If you are struggling to work out how to finance your business start up, then consider some of your options.
How much cash do you really need?
A website-based business will require much less than a tradesperson with tools and a van. Do some research and be realistic. If you have a basic financial plan and you are careful and disciplined in your management, you can make a little go a long way. You should know the ventajas fiscales andorra for the smooth running of the online business. The financial plan preparation is excellent to offer the desired benefits. The use of the best resources will provide the desired benefits in earning more cash. The paying of the taxes at the right time will provide success.
Don’t give up your day job
If you DO have a regular ‘day job’ and you can start your business in your free time then don’t be in a hurry to give it up. It may take a while for your business to get enough cash flow to sustain itself… and you. So you may not be able to draw a wage from it initially. Also many of the methods mentioned here will require you to either have an income or proof of an income in order to utilise them.
Traditional funding methods
There are some traditional ways of funding a business start up and they are still the most common.
The usual DIY method, fund it yourself. This can be by using personal savings or by putting aside some of a wage from a regular job.
In a similar way to using personal funds you can use personal credit. Purchase what you need on a credit card and then pay back using either your own income or the business income. Naturally, you need to be careful with this route as you can end up with debt you can’t manage. So you may prefer the next option.
There are plenty of ways to get a personal loan. If you can start your business for $10,000 or less then a loan over 5 years does not stretch the budget too much. It really depends on what kind of cash flow you think your business will be generating in 12-months time. To get a loan you may need to provide a security to the value of the loan or proof of income to show your ability to repay under your current circumstances. You will almost definitely need someone as a guarantor.
If you already have a mortgage then it may be possible to access a redraw facility on it. If you’ve had the property for some time then it may have increased in value enough for you to access the value of the difference… up to the percentage value of your loan.
The 3 F’s… family, friends and fools – As strange as it sounds, this is one of the most common methods of funding a new business start up. OK so family and friends are self-explanatory… who are the fools? They are people you know who have access to some cash whether through a family trust, an inheritance, a lottery win, insurance claim etc. They are not usually business people so they will not necessarily ask for a contract but a simple hand-shake agreement that you’ll give it back one day. Much like your friends and family though, they are not likely to send ‘heavies’ after you to get it back if you don’t succeed. Be aware you may lose friends though.
There ARE people out there who will finance a good business idea. If you’ve ever watched the ‘Dragon’s Lair’ then you will have seen the selection process in action. It relies a lot upon your ability to present the idea and the way it can make money. It can be tough, they are only usually interested in scalable ideas that will make lots of money, and it’s possible that they will demand more in return than you are prepared to give. But these people are usually great business people and, if you’ve never owned a business before, they can be fantastic business mentors. So sometimes it can be a trade-off.
A new method
Today there is another method of funding a business start up. It is not a method everyone can use but, if you have the right idea, crowd-funding has proven to be highly successful in a number of cases.