Whether you are a newbie in the business building process or an experienced entrepreneur launching into a new venture, one thing is for sure- start up capital is necessary. Business funding is usually one of the toughest stages for the new entrepreneur and the truth is not many pass this stage.
One common misconception is that building a brick and mortar business (offline business) is tougher than bringing up a software company Well, sorry to burst your bubble but they both have their risks and intensities accrue to them. There are various ways to source for capital for your new business. While some are harder than others, some require more creativity than the rest. You just have to know which one works best for you. If you are among those who wish they had enough capital for their business, here are a few ways to help you out.
- Your Savings
A lot of people believe that funding your business via bank loans is the most ideal. This is not always the case. Although funding from your savings seems like an obvious option, it requires the most discipline. It requires you to keep your present job and save up for your future business. This saving part is where many of us miss it. You do not need a higher paying job before you start gathering capital. Many of us still want to maintain our standard of living and then expect the money to come from elsewhere. By having this attitude,paying ourselves first becomes impossible.
The amount of money you save monthly will determine the amount of time you wait before attaining your needed capital. By living below your means and implementing different money saving methods, this option should be really effective.
- Sell Your Stuff
Depending on the amount of capital you need, this option could work out well too. Not many people like getting rid of household stuff due to emotional attachment, but the question is, “What’s important- is it you business or your flat screen TV which you haven’t used in 3 months?”
Set your priorities right. If getting rid of your car which takes you to work everyday will only increase transport costs, then don’t. Know your expendable items from those that aren’t. Just make sure the returns go towards your business and not something else.
Do not limit this option to physical assets alone. Your investments and mutual funds are other sources of business capital. Just ask your broker if some assets can be liquidated and you are good to go.
- Joint Ventures
Although, this is another common option, it is quite risky. This is because not everyone in the joint venture has the same drive as you do, especially if you gathered the group. Here, you will need some leadership qualities to be able to make this option a success.
Gather a team of people with different skills who are willing to join you in funding and running your business. Ensure that each member of the group understands the risks and responsibilities involved and make every process or agreement as legal as possible. This will ensure smooth running of your business.
- Get a Venture Capitalist (VC)
This is a very easy way to fund your new business, especially if it is promising. Venture capitalists are individuals or companies that are willing to fund your start up in exchange for royalty fees or a partnership in your business.
The advantage of this option is that you have the extensive network of the venture capitalist at your disposal. Being that they will be majorly funding your business, they will have to be consulted before major business decisions can be implemented. This reduces your control over your business.
That’s a wrap. The tips above should open up your mind on ways to raise start up capital for your new business. Just remember that regardless of the option you choose, having a credible and well planned business is important.