You have a new business venture and are ridiculously proud of it. And you should be proud of a venture you undertake. Unfortunately, when it comes to setting up the venture, it might be a little difficult to raise the finance. You have a few options.
1) Getting finance from a bank – This may be the toughest one to swing. Banks are unlikely to get excited about your idea and are not likely to be as passionate about your vision. That is because they are passionate about their own business which is usually based on responsible lending. In order to convince a bank that they should lend you the money, you are going to have to do some legwork. The main thing the bank wants to be reassured of is that you will pay the money back.
You need to have a clean credit record and good credit history. They are probably going to ask for some form of collateral, in the event that you cannot repay the loan. Basically, they are also going to look for some sign that you will be able to make the business work. This should be laid out in your business plan. Your business plan must lay out your plan for the business step by step. The business plan will also give some indication of what skills you can bring to the table. That said, if you have trained as an accountant and suddenly want to open a mechanic’s workshop, the bank may query your abilities as a mechanic.
2) Get the money from mom – We all know that you should ideally never borrow money from friends and family but sometimes you have no option. Take as much care thinking the idea through as you would if you were approaching the banks. Make sure that your business plan is well written and realistic. Do your homework properly. At the end of it, should they agree to loan you the money, have a proper contract draw up to seal the deal.
3) Get money from investors – There are going to be a similar set of requirements as a bank would want. The investor, however, has more of a vested interest in the growth of the business as these deals usually entail some sort of part-share. Still, you will have to make a strong business case for the business investment. Again, get a proper contract drawn up to set out your rights and responsibilities. Make sure that the contract details what rights the partner will have when it comes to the day to day operation of the business. A silent partner may not always wish to stay that way and you may see your vision for your business radically altered. Getting finance for a new business can be tough but is possible if you have done your homework properly. Give your business the best possible chance by thoroughly researching your proposed business and strategies before going ahead with these.