Starting a new business or a startup is like a dream come true for many aspiring entrepreneurs. This requires a tech team, a website, some office space and last but not the least – enough funds to pay for monthly rent and other required expenses.
In every stage of a new business, money is required for a powerful kick-start. However, it is not easy to arrange it all the time and as such many dream startups close down due to lack of investors and money. Here are some basic ways of funding solutions that will not only help to arrange money for any new business but also leverage thoughts beyond bank loans:
Put emphasis on your personal savings
It is one of the prettiest ways to self-fund one’s business. One can even use his/her family savings provided they are financially secured to support the business until it starts getting revenue. However, to do so, one needs to spend time on through planning and make calculations so that the business can run smoothly at the initial stage with that amount of saved money.
Borrowing money from near and dear ones
Borrowing money can both be simple or complicated depending from whom we are borrowing from. If we want to be safe, it is better to start off borrowing from an unofficial route such as from family and friends. In such cases, one must return their money before the deadline so as not to fall under any harsh circumstance or loss of property. On the contrary, banks these days offer loans depending on the type of business and according to their fixed rules and regulations. Some have low-interest rates while others have long-term repayment plans.
Partnering with a sleeping partner
Partnering with someone showing similar interest in your business is a great idea. The person you partner with must understand the concept of your business, be trustworthy and work accordingly. There is another concept of active and sleeping partners. In case of having no funds initially, one can easily partner with a sleeping partner who can fund the startup without in-person participation in the daily activities of the business. On the other hand, the one not investing in the business becomes the active partner and gets involved in the daily affairs of the business.
A financial aid
A wide range of special financing programs are offered by our Indian government for various divisions. If your business startup is within a niche in which there are schemes of government provisions of a financial grant, then it will take away half the burden of the business. Such government programs include development-related grants and low-interest loans.
Finding substitute funding sources
When someone does not get any assistance from close ones, government grants and partnerships, then the aspirant entrepreneur can seek the help of a few micro-loan organizations that are ready to lend to some desirable startups and entrepreneurs. Such websites that help low-income entrepreneurs in the US are Kiva and Accion. They give micro-loans for those aspirants living below the poverty line. Another popular crowd-funding site is the Kickstarter that provides a platform to grow money from an individual, small supporters across the web. With Kickstarter, one can get to keep the money if they raise the full amount of their goal. A campaign is setup with a target amount and perks for donors who pledge a certain amount of money are enlisted accordingly. Then money is raised for the campaign over a specific period of time.
Looking into bigger capital
If an entrepreneur is looking for some serious funding, then he must take the help of any venture capital. Venture Capitalists (VCs) require an airtight and in-depth business plan for which they can provide a large sum of money. They typically invest in a few companies for their clients and aspire to make money off of one of them to give them back their client’s investments. This means an entrepreneur has to make a strong business standout for the VCs to invest in them. The VCs, in turn, take the return anywhere from 3-10 times their original investment within the next 5-7 years.
The road to success for your startup can be long but not impossible. The prime factor is money and the best person who can either invest or start the business along with you, then only your business can stand and make all the differences in the world.