Where you can get money for your own business

In this article we will review with you the most popular solutions to the question: "where to get money to start a business?". Original ideas for launching their own company arise in most people in one way or another. But any, even a small business requires certain investments. Where can you get startup capital? Let's look at the main ways to get it.

Where to get the money for your own business:

• Own savings and sale of existing assets;
• Borrow from friends or relatives;
• Get by with minimal investment;
• Search for an investor or business partner;
• Take a loan for business at the bank;
• Receiving subsidies and grants - business money from the government;
• Using fundraising services (Crowdfunding);
• Fundraising through the issuance of "tokens";
• Financing your business through the issuance of company stock.

Own savings and sale of existing assets

This is probably the easiest and most reliable way of obtaining start-up capital. Own savings can be presented in different forms:

• Movable and immovable property (cars, apartments, non-residential premises);
• Shares of other companies;
• Government loan bonds;
• Other Securities;
• Income from other businesses;
• Deposits and bank accounts;
• Art and jewelry;
• Cryptocurrencies;
• Stakes in other businesses.

If you are confident in your own idea and a quick return on investment, then using your own savings as start-up capital is the best option. After all, in this case, the main profit will also be yours. In addition, when looking for investments, the fact whether you have invested your own money in the company or not will be of great importance. Investors are more willing to cooperate if they know that the initiator and manager of the company have already invested their own funds, and therefore will do everything possible for success.

Another obvious advantage of using your own funds at the initial stage of business development is efficiency and a single center for making important decisions. In this case, you will not have to report to anyone or prove anything to anyone. You will be able to make key decisions on your own, and this, at the stage of development, is extremely necessary. You will not miss an important moment and will be able to take the necessary action in time.

Borrowing from friends or relatives

If your own savings are clearly insufficient, the question arises: "Where can you borrow the necessary amount of money? The first and easiest thing that comes to mind is to borrow the missing money from friends or relatives. This option can be used only if the amount of the loan is small and you know how you will pay in the most unfavorable circumstances. In all other cases, this option should be abandoned. After all, then you will lose not only your own business, but also the respect and support of people close to you.

Make minimal investment

Another option to avoid high costs, and therefore the risks associated with it - is to try not to make large investments at the initial stage, and try your idea with minimal costs, if possible. You yourself can fulfill the role of director, accountant, courier, and the rest of the staff for the first time.

Test your idea for demand in this way. If it will be a trade organization, do not rush to buy a full stock of goods. Buy one or a few pieces of each sample, even if it will be more expensive, but this way you will check which of them sell well, and which will be in stock for a long time. Work this way for at least a couple of months. First, you will gain experience in a new business and understand where there may be difficulties. Secondly, this knowledge will be useful to you in your future search for investors as evidence of your future success.

Finding an investor or business partner

You can get money for your own business by raising outside capital. This can be either individuals (investors and business angels) or companies specializing in investments. In both cases, you will need to prepare detailed business plan, a document in which you thoroughly and with the help of various kinds of research and calculations prove the success of your future enterprise.

Investors and investment companies are generally divided into two types: those who make investments at the start-up stage and those who invest in an existing business. The former are business angels, or business partners. The latter are venture capital funds and investment companies.

In the first case, investments are more risky, as most start-up businesses are statistically closed after six months of operation. You must interest the investor in the high profitability of your business. It is good if it will be a branch of production or somehow related to innovation.

No one is likely to invest in established areas with high competition, such as trade and construction. And you will have to realize that if the investor agrees to assume most of the necessary costs, he will also require a large part of the profit for himself. Often this share will be as high as 80-90% of the net profit.

The benefit of such cooperation will be additional assistance from your business angel, which may consist of: existing business connections, assistance in selecting a professional team, assistance in office management and selection of counterparties. The best option in such a case would be to find a business partner with whom you will share 50/50 your expenses and income.

The second case is suitable for an existing business (from 1 year of successful operation). If your company has reached the point where it is time to think about expansion and entering new markets, then again, borrowed funds are required. Organizations that specialize in this type of investment are called venture capital organizations. In order to obtain the necessary funds, you will need to provide full accountability for the entire period of operation and a plan for further development.

After careful consideration and analysis, you may be granted funds under special conditions. As a rule, venture capital organizations invest only after they are absolutely sure that the expected returns justify the risks at least several times over. The advantage of this kind of investment is more acceptable conditions for further distribution of profits from your business. And you will still be the owner of the company, albeit sometimes nominally.

Getting a business loan from a bank

Not the best option for getting money to start a business for several reasons at once:

• Interest rates in local currency are generally high;
• There are always high risks when borrowing in foreign currency;
• The bank always requires collateral in the form of property.

As a rule, banks do not have the same analytical department as investment companies, so the bank will not be very interested in your "proof of future success". And you will only be able to get a business loan if you prove your solvency in case of failure. Under this, as a rule, is understood as collateral property, which the bank in the most extreme case will be able to get from you and later sell. Therefore, you should always think twice before taking a loan from a bank.

If you do decide to go to the bank, it is better to take a loan in the same currency in which you plan to receive income. The interest rate on the loan will be high, but you will not get into trouble when the exchange rate changes, which happen with enviable regularity.

For small loan amounts, you can use a loan "for any purpose" for individuals. In this case, the bank does not require collateral. In this way you can obtain financing at the initial stage for office improvements and equipment purchases.

Receiving subsidies and grants - money for business from the state

Getting money for business from the state has recently become a very real way to start your own business. It so happens that the state is interested in the development of certain sectors of the economy and is ready to support entrepreneurs in many different ways. This assistance can be presented in many different forms: tax exemption, reduced loan rates, registration and registration of various kinds of papers, direct cash grants for promising projects.

The list of sectors the government is willing to support can change with time and place, so find information on your business before you start looking for money.

Currently, a lot of support is given to those entrepreneurs who have decided to start their own business agriculturallyor any other production. They also try to help in any way they can small and medium-sized businesseswhich is not related to commerce or advertising.

In addition, there are regular competitions to find breakthrough projects. If your business idea is one of these, you can expect to find not only the necessary money for development, but also a team of professionals who will provide the support you need.

Use of fundraising services (Crowdfunding)

Another effective way on how to get money for a business from scratch. Thanks to the Internet, you can turn to ordinary people just like you. For this purpose, special Internet sites have been created where everyone can propose a project to raise funds. This method is called crowdfunding, from the word "crowd" - crowd, and "funding" - fundraising.

With the help of such platforms, you can invite other people to invest a small amount of money in your project. In return, you have to offer something. It can be your products, special bonuses, personal authorship and so on. The main thing is to interest your future mini-investor. To do this, you will need to present your idea well. Make a video or several. Describe what benefit you can bring to society. Create a favorable image of your project. Often on such sites people donate small sums not for profit or personal gain, but because this project is interesting to them or something close to them.

The most popular crowdfunding platforms are Kickstarter and Planeta. Many successful innovative projects, such as the voice-controlled smart robot Vector, the portable projector Nebula Capsule, and others, were launched on Kickstarter.

If you're not familiar with crowdfunding yet, make sure you go in and take a look at the available offerings. It's possible that you'll offer the world the next successful project or you might be interested in one of the ideas from other entrepreneurs. Either way - it's interesting.

Fundraising through the issuance of "tokens"

A relatively innovative method of attracting investment in your own business. It is based on blockchain technology. A company that wishes to attract investment issues so-called "tokens", or in fact its own "internal" cryptocurrency. From conventional cryptocurrency it is characterized by the fact that it has no liquidity on the market until a certain point. A company that issues and offers to buy its "tokens" must justify what exactly the owner of these tokens will get in case of success of the common business.

Since the technology of raising capital in this way is quite new, many people do not yet know what a "token" is and what it is based on. Therefore, you will need to fully describe the possible scenarios and what they are based on in order to interest a future investor.

Use this method if your future business has something to do with global internet activity or cryptocurrency. At this point, only this contingent of investors will understand what you will be doing and what your "token" is.

Financing your business by issuing shares in the company

This is probably the best known and proven way to raise capital for your business. A share in a company represents a share and the right to receive a portion of the profits from the organization's operations.

There are certain requirements to the very process of issuing shares. And, as a rule, only large companies with a large authorized capital and profit size can fulfill them. In the official order it is like this. A share is a security that is listed on a local or international exchange. With the help of shares, large capital is raised for further development of the company.

At the same time, every entrepreneur has the right to register his own business not as an LLC or sole proprietorship, but as an OJSC - an open joint-stock company. In this case, shares in the company are distributed among its shareholders and can be resold to third parties in any volume. Such shares do not require issuance and placement on the stock exchange, but are simply shares in a particular company. You can sell part of your business to a third-party investor without any accountability on your part as to where the money you receive from them will go.

Shares can be common and preferred. In the first case, the holder is entitled to dividends - a part of the company's profit, which it distributes among its shareholders. In the second case, in addition to dividends, the holder of the share also has the right to vote in decision-making at the shareholders' meeting.