Successful Entrepreneur: 5 Financial Resources You Will Need to Start a Business
[This article was written by Yassi Parrish.]
You say you want to start or open a business. Well, the good thing is that everybody can kickoff a business. However, the only drawback is that launching a business that will prosper and will continue to flourish is not so easy.
One of the preeminent hindrances of starting a business is ensuring that you will have enough cash to get you through the first challenging months. Without having enough and sufficient financial resources, your line of business will most probably have a hard time to have a successful future.
Financing is necessary to open a business and turn it profitable. If you are financially unstable, worry not. There are plenty of financial resources you need to consider when starting a business. To help you out, listed below are five of them.
A lease is a means of acquiring the use of properties for a specific business without utilizing equity or debt financing. A lease is an agreement (within the law) among two parties that indicates all the terms of the rental use of any types of equipment or buildings.
Usually, the lease agreement happens between the financing or a leasing organization and a company. It is not straightly between the organization offering the assets and the company. When it ends, the asset will either be renewed, re-purchased or returned to its original owner.
The best thing about this financial source is that it doesn’t link funds from procuring an asset. And Lease payments usually happen at the beginning of the year. Giving you tons of time to generate money to pay.
Government Subsidies and Grants
Some government organizations provide financing capitals or resources, like subsidies and grants that can be feasible to your line of business. However, getting government grants can be difficult.
You might have intense competition from other starting entrepreneurs and the standard for getting awards are often tough. In most cases, government grants need you to complement the funds that you will be having. This amount differs extremely, depending on the lender.
To apply for a government grant, you will need to have a comprehensive project description, a thorough justification of the advantages of your project, the exact work plan, and costs. Furthermore, you will also need all the details of your key managers and the finalized application forms.
For a little help, most reviewers will examine and study your proposal by its approach, significance, innovation, need for the grant, and evaluation of expertise. If you manage to check all the list, then there will never be a problem getting a government grant.
When a potential investor invests in your business in trade for an ownership share, then it is an equity investment. If you go for an equity investment, make sure that you think about what percentage of ownership you are very willing to sacrifice, and at what cost.
This type of investment involves any money from any person, companies, or other business. And the money might come from inheritance, personal savings, personal loans, stockholders, business partners, or friends and family.
However, before you decide to go on this path, it is of the utmost importance to know the BC Laws that implements to any entity that boosts money from investors. There are a lot of legal matters to consider. Thus it is important to consult a legal advisor to understand everything about this type of investment.
The most common financial resource for starting a business of your own is through Bank Loans. Know that all banks provide various advantages and benefits, whether it is a customized or personalized service. It is always a great idea to search for banks that fits your particular needs.
Know that bankers are searching for businesses and companies with excellent credit and record. Thus, having an excellent idea in mind is not enough. It needs to be in a solid and concrete business plan. Furthermore, if you want to get a loan for starting a business of your own, you will need to guarantee or assure them.
From your Family and Friends
Raising money for your family and friends is probably the most common and effective way to fund your starting business. It can be risky at times because you may jeopardize their financial future and also your relationships.
Create a solid business plan first before you even approach them. Give your family and friends legit financial predictions and an accurate assessment so that they will know where you will take their money. As such, no relationships will be at risk, and it will lessen the chance of having unpleasant surprises.
Let them know that you take this matter honestly and truthfully. Introduce or present to your family and friends all the risks involved by starting the business of your own. It is best that you will initially tell them that there will still be a chance that the money they invested will be off-track. Do not hide it from them because they deserve only the truth.
The success of your business often relies on getting the right financial resources, as well as the right talent, before you even start. Know that if you do not have enough financial resources, your business as well will have a difficult time to stand up on its own.
Financial resources like start-up lease, government grants, equity investment, bank loans, and from your family and friends are very helpful to succeed and turn your business profitable. Though they are not 100% insurance of success, they can truly boost your chances significantly.
Yassi Parrish is a business and finance blogger. She browses various financial sites like Ashe Morgan to get it as her reference or basis to some of her information. In her spare time, Yassi spends some valuable time with her friends and family.