Different Ways to Raise Funds For a Business
If you want to start a business, you have multiple options to raise funds for your business
Your own money: If you have savings, you can use it for your business.
Borrowing from friends and family: If I borrow from my brother or uncle, I will certainly get interest free loan. If I borrow from a close friend, I also get interest free loan. When I get interest free loan, I will not incur any extra expenses, I will not have liability to pay as interest is free. However, the major issue in this method is having friends and family who can actually lend you money. They might not have money to lend you even if they can lend, they might not be able to lend a lot of money
Loan: If you do not have money, you can borrow. Even though this carries risks, it can also help you start a business.
Crowdfunding: This is another effective way to raise funds, using online platforms to attract investors, or selling IPOs through stock exchange. The second option is available only when you have a functional business and is already making profits.
Partnership: Going into partnership can also help you raise funds.
How to Build Seed Money For Your Business
You might have a great idea but if you do not have money to fund your idea, your business will never materialize. Therefore, the first step of a business is to build seed money, or let’s say build business funds. How do you do that? You can always raise funds for your business by using your savings. If you have assets, you can also sell your assets to raise funds. If both of these options are not available, you can do borrow money. You can either borrow interest free loan from your friends and family, get a loan from banks, investment companies, and finance companies.
If you do not have any money, if you cannot raise capital from your friends and family, but you have a great business idea and you have skills and knowledge to operate on the idea, what option do you have other than taking a loan? However, not all businesses can be successful so you should always have a plan B. In other words, you should have resources to pay back the loan in a situation when your business fails. It can be risky but it can also be a great way to start a business
Raising Business Funds Through Friends and Family
If you are planning a business that does not need a lot of investment but you still do not have any money for your business, you can raise your business funds through friends and family. You can fund small business by asking with your friends and family. The best thing about this funding option is it can usually be interest free loan, meaning you can only pay back principal amount. That’s because your friends and family want you to become successful. However, relying solely on this method may not work always for securing business funds especially if you do not have a lot of friends and family and you need a lot of money.
Using Personal Loan for Business: Is It Good?
Personal loan is the loan you get for personal things, it is not necessarily used for business or investment. However, business loan is for business. You can of course get a personal loan and use it for your business but the interest rate for personal loans and business loans are different and usually business loans have lower interest and personal loans have higher interest
Business Loan: Is It Good
If you don't have funds, what options you have except getting a loan? Well, there is a risk in starting a business with a loan but you should not be afraid to take loan. If you do not attempt challenging thing like getting a loan, or if you do not dare any risk like a debt, how do you think you will be able to become successful with your business, as the old saying goes, there is no gain without any pain.
The best time to get a business loan is when you want to scale your business. You should always avoid getting a business loan during the start up. When you get a loan while starting a business, you will be paying loan even when your business has not started making profits. When you get a loan when the business is already functional, you can not only easily pay back your loan but even use your loan to generate more revenue for your business.
It is easier to get a loan for functional business instead of a business that has not been started yet. if your business is already making sales, and also some revenue, banks will trust you and easily lend you money. Therefore, if you have plans to use loan for your business, you should first focus on making your business operational. This will also help you with repayment as your functional business will already be generating revenue.
How to Use Kickstarter to Raise Funds for Your Business
If you want to start a business and grow your wealth, but you do not have money to fund your business, you can use Kickstarter.
Kickstarter is a crowdfunding campaigns that is aimed at helping small businesses grow. The platform is frequently used by indie game developer, start ups and creative individuals to raise funds for their projects. The best thing about Kickstarter is you are not obliged to pay back, however, the funder will appreciate if you give them free products once your project begins.
To use Kickstarter, you need to create a campaign that can attract funders, a project that people believe should be funded as they genuinely believe in that cause. You can get funded if you establish that your project is genuine and you have genuine intentions. You can do that by linking your kickstarter campaign page to your social media pages, websites, and even submitting a video message.
Getting Business Loans From Microfinance
Microfinance are the finance companies that deal with small loans. Compared to big banks, microfinance also offer easy loan process. In most case, you do not even have to give them collateral. However, if you want to access business loans through micro finance, you will have to understand the terms and conditions. Applicants must be shareholders of the microfinance institution. In other words, you need to be an investor in the company. Secondly, you will also have to get approval from multiple shareholders. Microfinance mainly work with small loans therefore, if you need big business loan, they might not help you.
How to Build Business Fund
Business is not possible without investing money. There are lots of ways to get money for your business:
Use your own money: This is the most common ways to fund a business. This can be a good option if you plan a small business. If you are planning something big. This might not be an option.
Sell something you own to get cash: You can sell your land, house, cars, gold, even stocks to start your business. If you believe you can earn more form your business than from these assets, this is also a common method.
Partner up with someone and start the business together: This is also a save way to start a business
Business needs money for various purposes, for example, to develop and manufacture products, to build the business brand and market the products, to pay the staff, to pay other operational costs, etc. If yo do not have sufficient funds, you will be affected in one way or the other. Having sufficient funds ensure that you are operating your business smoothly. Therefore, having access to a good funds will help you run your business smoothly as well as make profits from our business. Insufficient fund might ruin your business
You need money, skills, knowledge and experience to start a business. If you intend to start a business, you should first build funds, then acquire skills, knowledge and experience. One of the easiest ways to build funds and also build skills, knowledge and experience is by working on a job. When you receive salary you can start saving some portion of your salary to build your business fund. Working in a job also builds your knowledge skills and experience
The best way to manage business funds and personal funds is by having a business bank account and personal bank account. You then keep your personal funds on personal bank account and use this account to send and receive personal funds as well as make personal purchase. Keep your business funds in business bank account and use business bank account to pay for business related purchases or expenses