No matter how great your business plan is, the venture will likely turn out as a loss if you don’t have adequate funds to run it efficiently. Unfortunately, many people start businesses with the little funds they have, believing that it would be sufficient for the time being, only to later find that their venture is in deep financial troubles.
And to ensure that you get the proper funds you want, we list below four sources of start up business financing.
If your business idea has great potential, then you can raise funds from angel investors. They are people who have a big interest in investing in up and coming companies. Angel investors usually work as a group and will screen various proposals using multiple criteria before deciding to invest in any startup. As such, if they sense that your company has incredible growth potential, then they will be ready to invest in it. The only drawback is that angel investors usually demand a share of the company that might come across as too exorbitant. Some investors might demand even 30% of the share of the firm. As such, it is better to only approach angel investors when you have no other option left for raising funds.
If you do not wish to dilute the ownership of the company, then you should look for a bank loan. As long as you have collateral to provide, the bank should lend you the money. However, if you cannot provide collateral, then you will never receive any loan no matter how great your idea is. The bank will not take such a risk. The only way to overcome this issue is by using a co-signer. By doing so, the co-signer’s assets can be used as a collateral by the bank to give you the loan.
This is the most popular choice for business owners to preserve capital and lease things that depreciate and pay cash for things that appreciate. If your startup business requires many pieces of machinery, then you should seriously consider equipment leasing as a way of start up business financing. By leasing the machinery, you don’t have to pay the cost out of your pocket. Instead, you only have to pay monthly installments. And unlike bank loans, an equipment lease is far easier to obtain. They will also cover the costs of taxes, transportation etc., which means that you can get all the equipment you want at your workplace without having to spend anything from your capital funds.
The internet has opened up opportunities in various fields, one of them being crowfunding. If you have an idea that you believe is truly sensational and you are unable to raise money through regular channels like bank loans, angel investors, and so on, you should definitely try out crowdfunding. Thousands of people can contribute to your fund target, helping you kick-start your venture. However, make sure that you develop an excellent presentation of your ideas that can influence and inspire people. Only then can you raise a good enough amount through crowdfunding. Otherwise, your fund targets will never be met.
By Paul Kendall
who is having 15 years of building regional sales channels, business development, commercial financing, account management, and marketing experience.