Saturday, 23 October 2021

A complete guide on Startup finance

 Start up financing can be defined as the initial infusion of the money which is required for turning the idea of starting a business into reality. While starting the business, just with ideas, most of the time, big lenders like bank or other organization often not convinced to lend money for the start up business.

This is the reason why the start up business owner needs to outsource or arrange some fund in order to turn their creative entrepreneur idea into start up business. As most of the big lenders like banks are mostly not the option to arrange money for the new businesses, asking money from family, or selling own assets, or borrowing money against home is kind of risky. That’s why most the entrepreneur while starting their business, have query how to arrange the finance for the start up.

In order to help the entrepreneurs and other business owners, here we are listing some of the ideas that can help you arrange start up finance.

How to arrange start up finance?

For starting and making any business successful, there is need to invest some money and time in it. The fund required for starting a business is known as start up finance. Here we are providing you some of the innovative ideas for arranging the start up finance. These are:

Personal financing

This idea of start up financing might not seems to be innovative, but is actually very important in order to start a business. It is important for those who want to be entrepreneur in their life to save some money for their business. If you are not investing any of your personal finance, no other investor will be ready to invest in your firm. In order to take help from other investors, there is need to contribute some amount of your personal finance as well in your business.

Personal credit card limit

Though this is not a option for large businesses, but can be a good option for small business. Depending on your past behavior of paying the credit card bills, you will have a credit limit for taking loan. Paying credit card bills on time will  help you extend your credit limit and this can help you take more loan from the credit card for starting the business.

Make sure, this is option only for the businesses with continues credit flow as there is need to re[ay the credit next month or on time.

Friends and family

Generally while starting the business, no outside will trust you only on the basis of a business plan. Your family and close friends are only those who can trust you and lend you money. But this is also not a appropriate option for startup financing.

Peer to peer lending

This is great idea for start up financing where the group of peoples come together and lends money to each others. There are several small and medium sized business groups that can have faith on you and can support you with money for your business.

Crowd funding

Crowd funding is an idea of collecting or arranging money for the business from a group of people. It is usually defined as the process of collecting small amount of funds from more number of peoples. This is a easy way for fund collection as more people can come together to raise fund and thus will not big burden on one person or investor. In this method, multiple small investors can come and together raise fund for the start up business.

Crowd funding can be done via the internet or from the social media network. There are several crowd funding websites as well that can help in collecting capital for the start up business. 

Micro loans

This start up financing method is also a kind of loaning method, but not by the banks. In this method, either individual or the aggregate group of people lend money to the business man at lower interest rates. The money for the start up business can either be lend by the single individual or more than one people can contribute in lending the total amount or the capital fund for the business.

Vendor Financing

Vendor financing is a kind of financing where the company itself lend money to one of the customer in order to buy the products or the goods form the company itself.

The facility of vendor financing is provided by several large or medium sized manufacturing s well as the wholesale companies. These companies provide the opportunity to their customers to buy goods or the products once and pay later after they sell all the products. 

Also, many times, the vendors are not having this facility, still good professional relationship can make them convince to defer the payment until all the goods by the new business are sold.

This is kind of financing where the business man can pay to the manufacturer or the distributor after the selling of their goods. It is basically a extending of the payment depending on the good image of the businessman or the amount of money.

Purchase order financing

 This Is another method of financing for the new businesses. Often the new businesses are not having the fund to work on large product orders. In this case, the advance payment from the client can help them complete the order and earn profit for the further growth of the business.

Finding Investors

So this is one more option for the start up companies to arrange finance. In the method, the business owner either can search for partner or just the investor to invest in their company. There are several platforms as well where the business owners can find the investors for their start ups.   

The bottom line

SO these are some ideas for arranging the start up finance for the new business!

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