Starting a business is no picnic.
The most common dilemma of budding entrepreneurs is how to get sufficient funding to support their business ideas. That is why it's good to know that there are a lot of companies and non-government organizations who are willing to lend financial aid to those who display promising future in their respective industries.
But in case you can't find companies who can do this for you, here are some alternatives on how to raise money for your future business startup.
Get from your own savings.
Before engaging on a new endeavor like starting a business, the first thing to think about is your capital. Given that you have been working for some years now, it's only natural that you already have an acceptable amount of savings in the bank or a number of investments.
Calculate the estimated amount you will need for the business. If the amount needed will not exceed more than 50% of your total savings, then you can lend a portion of your personal funds. If it exceeds the 50% cap you can still proceed in investing your money but would be best advised to find additional resources to tap into. But(!) if your savings fund is your only safety net, better not to risk it.
Apply for a business loan.
If you're not too comfortable taking a portion of your savings fund, another possible source of your business capital is to apply for a business loan. The standing advantage is that you are borrowing the money and not tapping into your savings, thus your nest egg is not touched. The downside, however, is that the interest rates can be a real killer.
Find another source of income.
Compared to the first two, this strategy has no immediate effect. You have to allot a few months to accumulate the money you will need. The plus side, you don't need to cut any of your existing funds or pay high interest rates from bank loans.
Sell some of your properties.
Putting your assets on sale will be handy if you need a huge sum of money. But if you just need a small amount of capital, managing a garage sale or auction event may be enough for now.
Scrimp on your other finances.
Saving a part of your monthly income may already be enough to support your new business. However, your spending habits may be the problem. To make things work for you, create a daily/ weekly/ monthly expense plan (whatever method that would be comfortable for you). Set the target amount you're willing to allot for each segment: business capital, food, rent, bills, and recreation.
Borrow money from family and friends.
The idea may be a little uncomfortable for some, but if you need the money as soon as possible, asking your parents, your siblings, your relatives, or even friends may be your only way. Just make sure that you return the money on the date you have promised, to not spur any conflict or discomfort among you and the people you value.
Use your credit card.
This option is only practical for acquiring equipment and supplies for your business. Though it's not a good source of actual cash, it can help delay some of your expenses.
Apply for home equity loan.
This is the boldest method you can make use since you're using your house as the collateral. If your business is not able to reach its target ROI (Return of Investment), then there's a huge chance of losing your house. But if things go as planned, then you will enjoy a successful business and maybe, a new home.
Whatever method you choose, be sure to check out both the pros and cons first. You will not be alone when trying to locate funding for your business as all entrepreneurs face is very same dilemma. Most, if not all, choose one of the above mentioned items to help fund their business initially. The best way to think about acquiring your initial allotment of capital to start a business is a look at it as an investment. An investment in yourself!
The most common dilemma of budding entrepreneurs is how to get sufficient funding to support their business ideas. That is why it's good to know that there are a lot of companies and non-government organizations who are willing to lend financial aid to those who display promising future in their respective industries.
But in case you can't find companies who can do this for you, here are some alternatives on how to raise money for your future business startup.
Get from your own savings.
Before engaging on a new endeavor like starting a business, the first thing to think about is your capital. Given that you have been working for some years now, it's only natural that you already have an acceptable amount of savings in the bank or a number of investments.
Calculate the estimated amount you will need for the business. If the amount needed will not exceed more than 50% of your total savings, then you can lend a portion of your personal funds. If it exceeds the 50% cap you can still proceed in investing your money but would be best advised to find additional resources to tap into. But(!) if your savings fund is your only safety net, better not to risk it.
Apply for a business loan.
If you're not too comfortable taking a portion of your savings fund, another possible source of your business capital is to apply for a business loan. The standing advantage is that you are borrowing the money and not tapping into your savings, thus your nest egg is not touched. The downside, however, is that the interest rates can be a real killer.
Find another source of income.
Compared to the first two, this strategy has no immediate effect. You have to allot a few months to accumulate the money you will need. The plus side, you don't need to cut any of your existing funds or pay high interest rates from bank loans.
Sell some of your properties.
Putting your assets on sale will be handy if you need a huge sum of money. But if you just need a small amount of capital, managing a garage sale or auction event may be enough for now.
Scrimp on your other finances.
Saving a part of your monthly income may already be enough to support your new business. However, your spending habits may be the problem. To make things work for you, create a daily/ weekly/ monthly expense plan (whatever method that would be comfortable for you). Set the target amount you're willing to allot for each segment: business capital, food, rent, bills, and recreation.
Borrow money from family and friends.
The idea may be a little uncomfortable for some, but if you need the money as soon as possible, asking your parents, your siblings, your relatives, or even friends may be your only way. Just make sure that you return the money on the date you have promised, to not spur any conflict or discomfort among you and the people you value.
Use your credit card.
This option is only practical for acquiring equipment and supplies for your business. Though it's not a good source of actual cash, it can help delay some of your expenses.
Apply for home equity loan.
This is the boldest method you can make use since you're using your house as the collateral. If your business is not able to reach its target ROI (Return of Investment), then there's a huge chance of losing your house. But if things go as planned, then you will enjoy a successful business and maybe, a new home.
Whatever method you choose, be sure to check out both the pros and cons first. You will not be alone when trying to locate funding for your business as all entrepreneurs face is very same dilemma. Most, if not all, choose one of the above mentioned items to help fund their business initially. The best way to think about acquiring your initial allotment of capital to start a business is a look at it as an investment. An investment in yourself!
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