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What Inspires People to Start Their Own Business And How to Get Funds?
Many people want or have a dream to have their own business. There are many people out there who don't want to work for others anymore. They want to be their owner. When you have a unique idea for a product or a service, it makes you want to start your very own business. Besides having your own business makes you more flexible and most importantly, you will be your boss setting your own rules in your very own organization!
You can pursue your passion and use products and services to help people the way you wanted it to be.
How to arrange funds for initiating your business?
According to a recent survey, most businesses fail to grow in the first year due to lack of proper funding. Every entrepreneur asks themselves how or from where can they finance themselves for a start-up? Starting a business is a very big challenge. The most crucial element in beginning a business is money. To get office space and buy equipment, hiring staffs and many more all these screams only for the monetary fund. Without all these, you cannot even think of. You indeed need to work hard and find ways for raising fund if you are interested in owning a business.
You need to ensure that you have quite a savings to start with. Or even if you are short of it, you can arrange some from family, relatives, friends or you can also consider thinking of loan. In this article, we will mention some few steps on how to help you raise fund for business.
- Self-finance -If you are well off, this is the first step you should opt for. However, this is the best consideration when you are planning for a small business only. This is the safest and easiest method. You can use your own money in your very own way as you have no strings attached. Business always involves risk. You can sell off your assets such as stocks, bonds, real estate, or family heirlooms and raise funds for your business.
- Bank loan -You can persuade in the traditional source of financing. You can approach all the institutional banks for loan approval. One advantage in personal bank loan over a credit card is you can get a loan with a lower interest rate depending on your credit history. You need to repay to the bank with interest. You need to share the basic business plan for which the banks and NBFC will make a lending decision.No matter what situation your business is into but you need to pay the principal amount and interest of the loan too.
You need to meet certain criteria for eligibility of loan purposes such as:
i. You must have been into business for more than two years
ii. You need to have a good credit score
iii. You should have strong business revenue
Credit card - You can make use of your credit card. But before starting so, you do need to check out all the terms and conditions. You need to be more responsible and ensure to pay the bill on time. Remember that if you miss a payment the hefty interest rate will zoom up and lurk up in your shoulder and you might even go bankrupt. It might not be a good idea even before your business generates revenue. However, keep checking for rewards or cashback program, which they offer for business purchases.
Equipment financing - Most owners often worry about equipment to be purchased before starting a business. Along with office or restaurant or any other commercial space equipment also need to be kept in mind. This is a kind of loan or lease in which you can borrow things for office or business use such furniture, restaurants oven, or company car, etc. It is always better to purchase items rather than obtaining such stuff through a loan. But you would want to start a business at low cost, in the beginning, making some adjustments.
Savings - You can also use your long terms savings account at this point.
• Families, friends, and relatives - If you fail to get loan approval from banks or if you have a low credit score, don't worry, you still have a way to get loans. You can approach all your friends, families, relatives who know you best. They will hardly have any condition or even expect interest rate, which will be a very big help to you. This is a very popular way and is also the best and convenient method if you have a very strong bonding of belief and trust. However, it has its cons, too, such as your relationship may suffer. If you fail to pay on time and if your business is taking time to grow or your venture fails for some reason.
• Angel investors - Angel investors have a surplus amount of money and are keen on helping out start-up companies. They stand out from other investors as they always lookout for new business and ideas. They also assist in mentoring and advice, along with providing loans. Many prominent companies like Google, Yahoo, and Alibaba also sought help from Angel investors.
• Crowdfunding- This method is becoming popular of late. You can take loans from more than one person at the same time. You will need to share your detail business plan in the platform such as business goals, the outcome in terms of profit, funding detail, and for what purpose it is required. The lenders will give money if the business idea interests them. They would also make online pledges of either donating the money or buying the product. But keep in mind that crowdfunding is a very competitive platform, so you need to have a rock-solid reason for your start-up to influence and gain your crowd's attention.
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