Having a good business idea to create a new company or a startup is fine, but what's next? You probably need a website, a technical team, several office rooms, and, of course, enough cash that is needed every month to pay rent and other services. So where to get the finance for the implementation of the idea?
Real look
Naturally, you need money. Whether it's a cool new smartphone app or a smart cafe, most businesses and entrepreneurs need at least some funding to really get down to business in the early years. And do not burn out in subsequent.
Entrepreneurs often need to seek financing, so you are not the only one looking for such an opportunity. The good news is that there are many places where you can get the funds you need (and many often miss some of these options). What will help a novice entrepreneur have a good reason to implement a business idea? What are the sources of funding? Let's find out.
Personal investment
Getting started, many entrepreneurs finance the company by collecting any personal funds that they can find. Typically, this includes your own savings account, credit cards, and any home equity you may have. How useful is this approach?
In many cases, using your money instead of borrowing or raising funds is a great approach. This means that you will not have extensive loans and monthly payments that are very tiring and exhausting, especially if there are difficulties along the way.
But if there are not so many initial funds, most likely you will want to attract external sources of financing. So what happens when your funds run out, or will you decide that you need something else to grow your business? Ultimately, it will depend on the type of business you are creating, but there are a few common options to start with.
Friends and family
To ask for money from your friends and relatives may seem a frightening prospect, but connecting the people closest to you is often a good first step to obtaining external financing. As they say, demand will not hit the nose. Although Aunt Ira will probably not be able to finance your entire business idea, something can impress her so much that she lends you a couple thousand rubles.
What should be remembered in such a situation? Before asking for money from friends and family, you should already have a ready-made business plan. This way you can explain to them what you are selling and what you plan to charge. Try to say convincingly: so that they do not doubt that you will return the money to them. Show that the game is worth the candle.
Alternative sources of financing (crowdfunding)
If you are looking for a relatively small amount of money (up to 300 thousand Russian rubles), there are quite a few microcredit organizations that provide loans to start-up entrepreneurs. These websites are intended for low-income entrepreneurs or those working for the benefit of society (and some provide microfinance only to those living below the poverty line).
In recent years, crowdfunding sites have gained immense popularity, providing a platform for collecting money from individual small supporters on the Internet.How it works? You create a campaign, name the goal and the amount of money you want to collect, and also introduce certain benefits for donors who promise to share a certain amount of money. Then you collect money for your campaign for a certain period of time.
If we talk about the situation in Russia, then there are several popular crowdfunding platforms. One of them is the planeta.ru website. You can try to organize fundraising on this platform.
Consider getting a loan
What other opportunities exist to receive external financing? If you can prove that you have begun to gain momentum and earn money (and that a loan will help you earn even more), then you can get the right to a traditional bank loan. Some banking companies encourage small businesses. Despite the fact that the situation in each bank and in each individual case may differ, it may be a good idea if you are looking for funds in the amount of approximately 2-3 million Russian rubles.
Angel investment
If you have a startup (an organization that creates a product or offers services), then probably in the end you will need more capital to really start working - for example, to hire people or rent office space. Then you will need to contact external investors. Angel investors are usually reputable business professionals with a high level of equity who want to invest in promising companies or profitable business ideas. Such an investment may amount to several million rubles.
But you should remember: often such an investor will be on the board of directors of the company, having the right to vote or block for an unreasonable, in his opinion, decision.
In Russia, a similar opportunity for angelic investment exists, although it is small. Grants programs carry out investors' tasks, and state institutions - the Russian Venture Company and the Internet Initiatives Development Fund - are engaged in the preparation of new angels. Investments in startups in the field of information technology are gaining popularity.
Total
This article provided several ways to implement your business idea. Remember: the search for financing can be the most difficult part of business development, but also the most profitable. After you have accumulated money, received approval for a loan or found other people who could invest in your company, you can return to your promising idea and get started! Although it can be a long and difficult path to success, finding allies (be it friends, angel investors or venture capitalists) to help keep your business afloat can make a difference.