Contrary to popular belief, you do not necessary have to have millions for you to be able to open a business. In fact, some of the big companies today came from startup capital for as low as $1000.
In all the planning stage of every new business, the section on how to raise capital is the hardest part. This is when the construction of a financial plan becomes too crucial and important.
The primary source of capital comes of course from whatever amount in your savings that you have intended for the business. Some entrepreneurs will have enough savings to operate their desired business but most of the time, especially the new entrants, supplementary funds are still necessary.
Traditionally, the first source that comes to mind are family, friends and banks. You should be prepared to accommodate a few partners or sell shares if you’re going to approach family, relatives and friends to support you. If you want to be a sole proprietor and you have a clean credit record, you could also try applying for loans at domestic banks. Almost all banks offer programs for small business creditors.
Today, as the world of business and finance has evolved, various new ways have been introduced to the society. Concepts such as bootstrapping, angel investor, venture capitalist and crowdfunding are now popular to the young entrepreneurs worldwide. Bootstrapping is a good cost saving strategy for all new businesses. Angel investors and venture capitalists usually apply to big enterprises needing large amounts of start-up capital. These are individuals or corporations willing to lend you their resources and skills for a certain position and profit share should they find your proposal favorable. Crowdfunding sounds a bit for the techie geeks and computer versed younger generation but it’s not always the case. Crowdfunding works by campaigning online for the netizens’ financial support. The challenge here is to be able to communicate and package your program or product for the readers to notice and poke their interest.
In some jurisdiction, governments also offer financial assistance for business use. You should try visiting your city hall and inquire if this program is available in your area or country. In cases where you still lack funds after trying all of the above suggestions, you might want to try other unconventional sources. Some got very creative and used the help of their community to raise funds and some took advantage of their first customer. You might also want to check out the various raise capital websites easily found on search engines. This could be risky so be sure to do your research properly.
The enumerated methods above may not be the complete list you need. Your requirements will also differ from others so the source that would fit yours may not necessarily work for some. If you are serious in pursuing your desired business, you really must invest much time in researching and planning your operations. Read as much references as you could. Learn from the experts both in theory and practice.