Getting money to make a business idea function is one of the toughest things many entrepreneurs have to face. Even more so, in today’s time, because the right business idea is the one with the power to attract investors. With the internet being mainstream and a lot of information is available for everyone, investors are much more aware than they ever were. So do you have any ideas to get funds for your project? The need for a thousand dollars is different from borrowing a few bucks. Keep in mind, a business idea alone is not enough to compel the audience. You need to have a strong plan to attract investment for your project. Here are a few possibilities for you:
1. Family and Friends
Not to forget, investors will never take you seriously if you cannot convince them with the right words. Even if it comes to taking money from your parents and best friends, emotional blackmail won’t work at all. However, getting your closest ones on board if the easiest option is available. Especially if your loved ones know you well, it will be easier for you to convince them. Show them a part of your plan and allow them to give their suggestions.
Furthermore, if you plan to start with the partnership, it is also a good way to begin everything. Whenever you plan to start a new business, it is best to engage you, parents, in it. Especially if you believe they are the ones who will fund it; it is imperative for you to engage them in the process. However, never take your loved ones for granted because they deserve to be treated like stakeholders when they shoulder your business.
2. Venture Capitalist
In simple words, a venture capitalist is a person who will give you money that wouldn’t be acknowledged as a borrowed amount. However, the venture capitalist is like stakeholders and will have a strong say in the decision-making process of your business. They will claim some part of your equity and will have a stronghold as well. So if you can lose some part of your freedom in business, it is best to contact a venture capitalist.
In some cases, venture capitalists often restrain the company owners from selling shares to the general public. However, if a venture capitalist is your friend or someone you know well, both of you can collaborate for the betterment of the business. However, even as a friend, you won’t be able to take away the rights that a venture capitalist is entitled to. So it is best to talk things wisely instead of fighting at some point in time.
3. Bank Loan
Borrowing money from the bank stands concrete with a logical explanation, but you need to be mentally prepared for the stress it will bring along with it. The most coherent problem of borrowing money from the bank is, mainstream financial institutions don’t lend money to beginners very often. Although they have no issues with regards to lending money to well reputable businesses, they will always have their concerns with startups.
Search for consumer finance at Wingate to know how they help their clients in getting bank loans. Such companies can offer you quick solutions for all kinds of financial problems. However, sometimes you have to pay a heavy price for getting through a big problem. Banks offer themselves as the best option out there, but it is important that you weigh the pros and cons before borrowing money. When people fail to pay the bank loan on time, they often lose their assets.
4. Personal Funds
With this option, you won’t have to beg for money, nor will you have to beg your daddy for money. If you have personal savings, it is the best option for your business. This way you won’t also have to trade a part of your company. For instance, if you have plans to start your business after six months, now is the right time to start saving for it. Not to forget, borrowing money from someone won’t only be a big responsibility on your head but will always keep you stressed out.
However, if you use your savings to begin a new business, you won’t have to worry about anything at all. Even if your business plan doesn’t turn out to be a success, you won’t be answerable in front of anyone. When you’re using personal funds to start a new business, it is best to put aside some part of your savings in the emergency funds. This way, you will easily be able to declutter your mind from stress on account of finances.
5. Angel Investors
Although a lot of people consider them to be similar to venture capitalists but in reality, both of them are very different. Keep in mind; an angel investor will need a part of your equity share for their investment. This means their funding can also be transitioned into a convertible debt. Most angel investors are active entrepreneurs who are interested in investing money in new startups.
Secondly, because money is not their primary motive, they will support you for the improvement in your business. They are concerned with the growth of an industry overall and might provide you a strong amount of investment. This means, if you find a good angel investor for the business, you will easily be able to benefit from their expertise and skills. So it is important for you to take some time and choose the right person for your business.
6. Strategic Partner
If you have heard “two heads are better than one,” you must have thought of looking for another dominant person in the business. If you find a strategic partner for the business, it will help you in expanding your business easily. You will be surprised to know, around 80% of entrepreneurs think, strategic partnership is good for the growth and development of a new business. Secondly, since your partner will also invest money, the total burden of investment will easily get divided. This way, you won’t have to worry about your finances. The downside of this idea is, your profits will get divided, but whatever you receive will be according to your financial contribution to the business.