‘Capital is king’ for new businesses to get started and move towards growth. Without capital/funding, your business idea will be lost in the crowded marketplace. Almost 94% of new businesses perish due to lack of proper funding channels to keep the business running. Capital is the fuel that transforms and shapes a business idea into a business process.
Not everyone has enough capital to kickstart a business. This is where outsourcing funds to raise your newborn business can come in handy. Funding can help new businesses to get going from the onset.
Funding options available largely depend on factors like your business age, its position in the marketplace, financial status, etc. So here are a few ways you can bring in capital for your business from the outside, thereby, leading your business towards financial growth and overall success.
The first option that business owners, entrepreneurs have is to self-fund their business.Self-funding is also referred to as Bootstrapping. It can be a tough task to get funding during the initial stages of your newly formed business. Therefore, they self-fund themselves or manage to get capital from friends, family or other known sources. This is the easiest way to get funding for your business with almost no or flexible interest rates. Bootstrapping is effective only if the initial business requirements are small and affordable by self.
Angel Investors are individuals with excess of capital to fund businesses(mainly startups). Angel investors who have a keen interest in investing their money into businesses with a potential to stand out. Many Angel investors also work with collaborative teams. Google is a fine example of how successful Angel Investing can be, especially during the early phases of the business. In return for higher returns they prefer taking higher risks.They also offer mentoring or advice which is backed by their success and experience.
Venture capitalists are what have been looking for if you need a larger funding option. VCs are usually a group of high-growth companies with higher investment portfolios and high-power management teams looking to invest in stand out businesses with exceptional growth opportunities.They usually invest in businesses that come with a well planned business strategy, eyeing for a return of 3-10 percent within the next 5-6 years. VCs is where you should be making the big bet on. You’ll have to have a well planned exit strategy as well if you want to land a VC funding.
During the later stages of your business or even during the early stages, if you can show results of your success, you may be able to qualify for a traditional bank loan. However, securing a bank loan can be a little struggle since banks require proof of final information as a collateral to secure and guarantee a loan.
Crowdfunding is becoming a quite popular funding option. The entrepreneur usually puts up his idea on a crowdfunding platform wherein interested parties(small investors, common people) can invest in businesses they believe in.
The entrepreneur puts his business idea up for crowdfunding while mentioning details like goals, objectives, P/L forecast, etc. While anyone can contribute, crowdfunding also let’s you learn about the demand for the product/service. To receive crowdfunding, your business idea needs to be impressive enough to attract individual contributors. Moreover, a successful crowdfunding campaign can also help you land VC funding.
Outside sources of capital can act as a catalyst to your astounding business idea, thereby giving it the wings to rise above all. While landing successful funding options for your new business can be an uphill grind but it surely is worth the trouble.
Try harder, keep trying and the results will be rewarding!!