When you have a great idea that you are sure will succeed, dont let the lark of capital kill it. Launching any business requires a capital investment which is not easy to find. However, get yourself social services from Jaynike.
Most of the time, it’s challenging to find business capital, below are a few important financing techniques that will help you acquire capital.
What to consider before engaging in any business financing
Capital involves money and alot of transactions, and such activity can attract predatory business practices such as, money laundering, scams and other illegal activities involving money. You should be careful before making any move and ensure all your actions abide by the law. Below are some steps you can consider when seeking capital for your busines.
1. You should be cautious about where you get capital from
Some investors are a good source of capital while others are not, you should be careful when receiving money. Most financial experts discourage entrepreneurs from taking capital from friends, family,and other private sources because some of them dont understand the risk of starting a business. When seeking capital from a less established investment firm, you should be extremely cautious.
2. Make sure you receive capital accompanied with suitable paperwork in writting.
This will ensure all legal requirements are archived. Dont start to spend capital from someone without signing an agreement. Make sure the paperwork is done by profession, and you can understand every detail on it before signing.
3. Do not start spending or promising before you receive the capital.
It’s advisable not to promise or start spending what you haven’t received yet. Some companies or investors may be spending on your contract, yet you might fail to receive the capital.
4. Do not seek help from friends and family when things go sideways.
It’s not always a good idea to turn to your friends and family, and most specialists discourage it. Friends and family might help little, and some might not help at all, also you risk losing your business, friends and family at the same time. You should seek help from experts who have experience in solving business issues.
There are some government programs that offer start-up capital for businesses. You are required to submit your business plan to the grant committee, which will approve it. Then you will wait for your plan to be scrutinized and approved then you will be given the capital you need.
Different government has their way of giving capital to its citizen for business, you should check on official government websites.
Venture capital and Angel Investors
1. Venture capital
This kind of capital is where investors give you capital so that, in return, you give them a share and role in your company. Most of them prefer to be among the company’s board of management or busines. Venture capital has alot of differences from traditional funding because it focuses on high growing company and it’s not a loan, the investor takes high risk for potentially higher returns. Lastly, it has a longer investment horizon than traditional financing.
Venture capital is always appropriate for businesses that are beyond start-up, busines tha are already generating revenue. Most investors in this sector look for enormous opportunities from stable companies that are attracted and have a strong team of workers.
2. Angel investors
Angel investors are is typically a group of investors who invest their money in their own business from the start of business. Angel investment has many similarities with venture capital. The difference is that angel investors tend to invest in a company early, while ventures usually invest in high-growth companies.
Banks are usually the first place an entrepreneur thinks about when they need capital. Bank usually provides working capital loans even though it requires one to go through a cycle like revenue-generating operations. To get capital from a bank usually is not an easy task you should share your business plan, evaluation details, project report based on loan sanctioned.
Almost all banks offer a working capital loan, but their interest rate, loan amount, repayment tenure differs you should choose wisely which bank you will work with. Banks require solid finance history or an asset to hold it as collateral before giving out their loans.
It is like requesting a contribution, taking a loan or investment from several people at once to start a business. Crowdfunding is among the new ways to acquire capital and has gained alot of popularity recently.
For entrepreneurs to acquire capital throught this method, they have to share their business description on a crowdfunding platform. An entrepreneur will describe the business’s goals, how they plan to make a profit from the business, the amount of funds they need, and what exactly the fund will do. People can read it those who are interested in that idea will pledge how much they will contribute or donate.
Crowdfunding is so competetive place to earn capital, make sure your busines can attract the attention of consumers. Advantages of crowdfunding are; the process generates capital, and at the same time it markets your product, it will help you know if there will be the demand for your product, this process cuts out all brokers, and it can attract venture capital investors.
You should seek capital from an option that you are more comfortable and confident with,to have enough time to focus on turning your idea into reality. When it comes to the source of finance, it usually does not favour everyone trying to associate with where you are seeking capital to have good knowledge about them.