Are you planning for a start-up business? Do you have enough funds to make your dream start-up come true? Funding the business in its initial stages is the first and foremost challenge that an entrepreneur face. It’s a crucial affair. Sometimes investing in a bad idea for business or may be putting it into false direction can put you in debt. So here are the different ways on how to fund your start-up which can help you to play well in your business.
1. Fixed assets, savings, friends and family:
Well, self financing is the most obvious choice of most entrepreneurs. So if you have enough money in your pocket, or some fixed assets like a plot for sale, use these resources. Convince your family and friends to contribute some money. But be aware of the pits ahead, take calculated risks. And also, never put all your income to finance one business.
American business magnate and billionaire were quoted “Never test the depth of the river with both the feet”, which clearly say always take calculated risks when investing in something. Don’t be that guy who sells everything to start a business. Go for it after you are able to afford it. Your money is valuable and you need not spend it unwisely.
2. Angel investors:
Angel investors are those rich people who funds for small start-ups. If these investors like your business idea, then they would agree to finance your business. But they will have their own profit motives behind this. For example, an angel investor may demand to be on the board of directors’ panel of your company or he may ask for a percentage of the company’s profit every financial year.
3. Bank loans:
Many nationalized and private banks lend money to entrepreneurs. There are special reductions in interest rates for entrepreneurs in nationalized banks. But banks generally give loans only to those individuals who sound promising or whose financial background is stable. It’s always better to depend on nationalized banks for a loan as they have lower interest rates than private ones.
4. Depending on incubators:
Incubators are usually run by government or on public-private co-operative basis. They don’t expect any great returns. They simply absorb and fund if the business idea and the team is very promising. As of now, incubators are popular only among tech start-ups. But the disadvantages with incubators are that, they aren’t capable of funding huge amounts like the angel investors. Moreover, incubators are only found within universities and other government aided institutions, Hence it is less accessible to people other than those associated with such institutions.
5. Crowd funding:
This is a new yet old way to finance your business. Crowd funding is generally done via the internet. It’s the combined effort of many people. There are many social sites such as kick-start and indiegogo which are popular crowd funding platforms. Here, what comes into action is the collective effort of the people around the world. The people donate small and big sums enabling you to get enough support in funding your project.
It may sound stupid, but you will be amazed to know that kick-start alone was able to fund 220 million dollars so far and has helped in launching 61000 start-ups. Make sure you always list out your savings and expenses in a personal diary. Updating the book regularly can give you an idea of how much you spend and how much you save. Most financial asset management systems do it the same way as well, so you can follow the same strategy and finance your start-up all by yourself.
Now believe in yourself, take calculated risks and get started!!!