Starting a business is a great adventure that can be extremely rewarding, but it can also be extremely challenging – and one of the greatest challenges you’re likely to face is that of financing your start-up.
You may have heard the term ‘capital’ being used, which in this sense, relates to the amount of money required to get your business off the ground. There are a number of ways to get the initial capital you require but they all have a fundamental requirement of you pitching for other people’s money to help turn your entrepreneurial dream into a reality.
For this reason, raising capital is rarely an easy task, and whilst it can be as simple as going somewhere like https://smallbusinessloans.co/ to apply for a small business loan – there is a certain heaviness to owing money, and gambling everything you have, in order to make your idea a success. There’s excitement and a feeling of pure aliveness and adventure; but at the back of your mind, there’s likely to be a niggling concern that what if things don’t go as well as you plan – and, given the statistics of small business failure, this is a very realistic concern.
It’s easy to forget the immense emotional pressure entrepreneur’s place upon themselves in order to launch their business, and nine times out of ten, the biggest pressure they face relates to having enough cash to operate their business; known as cash flow. This article offers three suggestions to consider in terms of raising the finance you need to fund your start-up.
GET A BUSINESS LOAN
Possibly, one of the most traditional and simple routes for setting up a small business is to get a small business loan from a finance company. The benefit is that you keep complete control of your company but the risk is that you often have to offer ‘security’ to the finance company in the form of securing the loan on your property.
FRIENDS AND FAMILY
Borrowing money from a wealthy relative is a great way to go – particularly if it is on the understanding of them having equity in the business (meaning they become a shareholder) rather than it being a flat-out loan. The benefit to this is that if you fall flat on your face, that money was given in good faith with knowledge of the risk that it might work out – or it might not. However, unlike dealing with corporate investors, getting investment from friends and family makes things personal; and it’s worth considering the potential strain it might put on your relationships should the business not turn out to be a success.
An alternative solution, and perhaps a much better solution in many respects is to embrace the recent trend of crowdfunding; where strangers invest small and large amounts of money in your start-up in reward for something that will be delivered in the future. There are plenty of sites such as www.kickstarter.com where you can raise several hundred thousand dollars and www.crowdfunding.com is a great resource to check out for an overview of the options.