How to Secure Funds for Businesses

 

Here are some common money sources to consider:

 

• Personal savings
• Bartering
• Equity in the home
• Loans
• Donations
• Credit card
• Borrowing from friends, family or business associates
• Venture Capitalist
• Crowd Funding
• Angel Investor
• Bootstrapping
• Fund-raising
• Stock
• Company equity

 

If you use any of these sources, it is best to plan how you will pay these funds back. You don’t want to have the pressure of carrying more debt than you can repay. Angel investors are your next ideal option for funding after you have exhausted family and friends. Don’t think that you will get a blank check, though. These investors are not going to give you money without first seeing how the business is progressing and how they will profit from the deal. They will need time to research and carefully consider your business plan, so make sure it’s a solid one. To be a suitable match for an angel investor, you must have similar interest and the right approach.

 

 

You can borrow money from family members and friends, but be sure to have a written note detailing the repayment plan. You don’t want your friends and family to take you to court over a borrowed loan. If you do get a bank loan, many financial institutions will want to know more about the business and the business owner. Collateral may be necessary to secure a bank loan. During your business start-up period, make sure that you do business with your bank to develop a strong relationship. You can do this by acquiring a merchant account, credit cards and a business checking account. Over a period of the time, the bank will be familiar with you and your company and be better able to assist you with funding.

 

 

If your business is at the stage where you want to launch a new product or go into the international marketplace, you may need a large investment. A venture capitalist may be able to help. These investors will also do extensive research before funding your business. Their goal is to do what it takes to get a financial return for their investment. In some cases, it could be selling your business to make their profit. So if you don’t want to liquidate your business, this wouldn’t be a good option for you.

 

Bootstrapping is another way to fund your business. What this means is using your credit cards and personal savings wisely. You have to be careful with this method because it can dig you deep into debt if not done right. You have to borrow money with the intention of paying it back within 30 to 90 days. When you use your personal finances, keep in mind that the potential of going bankrupt will more than likely always be looming over your head, which is equally motivating and terrifying. Having said that, bootstrapping has proven to be an incredibly rewarding way to securing funds, yet takes extreme pre-planning and careful maneuvering.

 

Consider crowdfunding, which allows you to choose from a wider pool of smaller investors who have fewer limitations. This is an ideal option in the early phase of your business, especially if you are not eligible for a bank loan and you are not at the stage where you are prepared for an angel investor.

 

Prior to committing to a specific fund, you should learn what investors are looking for. This will save you time and possible frustration. Be sure you have a strong business plan and don’t be wary about seeking advice from experienced business owners and individuals who may be interested in partnering with you.