Starting a business is hard but starting a business without any money is even harder. For most businesses, funding is needed at the early stages to help them grow. There are many different ways to fund your startup and each method has its own advantages and disadvantages.
There are many different methods that you can use to raise funds such as debt, equity, crowdfunding or even working for free. This blog will look at these different methods and how they can be used to help fund your business.
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Method#1: Help from Friends and Family
In India friends and family are second on the list for top start-up funding sources. After personal savings and credits.
Friends and family are the people who love and trust you. Most importantly they believe in your potential.
Don’t be afraid to ask for a loan from your loved ones. Unlike banks, you might end up getting interest-free money from your friends and family.
So, speak with your parents, siblings, grandparents, or even a wealthy friend.
Just keep in mind that there are certain drawbacks to this strategy.
You don't want to forfeit a loan that your friends offered to you in good faith.
That might place the two of you in an awkward position.
Method#2: Bank or Financial Institution Loans
Visit the banks where you do your personal and commercial banking. Schedule a meeting with a loan officer.
You may be eligible for loans for specific aspects of your business, such as equipment, depending on your position.
If your bank rejects your application for a small business loan, you may be able to receive a loan from another financial institution.
Don't give up after the first meeting.
If your initial attempt fails, you can try other banks and financial organizations.
Method#3: Seek for Angel Investors to Fund Your Startup
Although the phrases are sometimes used interchangeably, angel investors and venture capitalists are not the same.
Angel investors can take an ownership stake in your company in exchange for their money, but they can also provide you convertible debentures.
It's not unusual for these investors to be business owners or previous business owners.
Despite the fact that money motivates them, they are more likely to be truly interested in your company and the growth and development of certain sectors.
You may profit from expert guidance and managerial abilities if you locate the proper angel investor.
Angel investors are more likely to invest in firms when they are still in the early stages, whereas venture capitalists are more likely to get involved later.
An angel investor, unlike a venture capital organization with a committee and experts, may make a choice on their own.
They may just enjoy your strategy, believe in your objectives, and feel that your company will succeed.
That is why it is essential for you to be able to effectively communicate your business plan to fund your startup.
Method#4: Seek for Venture capitalists (VCs) For Funding your startup
Venture capitalists can also help you raise money.
In exchange for a portion of your company's stock, venture capital firms invest in their early phases.
Be prepared to give away a piece of your company if you choose this path.
That isn't necessarily a terrible thing, though.
If VCs have a stake in the firm, they may be able to give you additional resources that will help you succeed.
But keep in mind that savvy venture capitalists will only structure these agreements for their benefit.
They don't want to see a 30-year return on their investment.
VCs want to recoup their investment, plus a little more, as fast as feasible.
Conclusion
Apart from the above methods, there are other methods to raise funds too such as Crowd Funding, Looking for a strategic partner, etc. However, the above-mentioned methods have proven the most effective ones.
Not everyone has the financial resources to launch their own business.
It's important to always begin with a solid business strategy.
Make financial predictions that are reasonable.
It will be easier for you to obtain funding for your business as a result of this.
To make your finances last until you can acquire a consistent income source, you should keep all of your costs as low as possible.
Please note: Each and every method mentioned above, comes with few compliance requirements, if you are raising funds then it is mandatory to file for the compliances related to the same. Reach out to us at BBNC.IN if you need help with the compliances.
