In business, you need money to make more money. Good and enviable business ideas die or remains unproductive because of lack of funds or finance to execute the business ideas. In order to properly start and run your business you need some amount of capital.
Neither of which you want, finance is paramount in business success. Capital is basically the money used to run your business. When you start your business, chances are that your first source of capital will probably be your own wallet or your saving account.
You are the first and, maybe, the only person that will be interested in investing in the company you are setting up. Therefore, you must be prepared to put in your hard earned savings to help your business through its first few months. The fear of losing your investment in the business should, naturally, make you work hard to succeed if it is a part time biz, you may use income from your regulate job to finance it.
There are numerous sources of startup capital or finance for a business; these include sailing stocks, stocks, loans, friends, partners, family, and venture capitalist. Let’s examine more in detail. When considering practical finances for your business, below sources will guide you more.
1. Sell some of your assets: Some people sell homes, cars, furniture, lands, or other possessions to start their business. You will have to be careful here because you wouldn’t want to sell something you will want or need later on.
2. Partners: taking on additional business partners, either in the form of fellow incorporators or limited partners, is another method of raising capital. Often, an investor will agree to become a limited partner on the strength of your plan and your personality. In this situation, your partner is strictly a financial backer. He or she will want to see a return on investment but will not want to participate in any other work of the company.
3. Government agencies: the federal and state governments have a variety of departments and programs to aid small businesses. Information on these can be sourced from your state, chambers of commerce and industry, etc.
4 grants/incentives: Sometimes, foundations and non-governmental organizations offer grants and incentives to small businesses. Utilize this platform and create a successful business empire
5. Venture capitalists: a venture capitalist is an individual or organization that invests in companies with potentials for growth and profitability.
Venture capitalist is an individual or organization that invests in companies with potentials for growth and profitability.
Venture capitalists are professionals that are not easily won over. In order to attract one and to sell your company’s prospects, you have to be a professional yourself. Asides from meeting you, a venture capitalist will want to see your plan and your financial (balance sheets and cash flow) statement. The capitalist will determine whether your company has a past record of success that will bring about a future record of growth. If your company fits this profile, you might interest a venture capitalist.
Those going into business for the first time may not be financed this way, so the best way is to start your business, grow, and then prepare a proposal with an appropriate firm.
6.Part time/seasonal job: a part-time job before, during, or after your start-up can provide capital and will be proof to potential investors and lenders that you are serious about financing your business.
7. Business networking/brand name sharing: this is where one or more businesses combine to share one brand name, although each produces different goods. For example, let’s say a group of automotive suppliers cannot get their products on shelves. They can sign an agreement, put the common brand and logo on all products, and use a combined marketing/distribution system to sell the goods. This really works and can increase each participant company’s market share dramatically.
Although this is not capital per se, it’s a way of helping you sustain your business at start up. It is also a way of increasing cash flow and revenues.
8. Use another business’ assets: maybe, you have one part-time business with cash flow but limited growth opportunities. This business could provide eventual start-up capital for a future business with greater growth potential.
9. Barter: business by barter is relatively new and interesting. Here, participating companies exchange goods and services.
If you are unable to raise any capital by yourself, you might have to raise a business plan for presentation to a financier or put your venture on hold. Again, the best way of getting money is to first raise some personal money. That is why most businesses must start small. Don’t give up, though some companies have started small and grown big while some started big and failed.
You must understand clearly that Success is not final; failure is not fatal: It is the courage to continue that counts. For you to be celebrated in future with regards your work, you have to take action now!! Because action is the foundation to all success.