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One of the greatest challenges any entrepreneur faces in terms of starting their own business is ensuring that they have enough capital behind them to launch. The word ‘capital’ relates to the amount of money a business has in its bank that is required to launch the business; taking it from the idea stage into something more tangible.
Funding your business is both an art and science.
There are many things to consider, and it can get very tiring to keep all the plates spinning; where one second you’re having HR meetings and the next you’re having finance meetings with your bank manager whilst also resolving a customer service issue. It can be exhausting.
Raising capital is rarely an easy task, and for many entrepreneurs it can be a scary process – going before a panel of investors and being grilled about their business or securing a sizeable business loan on their house, can all be very stressful.
Entrepreneur’s can face immense emotional pressure and work very long hours; all the time knowing the odds are heavily stacked against them, but the one thing that allows them to turn their vision into reality is to have plenty of capital behind them, and this doesn’t have to be in the form of loans. If you are looking for an invoice finance company you’ll be surprised by how helpful and flexible they can be; this is where a finance company offers you a loan based on invoices that are due in the future.
This article offers three suggestions for raising capital:
GET A BUSINESS LOAN
The most traditional route for setting up a small business is to get a business loan from a bank. This is one of the most easy, reliable, and independent ways of financing your business as you retain complete control of your company, because you aren’t having to offer equity to external investors; and sometimes convincing one person can be a lot easier than multiple investors.
The downside, however, is that this finance is usually secured on an asset such as your home.
FRIENDS AND FAMILY
In some ways, the best place to look for financing your start-up are to your own savings account, yet there’s a good chance your savings have already been invested to get you this far, meaning you might need to turn to friends and family for some support.
If you have people who are open to backing your business for a small incentive (such as interest on the loan or equity in the business) this is one of the cheapest ways to raise finance, that said, it can result in a stressful experience that can ruin friendships.
CROWDFUNDING
A recent trend in raising start-up capital is crowdfunding; this is where you pitch your idea on an online platform such as www.crowdfunding.com and strangers pledge cash to back your idea.
Crowdfunding is particularly effective if your project has an element of social value about it or a sense of “giving back” as people are keen to back projects with a compelling social story.
