How to Fund Your Start-Up Business
/In business, you have to spend money to make money. This is especially true when you plan to start a business as a solo entrepreneur. You will likely need an initial investment so that you can set things up and ensure success. Here are some ways to fund your business.
Saving Cash
Depending on your circumstances, you may be able to fund your business using cash, or money that you’ve saved up yourself. This is a good option because it allows you to be as flexible as you like. You aren’t beholden to anyone else, which means that you’ll never have to repay a loan or lose a cut of your profits.
However, this also means that you lose a measure of security. If your business goes bust, then you’ve lost that money. It also takes time, which means that your business isn’t up and running until you’ve gotten around to raising the cash. Time is money, meaning that you’re losing out on potential profits.
If you plan on saving up the cash required to get your business running, you need to set up a budget. Ideally, hopeful business owners should create a business budget in any case, and it may be necessary if you want to borrow money, but a business budget will make sure that you get the most bang for your buck.
Taking Out a Loan
Many business owners get started by taking out a loan. Borrowing funds in this way allows them to quickly raise capital and set up their business as soon as possible. The sooner you get your business running, the sooner that you can start making a profit.
Some people find it difficult to find a lender. However, lenders like The Change Company are dedicated to providing equal access to financial services. This means that you can get the leg up that you need to get started.
Many lenders will require a measure of assurance that your business will remain solvent and profitable enough for you to repay your loan. Create a business plan and prove that you know what you’re doing and that your business will remain relevant. The aforementioned business budget will show your lenders exactly where their money is going and how they can hope to get it back.
Finding Investors
A similar option to taking out a loan is to find investors in your company. Private investors and organizations alike can invest in your company by purchasing a portion of ownership, or shares. These shareholders will benefit from your profits and, depending on your contract, may have a voice when it comes to running the business.
When you’re starting a small business as a solo entrepreneur, the chances are that you’re more likely to look to private investors. These can include your friends and family. In this case, it’s important to draw up a contract and keep things as professional as possible. Whatever you do, don’t hound people for investments.
