are at a disadvantage in accessing conventional banking services. If the requirements requested by your banker are unreachable, or your credit ratings don’t favor you, don’t panic. You could try borrowing a business loan from a microfinance provider in your area.
In recent years, crowdfunding has been gaining popularity in the business world. It works through accessing loans or contributions to fund the business from many people at the same time. Through crowdfunding, you will put up a detailed description of your venture and your business plan in a platform wired to attract contributors. People who love the idea will make pledges or donate funds to make the business a reality.
7. Apply for Government Grants
The government and a few private organizations have been trying to find creative ways to promote entrepreneurship. These organizations have managed to boost many start-ups by offering business grants to individuals with remarkable business ideas. Consider applying for this free money from federal grant programs, private grant organizations, and local or state government funding programs.
The quest for sourcing capital for your business isn’t a game for the faint-hearted; you need to carefully review all the available options and make the right calls. However, the above are some excellent sources to help you turn your concept into the business of your dreams.