So you’ve developed your business plan, now what? You should have a clear understanding of the amount of money (or capital) you need to start and run your business. If you need to raise or borrow money, there are options available.
Bootstrap: This means starting a business with little capital using personal savings, personal credit card debt or operating revenues of the new company to finance operations and growth. You can control all decisions you make, but at a potential risk if you don’t make enough revenue to survive.
Borrow money: Get funding via an external lender, such as a bank, building society or credit union. This is called debt equity. The most typical source comes via financial institutions that offer a range of products with both short and long-term finance solutions. These may include business loans, lines of credit, overdraft facilities, invoice financing, equipment leases and asset financing.
Your application’s success will depend upon how well prepared you are. Ensure your business plan, required documentation and financial figures are accurate, well researched and concise – still retaining enough detail to offer the lender confidence in your plan.
Crowdfund: This offers a finance option through donations of money from the public through crowdfunding sites like Kickstarter. Post your business idea with a clear description of the project. If people support your campaign, they can donate money – as low as $5 – to help you reach your goal. This method enables you to build a customer base before launch, to test your concept’s demand and retain full ownership of the business.