So you have a sure-fire idea for your new business. You have discussed it with a few close friends and family members and they agree that this sounds like a good proposition, a likely success. You are ready and raring to go! But there is one major obstacle. Based on your projections you do not have enough start up capital to proceed at the pace you want to. How can this be resolved?.
Raising Start-up capital is often the dilemma of many budding entrepreneurs. Don’t throw your hand up in the air and give up just yet .If you are optimistic and driven you can beat the odds and be off to a running start. Here are some options that are available for you!
1.Use your own cash/personal resources. Self funding is indeed risky but can yield great returns and reduce your external obligations/liabilities.
2.Seek help from family and friends. There may be family or friends who understand your plans, believe you will succeed and are willing to support you financially.
3. Apply for a bank loan. Even as a new business client , if you have a good personal credit rating, a disciplined approach to savings, a clear and detailed business plan, your bank will be happy and willing to provide sound financial advice as well as start-up financing. Most Start-up loans will require firm security by way of real estate &/or readily realizable security (cash , fixed deposits, investments etc.). This security may be your own or a guarantor’s .
4.Try to identify a suitable investor - Outside of immediate family and friends, there are investors who offer short-term financing. Ensure clear expectations are established at the outset to avoid conflict.
5.Use a credit card - Credit cards come in handy as a revolving line of credit . A great feature and benefit of credit cards is that if you pay in full within a specified period, say 21 days of point -of- sale usage, there are no interest penalties. A credit card requires significant discipline as monthly payments are a normal feature. If not carefully managed this option can incur significant charges and affect your credit rating.
6.Shop around for government based agencies that offer funding. Micro and small businesses provide needed stimuli to the economy as they earn revenues, pay taxes and employ other persons. Specialized government agencies often provide financial advice, loan support and even grants for defined purposes .
Raising capital may indeed be a “Catch 22” for new business owners, absolutely necessary but difficult to access. The important thing is to have faith in your venture, never give up, and explore all the options available to you. If you are persistent and resourceful, you will raise your needed capital and move forward.
