Finding cash to start or open a business is always a challenge faced by many aspiring entrepreneurs. Many businesses require a certain amount of amount to kick start the operations of a business; fortunately there are numerous ways a startup can employ to structure their business for a prosperous and successful future.
1. Self funding your own small business: Privately owned businesses generally rely on personal banking accounts for funding; many owners of small businesses take the risks of injecting their own funds to bring their businesses into full swing. This method of funding has many shortfalls and such include defaulting on credit card payments, keeping tax records for the business a s a separate entity and maintaining a good personal credit record.
2. Angel investors: This form of funding is whereby a wealthy investor injects capital in a business in exchange for profits or as a loan to be repaid in form of interest. It’s important to make sure you put that agreement in writing to avoid any possible misunderstandings.
3. Small business loans: Some angel investors are not willing to fund a business whose operations doesn’t promise to yield any profits. As such, there is an alternative solution – banks. Banks require detailed information about your business idea before they offer you with a loan; such includes a business plan, your current financial information. Banks have different types of loans and you should be able to choose from these:
a. Overdraft Agreements
b. Medium-term loans
c. Business revolving credit
d. Mortgage or property finance
e. Vehicle/Asset finance
4. Crowdfunding for startups: This is whereby startups contribute varying amounts of money to small business founders in return for fairness in the company or any other future services or products should the target amount be attained. Websites such Kickstarter and Indiegogo are making use of crowdfunding to attract potential funders.
5. Government grants for businesses: Government has a set of mandated grants, loans and tenders that are specifically designed for individuals who come from disadvantaged backgrounds. These funds are channeled to small businesses with BEE accreditation and tax clearance certificates.
6. Bootstrapping your startup: This requires the act of opening a business without any funds. No outside funding is used to open the business; it simply means plowing back into business the money which is earned form customers.