Top Tips on How to Fund Your Start-Up

Image courtesy of Edward Li
Image courtesy of Edward Li
If you are starting a new business it is likely that you will need some money to get started. You may just need to fund a domain name and hosting for a website or you may need to pay for stock, business rent, insurance, staff and many other things. Obviously it will very much depend on what you plan on doing. However, unless you have a very small starting cost, you will need to find some ways to fund the business.

Savings
If you have savings, then you could use these to fund your business. Using savings that you have means that you can avoid borrowing. This can be good as you do not have the burden of having a loan to pay back and the cost of repayments each month. However, it may mean that you have no money to fall back on. Your business is unlikely to make enough money to pay you a wage initially. This means that you will need to have some money to manage on and it might be that your savings would be better for that. You may also find that once you raise the necessary capital, you need some extra later which the savings might be good to use for as well.

Crowd Funding
Crowd funding is a fairly new idea where people ask for money for various projects. If your new business is something exciting, then it could be that you will be able to raise enough interest to get some funds this way. It will take a bit of looking into, to find out how you can get started with this sort of thing but it could be a great way to get some funding without having to get a loan. You could ask friends and family to help you financially through this sort of thing or make it broader through more people. Some people give a reward in return for the funding and you will need to decide whether you can afford to do this, once the business gets established.

Business Loan
A business loan can be a way to get money for your start-up. It may not be that easy though as banks do not lend that easily these days. You will have to come up with a business plan to explain how you will be spending the money and what you will be doing in order to get a good return on it. This should be fairly straight forward to do, as you will have had to go through this thought process when deciding whether it was worth starting up the business in the first place. You should have come up with figures and costs, to see whether you felt you could raise enough income to make a profit.

The choice that you make may depend on how much funding you need. If you need a lot of money then savings may not be an option for you. If you only need a little money then it could be the most sensible option. Think through all of the options carefully though, to make sure that you use the one that makes most sense for you and your business.

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Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process http://www.turnonepoundintoonemillion.com and sells her books through http://www.bowbridgepublishing.com.

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