Now that you have decided on the kind of business you want to start, it’s time to think about how and where you are going to get your financing from. If you talk to other entrepreneurs, you’ll come to understand just how crucial and difficult getting the right investment is. On the other hand, you may also get lucky like hundreds of other entrepreneurs did during the dotcom boom. The rush to become a part of the Internet was so overwhelming that funds were easily available for those who dreamt of making it big online. Eventually, many of these companies went bust and few survived the initial gold rush phase. Although there are different ways you can get finance for your start-up, remember that it could take anything from 4 months to a year for anything to materialise
Self- Funding- If you are rich and can afford to do so, there’s nothing like funding your start-up entirely by yourself. The biggest advantage to doing so is that the control of your company remains entirely in your hands and you don’t need to sell any stake in your start-up to external investors. On the other hand, a start-up has plenty of initial costs which may also be a drain on your wallet if you decide to use your own savings. Unless you have a very clear idea of how much your estimated expenses will be, it’s likely that you may miscalculate your future expenses.
Family & Friends- Got any family members or friends who can afford to lend you some money to get started? You’ll be surprised to know this, but your family & friends circle is actually a solid pool of financial resources and support. If you are willing to ask, borrow small amounts from different people so that nobody feels that big a pinch. If you are sure that you can pay them back, then there is no risk of ruining the relationship. Don’t take it to heart if a loved one says no to lending a helping hand.
Angel Investors- Many entrepreneurs get their actual financing from venture capitalists and other investors looking to diversify their portfolio. Remember to be well prepared if you plan to meet an investor in person. Although, most venture capitalists are more than ready to make an investment in an upcoming venture, they still need to be convinced that the idea will work and that you can repay them back as well. It’s best to have a business plan in place with an estimate of how much capital you will need, when you can recover the amount and how much profit you expect to make in a few years.
Bank Loan- If all else fails; your local bank may turn out to be your saving grace. Banks these days have a number of diverse loans to offer customers which include funding start-up ventures as well. Do remember however that you need to have a good credit history with no defaults on credit card payments and existing loan repayment instalments. The important point is to take a loan of an amount that you are sure you can pay back, bearing in mind that you will have to pay interest on it as well.
Getting the investment you need may require plenty of homework and patience on your part, but once you get it; you’re already half-way there to making your start-up venture come true.