Staring a new business in today’s world is not at all easy. Studies have proved that people who try to create a startup usually fail due to lack of funding. Also, a recent study has concluded that more than 90% of the businesses that are new fail especially in the first year of their maneuver. This is because they don’t have enough money to make the business a successful one.
Whether you’re looking to start a business or want to expand an existing one, finding the cash to do so can be tough. While the most traditional option is to go to the bank for a loan, there are many other choices that you may not know about.
The Need for Business Capital
Every business needs some capital. Obviously, for starting up with it needs Physical capital and then for working on operations, it needs working capital. But fixed and working capitals are overall a capital which is the basic requirement of business. For a generation of revenue, capital is a must. Capital is essential for every business out there.
You might have heard many businessmen or people who had started their business talking about the funding. We usually listen to a common sentence from them which is “How do we arrange funds”? We are very much familiar with this sentence. However, we usually cannot find a solution to this problem. But, now we can.
Capital usually depends on what type of business you do. “What is the nature of your business” is the major factor which decides how much capital or funding will be needed for a business.
To help you secure the capital you need for your business, we’ve compiled a list of the funding resources that every entrepreneur should consider.
- Self-funding your startup business – Self-funding is popularly known as Bootstrapping. Self-funding means starting your business or financing it with your own funds. It is considered as one of the effective ways to make startup a huge company. If you are one of them who are starting the business for the first time, then self-funding is really for you. You can use your savings or money that is with you in a bank to establish your business. It is considered very effective ways because without any formalities you can start up your business and make it reach a next level.
- Angel investment in startups – Does it sound a little weird? Maybe to some people. Angel investors are people who have surplus fund. They are the one who is willing to invest in startup businesses. This is the newest and very much in trend funding options for startups. It is interesting to note that those people even offer free mentoring to people whom they fund.
- Try Crowdfunding – Crowdfunding is one of the latest funding options for a startup business. Do you how it works? Any startup which needs money can enter a comprehensive and thorough portrayal of his/her business on a platform of crowdfunding. They need to mention each and everything regarding business and then the people will read about your business and if they feel like giving money and they trust you as the genuine business then they start funding you.
- Venture Capital as a funding option – Venture capitals are funds that are supervised proficiently and competently. These funds are invested in large business houses. However, they are also useful for those startups which are grown and have started generating revenue.
- Funding from Business Incubators & Accelerators – Nowadays, businesses or startups consider this funding option very necessary for their business. These two terms are almost same, yet there are some differences. Incubators are the one who nurtures or nourishes a business or startup. They provide training, tools, shelter and many things. Accelerators, on the other hand, are more like Incubators but they help to run a business. One of the best funding options it is considered because business can grow with many people.
- Funds from Contests – Winning a competition or any contests have now become one of the great funding options for people who have startups. It has tremendously increased and is a good way to make money for the business.
- Raising funds through bank – When thinking of funds, everyone whether businessmen or normal people they think of the bank. Bank provides the loan to business houses on certain terms and conditions. It usually gives two types of loan, working capital loan and funding.
- Consider applying for a personal loan – Personal loans can and are often used to fund small businesses, but there are some important caveats to consider. While some lenders don’t care what you use the money for, others will deny loan applications from entrepreneurs looking for startup capital. Immediate cash loans might be the move for you if you’ve yet to start your business, if your revenue or other financials don’t meet the minimums for business lenders, if you don’t have the collateral for a business loan, if you’ll be putting that cash into an unorthodox use, or even if you’re in a typically risky or undesirable industry. If there’s something in your loan application that could stand out in a negative way, a personal loan might be able to step up to the challenge where a business loan wouldn’t even try.
- Funding options include Government programs – The government nowadays is coming up with programs to fund the startup businesses. Look at US: they have their own agency taking care of small businesses.
- Other options for funding – There are many other options available to fund any business. Some of them are selling assets or selling the products before sale or even there are credit cards available for funding of the business. These options are also very useful for funding the business.
Erin Fiddler is an online financial consultant in Singapore. She’s working in the finance industry for over 5 years and is an authority on emerging financial services. She specializes in helping people looking for investment options and also where to get loan in Singapore.