The most difficult part of starting a business is figuring out how and where you can raise the capital for your start-up company. The ideas may be great, but without the money to make them real then every start-up company and every idea is still-born. Here are some of the more popular ways to fund a start-up company. Before we get into the ways to fund it we should take a look at some of the keys to being successful, no matter who you approach to fund your start-up company.
Before you start approaching people for money make sure that you have all your ducks in a row. The better and more specific your planning the more likely people will be willing to lend you the money to get started. Everyone who invests with you is basically interested in one thing – getting their money back with a little extra on top and if you can show them how you’re going to do that you’re far more likely to win their support.
You case should make business sense, be short and concise and hit the key points as quickly as possible. The simpler you can make your presentation the better. Charts and graphs make great tools but if you can express you business case as a simple no-brainer then you’re going to be more successful. Don’t forget though, you may still need the data and charts to back up what you say so don’t go in without them.
Friends and Family
You can go to friends and family for money. Just remember to take them a pitch that you’d take to anyone else and don’t force them into investing if they don’t want to. However, many friends and family can lend you money with fewer strings attached than investors and banks and they have a flexibility you may not be able to find elsewhere.
Banks are the traditional place to go for small business and start-up financing and if you have a strong business plan with strong data then it may be the right place for you to try. Banks are great because they have experience in the market and may be able to offer you other services as well as the loan.
You can dig into your personal savings to fund your start-up. You can also use your personal savings and personal assets as collateral for borrowing money. Make sure you don’t borrow too much and make sure that you have a strong business plan otherwise you can lose a lot.
Investors are a good place to try if you need financing because they are often experienced and if you can find a large investor they may also be able to offer their advice and experience in helping you get up and running. They do want a return on their investment and the more specific you can be in terms of how and when that return will be generated, the more receptive they’ll be to you proposal.
These are some of the most popular ways to fund your start-up company. Make sure you do your research before hand, whichever funding route you decide to go. Even if you’re self-funding your start-up make sure that you’re able to justify the expenses you put in otherwise you run the risk of losing a lot of money. A bad end to the business can have serious damage to you personal credit and finances as well as those of the business so it should always be taken seriously. Having said that, if you have the ideas and drive to start your own business then you shouldn’t let the fear of funding your start-up hold you back.