Start-Up Business Funding Tips For Young Entrepreneurs


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Getting fund for your start up business is one of those great difficult aspects you might have experienced with or is currently experiencing. You might have got a no from many people when you approached them for funding in to your new business. If so, how your business idea will be practical? What you have to do to get enough funds for starting your dream business? All these thoughts may arise in your mind.

If you are new in to business, things can be much more difficult for you as you might not be sure about the sources from where you can avail enough funds.  You may not have a proven record of accomplishment to submit for getting funds. All you need is some good amount of money to start and flourish your business, which is lacking.

Persistence gives many options

Many new entrepreneurs think of starting the business with their own capital. However, it may not be sufficient in a long run and you may run out of money to continue the business. If you have a good financial back up from friends or relatives, things can be worked out in a better way. Still a further expansion of your business in near future like acquiring assets like machinery, hiring more employees, payroll, building rent etc may be difficult when there are no enough funds.

There are in fact many funding sources available for business start-ups. However, the best way is to approach a professional business consultant before go ahead with a funding option.

Here are some four categories of funding options suitable for a start up business.

Equity Partners

You can approach equity partners, who are ready to invest money in to your business. They will ask for a shareholding or a certain percent of ownership in your business in exchange for the fund provided. Being into ownership, these equity partners can be either working partners or stockholders.

 Angel Investors

Another option is to approach anger investors. They provide money for your business out of their pocket. They are known to be angels because they can give enough funding to your business when you are urgently in need of money as someone sent by god to save your business. However, angels are expert people who will analyze the business you are in to and then provide money for it. They expect a higher ROI from your business.

Venture capital

Venture capital is something you get as a loan from an individual or a company. If your business is a larger one, you can approach for venture capital. Firm or individual providing venture capital expect higher rate of returns from their investments in your business. The venture capitalist will also ask for an ownership in your business as an equity partner, where a certain percent of ownership goes to him.

Business loans

You can also avail business loans from n number of banks out there. However, when you are applying for a business loan in a bank, make sure that you have enough documents to produce in the bank as per their requirements. Bank approval to business loans is becoming tougher now with their new set of requirements. However, this option of funding is also worth trying since, you will get enough funding from here, without seeking another funding option.

Hence, before you get in to the business or in the time of business planning itself, you have to decide about the funding sources for your start up. Since, you are in the competitive business market; you may have to try a couple of times with more than one funding option.

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