Started your Business? Now find ways to fund them !
Starting a business has never been easy and the journey itself is very fascinating with a lot of ups and downs.
Starting up a business goes through many stages idea generation, the viability of the idea, understanding the market and the target group, developing the product, execution and lastly funding.
Funding has been considered as one most of the crucial stages of business because it's the fuel that's required to run your business.
Keep in mind, nobody come forward to invest in a business which is just on excel sheets, or on a piece of paper, the business should be up and running and the revenue and business model should be operative.
Lately, people realize the sources of funding that could help them start the game. Major sources of funding can be divided into 2 i.e. Equity Financing or Debt Financing.
Equity Financing is pledging your ownership in the company ownership with the funder.
Debt Financing is that you got to pay the amount over a period of time.
Both of these financings are dependent on factors like Nature of business, collaterals, funding size, business age to name a few.
Apart from these, there are ways to fund your business which might be useful for you to get started.
Factoring -
It is a type of method where the company sells its receivables to a bank or financial institute for upfront cash. It's for a small percentage of charges the banks agree to issue the cash for your business. Example, if you are running an apparel company and have cash receivables of more than 2 crore from the market, you can simply submit it and get cash in return. It's issued normally at a rate of 2-5% rate of interest depending on banks. It can be repaid as a normal loan, failure to repayment will give the banks the leverage to bid the receivables in the open market. Apart from India, this method works extensively and have been saving businesses on a cash positive note.
International Banks -
Banks are one of the oldest methods of financing for businesses. It requires your business to be registered, with all possible audited financial documents and statements to get funding for your business. In the case of corporate loans, the interest is not less than 15-18% PA. Banks like JP Morgan Chase, Bank Of America, Standard Chartered, Royal Bank of Scotland, Bank of Bahrain and Kuwait are more interested in Indian business loans than any others. Corporate India has evolved so much so that it's attracting international interest.
Crowdfunding
Loyal, simple, longterm way fo funding is crowdfunding. Companies like Oculus, Bragi earphones have got big because of crowdfunding. Here, funders support your ideas and business for an incentive. Crowdfunding is growing day-by-day for ideas that are unique, who want to pledge their equity, who do not want to become liable for any financial aspects except the progress of your business.
Attract Angel Investors-
Angel investors are often from a close knit of your community. They can be your just any person who invests to get the idea into a prototype and build a successful business model. Currently, angel investing has become a serious option for startups who are funded to get the business right. Rehan Yar Khan or Orios Venture Partners is known to have support most no. of startups as an angel investor.
Starting up a business goes through many stages idea generation, the viability of the idea, understanding the market and the target group, developing the product, execution and lastly funding.
Funding has been considered as one most of the crucial stages of business because it's the fuel that's required to run your business.
Keep in mind, nobody come forward to invest in a business which is just on excel sheets, or on a piece of paper, the business should be up and running and the revenue and business model should be operative.
Lately, people realize the sources of funding that could help them start the game. Major sources of funding can be divided into 2 i.e. Equity Financing or Debt Financing.
Equity Financing is pledging your ownership in the company ownership with the funder.
Debt Financing is that you got to pay the amount over a period of time.
Both of these financings are dependent on factors like Nature of business, collaterals, funding size, business age to name a few.
Apart from these, there are ways to fund your business which might be useful for you to get started.
Factoring -
It is a type of method where the company sells its receivables to a bank or financial institute for upfront cash. It's for a small percentage of charges the banks agree to issue the cash for your business. Example, if you are running an apparel company and have cash receivables of more than 2 crore from the market, you can simply submit it and get cash in return. It's issued normally at a rate of 2-5% rate of interest depending on banks. It can be repaid as a normal loan, failure to repayment will give the banks the leverage to bid the receivables in the open market. Apart from India, this method works extensively and have been saving businesses on a cash positive note.
International Banks -
Banks are one of the oldest methods of financing for businesses. It requires your business to be registered, with all possible audited financial documents and statements to get funding for your business. In the case of corporate loans, the interest is not less than 15-18% PA. Banks like JP Morgan Chase, Bank Of America, Standard Chartered, Royal Bank of Scotland, Bank of Bahrain and Kuwait are more interested in Indian business loans than any others. Corporate India has evolved so much so that it's attracting international interest.
Crowdfunding
Loyal, simple, longterm way fo funding is crowdfunding. Companies like Oculus, Bragi earphones have got big because of crowdfunding. Here, funders support your ideas and business for an incentive. Crowdfunding is growing day-by-day for ideas that are unique, who want to pledge their equity, who do not want to become liable for any financial aspects except the progress of your business.
Attract Angel Investors-
Angel investors are often from a close knit of your community. They can be your just any person who invests to get the idea into a prototype and build a successful business model. Currently, angel investing has become a serious option for startups who are funded to get the business right. Rehan Yar Khan or Orios Venture Partners is known to have support most no. of startups as an angel investor.
Raise funds from your Friends and Family-
Offer up a strong business plan, but remind them there is a good chance their money will be lost. It also lets your investors know you take their money seriously. Although it remains an important and oldest way of financing your business, you're turning your loved ones into creditors and may lose them in between losses and lose personal relationships too.
Pledging Future Earnings
The most rewarding and mutually beneficial way of funding is pledging your future earning. Here you are raising funding by pledging 100% or a certain percentage of your future earning capabilities from the business. But this may not be entertained unless you're ambitious, your market has a dire need of the product, the future projected earnings are the best in the industry.
Explore the best funding option for your business by knowing the pros and cons of each method.
Comments
Post a Comment