Starting a business can be an exciting time but raising enough capital to get you business started can be one of the greatest challenges. Many businesses do not consider all the costs required to start up a new company successfully. Here are some important considerations when it comes to raising finance for your new business.
Invest yourself if you can
If you can get your business up and running from revenue that your company makes from the beginning then that can be much more beneficial than using professional investors who will normally want a large slice of your business in exchange or will charge higher interest rates. Taking out unsecured bank loans and making agreements with suppliers to pay them later can all be good ways to finance your business in its early stages.
Look at offering a stake in your business to family and friends
Getting investment from family and friends can be a good way to finance you business without losing a big share to an outside investor. As these are close relatives and friends, they will be able to support your ideas and dreams for a much lower share.
There are many banks who offer loans with good rates of interest. Starting your new business will generally require an investment in purchasing your business assets. Banks are a logical choice for financial aid and many lenders will actually encourage borrowing from business start ups. You can check out a loan repayment calculator to see what your monthly repayments will be. This monthly outgoing can then be accounted for in your profit and loss account. Bank loans also offer much lower interest rates with some loans offering an annual APR of around 6%. The liability will be solely with the business owner but banks will only require the loan to be paid back and no stake required in your business unlike personal investors. Other types of financing may actually require the issuing of securities…
Make good relations
Building strong relationships with other networks and business owners can be another good way to raise finance for your business. There may be suppliers who are willing to help you out in the beginning by delaying invoices until you have cash coming into the business through sales. If they see you as a long term customer then they will be willing to help you out in the beginning. Network meetings can also be a great way to meet with suppliers and get investment into your business. Gaining credibility can help people go that little bit further for you.
If you are looking to finance your own business then there are options available. It is important to consider whether you are willing to let people have a stake in your business in return from their financial help or whether you want complete ownership.
Sell to everybody you can
You may actually get investment from unexpected sources. Be sure to sell your business ideas and ensure that you are constantly selling. Remember you should be the best salesperson in your company.