The biggest challenge for any start-up is to find the required funding to start or scale the business. Having a great idea is simply not enough; you still need a strong financial backing to transform your good idea into a viable business. When you are assessing financing options the most important thing is to limit your choice to financing solutions that are long term. In other words, you need to make sure that the finance for business start up will be there if and when you need it.
The following are some common business financing options to keep in mind:
CrowdFunding is one of the newer ways to secure funding for start-ups. CrowdFunding websites such as Kickstarter and Indiegogo have helped many start ups raise capital by pitching their idea to potential customers or investors. In this particular option, the entrepreneur creates a detailed description of the business and its model and then hopes that people who believe in that idea will help fund start up costs. The only disadvantage about CrowdFunding is that you can’t raise so much money at that exact moment when you need it.
Venture capital is ideal for businesses that are looking for a relatively bigger investment. Venture capital firms have a lot of resources and they will invest in a company that has the right idea and the right organizational structure to succeed. Most of the time, people who are looking at venture capital as a way to secure finance for business start up must demonstrate their scalability potential of their businesses and their ability to cohesively manage the start up until its achieves its short and long term goal.
An angel investor is simply a person who puts his or her money in a business at the infantry stage with the hope of growing their capital as the start up grows and expands its revenue. An angel investor will provide the start up costs needed and he or she will own a given equity stake in the business. The great thing about angel investors is that they are often in it for the long term and they will prove additional expertise to help you succeed.
There are so many ways to get finance for business start up but the three above are basically the most common ones. You can also go for bank loans and grants if you feel you need more money.