So many recent studies will suggest why over 94% of all new businesses and start-ups fail during the first few months or the first year. The odds of success are long. Most of them survive 5 years to max 10 years. The most common problem that was found was the capital.
The funding problem is the biggest one because money is the bloodline of any new or old business. Whether you’re looking for start-up funds or to expand the current business, raising capital is a tough task. Without capital, that is a continuous need for a business, none can run smoothly. The exciting journey of your new business is sustained by fuel named money. That’s why the first and the biggest question to raise in any entrepreneurs mind if “From where do I raise this fund?”
How much funds will your business need will totally depend on the nature of your business. After deciding that, you can sit and make a list of the options you can think of. Read on to know a few:
Before anything, start seeking if you can help your own self. Be responsible enough for those options. This means you can rely on credit cards, bank loans, etc. Credit cards can be used for smaller amounts. This is a quick and easy finance idea. However, keep in mind that credit cards come with a hefty repayment amount of interest. The rates can be high at times and the amount can be unpaid by the end of the month. If not cards, bank loans are the next option. Their interest rates are usually lower compared to the credit cards. You can tap into your savings if any. Alternatively, you take a loan against a property if you have one. Selling some personal items can also help.
friends and family can come to help if you do not have the above options or don’t have a good enough credit history. You can convince people whom you know best around you. They can be easier to convince than officials. There’s no need to worry about the need of looking at the risk of whether you’ll be giving back or not. Obviously, less stern in asking for repayment, family, and friends are thoughtful while extending a loan. You can also be lucky enough to skip on the interest rates completely. Needless to say, this option comes with its risks. It may spoil relationships between both parties and affect family because it may take much longer for you to repay the loan.
- Venture Capital:
Venture capital firms make direct investments in companies that are doing good. They exchange this for equity shares in the companies. Since most of these are partnerships in investing companies, they invest in already well-established businesses that have good profits coming in. Venture capital firms do this with the assumption of encashing their equity shares.
- Angel Investors:
It will take some research but you can find some angel investors if you don’t have family and friends helping you out with your capital. A non-relative can be of help at times when luck strikes. A well-off individual can have an interest in funding start-ups, in exchange of equity stake in the new business. An angel investor has been seen mostly in a particular industry and is always looking out in the same line. Some can also be guidance angels. Meaning, they can guide you based on their experience. However, many angel investors always prefer to be low key about themselves. Financial advisors or your networks can help you find them.
- Win contests, raise funds:
Contests and the excitement of it have tremendously increased recently, helping so many opportunities for raising funds for different reasons. This is great to encourage new entrepreneurs, businesses and start-ups. These competitions are competitive and you have to make your idea/project stand out to win them. This can be pitching it in person or business planning. It needs to be comprehensive and worth investing in.
- Microfinance providers:
When you don’t qualify for a bank loan or any other glitches come your way, you still have the option of Microfinance. It is basically access to any financial services to those who cannot access conventional banking services. People who aren’t being helped by traditional banks can rely on these banking services.
While there are a plethora of options to pick money from in the market, You should be a responsible entrepreneur and ask yourself all the whys, hows and other details and know what you are doing. Financial assistance for a new business is not a small step. This needs complete commitment, research, planning and wisdom. It is not impossible to get finance smoothly. You can find yourself funding and being a successful business owner with the right steps.