Small businesses are quintessential to an economy’s welfare. It is not enough to depend on huge conglomerates to revive the economy and get the development wheel spinning. Local markets and what is known as “mom and pop” stores are more than cute little corner shops. Young people and others with no specific educational degree need a chance to build up their own business without waiting for a corporate job offer.
When governments and investors take the risk on them and provide necessary funding, their businesses will thrive, and they will make money. By gaining this purchasing power, these small business owners will turn into consumer spending on other businesses’ products and services. In addition to that, any extra income they make will be put in banks as savings, which gets to be utilized as bank loans to further finance other small businesses. It all comes full circle.
So, in order to give small business owners the push they need to take off, below are some tips for funding a small business:
Seek A Loan Company
If you have been itching to start your own business but don’t have the necessary funds, look for lending companies. After studying your business plan and assessing the associated risks, these companies will lend you the startup capital in exchange for a monthly interest.
If you live in Australia, you’ll find an explanation by Jacaranda that shows how these companies can provide you with the money in no time and will not lend you more than you can afford to repay. This is one of the most common ways of acquiring funds, since it comprises mutual benefits. Usually, the amount asked for by small business owners to bear no risk at all to such entities.
Crowdfunding is the new trend in funding; it’s especially popular among younger generations. It starts with you promoting your product or service on a crowdfunding platform. If enough people liked it, they will give you the money in exchange for potential profit or any other kind of reward. This is an amazing way as you get to do a quick market research while raising money. Since crowdfunding is mostly done online, you should make sure you are using an authentic and trustworthy platform to avoid getting conned.
Secure An Angel Investor
Angel investors are individuals or groups seeking to invest in small businesses as a way of giving back to their communities, but this will cost you some equity. They are usually more interested in the person behind the business unlike other lenders.
Angel investors are known to stipulate milder lending conditions, since their main goal is to get the business up and running, regardless of how much it is expected to make in profit. They are also known to help out a budding entrepreneur with building up his/her connections network. This would explain the “angelic” aspect of this investment model.
However, the catch here is to make sure that this kind of support angel investors offer, does not come at a price of interfering with the way you conduct business. This should be agreed upon prior to resorting to angel investment.
Apply For A Governmental Grant
In all countries, part of governmental budgets are allocated towards financing small businesses. These are saved for businesses that can prove to benefit the public or contribute to economic prosperity. Although they’re helpful, these grants are usually very hard to win and your chance of getting one is relatively small, since you are basically competing against a whole population! However, the lack of constrictions-interest and fees-free-related with this type of funding makes it well sought after.
Raise Money from Family and Friends
No one out there will believe in you and your dreams quite like your family and friends. Since they know you so well, they probably know how passionate you are about your business idea and how hard you have been working to get it out there. Ask your siblings to go on an adventure with you to build a family business that will be passed on to next generations.
The key here is to maintain the professional setup you would avail to any other investors. Prepare a business plan with charts and studies to get them on board. You will also need to put all agreements in writing; this will spare you any possible family feuds when times get tough.
Having a business idea means that you’ve already passed the hardest stage of starting a personal business. Study the pros and cons of the available funding options and go for the one (or more) that works best for you. Finally, consider the help of a business advisor to help you in this venture.
Article you may find interesting: “What is Business Finance?“