Planning to Start Your Own Business? Here’s How You Can Get Your Capital to Fund It
Whether you’re starting a business or just looking for ways to expand your company, funding your organization can be a challenging task to do. Without a fund or a starting capital, your business will soon cease to exist. You wouldn’t be able to continue your company’s work operations if you don’t have enough money to help sustain it and you’ll surely need to pay the bills and amenities for establishing your office. To top that, you need to pay for your employee’s salaries.
You may think that your profit will pave its way to pay all your duties and responsibilities but this is not always the case, especially when you’re just starting out. When you start running your own business, you’ll find yourself sacrificing more of your hard-earned money for your company, while sustaining your personal needs too. That’s why most businessmen are on constant lookout for investors or other sources of funding, in order to get capital for their business. If you’re one of these entrepreneurs, here’s how you can get enough capital to fund your firm!
Allocate a Portion From Your Personal Savings
We can say that this is, by default, easiest and safest way to earn the capital you need for your business. Whether you get paid a large sum of money from your current job or you have set up an insurance/investment account, you can always allocate a portion of your savings to go for your business funding. It’s the easiest and safest way to do it because you don’t have to put up with the hassle of filling out forms, bank statements, and submitting documents for approval.
You only have to setup a separate bank account for your business funding and deposit your money there. However, it will take sheer commitment and discipline in order not to spend this money. Aside from that, you won’t carry the burden of giving back the money to your investor should your business fail, in worst-case scenario. However, the only setback about this is that it’ll take years for you to accumulate the exact amount you need to start a business if you’re only relying on your personal savings. And by that time, someone else might’ve turned your business idea into a reality too.
Crowdsource to Your Family and Friends
This is a slightly upgraded version from the one mentioned above. In this case, instead of saving up by yourself, you can now ask your parents, friends, or relatives to join this business venture with you. Since you’re close to their hearts, it’s most likely that they will lend you enough money you need for your capital. And if they’re interested in your business endeavor, chances are they will take a risk too by establishing the business with you. This will form partnerships with other people to become co-owners of your business.
This is essentially a good tactic because not only it’ll help lessen your expenses, but your duties and responsibilities will also be divided equally. You have more chances of running your business if you have someone you know and trust to operate the business with you. Often, we also see some of our family members taking up some roles or tasks during the first few months of your business. This will help you save more money since you can give a portion or allowance to your family members (some even do it voluntarily, for free) rather than hiring employees when clearly you couldn’t afford it just yet.
Get a Business Loan
This is actually the most common source of capital we have right now. In fact, most businessmen use this method because it’s the most efficient way to let their business grow while keeping their debt at a minimum. You need to go to a banking (e.g. Bank of America) or lending institutions to avail a business loan. Keep in mind that requirements will differ on availing the business loan depending on the institution you’ve applied to. Just make sure to read the terms and conditions carefully, and that you’ll be able to pay the interest rate without draining your pocket before taking it. Take note, we don’t recommend you avail credit card loan as that will be a sure way to fail with your business.
Apply for a Business Grant
In a way, this is also similar to a business loan. The only difference is that most business grant is funded by government institutions. As you may have noticed, most government institutions nowadays are in constant search for new, innovative ideas to implement and turn into reality. That’s why they offer business grants and as a business aspirant, you need to propose your business idea to the panel.
If approved, the government will lend you the money you need to start your business. However, you must follow the timeline presented to the panel in order for your business to grow and get the profit from your business. Yes, the government wants you to be successful in your business endeavor (or maybe they just don’t want to waste the money they’d invested), which is why they’ll be requiring a timeframe for you to know when you can get your ROI.
This method of business funding has been gaining popularity over the last few years, courtesy of crowdfunding websites like Kickstarter.com and Indiegogo. Thanks to the Internet, you can easily create an account on these sites and set up your business idea. When you’re done, you’ll be sharing the link to your social media accounts, your families, friends, and relatives. The secret formula to be successful in crowdfunding is – effective referral program and word of mouth. When people like your business idea, they can pledge an amount (depending on them) to help you fund your business. They will also likely share it to their circles of friends, and so on. Once you’ve met your targeted amount, you can start operating your business.
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