Raising money to turn your business ideainto a business is one of the biggest challenges every entrepreneur will haveto face. We have listed some popular ways entrepreneurs raise money to enablethem to turn their ideas into businesses. 1.
Family and Friends This is usually one of the easiest means.You can ask your family and friends for money. Do not forget you should haveyour business plan at this point so you can give a clear explanation of whatyou are selling, how much you are selling, how you plan to make money andwhether you need a loan and investment or a gift, how you plan to pay back ifit is a loan and how much they should expect. 2.
Bootstrapping Also known as personal funding. This meansfinancing your start-up from personal savings, credit cards or any otherpersonal means of finance you may have instead of borrowing. Some entrepreneursstart with this method until their business becomes profitable, and they feelthe need to expand and then use other means to finance the new growth. 3. CrowdfundingThis is also known as crowd financing. Thismeans having to present your business idea on a crowdfunding website to a groupof people and raising small amounts of money from them at the same time to fundthe business idea and turn it into a business. How it works; you present youridea to a crowd of people by posting it on the website and your proposal willconvince potential investors and offer them ownership in the business if theyinvest. 4.
Angel InvestorThis are usually successful and wealthybusiness people like professional lawyers, engineers, accountants. Some of themare wealthy from businesses they own and are experienced entrepreneurs. Theyare known as “Angels” in the world of business because they are the easiestmeans of raising capital compared to others. Angel investors are usually peoplewe know or are sometimes recommended by someone else. Angel investors can also provide mentorshipand coaching for young businesses, which can be very useful and help in the successand growth of the business. It is important for any start-up to have a businessplan. A business plan usually contains the different start-up costs for thebusiness and these start-ups cost which are the expenses incurred in thecreation of a new business, so it is important to capture this early on. All businesses are not the same and sodifferent businesses require a different kind of start-up cost.
Onlinebusinesses, for example, would require a different type of start-up cost to abusiness that exists both online and offline (brick-and-mortar). A clothingstore will have a different start-up cost when compared to a coffee shop.However, here are some elements that can be common for most start-ups. 1.
Market Research expenses2. Insurance, license and permit fees3. Equipment and supplies expenses 4. Advertising/ Marketing and promotions5. Borrowing costs6. Employee expenses7.
Office space8. Communications9. Website