Business is one of the ways to earn more money aside from being an employee. It is either producing your own product or by buying and selling it. A form of business doesn’t mean you will enter a company, a corporation or a partnership, having a business even just in the market can already make you money.
Name of the business, location, capital, and product that you will sell are the factors to consider before starting a business. Name of the product should be eye-catching and easy to remember. A feasibility study about your business is not required but try to do it if you really want to test the marketing of the location and the customers taste about the product you want to sell. Most importantly think about having you will finance your business.
What is an entrepreneur?
An entrepreneur is a person who starts or owns the business. The inventor of ideas, services, and goods. These are the people who bring good ideas to the market and have the skills and pole position to get ahead of the current and future needs of the people. They are the person who has taken the risk to be compensated with profits and rewarded with fame if they will become successful. The true entrepreneur will not easily give up if they have been challenged while starting a business.
Entrepreneurship is the method of proposing, starting, and running a new business.
So, to fully develop your self to become an entrepreneur you must be known about the various options on how to finance our business.
Aside from the bank, here is the non-bank list of option to finance your startup business.
- Community Development Finance Institutions (CDFI)
Across the country, there are thousands of nonprofit Community Development Finance Institutions (CDFIs) that are providing capital to small and micro-business owner intelligent standings. They help those who want to start a business yet struggling on where to access the capital they need to thrive and grow. Some lenders have their rule and regulations about the people who can lend, if they see “poor credit” then the decision is a “no” pile. But in CDFI lender they look in a different way. They understand the unfortunate thing happen to a good person, money-wise and responsible borrowers.
- Venture Capitalist
Venture Capitalist is the group of people who take part in the proprietorship of the company in exchange for capital. The percentage of proprietorship when it comes to capital are mostly based on the company’s assessment. Some other benefits are additional resources like hands-on support and a representative of the venture capital firm on your board of directors.
- Partner Financing
Partner Financing is a good alternative because you can be partners with a company in a similar industry or interested industry in your business and the company you will be partnered are usually be a large company. Most large companies have their loyal customers, marketing programming and salespeople that can make you to the top. Assuming that your good service and product are compatible with them, they will surely invest.
- Angel Investors
Angel investor is an individual investor who is interested to invest in a startup business. They have the same business proposal model with the venture capital in securing a loan but the angel investor is more likely to have a greater element of human interest. Because they are an investor who is a lot interested in an equity stake in your company.
Aside form fund, guidance, and assistance are what they offer. Because what is the use of letting them borrow money if you will not guide them on how to use it properly. They provide technical and operational knowledge to a startup business.
- Factoring/Invoice Advances
Factoring/Invoice Advances is a way of paying back the customer with the settled bill and a service provider that will invoice the money to be billed out. And it is also a way to keep the business ongoing while waiting for the customers to pay the balance. The goal of factoring advances is to help the entrepreneurs to grow their businesses.
Grants only provide funds to the small businesses which are focused on science researches. The government required those who have a high potential for commercialization to meet their federal research and development goals.
- Family and Friends Financing
Asking for a family or friends to invest in your business is risky. Your strong relationship with them will be in danger because the money you borrow can be the reason for your fights and misunderstandings especially when you cannot give back the money you borrow on time.
- Small Business Investments Companies
Small business investment companies are licensed to provide funding to small businesses. It is very competitive and strict when it comes to requirements.
- Mezzanine Financing
Mezzanine financing that utilizes both debt and equity is truly a hybrid form of funding.
If the company goes well, they will just simply pay back the loan. But when the company didn’t succeed then the ownership will be passed to the mezzanine.
- Royalty financing
Royalty financing has a less formal procedure than venture capital and angel investor. And it all depends on the future sales of a product. Royalty financing allows the entrepreneur to gain capital without the condition of giving up the ownership of the small business. Because the founder of this wants to help motivate those entrepreneurs to be successful.
What you can read is 10 nonbank lists of where you can borrow fund for your business. Make sure to choose wisely and consider fast business lending & working capital before picking a company to lean on.
Before borrowing some money to use as capital in your startup businesses, you should plan first and think of the consequences. Taking the risk to make more money is dangerous especially when other people are involved. Make sure you can multiply the money and pay all the dept. And one thing more is that you should be confident in starting a business, this is not a game, take it seriously and responsibly.