Here’s How You Can Raise Capital For Your Business Idea
You are dreaming about setting up a new company or creating a start-up and have a billion-dollar idea. But how would you implement that? For your own business, you would require an office space, a tech team, a website, and cash that would be sufficient for the rent every month. Therefore, the bottom line is – you need money. Whether you are launching a new app or opening a stylish and luxurious café or anything else, the first and foremost thing you would require is money. Without funds, you won’t be able to put a single step forward. Now, from where will the money come from? There are some ways through which you can raise capital for your business idea.
When starting their own venture, entrepreneurs use the process of bootstrapping. What does bootstrapping mean? It is a way to arrange capital for your company with the help of your personal funds like your savings account, credit cards, etc. Many times, making use of your personal funds is a better option than raising money for your business or borrowing money from a lender.
You will find a lot of entrepreneurs continuing to fund their own business or bootstrapping till the time they reap profits. Bootstrapping implies that you can safely stay away from loans and the payments you have to make every month. With that being said, if you are aiming for an early profit and scale up your business in a short period of time, opting for external funding sources might prove to be advantageous.
Friends and Family
Many of you wouldn’t like to borrow money from your friends and family. But if you ask for help from your closest people, it will be a fruitful step rather than looking for external sources of funding. Asking them isn’t that daunting. Who knows, a few of them can toss in some good bucks for your project. However, before you approach your friends and family for financial help, make sure that you have a proper business plan ready at hand. That will make it simpler for you to explain what you want to venture in, what you want to sell, what steps will you take to make money. Also, explain to them whether you are asking for a gift, an investment, or a loan from them. This will ensure that your close ones will have a clear picture.
In case you are setting up a small business, it’s better if you can figure if you can receive help from the small business development center in your locality. These centers play a key role in connecting you with angel investors for the capital and entrepreneur groups for networking. Aside from that, they can also come to your aid while you try to figure out what kind of loans you are eligible for. Another source of information and guidance concerning local funding is the local chamber of commerce.
Take Out Loans
If you can show that you have already started taking a grip on your business and your company is making money, you might qualify for a bank loan. Wells Fargo and Bank of America have committed themselves to small businesses recently. Of course, the funding might differ from one bank to another and from one situation to another, availing a traditional bank loan is definitely a good option if you are looking for a loan in the range of $5000 to $50,000.
Angel investors are an option you have if you have a large business. In case you are looking towards funding your tech start-up, you will eventually need more money than what you would usually get from crowdfunding or bootstrapping. You will have to get out of your circle and approach external investors.
Angel investors are actually those business professionals who are successful with a high net worth and want to invest a portion of it in companies that look promising and have the ability to give them returns. An angel investor usually funds in the range of $10,000 to some million dollars.
Availing funds for your business can be quite challenging as well as the most difficult part. However, once you have the funds arranged, you are bound to feel rewarding.
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