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Last Updated on by Noni May
There are lots of entrepreneurs out there that are struggling to raise the capital to start a business. They’ve saved lots of money, but, it isn’t enough to cover all the costs. So, what can you do in this situation? Well, you have to look for additional finance options. Here are three that might be perfect for you:
Angel investors are every entrepreneur’s dream. They come along and give you as much money as you need, without requiring it to be paid back. In a way, you’re receiving free money to help you achieve your business dreams. The only catch is that investors do want to get something out of their investment. Typically, this involves owning some shares in your business. This way, whenever your business does well and earns money, they gain something too. Plus, if there ever comes the point where your company is doing incredible, they can sell their shares for a profit. The tricky thing about angel investors is that they’re not easy to find. Unless you have industry contacts, you probably won’t find funding this way. My advice is to do a lot of snooping around and networking. Attend business events where you have a higher chance of finding investors. They won’t come to you, you have to try and seek them out.
Arguably the most common way to start a business when you haven’t got much money is to get a loan. There are loads of ways you can get a small business loan nowadays. Banks offer them, as do independent financial organizations. The benefit of a loan is that it can help out people that are in serious need of cash. The downside is that your business goes into debt right away. When you start to earn money, some of it has to go towards paying your loan. Plus, you’re heavily dependent on the success of your business. If you don’t do well, then you can end up falling into worse debt. It can be a risk, but, it shouldn’t be. If you have a good business idea and a solid plan, then you don’t have to worry about paying the loan. Your debt will get cleared quickly, and you can put all of your focus on making profits.
The final option is to look for business partners. Now, this idea is very similar to finding and angel investor. A business partner will contribute money, and you don’t have to pay it back. The difference is, they’ll have a more active role in the company. They will help run it alongside you, as you’re now business partners. Angel investors don’t take part in the daily running of your business. You can have more than one partner, depending on how much money you need and the interest in your company. My advice is to ensure you trust the people you’re partnering with. Make sure they have the same visions as you do. After all, it’s your business idea, don’t let them change the picture you have of it.
All three of these options have their pros and cons. They will suit different people in different situations. Take your time to choose the best finance option for you, and then start your business.