5 Easy Ways to Fund Your Small Business
Any business, be it small or large requires funds for it to start functioning and many ventures have failed due to lack of proper funding. Thus, before you start your own business, you need to keep an account of the places from you are going to get funds for your business and in case of emergency who will help to fund your concern. So, planning how to fund a business is hardly a trivial or brief topic. It requires a thorough discussion would take much more space than we have here. Some depend on their family for funds while others depend on other resources to fund their small business. Here we will discuss, 5 great ways to fund your small business. They are:
- Self funding – many entrepreneurs fund their business themselves. They use their savings, sell assets or take loans to generate funds for their business. This is a simple and easy way of getting funds for your business and is common way of getting funds for any type of business. Since a small business is small and one does not require too much of fund for it. It is quite easy to fund them.
- Friends and family – Borrowing funds from friends and family is a very common idea for funds for the Indian business owners. The advantages of taking such a loan is that there is usually no interest payments, repayment is flexible and no hard and fast for it and no cumbersome paperwork, which when dealing with banks becomes an important issue. But when businesses fail the loss of capital can hurt feelings of friends and family, ruin friendships and can make family gatherings unpleasant. So, while borrowing from friends and family both the parties should be aware of the risks and failures of business. Thus, while borrowing from friends and family is easier than banks yet it may lead to problems in relationships.
- Crowdfunding or Crowdsourcing – This is a comparatively new way to raise capital for your small business. These new Crowdfunding platforms like Kickstarter or Indiegogo let you put forward your business or idea and make appeals to the people to contribute funds. Many sites allow companies to raise money in exchange for rewards or products. If you can pitch your ideas well and it is able to please and satisfy them, thencrowdfunding or sourcing can be an easy, effective and hassle-free way to raise funds for your business. The best part of this type of funding is that you don’t need any collateral for this and the funds you raise here are interest-free.
- Angel investors – These people are mostly affluent individuals willing to invest or put funds in businesses. Today these, angel investors are forming investment groups to spread risk, and to form a pool of investment. This alternative form of investing generally occurs in a company’s early stages of growth, with these investors expecting a 20 to 25 percent return on their investment. You can search online for local angels or you can even talk to your chamber of commerce for help. Your local chamber may know who is interested in funding new ventures and ideas in your area. With them you are likely to get an investor who is friendlier and has strategic experience, so they can provide great benefit to the company they are investing in.
- Grants – lastly, you can take advantage of grants from nonprofits and government organizations to get funds for your small business. Grants are better than loans as they do not have to be repaid. Grants can be based on who you are or the nature of your business. Some really great, high-impact and high-growth businesses can be eligible for the Small Business Innovation Research Program, which funds Research and development projects; and many cities and places offer incentives and funds to startups based there. Grants are often given to provide incentive to encourage certain types of business, or people with ethnic or racial descent.
Thus, if you are still worried about the source of funds for your business, then the above factors are some really great ways to get funds for your small business. Most of these ways are common and have been tried by many business houses to good effect. So, what are still waiting for, use these sources or others to get cheap and easy funds for your small business.
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