Whether you are starting up your business or expanding it you will need finance in order to do so. This is especially relevant to new businesses that are just starting up. There are numerous avenues that you can approach in order to gain this start up finance and there are many different forms of it open to you; choosing the right finance that will benefit your business most is the important thing.
There is a saying that states ‘it takes money to make money,’ this applies so much to new business ventures. For your business to become a success you will need a large amount of money to start off with that can be used to get your business set up. This money will be used to buy equipment, pay the rent on your business property, employ your staff and ensure that you have enough stock to get your business going as well as being used to pay the first few months of all your bills.
Two of the main reasons why many new businesses fail to get anywhere beyond the starting point are due to inadequate business capital and poor management skills, which is why raising money is so important in the early start-up stages of business.
Some ways in which people choose to fund their business idea is by using savings, but realistically not many of us have that sort of cash tucked away, which is why we require outside help. You could opt to borrow money from friends or family if they have the financial resources to help you or you could take out a credit card for the specific use of funding your business. All of the financial options that are open to you can be split into two sections, either debt finance or equity finance. Debt finance is classified as being money that is borrowed from varies different aspects. This is finance that is required to be paid back.
Some examples of debt finance include:
• Bank loans
• Credit cards
• Overdrafts
• Leasing
• Asset financing
All of these are the borrowing of money in one form or another and they will require monthly repayments that will have added interest. Most people however use their bank as the first call of gaining start up finance regardless of the fact they are going to end up paying more money back.
There are disadvantages and advantages of using a bank loan to fund a new business idea. However the disadvantages of having a bank loan to fund your business start up far out-weigh the advantages. The benefit of using a bank loan for business finance include being able to organise a repayment holiday meaning you only have to pay interest for a certain amount of time and you don’t have to turn over a share of your profit. The disadvantages however are that bank loans have strict terms and conditions and can cause cash flow problems if you are unable to keep up with your monthly repayments. Also bank loans are often secured against assets and you may be charged if you decide you want to repay your loan before the end of your loan term.
The other form of finance; equity finance, is often more overlooked than it should be when in fact equity finance could be just the answer that your business is looking for. The main forms of equity finance come from business angels and venture capitalists. Equity finance is money that is invested into your business in return for a share of the business. With equity finance the advantages out-weight the disadvantages and equity finance is a lot more helpful to small businesses than bank loans are.
Some of the advantages of equity finance include your investor being committed to your business and intended projects, they can bring valuable skills, contracts and experience to your business and they can assist you with strategy and decision making as well as often being prepared to follow up funding as your business grows. Two disadvantages of equity funding are your business may suffer as you are spending time securing your investor deal and the investor will own a share of your business.
The one thing that you must do when choosing your business start up finance is to use a finance option that is most suited to your business needs.
By: Helen Cox
Posts Tagged Raising Money
The world of treasure hunting and gold can posses people. It has me and many other people. But the fact remains that treasure hunting can be funded and successful if they step back from the enthusiasm of the project, and operate on a rational level.
Treasure Hunting is a business as well as a passion. If you can be grounded on the numbers and the research, your enthusiasm will sell the project.
Anyway this guy and another guy were trying to raise money in $20-$100 per person. I simply could not understand why the were trying to raise such a small amount of money from like 500 people. It just seemed like a waist of time when they could have asked for $2-$5,000 from each person. I would not have invested and money with these 2 people because they are lost in a dream and not organized.
They had no plans and there research was weak. They also had no idea on how much is needed for treasure recovery or even how much money they needed at all. They had no planning so there is little to no chance of them being successful.
Just because you think you know where a treasure is does not mean you have any idea on how to pinpoint and recover it. That takes money…Lots of it.
For an underwater pin pointing and recovery takes time and money. The fact is they were looking for about $6,000 total from 500 people. There is no way this is enough money for their projects. Also getting 20 bucks from 500 people is going to be a huge problem.
It would be so much easier to find 5 people who want to invest $2,000. They would have fewer people to deal with and $10,000, that is 4 thousand dollars more than they would have got at $20 from 500 people.
They are disorganized and trying to get money from the wrong people. There are people who have thousands of dollars lying around just looking for the right way to invest it. They can be sold the dream if your numbers and organization is sound.
I just do not understand some people.
http://roguetreasurehunter.blogspot.com/
By: Eric Thomas