There are many people out there who
dream of becoming an entrepreneur and they also have huge saved money to fund
but unfortunately, they don’t have a feasible and sustainable idea for a
business. On another hand, there are many who have an excellent business idea
but lack of a source of funding their business to start up. No matter how
revolutionary or unique business idea you have, it is unlikely to take off the
ground until you have a proper source of funding.
A recent study found that more than
94% of new businesses fail during their first year after startup. The most
common reason for failure is believed to be the lack of capital and proper
funding source. Money is the backbone of any business. Gathering of funds that
can help to build your startup is an enormous challenge especially if you don’t
know where to start and where to find funding. Using the wrong ways and paths
in search of funding will keep you away from the necessary funds and waste your
time.
The need for funding greatly depends
on the nature and type of business. But it is obvious that every business needs
fuel to start and move called capital. Here is the guide with different funding
sources that will help you to raise capital for your business.
Bootstrapping
Bootstrapping is also known as
self-funding and it is the process of utilizing your own personal saved up
funds or from family or friends. It is an effective way of funding especially
when you start up your business for the first time. As the first time
entrepreneur often face trouble to find funding. You can use your own saved
money for a startup business or ask your friends or family to contribute.
Self-funding is preferred because of
its advantages. It has fewer formalities and compliances and less cost of
raising and sometimes friends and family provides you with very less interest
rate. It is suitable for small business startups and you can get some if not
all funds required for large business startup.
Taking a loan
Taking a loan from a bank is another
way to get funds for business startup. It is an easy way to keep the initial
control of the business in your own hand. Loan from a bank is a good option but
only for those who are confident that their business will surely prosper and
run without difficulties.
Before you go for loan, check the
interest rates and terms, you must also check if you are able to pay back. It’s a must to carefully check all the terms
and conditions whether you can comply, you can get loans on reasonable interest
rates with fixed terms by visiting this site A1
Credit.
For business owners having a strong personal credit and have a new business
idea to start up, the personal loan is the best option. They have an advantage
over business loans as they are simple, with no hidden fees and no complicated
formulas. They are just a simple personal loan with lower interest rates and
easier repayment terms.
Using these strategies provided in
this guide can significantly enhance the chances of existence and survival of
your business. You can boost your startup a business employing any finding
source outlined in this guide. You can use debt-free sources of funding or
other sources depending on your business size either big or small business.
Crowdfunding
Crowdfunding is the way of
generating a small amount of capital from a large number of individuals out
there to fund your startup business using a platform such as social media. You
can use crowdfunding websites and social media to easily access the investors
and other people who may help you for funding. Crowdfunding websites are usually
set up to allow individuals and potential entrepreneurs to show their business
ideas and people who are willing to support their ideas and ready to fund
business ideas.
Crowdfunding works when an
individual makes a business pitch on a crowdfunding platform and shares the
whole business idea using models and explains its potential growth and future
perspective. If that business idea clicks the mind of investors and bought by
the crowd funders on the platform, they will publically support that business
idea and raise funds for startup.
Angel investors
Individuals having surplus cash or a
huge amount of capital and greater interest to invest in upcoming startups are
called angel investors. Many prominent companies like Google, Alibaba, and
Yahoo were initially supported by angel investors for startup. Angel investment
is generally effective in the early stages of the company’s growth with up to
30% equity of investors.
Usually, investors take more risks
in investments for higher returns. Often you can see angel investors coming in
a group to inspect and analyze the business ideas in order to select a perfect
idea to invest for startup. The investors are usually entrepreneurs they also
advise you and offer to mentor in addition to funds.
Win contests and competitions
Another way to fund your business
startup is the participation and winning of contests and competitions that
require entrepreneurs to pitch or showcase their business model or idea against
other participants competing for the same funds for their own businesses. If
you want to win the contest and investor’s confidence you need to present a
detailed and comprehensive business idea. An increasing number of contests and
competitions out there have tremendously enhanced the opportunities to find capital.
For such competition, you have to build a product or create a model of your
business idea. If you win a contest you will not only find capital for your
business but also some media coverage.
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