TMCnet Feature Free eNews Subscription
September 11, 2018

How to Fund Your Next Business Deal


 

Not each and every individual has the capability to be an entrepreneur. But there are those who, from the moment they take their first steps in the business, make manifest that they can make sales.



Starting a business can indeed be rather intimidating. However, as long as you have the hunger to do business, and you don't give up. you will eventually be destined for success. If you are in the middle of deciding whether or not to take the plunge, and start your own business, understand that there are many unknowns, yet there are many benefits as well.

Some of the benefits are included in the following:

  • You get to be your own boss
  • You have major flexibility
  • You are able to pursue your own passions
  • You can provide employment for others
  • You will inevitably meet many new people

Although, one of the greatest challenges entrepreneurs face is that they lack the money needed to continue on to success.

The Top Tips to Help You Fund Your Next Business Idea

 The following is a guide on how to gain the necessary funds wherewith you can grow your business.

1. Crowdfunding

In this day and age, crowdfunding is one of the most digital ways to raise money for your idea. Crowdfunding can simply be defined as a method of obtaining funds for your business, from the public.

This is done through crowdfunding websites, ones that are ready and willing to help you out. Some of these crowdfunding platforms include GoFundme, Indigo, Kickstarter, RocketHub and Crowdrise.

So, this is how crowdfunding works: You post your business on a crowdfunding website as a campaign, with a description of your business. Some websites will let you give a monetary value and a time frame of how soon you will need the funds.

If people decide your cause is worthy, and are willing to give of their own cash, they will have the opportunity to donate. The best way to attract donors is to offer incentives. They can be in the form of rewards, which depends on how much an individual has donated.

Pros of crowdfunding

Here is a quick glance at why you may want to consider crowdfunding.

  • You get to interact now with those who may be future customers
  • The audience can test your product, and give you feedback
  • People offer their own money, thus you don't need to sell shares (therefore you rendered fully the deed of ownership)

Cons

While crowdfunding does come with its benefits, there are a few things that you should note.

  • A lot to complete
  • No guarantee that of will to reach your target goal
  • Consumes a lot of time, especially since you have to interact with a lot of people
  • Pressure to provide rewards to donators

2. Commercial Lenders

A lot of business startups are quick to criticize bank lending. Albeit, banks can be a great source of funding, especially for smaller businesses.

Fortunately, federal laws limit banks from investing too much into small businesses.  This is because the government would never want a bank to invest in anything that has such a high likelihood to fail. In the event of failure, it is the depositor's money which is lost, and not the one who attempted to start the business.

A bank can simply offer a loan to a small business. Although, businesses that have been around for a few years are more likely to get a loan, since they have proved their own stability.

If the bank has decided to loan a business, then the business itself will act as collateral. There is a specific formula which is used to determine how much a business will be given. You could also try out online loan options like https://www.unsecuredfinanceaustralia.com.au/ to help get the money you need.

3. Friends and Family

Friends and family are, more than likely, the people in your life you can trust the most to get finances from. Indeed, that may be right, but they are also the most common source of debt.

Seeking money from family and friends is a very delicate process, and should be handled with great care. Thus entrepreneurs should always conduct themselves as professionals, even when dealing with friends and family.

The following are some basic rules that you should bookmark when seeking funds from friends and family.

  • Forget that they are friends and family, treat them as complete strangers
  • Make the funding a loan instead of an investment
  • Avoid obligations with all payments and, instead, make payments when you have cash flow

4. Angel Investors.

An angel investor is a wealthy individual, or a group of individuals, who invest money or equity investments into a startup.

They provide private equity funding, so that the second round of the business is able to commence. Angel investors can be found on the internet with a description of all their objectives.

After a business owner has submitted an application, then the angel investors will determine if the business is viable. They can invest up to $500,000, and, if they reach this stage, then it means they can take your business to the next level.



» More TMCnet Feature Articles
Get stories like this delivered straight to your inbox. [Free eNews Subscription]
SHARE THIS ARTICLE

LATEST TMCNET ARTICLES

» More TMCnet Feature Articles