Starting and running your own business is a dream for many people. If you are thinking of starting your own business, you could find that it is difficult to get the business off the ground due to start-up and recurring costs. While it can be expensive to start a new business, there are three ways that you can get the funding for your new business venture.
Find an Investor
When you are trying to fund your business, finding an investor is a great way to get your business moving in the right direction. When you are looking for an investor, you should try your family and friends first. However, if they can’t or won’t invest in your business, you should continue to network to find someone that will. If you believe that your idea is good and have a good business plan, it will be easy to attract investors. Additionally, seasoned investors could also provide you with valuable business advice.
Another great way to raise money is by going through a full fundraising process. If fundraising is new to you, follow some fundraising tips in order to have a successful campaign. Some tips can include making sure that you have a pitch and business plan fully prepared, being proactive and continuing to seek out new potential investors, and by considering alternative fundraising options such as having a crowd-sourcing activity established online.
Resource: General Fundraising Tips
Get a Loan
Another great way to get the money that you need for your business is by getting a business loan. By getting a loan from a bank or other business loan provider, you will be able to get the capital that you need to buy equipment, fund inventory, and manage your working capital. While this will come with added expenses, such as having to pay interest and bank fees, you will be able to retain full control and ownership of your business as you will not have to give away any equity to investors.
That said, it’s worth noting that there have been recent changes to accounting standards. Under the current expected credit loss (CECL) model, lenders assess an individual’s or company’s creditworthiness in the context of future expected losses. This new standard could affect the terms of your business loan. It’s worth noting because acquiring credit could become more complicated once these standards take full effect.
Resource: The CECL Model Q&A
When you are looking to raise money for your company or business venture, it is important to consider what is important to you and figure out what you need. By doing some precise budgeting and considering the pros and cons of each option, you will be able to figure out which source of capital is right for you.
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