When a great business idea has ripened in my head and is already eager to implement it, a problem arises - where can I get money for a business? Every second novice entrepreneur faces the difficulties of financing a new project. That is why many abandon their business without even having time to start it. Although there are a lot of options for attracting investments.
Signs of a successful business
Before you ask yourself where to get money for a business, you first need to answer the other - is it worth it to look for. Yes, your own business allows you to enjoy your work and not depend on bosses. But only 15% of business ideas become successful. Therefore, before you engage in the implementation of your own project, you need to assess the possible risks.
Signs of a successful business:
- Relevance. The business worth investing in should be in demand on the market. And do not focus on your own opinion. It is necessary to study the niche that the business will occupy in the market and determine the approximate coverage of the target audience.
- Novelty. With new projects you need to be extremely careful. Some are able to “blow up” the market, others are able to bury the invested time and money.
- Ease of implementation. If a business idea requires a complex organizational stage and huge investments, then the chances of finding where to get money for starting a business are reduced to zero. After all, the faster the investments begin to pay off, the more attractive the project looks in the eyes of investors.
- Reliability. When making a profit is based on outright fraud or trash, you should not even try to look for sponsors. Problems with buyers, and even more so with the law, are not needed by any decent investor.
Fundraising Preparation
Before looking for where to get money for a business, you need to clearly understand that people who are ready to invest in an idea must be completely sure of the seriousness of your intentions. Therefore, you can’t do without preparation for raising funds .
The first thing to do is draw up a business plan. A business plan is needed not only by investors, but also by the entrepreneur himself. Sometimes an idea that has matured in the head seems just perfect. But after a thorough analysis and systematization of all the received data on paper, the future of the business does not seem so promising. Therefore, investors, considering the proposal, will focus only on numbers.
The second - you need to learn how to correctly convey the idea to the investor. The numbers are good, but the entrepreneurial business acumen is much more important. Therefore, thinking where to get money for a business, you need to be prepared to defend your project and convey its prospects to the audience.
And the last - all matters that do not concern your business should be postponed. All the time, attention and strength should be directed only to the realization of your idea. After all, finding where to get money for a business from scratch is not so simple. But numerous attempts will yield results if you fully devote yourself to a given goal.
Sources of financing
It is conditionally possible to divide all sources of financing into two groups: own and attracted. Of course, when organizing your own business, it is better to use your own resources to the maximum. However, when there are not enough of them, one need not be afraid to raise funds from outside. Especially if there is complete confidence in the profitability of the idea.
Own sources:
- accumulation;
- sale of property;
- diversification of capital.
Attracted sources:
- bank loans;
- sponsorship investments;
- government subsidies.
To determine the source of funding, you need to familiarize yourself with them in more detail. To collect the full amount of the initial capital, entrepreneurs often combine several financial resources. But it’s better after all, when most of it belongs to the owner.
Own savings
Saving money is not the fastest way to finance a business idea, especially if the wage is less than the national average. But often a person has his own savings, deposit accounts with banks or passive earnings, for example, renting an apartment, which can be sent in the right direction.
If there is a real opportunity to earn money on start-up capital and support the business until it reaches self-sufficiency, then this method of financing is best used. Since it almost completely eliminates the risk of getting stuck in debt.
Property sale
An apartment, an expensive car and other property is a potential source of own financing. Moreover, the money from the sale can be obtained quickly enough, discarding thoughts on where to get money for a business without a loan.
But if an apartment, house or other living space is the only place to live, then selling it, of course, is not worth it. The risk of "burn out" exists in the implementation of any business project, so you should not invest in it a single roof over your head.
Capital diversification
The term "diversification" refers to the redistribution of capital from one sphere of activity to another. The financial flow management system is a rather complicated process that requires a serious approach. This method of financing is suitable for those who have already invested in a business that has not brought the expected results.
Therefore, instead of waiting until the first company "sags" completely, the money invested in it can be used to finance a more promising project. However, in this case, the risk of losing everything doubles. Therefore, before the diversification of capital is worth considering. Perhaps it is more advisable to look for where to get money for the development of a small business that has already entered the market.
Bank loans
Banks - investors number 1, participating in the financing of legal entities. However, according to statistics, only 5% of applications for loans for opening a business are approved. Banks are more loyal to existing organizations that have been operating for more than 3 months.
To get a loan, you need:
- Draw up a business plan.
- Register IP, LLC, etc.
- Open a bank account.
- Be registered with the tax authorities.
- Make a corporate seal.
- Apply for a loan with a prepared package of documents.
This method is ideal for those who are looking for where to get money for business development. But there are chances for the "newcomers" too. The main thing is to develop a detailed business plan and convince bank employees of the reliability of the investment. When calculating the loan amount, you also need to remember that money will be needed not only at the time of opening a business, but also until the first profit is received.
Sponsorship Investments
An investor can be both an individual and a legal entity. The goal they pursue is to profit from their investment. Therefore, you must immediately be prepared if, before concluding a transaction, an investor requires up to 90% of the company's net income.
When considering an investment project, investors are guided by the data of the business plan, the level of demand, the market situation and their own impressions of the idea. Experienced businessmen can easily distinguish a promising project from a knowingly unprofitable one. Therefore, numerous failures are a direct reason to think.
Today, finding where to get money for a small business is quite simple. There are many international business portals, sites for attracting venture capital investments and other online platforms that provide an opportunity to convey your idea to interested parties and receive initial capital. For example, using one of these services, the first e-sports school in Belarus was born.
Government subsidies
Any state is interested in the development of small business, because it is the foundation of the economy. Therefore, there are government programs to subsidize small and medium-sized businesses. Moreover, at the expense of the budget, you can learn the basics of private entrepreneurship, which will allow you to independently develop a business plan without involving third-party specialists.
To receive a state subsidy, you must be officially unemployed. To do this, you need to contact the Employment Center of the Population with a statement on registration. Further, when communicating with a center employee, you need to declare your intentions to open a private business.
If the commission, before which it is necessary to protect your business idea, makes a positive decision, then the novice entrepreneur can count on state support in the amount of 60,000 rubles. This amount is unlikely to cover the costs of a really serious project. But if this money can be received free of charge, do not neglect it. The main thing is not to forget that three months after receiving the subsidy, it is imperative to report in detail on its intended use.