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July 21, 2017

How Easy Is It to Fund a New Business Realistically?

There are probably more ways that someone can start a new business today, than at any time in the past. A few have started a new business from their bedrooms, while others have managed to do it all online. Having the idea and the drive to succeed is in some ways, the easy part, you then have to find the money to turn that idea into reality.


There are many avenues you can use to gain the capital to start your new enterprise, but just how easy is it to choose the right one?

Self-Financing

Self-financing is something many new businesses use to get started. It can be the only way to get funding until your business is up and running. You can self-fund by using your savings, low-interest credit cards or by selling personal assets.

Whatever way you choose to raise the money, you have to work out how you are going to repay the amount, especially if you are using credit cards.

The important thing to remember is that you shouldn’t keep siphoning off your own money indefinitely, as this can cause you other problems down the line.

Friends and Family

Another popular way to fund your business is by asking family and friends to help you. You should be aware that loaning money especially from friends may cause issues that could disrupt your friendship, so it is important that you treat family and friends just like any investor. Give them a copy of your business plan and tell them how you want your business to grow. Above all else, be honest about profits and losses that you calculate in the first year or so, that way, they will be completely aware of what is in store.

Small Business Loans

You might be thinking that banks are not entirely open to lending money to new businesses these days. Although they are tougher than they used to be, there are some companies and banks that specialize in helping small businesses.

You will need to prove your company is worth the money of course, but it is encouraging to know that help is out there. There are things you can do to prove you mean business, open a separate business account and get business checks printed with your company logo from specialized companies. It will give your company a professional appearance and will look good to potential investors.

Investors 

There is another option to fund small companies, and that is the small business investor. They will usually loan you the money for your venture, but in return, they will want a part of your company.

It isn’t always an easy option, and it means you will have to act in their best interests as well as the company’s. However, with honesty and trust, it can be an option worth considering.

With investment behind you, your company can start to grow and then you can begin to pay back the trust and faith others have placed in you and your company.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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