Starting a business is a challenging venture for anyone. The additional strain of sourcing funding can often render many people helpless.
There are many options to consider before giving up though. There are numerous ways of finding funding which can help you to get your business off the ground. An initial cash injection can help substantially with getting a company on its way to success.
Self-Funding
Small business within the private sector often relies on external funding to get started. However, when this doesn’t work out, many business owners take a risk by financing business operations from their own pockets. The advantage here lies in having direct access to money.
Taking on personal debt, for business purposes can be in the form of making business purchases on credit cards or even refinancing your mortgage. It’s important to pay attention to interest rates and to make sure that you don’t borrow more than you can afford. Don’t over-commit to your business, to the detriment of your financial health
Angel Investors
This form of funding involves a scenario where funding is provided by a wealthy investor. This is usually offered in exchange for a portion of the profits or as a loan to be repaid with interest.
These investments may be offered by individual investors or a network of investors, some of whom may prefer to be excluded from managerial roles or business operations. Others may want to take on the role of being a mentor or of sitting on the board. It’s important to stipulate agreement terms clearly in writing to ensure that there is no confusion about returns, investments or responsibilities.
This option also opens up new opportunities for your business. Angel investors can also be found in practically every kind of market nowadays. You can also benefit from their vast wealth of knowledge and experience. They also tend to insist on less formal investment criteria and are more open to negotiation.