Thursday, August 29, 2013

How To Find The Necessary Funds For Your Business

funds for your business


What is the toughest challenge for an entrepreneur? Most times, it’s finding the appropriate funds to launch the business and then grow it.


So, how do you embark on this task?


The first and foremost step in materializing your business ideas is to collect the necessary money. Certain funding opportunities like grants offer very limited capital. It does not cover all the costs needed for a new business and entrepreneurs with for-profit enterprises are often refused grants. If you aspire to establish a non-profit organisation, the chances of getting grants are positive.


In the midst of these uncertainties, the wisest idea is to weigh all the options for finding the right financial match for your business. Below are some simple tips to guide you through the fundraising process of all the stages of a business cycle.


Where to Find Funds For Your Business


Bootstrap: Use Your Own Financial Resources


In the initial stages of your business, using money from your savings account may be the right option. Since you are in the experimental stage, taking loans may not be safe. Keeping in mind the chances of succeeding in the long run, you may decide to stick to the current business idea or shift focus to a new one.


If you are considering bootstrapping, you need to be careful of making use of your precious savings.


Ask Among Family and Friends


If you do not have adequate savings to invest in your business, there is no need to lose hope as there is another way. Invite your family and friends to invest in your venture. Once you are successful, repay the money to them.


Before any of your family and friends make an investment in your business, come to an understanding that it may a considerable amount of time to repay the money.


Crowdfunding


If you don’t have enough money in your savings account, you’re not ready for venture capital funding, you have failed to qualify for a bank loan and your family and friends are not willing to invest in your business, then you must be wondering whether there is any other way left. The answer is yes, and it comes in the form of crowdfunding.


Launched on January 1, 2013 under the JOBS Act, crowdfunding allows a wider group of small investors with fewer limitations. When it comes to investment in the early stages of a business, this option is ideal.


There are many sites offering crowdfunding. In such situations, you require selecting with utmost awareness. Carry out thorough research on top online resources for crowdfunding and decide on the best one for you.


Angel Investors


When your business advances to the next stage of growth and you need more capital to progress further, you may approach angel investors. Is the concept of an angel investors new to you?


If so, angel investors are wealthy individuals or a group of individuals that offer funds for launching a business in exchange of translatable debt or ownership equity.


You can locate angel groups on the Internet. They make their presence felt on the Web with an eloquent description of their objectives. These groups decide whether your business fulfills their requirements. If so, they will arrange a meeting to collect more data. Investments can start from $50,000 to $500,000 and even more.


Bank Loan


A growing business in the later stages may require funding for different purposes to ensure long-term growth. At this juncture, a bank loan can be the source of monetary resources.While applying for the loan, the financial institution will ask for detailed information about you and your business. This information is vital to secure a loan.


The process is lengthy and complicated. You can facilitate it by establishing an amicable relationship with the bank at the nascent stages of your enterprise. The point of contact need not be for a loan at first. It can be a merchant account, checking account or credit cards. With time, the financial institution will become familiar with your enterprise and you as an entrepreneur and you may find yourself in an advantageous position to avail of their services.


If you devise a business plan, taking into account these five options for funding, it will be easier for you to secure the capital you require, no matter which stage of business you are in.


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