Venture capitalists and investors can be useful sources of funds for companies that are established but are questionable at best. Entrepreneurs should aim to finance their ventures by means aside from venture capitalists, private equity and investors unless a fortune is required to finance business start-up activities or they decide to work with investors focused on start-ups. Here are strategies where many entrepreneurs may choose to finance their ventures:
Business Credit Cards
Many businesses were financed through credit cards in the early stages of their venture. They can be a source of fundingwhile credit cards are not necessarily the source of funding as they do have their downsides if used properly.
Supply Chain Financing
See if your provider, manufacturer or distributor could issue you a loan or line-of-credit if you are selling goods. The more successful you are, the more successful they are and this is understood by them. You will be surprised that is producers, providers and vendors have set processes for these conditions. All you have got to do is ask.
You should consider carrying a microloan if your enterprise requires less 35,000 or less. A microloan is a short-term loan available to small companies which may be applied as working capital or towards buying supplies stock or machines. Nonprofit community lenders are made available but distribute these microloans. They provide terms and are easy and fast to get although such loans do require some kind of security.
Private savings remains to be among the procedures while not the most innovative source of funding for a start-up. Savings enables entrepreneurs to have 100 percent of the equity of the company. As it leaves you answerable to nobody but yourself relative to financing procedures savings supplies terms that are attractive and the expense of capital is the opportunity cost of investing that money elsewhere. Since it is one of the sources of financing, savings should be strongly considered.
Friends and Family
Experts agree on the role family and friends should play in funding a startup. In one hand financing from friends and family can be simple and straight forward because is a mutual respect and understanding. Family and friends will be inclined to offer terms to you and may be less strict on how the money may be used. In the other hand you have the chance of straining relationships. There might be pressure coming if the company begins going sour from.
Many start-ups are short on credit and money. Paying for service or a good may not be possible, leaving entrepreneurs. One possibility is to barter for service or that good. Build a relationship and make a proposal. Bear in mind, always think about the other side’s point of view and what is in it for them.