In thinking about starting a business of their own, most future entrepreneurs see bank loans as their only source of resources.
But there are many other ways to fund your business without having to pay high interest rates to banking institutions.
Being the boss himself, having more family time, moving up socially and economically, in short, there are countless reasons why people think about starting a business of their own. In many cases, entrepreneurship becomes a necessity, such as due to sudden dismissal.
But the truth is that not all people will be successful entrepreneurs. Rest assured that this is the path you intend to follow before you begin your journey as it will be long and arduous. However, it can be very rewarding.
Difference Between Undertaking And Having A Job
Ask any successful entrepreneur what was the most important decision he made on his journey, and surely he will say that he left the comfort of his job to invest time and money in his project.
Many people find this attitude of leaving a good job risky to own their own business. But in fact, entrepreneurship is no more or less risky than having a job, it’s just different risks.
As an entrepreneur you run the risk of seeing the business fail and lose the invested capital and have to start over again.
As an employee you risk being fired at any time and having to seek a new job. After all, there is no job with stability.
Fleeing High Bank Interest To Get Financing
If you have no money but want to start a business of your own, perhaps the first alternative that comes to mind is to take out a bank loan to get financing . But be aware that this is not the only alternative to getting credit, and it is by far not the best.
Commercial banks have been breaking billing records every year and are the most profitable banks in the world. All thanks to the numerous fees charged to its customers and the high interest rates on loans.
So, leave the possibility of applying for a loan as the last financing alternative for your company. That will make a big difference.
The Need For A Corporate Plan To Get Business Financing
Before going after money to start your business you must have completed your business plan. He will be responsible for outlining your path to the start of your business, as well as expressing all the details about it.
It is through the business plan that you will know if you are going the right way and what adjustments you will need to make along the way to ensure the success of your business.
The business plan also allows you to test the viability of the business: if after completing the plan you find it infeasible to pursue that activity, all you have to do is discard it and start a new business plan on another type of business. venture.
Believe me, it hurts a lot less to discover that a business is viable during the development phase of the business than after starting your business and investing money in it.
In addition, most forms of financing that exist in the market are made based on business plan analysis. If you intend to put third party money into your business, you will need to present them with your detailed business plan.
If you are unsure how to design a business plan and your budget allows you can hire a business consultancy or use the How to Open a Business Kit to make the plan.
Here is a complete business financing plan guide
Ideas Don’t Get Funded, Opportunities Attract Investors
There is a myth among entrepreneurs that business success depends solely on having a brilliant business idea .
That revolutionary idea that nobody had before and that will change the world. Yes, indeed many companies come from innovative ideas, but this is not the only inspiration for a new venture.
Many companies gain market share and become leaders only by doing what their competitors already do, but more efficiently.
The secret to the success of many businesses lies in the entrepreneur’s perception and curiosity to know the unmet needs in the markets and to quickly develop products and services that meet those needs, ie capture opportunities.
Now that you understand the difficulties and benefits of having a business of your own, you know the importance of designing your business plan by looking at the opportunities around you and are aware that you must resist the temptation to seek bank loans to finance your business. company, let’s look at the various sources of alternative resources that exist.
What Are The Financing Needs?
Before borrowing money from anyone you must know precisely how much you will need to start your business. This information is extremely important and should be thoroughly described in your business plan.
This should include all your initial and monthly expenses such as rent, furniture, tools, computers, employees, vehicles, raw materials, telephone, energy, and as many as your business needs.
Also, remember to add a working capital amount because your business will have fixed monthly expenses before it even starts earning enough revenue to cover those expenses.
This is not an exact rule and should be relaxed according to company activity and the amount of monthly fixed expenses.
Another alternative is to add the monthly fixed expenses (energy, telephone, employees, accountant, etc.) and add 50% of the value.
Family Capital And Other Individuals
A very common way to start a business venture is by raising funds among friends and family.
These people usually lend the money for a small fee and, in many cases, asking for nothing in return, giving capital only as an incentive.
Show your business plan to these people and talk about your project. It is also likely that some will be interested in making a partnership with you. Analyze the offers and consider opening the company. But don’t forget: Friends, friends, business apart!
There are also individuals with high purchasing power and no time to invest in a business. These are people who don’t expose themselves easily.
If you do not know someone with this profile in your personal network, you should attend business investment events and ask for help from someone who is your friend or investor friend.
Sources Of Funds Lost For Funding
There are ways of financing new business where there is no need to repay the amount you borrowed or it will be paid with irrelevant interest.
Generally these sources of funds come from government agencies promoting research and innovation and entrepreneurship.
There are also some banks whose purpose is to assist companies by providing low interest loans with a grace period to start repayments. Some examples are:
Investors For Financing
Investors are people or groups of people who have high purchasing power and are used to taking calculated risks with their own money. Many enjoy the game of discovering and exploring business opportunities.
An excellent way to find investors is through one of these events or through the investor groups website itself.
Getting Financing Is Only The First Phase
Whether through equity, family and friends, funding agencies, private or public banks, or investors, getting finance will only be the first phase of your business.
Keep in mind that for the good performance and consequent growth and success of your business it is crucial that you have sound financial management so that the investment acquired from third parties can be returned as soon as possible and you can thrive as an entrepreneur.
