Tag: business

The idea of starting a is exciting. But this only lasts for a while till you dwell on the nitty-gritty details of funding the business, operating it and so on. Raising capital is one of the biggest challenges faced by startups. You may have a brilliant business idea, but where you decide to get the capital from may determine the success or failure of your new adventure. If you are looking to become an entrepreneur, here are the best ways of raising money when starting a business.

Self-Financing

If you are in a position to get the money you need to start the business, then this is the best option for you. If you have personal savings, then channel them into starting the business. You may also self-finance the business by selling personal assets. Although you risk losing everything, it gives you peace of mind knowing that should the worst happen to the business, and no one will come knocking on your door asking for their money back.

Friends and Family

This is a popular yet highly effective way of raising money for a business. The ones close to you are the ones likely to believe in your abilities and the business idea and vision more than anyone else. Structure the funding in a manner that those who invest will get a share of the profits before you repay back their money. Some of your good friends and family may be willing to give you money without expecting it back as a way of empowering you. Take advantage of this!

What makes this a good way of raising funds when starting a business is that even if the business struggles, your family and friends are less likely to auction the business to recoup their investment. However, this also puts you in a tough position as you may lose relationships you have cultivated for years in a case where you fail to keep your word.

Angel Investors

These are entrepreneurs who have made their money, and they are looking for startups to invest their money in. Some of the world’s most successful businesses received their start-up money from angel investing. This is a great way of raising money as you get more than the cash. The investors give you advice on how to make the business successful, and they also act as an excellent channel for networking with potential clients. Look for angel investors who focus on the industry you are in and pitch your business idea.

Business Partner

You may lack the money, but know someone who has it. A business partner can be a driving force on the success of your business besides giving you the money. Choose a partner whose vision for the company is in line with yours. Ensure that you have all the agreements written down.

Venture Capital

Venture capitalists invest their money in businesses which are just starting with high growth potential. Most of them will request for equity in exchange for the money. The …