Starting a business

Starting a Business: Get funding for your business idea

Regular ways to finance your business

- Overdrafts are good ways to fund your cash flow.

- Bank loan: Always secured against your assets, but with planned repayments (e.g. EMIs).

- Overdraft: To meet your short-term working capital needs. Lender looks at your cash flow trend, and need some guarantee/security. It can be called in when you default on the repayments.

- Government grants and subsidies: For example, if you are into renewable energy business, or operating in areas where the government wants more businesses to come up to help with unemployment.

- Old insurance policies: Banks may give loans against long-running insurance/endowment policies.

- Home equity: You get money by putting up your house (its equity) as collateral.

- Wealthy silent partner: Ah, the dream!

- Venture Capital (VC): They give money without asking for collateral, will interfere much, and know already that only 1 in 10 investment will bring them the return, compensating for all other dud investments. VCs work on the 10X/100X formula - that one investment which will do the trick. Till then, it is a lottery.

- Angel funding: The high networth individuals (HNIs) are no more willing to be solvent partners. They are joining in bands and investing seed amounts in companies, in return for 5-20% of equity for any money that will help you get things rolling - launch the prototype, starting the team etc.


Financing your business without taking a loan/investment

The best thing is to know how fast do you have to grow. Many people start slow, making and selling only what they can afford to buy readily.


1. Use Factor: Foe a fee, a factor collects your debts for you and pays you the money as soon as you raise your invoice.

2. Take deposits: Upfront deposits for orders can help you with purchasing material with customers' money. Real estate companies do this.

3. Share resources: For example, share a warehouse with other players in your field. eCommerce companies do this.

4. Buy cheap: Go to auctions and wherever you think you can get the material and equipment for knock-off prices.

5. Lease: Businesses lease all sorts of equipment, even offices and cars to avoid upfront payments.

6. Sell and lease back: Businesses sell their office space and lease it back, making some extra capital available for business growth.

7. Extra shifts (and extended working hours)

8. Credit cards: The staple of entrepreneur financing. Very expensive.

9. Price increase: If you see a very healthy demand for your product.

10. Focus on most profitable products at first.

11. Sell accessories etc for the product to get some extra cash.

12. Sending business to other businesses, for a commission.

13. Crowd Donations Sites: If you are creating a consumer product, use crowdfunding websites (you make a pitch, users of the website vote by pledging money) such as KickStarter, IndieGoGo or RocketHub to get donations from interested buyers (who get the product at handsome discounts). There are many Crowdfunding websites. Google search for 'crowdfunding Product category x'.


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