SOURCES OF FINANCE FOR BUSINESS STARTUP WITH LESSER RISK
Business startup or expansion needs additional capital depending on what types of business you are going to build. For starters it is always good to start in modest way a sole proprietorship business is a good start up to test your business because it is simple, inexpensive and it needs a little capital but usually you will also need to take care of all the responsibilities which is a little bit hard for start up but you will soon get familiar as you go along. Start with a plan, make a little research on your prospective location and assess your potentials, this should build a good foundation of what would be your expectation during pre operation.
A simple home based business or online business is also recommended to start, you should also build customers from friends, relative and neighbors and expand your prospects slowly but surely. If you think it is impossible for your situation to start alone you can also establish a general partnership you can ask your close friends or relative so that they can provide help with less expectation, they can also provide additional capital, ideas and opportunities in extending customers although this form of business is not really recommended for there will soon be struggle for authority and decision making especially in the division of income. Finally if you have already done everything and all that is left is an additional sources of financing I would like to recommend four of the best financing that you can deal with less risk;
Personal Financing – this is probably the best financing scheme that you can find. This can be your personal savings, something that you already have or an excess of your earnings and passive income is a good source of funds to invest and it is readily available. Other people prefer this types of finance to start up a business if they have already save some of their hard earned money because this type of financing only risk a single person’s money and that’s you. They also believed that if the business start up comes from your own finance then you will be ready to accept full responsibilities and aim for the best outcome of your business because you have all the challenges and risk to take and also the opportunity to earn.
Borrowing from friends and relatives – but make sure that you have already selected friends and family who are usually supportive in your business so that they will be eager and willing to give you the opportunities you deserved and most likely they will even extend an obligation into your business because they will become interested in an indirect participation. They are the good sources of finance and they would never ask too much, verbal communication is also easy but you must not accept such form of deal so make sure you settle your deals in formal written contract this is how to conduct serious business. They can even give encouragement even if you fail or succeed. But be sure they are considered and be paid on time especially when your business grows, never take them for granted and always be formal when you speak about money even if they are close to you remember that business is business. The only disadvantages of this kind of settlement is if they are being attached so much in direct decision making makes it hard for the owner because they are also the closest person in your life.
Try different business and security loan – if you are a member and you qualify from social fund or social security fund then by all means use it because the money you are going to borrow is also yours. The payment scheme is minimal and the form of repayment is usually in favor on your side. In other countries and states like in USA they can even give Small Business Administration (SBA) funds for business expansion that can provides up to 90% guarantee to strengthen small business in the community. They also provide grants for the most qualified applicants even if they suffered disability, aging and other incapability of their status. The condition of grant is usually to provide entrepreneurship and livelihood to people who never had the opportunities but who has the courage and determination to enrich themselves although this kind of funds usually takes time upon approval.
Angel Investors – they can be good sources of finance, they are the people around you but not necessarily your friends or relative but they are just simply acquaintance that has the money and authority to fund a business. They are the person who have the money but doesn’t have the time; they can usually give in to financial investment of their passive income. For example a busy doctor or lawyer has the money but usually their schedules are full. They can also be a retired old age rich people who do not concern much about money, they can also be the person who simply wanted to help others without reason or for publicity and social services like government officials or social workers etc. in short they are the people who do not necessarily need much income in particular. But borrowers must also keep in mind that they need to pay their obligations on time because they also have the power to sue creditors if they are not paid on time.
Credit:ivythesis.typepad.com
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