subject: Hw Can You Fund Your New Business [print this page] I am often asked: What is the best way to finance new business. Is usually followed by the question "So, did not invest any time before you are in the new projects?"
Answers, respectively, are: 1. There is no "best" way to finance a new business, and 2. I do not invest in new projects, but darn it I can not today, because I left my checkbook in my other suit.
The truth is that there are a variety of ways to finance new business and the way that is best for you depends entirely on the product, your market and your financial needs, your burn rate, and most importantly, your personal circumstances and finances.
So with that in mind, here are some of the most common ways to finance a new business without touching the old Tim for a loan. Keep in mind that all the methods have advantages and disadvantages, and some (almost) can not work for your specific situation. Whatever the funding method you choose thoroughly investigate the ups and downs and not jump in with both feet until you are sure you will land on solid ground.
Savings and investment
The first source you should consider is to eavesdrop on private savings and investments. I am a big fan of self-financing when it comes to business because it does not make you responsible for the other that the company fail. The bad thing is that if things do not go below, of your money going down with the ship. If you were not willing to risk your capital should certainly not be willing to risk anyone else.
Friends and family
After benefiting from savings and investments, and business turn to friends and family for help. This works well for some, but here the motto I live by: never borrow money from those that you have to eat dinner with the Thanksgiving Holiday. Nothing causes tension in the family like lending money that is never repaid. And note I say "lending money" rather than investing money. Venture capitalists to invest their money. Your parents give you money. They expect to return one day, even if they say they will not. Remember, when your loved one is investing in your business, and are invested emotionally in that they are to you. Would be difficult to tell mom and dad that their favorite son lost their savings because of his work was going down the drain.Credit cardsI financed my first credit card, which was incredibly stupid thing to do given the fact that my company had failed, leaving me with thousands of dollars in credit card debt who have taken up to the year 2099 to pay. He was working at the end of the day for me, but if you decide to finance your business on plastic keep in mind that you will pay interest rates too high on borrowed money and a great hit if much of this money will pay for many years to come.Farm mortgageBank loans is almost impossible to get if you do not have insurance and a road map to business success, which is why many business people use the equity in their homes to finance their projects after they refused to get a bank loan. While this makes more sense than building a business on a range of credit cards, and the risks of not less abundant. You must pay this amount and if your business succeeds or not, but it is a good source of money at low interest to get you started and the interest may be tax deductible (check with your accountant to the picture of course).AngelsAngel investor is usually a rich person who invests in start-ups for a share of ownership. Angel investors are usually the first formal investors in the company, and provide seed money to get the company back on track. And some angel investors write you a check and leave you alone to run your business while others consider their investment a license for "help" the management and decision-making. If you accept the money owners make sure the conditions are clearly defined on both sides. Money always comes with the owners of the strings. Make sure whether these channels are in the form of an arc or line check before accepting the angel.Project capitalistsVenture capitalists and angel investors as pit bulls are the Chihuahuas. This does not mean all VC are big, bad dogs, but they have strong jaws that can chew and spit the company if things do not go their way. VC money does not come with strings, it comes with chains and locks and a lot of legal documents. VC always in control of any deal they invest in. This is how it works and this is the price you pay money to gain access to capital.If it's your job to get this level of VC money becomes a viable option, do not jump to the bone for the first time VC pending before your eyes. If we like your idea of VC, others will too. Submit to multiple VC and carefully consider each offer before agreeing to box.Remember, regardless of how you finance your own business, and use the money wisely. Plasma screens do not buy $ 1,500 and $ 1,000 Herman Miller chairs.To have a clear plan for how money will be used and how it will be refunded.And remember this, you can more of a small company, but most of the work that has the will in the end.I will be so happy if you decide to visit my Blog : Articles2Day.Org | Science Articlesby: Articles2Day.Org
