For any entrepreneur, the options to finance new business are of extreme importance as without the options to finance, every other planning for a business is just waste. Only an Entrepreneur understands the real need for money. He knows how to make money from money. He has the capability to bend it in any direction he wishes to. But an Entrepreneur, be it at any scale, needs the options to finance at the initial stage to make some of his own. He needs a start. Money, Finance gives him that start. One simply cannot become an Entrepreneur, until and unless he understands every nook and cranny of money.
Startups, in particular, find it very difficult to find options to finance. And technically speaking, they are the one who is in immediate need of funds. Understanding the need and difficulty of raising funds so as to finance a startup is very important. Below mentioned are few options to finance your new business.
The common way of raising funds is by taking traditional bank loans. However, banks nowadays are very hostile to providing loans to start-ups. The main reasons being the lack of security and the risk of failure. Also, there are many documents involved in the whole procedure. The whole process is very overwhelming. At this point, Entrepreneurs start looking for other options. Options that are quick, easy, and reliable.
Some of the good options to finance a new business are:
- The easiest way out there is to ask your friends and family. They are the most reliable source with no issues of security. There is no paperwork included. Though, drafting a legal agreement is suggested. There will be low or maybe no interest payments.
- Find angel investors or venture capitalists. This method is quite a trend and helpful also. Venture capitalists and angel investors will invest in your business if they are approached the right way. Make sure the investors are interested in your field. Tell them what your company aspires to achieve. Make sure, to be honest, and practical. If convinced, a legal document will be drafted. However, Investors will share some power with your company and will have a say in the decision-making also. Keep in touch or keep tabs on your competitors’ investors. This may get you some investors of your own.
- You can try another trending method called Crowdfunding (Online lending). In this method, you use the internet. Via the internet, you find like-minded people who have a small amount of money which they can invest in. You lure them. And they all together, fund you. Each person with his small amount of money comes together leading to a big amount of money. Web portals are even set, to discuss upon your company’s working by these online lenders.
- Look for partners. Partners that can provide funds. Now, having a partner clearly means sharing of power. Therefore, it is very important to find a potential partner. One with brains as well as money.
- Vendor financing can be helpful. In vendor financing, you delay the payment of your distributors or manufacturers. It gives you more days until you are entitled to payback. You can pay back once the products are sold out. This gives you time for other investments or paying back as a whole. Strong relations or extremely convincing skills are required for this type of financing.
- Government programs and other schemes can be really helpful. They are rare but effective. Find schemes that benefit you. Check the eligibility criteria and go ahead. Campaigns like Startup India can be helpful too.
Before choosing any above-mentioned option, make sure to use personal assets and income first. Above mentioned options make you entitled to debt, maybe in small quantity but debt nonetheless. Try finding yourself personally first then go out. Other than that, for any further finance or company registration related issues you can contact us, at LegalRaasta.