Starting a business of your own can be a wonderful adventure that will change your life, but it can also be quite challenging. It’s not only keeping up a business that is demanding, it’s also the process of actually starting one. Unfortunately, it’s not enough to have a great business idea. You will most likely require funds to get your vision up and running.
Unlike the role of an employee, where you can rest assured that you will be getting a paycheck, being the boss also means that you are in direct control of how much money you make. Like all organized things that lead to success, starting a business requires having a structure in place that you as a business owner can always fall back on, or build upon.
Having structure means knowing exactly what you want to do. The worst thing you can attempt is to go into business without even knowing what your business is. Therefore, it is very important to take a moment, or two, or as many as you need, to figure out all the potential in your future enterprise.
First of all, you have to figure out what your business will be offering. You are obviously going to sell something, but the question is, are you going to sell services or goods? Furthermore, will the business take place at set location or is it more of a “go to the client” type of business? These, as well as other questions regarding the “what”, “how”, and “where” of the operation, are critical to defining what you are trying to achieve.
This is important not only for you, but also for any potential funder you might include in your plans. If you are going to get money from a source, you can bet that they will want to know what they’re investing in, but more on that a bit later. When talking about ways to obtain funds for your business, these can be represented by three different categories: your money, borrowed money or investments.
This one is pretty straight forward. The efficiency of this method increases based on how financially secure you are, obviously, but there’s more to it than that. If you are a very wealthy individual, then you are probably on the wrong web page, but we’re just going to assume that’s not the case.
The first place you might want to look for financial support is your personal savings. You should be able to scrape something to get you started. You can also continue to save up until you have enough capital to start your business. That would require you to make some calculations, of course, and see exactly how much you need. Keeping your current job in the meanwhile is a sound plan.
Borrowing money can be more or less complicated, depending on who you’re borrowing from. Taking a bank loan or considering something else, such as a mortgage could be an option, but that’s up to you and how involved you want to get with banks. Beware: there are countless stories of people torn apart by bank debt.
You could also take a less official route and borrow money from friends and family. If you are lucky enough to have some supportive friends that are able and willing to lend you a hand, it might be worth trying to ask them for a loan. If you can’t pay before the deadline, they won’t take your house, but that’s not to say that you should abuse the kindness of your friends.
While the first two solutions represented stationary answers to the problem, investments represent a more permanent solution where the repercussions of being allocated a financial aid will resonate throughout the evolution of your business.
If getting the needed money on your own is too difficult a task, there’s always the option of partnering up with someone on the project. Granted, it must be someone that you trust and that shares your ideals regarding the business concept. It’s understandable that you want this to be your business and partnering feels like settling, so don’t feel obligated to venture into something you’re not comfortable with.
Another investment opportunity is crowdfunding. Through crowdfunding, you appeal to the general public, which can be considered your future clientele. You present them your product idea and demonstrate its potential. Then you ask for donations that will help fund the project. In return, company startups give out special perks to those who have contributed to the creation of the company such as bonus packages or premium content. It all varies based on what the business is, but the general idea is the same.
The same concept applies to angel investors. You can think of angel investors as crowdfunding, but with a bit of a twist. An angel investor will use their own funds to bring your business to life, and in return, they require a portion of your earnings. The terms of the deal differ and are set by the agreeing parties when the deal is struck.
That being said, it’s your decision how your company will be birthed. Each helping hand extended comes with its own implications which you have to be weary of, so look carefully into each solution.Opinions expressed here by Contributors are their own.