SiliconIndia | Wednesday, 03 October 2012, 16:39 IST
Certain obstacles are inevitable in an entrepreneurial journey. Every entrepreneur who has a great idea, at some point of time would find it difficult to move forward with his venture due to few reasons. Obtaining funding for a startup is often considered to be a challenging task because these men do not realize the various methods in procuring funding for their business. Here is a list, which explains the different ways on how an entrepreneur can raise capital for his business, as compiled by brainz.org.
Personal funds or savings
This method of inducing capital into a business from one’s own savings is the most preferred type by most entrepreneurs. The more an entrepreneur saves, the more helpful it is for the business. There are certain advantages in this form of funding as an entrepreneur is not accountable to anybody else other than himself. He can carefully utilize the money without being afraid of answering venture capitalists or investors.
Savings from partners
If there is another person who has a similar entrepreneurial vision and would like to be a partner, then, there is nothing like it. If the same partner comes into business with funds, it would definitely help the business to grow and expand. A good partnership has always benefited a business and this has been proven many times in the history.
Selling unused products
To keep a business active, it is mandatory to have constant flow of funds. This can be easily achievable if certain unused products in the business are sold. Rather than staking up an office with stuff, it is much advisable for entrepreneurs to sell them and to utilize the money in the business.
Windfalls
This works with mere luck. An entrepreneur must have good experience in investing and legal gambling to get whopping amounts into business. Investing on tax refunds, gifts and lotteries would help the business if there are huge returns out of these investments. Sometimes, if things are not carefully planned it can change the course of one’s entrepreneurial vision.
Barter Approach
This is quite a meaningful approach and does great benefit to a business. An entrepreneur can trade few things from his business to procure something from another business. This can eventually help in even obtaining shares of other companies which can be traded to get money, which can be invested one’s own business.
Retirement plans
A smart entrepreneur can make use of his retirement saving plans, especially if there are any special benefits or incentives from the government. By enrolling into such programs and also by taking the home ownership program can let an entrepreneur to utilize the original rental funds towards his business.
Blood Money
Blood Money is a popular method of fund raising. In this form of fundraising an entrepreneur can borrow funds from his family members, friends, colleagues or even employees. There is also an alternative for this method, where a person stands as a guarantee for obtaining a bank loan.
Bank loan
This in fact the safest method to obtain funds. If an entrepreneur has a strong business plan and if the money lending institution is happy and agrees to give loan, he should make the maximum use of the opportunity as bank loans are considered to be the cheapest form of raising loans in terms of interest rates.
Credit Cards
Credit cards are the easiest form of payments as it just needs a swipe. An entrepreneur can make the best use of credit cards during emergency situations and this is possible only if he has a good credit rating. It must be also noted that the interest rates on credit cards are much higher than bank loans and blood money.
Equities
If an entrepreneur has many investments in various other companies, he can sell a few of them to rotate and invest money in his own business. In certain other circumstances, he can also mortgage his house with a lower monthly payment, thus saving some money for the business.
Grants
Grants are normally government programs which are provided to specific startups and are not required to pay back. These kinds of funds must be utilized to the maximum as they can benefit the business without having to be returned.
Microloans
Microloans are generally small amount of funds that would not make a great difference for the company but if these funds are combined with bootstrapping or blood money, it would become a big amount which can help a business to pass through its initial stages easily. Microloans can also be easily obtained unlike bank loans or other forms of investment.
Incubators
These days incubators on a spree to pick up good startups. These incubating firms strategize the complete business plan of a budding company and they also provide necessary funds for a startup to perform its initial functions. Amounts procured from these incubators are called as ‘seed funds’ which can be repaid as per the agreed terms or in the form of company shares.
Investor Capital
Finding an angel investor to fund a business is now being a liberal task. Investors generally put their money in companies which would fetch them more returns. Startups generally prefer procuring funds from angel investors than venture capitalists as these investors can be added as silent partners to the company for the amount they brought in to the business.
Leasing
If certain things are carefully looked upon leasing is another form of way through which an individual can raise and save funds for his business. An entrepreneur does not have to invest in bulk for all the machinery and equipments of his business as he can get the same things on lease which would help the individual save some bucks to run his business.
Factoring
Factoring is another popular method through which companies raise capital. If an entrepreneur needs money on a great priority he can factor the business invoices to certain factoring companies who would buy the same but would pay in discount. This is in fact the best way for an entrepreneur to ensure that there is constant cash flow.
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