Ways to fund the creation of a business

One of the main harms we face when starting a business is the lack of money to start it up and run it for the first few months of life. However, despite being a common problem, the lack of capital should not be a barrier to starting a business, because if our savings are not enough, there will always be several ways to get the money you need.

Know some of the main ways that exist to fund the creation of a business:

Equality

The most ordinary way to finance the creation of a business is to use equity, i.e. use the money we can get, either from our investments or from any other individual source, for example, the use of credit cards or from the sale of personal property.

When starting a business it is always sensible to use fairness (since we are not required to pay interest or have to return the money) at least at the stage of shape, and later when the business begins to produce, new start seek outside sources of financial support.

Family

If we do not have enough equity, the first option is to have a loan of money from family, which is very expected to accept loan money if they are aware of our skill and responsibility.

The advantage of this type of financing is that generally we are not obliged to pay interest (although as soon as the business begins to produce profits, at our own cost could opt to economically pay back the self-confidence placed in us our relatives), or to return the money soon and on a deadline. Which allows us to work in quiet in the formation of our business without being so depressed at having to return the money?

Friendships

An alternative to asking for money to our relatives is asking our associates.

The average in this case is that both the loan quantity and the deadline for the return of these are lesser than in the case of our family, but also other major difficulty of this option is that funding could harm the friendship we have with our friends if we cannot return the money before the deadline.

Banks

This type of financing is a bit difficult to access, as banks usually grant loans only to businesses in process and with particular experience in the market, and not those just opening out.

However, to access a bank loan to start a new business is not possible if we have good credit status, good trade references, and above all, a good-looking business idea with a solid business plan to back it up.

Other financial institutions

An alternative to a loan from the bank is a loan from other financial institutions, which are rather oriented small and medium enterprises, which are more available than banks, but as in the case of these, in order to access our loan trade idea should be attractive and to be supported by a solid business plan.

The disadvantage of this type of financing is that, unlike usual banks, these financial institutions in the amount rented are usually small, and the cost of borrowing (interest rate) is usually high.

Partners

It is wise to look for a partner with the same motivations and aspirations that we spend the same capital that we, and also money, provides other resources that are complementary to those we have, for example, experience in some aspect of business, market knowledge, business contacts, etc.

The disadvantage of having a partner is that later may have disagreements, differences, or disputes, especially if it begins to fail in meeting the goals, and even more if we have a conflicted partner.

Investors

Find an investor involves looking for a person who wants to finance all or element of the investment business, and as a result receives a percentage of profits according to the amount contributed.

The disadvantage of using this type of financing is that we may have to deal with having to always pay a part of the profits of the business to someone who originally invested, and then did nothing to create or grow the business.

Contests

Finally, another way of creating a fund consisting of competitions on projects, business plans or business ideas, which are typically prepared by government agencies, universities or other institutions, and where they usually prize the best project plan or idea to the total or limited financing of the business.

If we have a good-looking and inventive business idea has backed by a solid business plan, we should not pass up the chance to consider the survival of this type of opposition in our region, as they may be a good option financing.