Having a business idea is one thing but having the money to fund it so that it becomes a reality is quite another. Thankfully, there are a number of different ways to get startup funding so that you can start your company on the right foot. Here are some of them.
If you have savings or perhaps you received a large redundancy payout, then this might be the best thing you can use for funding your new business. You won’t owe anything to anyone so you can begin your company without any debt which is a great position to be in if you can manage it. It also means that you don’t have to give away any equity at an early stage in the life of your business and this can make a big difference when you want to entice larger investment at a later date.
Friends and Family
You may not like the idea of asking your friends and family for money, but if you’re serious about making your business a success then you may need to do exactly this. If you do, remember to treat it like any other loan or business transaction. It’s true you may be able to negotiate some favorable terms on repayments, but it is important to draw up a legal contract so that everyone knows where they stand. No one wants a business situation to go wrong and ruin a relationship.
Business angels are people who search for innovative and interesting businesses and invest their own money into them in the hopes of a good return when profits start to be made. A business angel investor can be anyone (even family members as mentioned above) and can work individually or in groups. Some might want to take an active role in the company and others will prefer to take more of a backseat and be a silent partner.
Business loans are perhaps the simplest way to fund your business; you borrow money from a bank or other lender and then pay the money back with interest. The payments are usually monthly. Since the banking crisis of 2008, obtaining a business loan has become harder, and there are more stringent rules applied. You will need to have created a business plan that details how you intend to make money and what your profits are expected to be amongst other things.
If you decide not to use a bank to obtain your business loan then make sure you research other lenders properly before you choose one because interest rates and payment terms can differ hugely. Simply search online for Quarterspot reviews, for example, and you should be able to gather all the information you need.
Although starting a business on a credit card is not an ideal way to begin because the interest rates can be high and you are putting yourself into personal debt for your venture, it can be the only option. If so, try to use a card with a low introductory interest rate offer or an interest-free period to give yourself as much assistance in paying the money back as possible. A credit card is best for a small amount of money over a short period of time; for long-term credit, other options should be researched first.