Starting a business is something open to everyone, and something that, if it is something you truly want for your life and future, you should do. However, it is not something to be taken lightly; there are a lot of considerations to think about before you launch your business and start – hopefully – making money from it.
One of the things to think about is money. Some businesses will require more than others to begin with (and some don’t need anything at all), but it is less the launch and more the growth that is of concern, and in this area, money will be crucial. Here are some of the ways you can finance your startup and allow it to be as successful as possible.
You might have a decent amount of savings put to one side that you can use to fund your new business. This can be ideal since it means you don’t have to borrow money from any other sources right from the start, and neither will you have to give any equity away. Later on, when you want to grow, and you need to borrow from an external source, having your company with no debts and no shareholders (other than yourself, perhaps) is a much better prospect than anything else for securing a good deal.
If you put your own money into your business remember to ensure you are paid back once the business is making a profit. That way, you can replenish your savings and be financially secure both personally and within your company.
Some people don’t have traditional savings; they have investments instead. Stocks and shares are an excellent way to make a handsome return assuming you have thought about things carefully, perhaps have a good broker to help you, and are willing to wait (this is not something that will make a profit overnight in most cases).
Take what you need from your portfolio and leave the rest where it is to make up the shortfall. EFTs are particularly useful in this regard, and you can click here to find out more about what they are and how you can use them in your business.
A business loan is often the first thing that many people will think of when it comes to ideas on how to finance their new business. It can be the best way to go about things, as it means you borrow a specific amount of money and pay it back over a set number of months. Of course, you will also pay interest on the loan, but you will know what you are paying and when, and this can help with budgeting.
Since you will also need to create a business plan to prove to the bank or another lender that you can pay the money back and to show what you need it for in the first place, it will also push you to do this. A business plan is essential not just to secure funding but to give you a clearer idea of where the business is going, so there is a definite advantage in having one.
Bank loans are not something that everyone is keen to obtain, especially when the money could come from an angel investor which, in the right circumstances, will not only offer money but advice and useful networking opportunities as well.
Bank loans won’t be open to everyone, especially if you have poor credit or there is a doubt that the business will be able to pay the money back. If this is the case, or you want to get more for your money, an angel investor could be the way forward. An angel investor is a person (or sometimes a company) who invests in businesses they feel passionate about. They don’t always take an active role in the business, but some will want to, and if you want this too then, you need to research each potential investor fully to ensure that will be able to help you.
Friends and Family
It might be that you don’t have the savings or investments you need to fund your business yourself, and neither do you have the credit or the proof that your business will make money to show a lender. In this case, you could turn to friends and family to help you. This is not always the preferred option, as combining business with your personal life can be difficult, but if you create a contract and ensure that you know how much you are paying back and by then, it could work well.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.