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Money is the bloodline of every business, and a business without adequate funding is as good as dead. Surveys show that almost 73% of small businesses use some form of financing. It’s up to the entrepreneur to find a solution that works best for him, given the circumstances he is working in.

The most popular ways to fund your business are:

  1. Your own assets
  2. Bootstrapping
  3. Grants and bank loans
  4. Crowdfunding campaign
  5. Family and friends
  6. Angel investors


  1. Use your own assets

You cannot expect someone to invest in your company when you are not willing to. So, tapping into your savings account, home equity, retirement fund could be a good way to start, and cheaper than traditional bank loans.

Pros:

  • Cheaper than bank loans
  • Easily accessible
  • The investors will see that you believe in your own idea
  • It will make you work harder and be more careful about expenses

Cons:

  • You are using your own money


  1. Bootstrap your business.

Many businesses don’t need large sums of money in the beginning, and too much money is as bad as not having enough. So, you can fund your business just by keeping an eye on the expenses and paying as you go. The goal is to keep the fixed costs to a minimum: share office services, use business incubators, use your own computer equipment etc.

Pros:

  • Cheaper than bank loans
  • You pay as you go
  • You don’t need large sums of money in the beginning
  • You will develop some business skills like negotiating

Cons:

  • Finding the most affordable solutions can sometimes be a lengthy process
  • If you are always tight on money and have no additional resources, one bad deal, or unforeseen expenditure can halt your business


  1. Bank loans and grants

These have been around for a while. They made or broke most of the businesses in the world.

Pros:

  • The traditional way of funding
  • Credit lines can help when something unexpected happens

Cons:

  • They are not cheap and may end up costing a lot more than you expected


  1. Crowdfunding Campaigns

This way of funding has become immensely popular, and it is an interesting way to accumulate some starting capital.

Pros:

  • You don’t need an impressive, big idea, as simple products that make people’s lives better are winners
  • It’s a good starting point, and when your company grows enough, you can easily switch to the traditional market

Cons:

  • You may need a lot of time to create a robust crowdfunding project
  • You are showing your idea to the general public, and someone might use it for themselves


  1. Family and friends

You can ask them to help you fund your business. They know you and know if they can trust you and your idea.

Pros:

  • You are funded by people you know and trust
  • They will probably accept lower or no interest rates at all because of their personal relationship

Cons:

  • If your business goes down, it may take your personal life with it


  1. Angel Investors

They are typically individuals with an average income of over $200k per year who are looking to invest their money in small local businesses. They can be found through your local business community or many online platforms. All you need is a good idea and enthusiasm to get them on board.

Pros:

  • A good angel investor can be hard to find. Besides the money, they should also have contacts and knowledge that might help you.

Cons.

  • If you run into a bad angel investor, it could sink your business
  • Some investors like to get involved in the business more than they should


These are the most common ways to Raise capital for business, and it has been proven that combining several of them always works best.