5 Easy Ways To Finance Your New Small Business
Many budding entrepreneurs have an amazing idea to kick start their business, but the lack of capital is actually what forces them to take a back step. Every startup needs funding. May it is for funding product development or paying the first employees, every startup needs to have capital.
Most of them think, taking bank loans is only a leftover option for them. But, in reality, there are a handful of various methods which are more favorable than a traditional bank loan. So, besides bank loans, here are some simple ways to finance your new small business.
1) Self-financing or bootstrapping
Self-financing or bootstrapping is actually a popular method of financing for business startups and is really a good place to begin in for. For this, you need to get a clear idea of what your assets are. It might be real estate, savings accounts, retirement accounts or any other investments. In future, investors consider this as a good point.
However, bootstrapping has a limitation. This is suitable only if the initial requirement is small. Some businesses require huge investments from day 1, self-financing might not be suitable in such cases.
2) Try Crowdfunding
One of the newest ways to finance your startup is crowdfunding. Simply saying, it is taking a loan or investment from more than one person at the same time.
This is how actually crowdfunding takes place: An aspiring entrepreneur should draft a detailed description of his ideas/goals. Also, mention how much funding is needed and for what reasons. Anyone can contribute money towards helping a business that they really believe in.
However, crowdfunding is a very tough platform to earn funding. Unless and until your business idea remains exclusive and gain your consumers attention, you may not find people to contribute to your business.
3) Online lending option
Online lenders are being a great option for most of the startups nowadays. These online programs have an advantage of speed. The process just takes an hour to complete and the choice of funds can be issued just within few days.
4) Contact Angel Investors
Angel investors are those individuals with surplus cash and an eagerness to invest in a startup company. These individuals also work in groups and collectively screen the startups before investing.
Angel investors acted as helping hands to many of the then prominent startup companies including Yahoo, Google, and Alibaba.
Some of the popular Angel investors in India include Mumbai Angels, Hyderabad Angels, and Indian Angel Network.
5) Take loans from family or friends
When an entrepreneur has an idea with no customers, assets, or revenue to back it up, family and friends can come to your rescue. They can be a vitals source of funding since they are the people who trust the idea/product even before they can prove that their plan will work.
But, the commitments should always be in a document such as promissory notes rather than mere words.
Conclusion: Most of the entrepreneurs don’t consider all of the options. They stick to a single financing option and spend all time and energy trying to make that method work. It should be noted that there exist many chances of securing favorable financing.