We all know that it costs money to start a business. But, how do you get the money to set everything up? In this piece, I’ll take you through three of the easiest ways to finance your business.
Use Your Savings
The first finance option is simple, use your savings! If you’re financially savvy, then you should have been saving for years. If not, perhaps you should start saving until you can afford the startup costs of your business. The amount of money it costs to set up a company will vary depending on what you’re doing. Certain business ideas will cost more than others.
Why should you finance your business with your savings? Well, you’ll be in complete control of your business. You’ll own every single bit of it. Plus, it’s hassle free!
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Get A Business Loan
If you don’t have the funds to finance your business, don’t worry, there are other ways. One of the most popular ways is to apply for a business loan. A business loan is similar to any other loan. You submit an application and, if it’s approved, you get the money. Of course, you have to pay it back, if you don’t the lender can take control of your business. They can take it off you and do whatever they want with it. They might even sell it to someone else; that’s all your hard work will go down the drain. So, make sure you can afford a loan when you apply for one. Don’t ask for too much and take a risk.
The good thing about a business loan is that there are plenty of ways for you to get one. Some people apply for one through the Small Business Administration. They’ll give you something called an SBA loan to help finance your business. Or, some people will go directly to their bank and apply for a business loan there. However, no one will give you a loan if your business is rubbish. You have to have a clear business plan and show that you know what you’re doing.
Find An Angel Investor
The final finance option requires a degree of luck. An angel investor is someone willing to offer you the money you need to finance your business. They’ll give you an amount you both agree on, and you don’t have to pay them back.
This sounds perfect, right? You get money and don’t owe them anything! Well, there are two slight issues here. The first is that it can be hard to find an angel investor. Not everyone is willing to throw money at an unknown business. Secondly, they’ll often ask for a percentage of your business. Essentially, they’ll become a co-owner. If they ask for a 25% stake in your business, they’ll own 25% of it. Some people are fine with this; others want their business to be 100% theirs.
If you’re starting a business, make sure you consider these three finance options. Figure out which one suits you better than the rest!