5 Tips to Funding Your Business Responsibly
Starting or expanding a business without funding is difficult. This is because you can’t acquire inventory and cater for business expenses without money. As a matter of fact, most people have good business ideas but fail to implement them due to lack of seed capital. Besides that, businesses that are already up and running experience major hurdles when they want to expand because the owners lack sufficient funds to open new branches. Without funding, any business is bound to fail.
On the other hand, an entrepreneur has to be careful when seeking business financing. This is because illegitimate funds will haunt your enterprise to its grave. At the end of it all, you don’t want to step on other people’s feet as you go up because you expect them to hold you when your business crashes. Below are ways that can help you get funding for your business responsibly.
- Borrow from Friends and Relatives
You can get money to start a business or expand an existing one from your relatives and buddies. All you have to do is share your idea with them. It’s easier for relatives and friends to lend you their money because you have already build rapport with them. And although they may not want you to pay them back with some interest, you should mention that you intend to settle the debt with an interest. This will convince them to lend you the money that you need so much. The advantage of borrowing money from friends and relatives is that they won’t rush you to pay them back. However, you should commit yourself to repaying the loan because you might ruin your relationships by not fulfilling your promises.
- Sell Some of Your Assets
Disposing some of your properties is definitely the best option when you are looking for seed capital. If you have several assets such as cars, land, stocks and old home appliances, you can sell a few of them to raise funds for your enterprise. The advantage is that you will not be owing money to anyone. This will enable you to work in your business without a lot of pressure. Whether your business succeeds or fails, you don’t owe anyone an explanation. You can actually buy some of the assets that you had disposed earlier when business starts recording consistent returns.
- Get an Angel Investor
You can get funding by partnering with an angel investor. There are actually many people who have a lot of money but they don’t have investment ideas. You can actually pitch your idea to such individuals and secure start up capital. However, you must be ready to share your earnings with them. Before you approach such investors, it’s recommended that you first prepare a business plan. If the business is already in operation, you should prepare balance sheets, tax returns records and cash book statements. This is because you will have to convince angle investors that you have a viable business.
You can get funding by sharing your business idea with a Crowdfunding community. Kickstarter.com is the most popular Crowdfunding platform. All you have to do is elaborate on your idea and people will start donating money. You can reward your donors by giving them some of your products. For instance, if you want to publish a novel, you can send them a free copy of the book in digital format.
- Search for Microloan Lenders
Getting business funding from a bank is never easy. This is because they can’t give you the loan if you don’t have an asset to secure it. On the other hand, microloan lenders can give you seed capital without asking many questions. The downside is that their loans come with high interest rates. But that should not be a problem as long as your enterprise is profitable. Moreover, they might be able to refer you to other creditors with favorable terms.