Are you looking for ways to fund your Start-Up Business? There are different ways of funding a business, and in most cases you will have to combine funding from different sources to get your business going.

Start-up Funding can be of two major types:

 

 

 

 

Debt Funding

Debt funding starts you off in debt. This is money like a bank loan that you must pay back to the lender, irrespective of the outcome of your business venture.

Sources of Debt funding could include:

• Loans from banks
• Credit cards

Business Plans

To secure loans from banks or from other investors, you will need to be able to present them with a sound business plan.

The good thing about getting a business plan these days is that you can buy one then amend it to your specific needs; or you can get a business consultant to help prepare one on your behalf.

Credit Checks

Lenders will generally run a credit check on you and the other partners in the business to make sure that you are credit worthy.

If you are not credit worthy you may still find lenders that could help you secure loans through unsecured business financing, or help you with the repair of your credit; however the interest on such loans may be much higher that you would have had to pay otherwise.

Viable Idea

Your investors will need to be confident that your business plan is a sound and viable idea, and that you have the experience needed to implement your plan, before they risk giving you the loan, or invest in your business.

Equity Funding

Equity funding on the other hand has less risk associated with it, as the investment does not normally have to be returned to the investor if the business does not take off as planned.

Sources of equity funding could include:

• Investment from Business Angels
• Government Grants
• Equity from an existing property e.g. your home
• Profits from an existing business
• Income from the sales of goods or property
• Income from part time Job
• Investment from business partners
• Money from your savings

Business Angels or Venture Capitalists are professionals looking for businesses that they can invest their money in for a good return. However getting such money may mean giving over some of the control of your business to others, a move which will have both positives and negatives.

You may have more money, but you may have to give up the control of the business, because you have to take into consideration all the expectations of the other stake holders in your decision making process.

If you would like to retain control over your business, look to fund it from your own resources, or from family member's . It may take a lot longer to achieve your goal, but you will eventually achieve it, without all the strings attached.

To Your Success
Davida Yemi-Akanle

 

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