Starting a business is no easy task. You would have to plan out everything perfectly from the very start, including the funds needed to start it. If you are not sure of how to go about procuring funds for your new business venture, here are some handy tips to help you out.
Bootstrap and Put in your own Money
This can be considered as the best possible option to avoid the long list of investors and bank loan officers afterwards. Putting your own money into the business would mean you would have less worries about paying someone back, irrespective of how the business runs.
However, you would have to have plenty of savings in the bank to follow this method. It would also mean that you may have to drain your hard earned savings to start a business based on trust alone. But if you are starting a relatively small business, and have the money to start it (with some stored as financial backup of course), then bootstrapping would be the best option for you.
Ask Friends and Family Members
Instead of opting for loans from banks or investors who hardly know anything about you, try asking your friends and family members to pool in the money to start your business. You would need to choose your investors carefully and quietly (don’t let everybody know that you are asking for money). Only choose those who would be ready to at least try to help you.
Even if s/he were your friend or family member, an individual would be willing to invest money in your business only when s/he is convinced that you are serious about it. So show him/her the complete business plan, the amount you have already invested and the progress you have made so far.
Opt for Small Business Credit Cards
In case the above options don’t work out, your next course of action would be to opt for a small business credit card which you can use to fund your business. Having a credit card as a backup can help you start your business immediately and make quick progress. Credit cards with low interest rates and cash back offers can also help you pay less each month for the credit card bill.
However, you need to be extremely careful in how you use the money from the card. Use it wisely to avoid exhausting the money in it and raking up a mountain of credit limits before your business starts progressing.
Search for Private/Angel Investors
If you (or your friends) know a private investor who would be willing to fund your business, consider approaching him/her for the same. In return for the funds, you would probably have to give a partial ownership of your business to the investor who would in turn use the returns to pay back the wealthy individuals from whom he/she borrowed the money in the first place. Be really precise and particular when talking about the terms and conditions of the agreement to avoid disagreeing on something later on.