Businesses have unique needs. Thus, don’t expect a one-size fits all financial solution. Both your vision and financial situation will have an impact on how it is going to shape your business in the future. Do you think that businesses such as school fees debt collection spruce up out of nowhere? The moment that you know how much funds you need for your start up, that is when you can totally find out how you would get it.
Self-Funding Your Business
Self-funding a business is otherwise called as bootstrapping. With self-funding, it allows you to leverage your financial resources as a way to support your business. Self-funding also comes in form of turning to friends and family for capital or even using your personal savings account or tapping to your 401k.
Through self-funding, you will be able to keep full control of your business. However, this also means that you take the risks all by yourself. You have to be careful not to overspend. At the same time, be extra careful if you opted to use portion or your entire retirement account. You may face penalties or expensive fees or even damage your ability to retire at an early age.
Seek Capital from Investors
Believe it or not, there are a lot of investors who are willing to give budding entrepreneurs the funds they need to start their business. They do this in form of a venture capital investment. This type of investment is usually provided in exchange of ownership share as well as active role in the firm.
Venture capital is different from conventional financing in many different ways like for instance, venture capital is focused primarily on:
- High-growth businesses
- Invests capital in exchange of equity than debt
- Taking higher risks in return of bigger profits
- Longer investment horizon compared to traditional financing
Nearly every venture capitalist wants to have a seat on board of directors at least. Thus, be ready to give up part of your ownership and control to have funding.
How to Get Venture Capital?
The only question left now is, how you could find such investors? Well, there is no assurance that you can get a venture capital but, the process normally follows certain steps which includes finding an investor, sharing your business plans, going through thorough review and work out with the terms. Now, assuming that everything is agreed by both parties, then comes the part you are waiting, investing.