You may be new to the world of Small Business funding, with little or no knowledge of availing a fund in business but the wish to explore options. Here is a comprehensive guide to help you understand and work upon the right funding options in the right way.
Small Business Funding Challenges
Small business owners are often bogged by various challenges, some of which catch them off-guard. From hiring employees to paying them their deserved salary for their hard work but the most intimidating challenge that is faced by the budding entrepreneur is finding the right financial method. It is necessary to make an informed decision in whatever sphere of life you wish to work on. A survey was conducted that showed people use personal checking and saving accounts to fund a business maximum of the time.
Misconceptions that cloud small business funding
Some common misconceptions that exist are, firstly, the funding is all about business. People often think that they need to only start looking for financing when they find their business niche. Whereas, If experts are to be believed funding methods take into account the credit history along with business history righteously. The right business niche can definitely not guarantee efficient financing. The second misconception is that independent business and franchise are differently funded and envisioned. The likelihood of success depends on your business plan and how much in-demand that niche is.
Business funding options:
- Bootstrapping business startup- Self-funding is also known as bootstrapping. It is a financing option that is safe and hassle-free. Since startups and budding entrepreneurs are often faced with the issue of ‘what would they show as their credibility to avail any loan?’
- Crowd funding- It is another way to get funds for investment; It is essentially opting for a loan, contribution, investment, or pre-order. In this arrangement, the entrepreneur will put up a detailed description of a Crowd funding platform. There the goals and detail working of the business will be clearly defined. Anyone interested can contribute money towards the idea of business they believe in or relate with in any way.
- Angel investment in a startup- Individuals with surplus cash are known as angel investors. People may offer to mentor or opting for alongside capital. Angel investment option has one major drawback that not many are willing to invest humongous amount, this means less capital gets invested. When you consult a private financer in Delhi NCR, you will be guided with the best options.
- Venture capital- The big bets can happen here. These capital arrangements are managed professionally. The business invested upon is against equity and exit when there exists, an IPO or acquisition. VC will be greatly beneficial for businesses with fast revenue generating capability. Companies like Uber, Flipkart can avail millions of investment due to a pre-devised exit strategy.
- Funding from Accelerators & Incubators- Every major city has this option with the program assisting hundreds of startup businesses. The incubator is essentially a parent to the child that pledges to nurture business with training and tools. Accelerators help take a giant leap with connections and great investment options with reputed investors. A private financer in Delhi NCR will help you gain better understanding.
- Bank loans- Loans are generally the first thing that an entrepreneur goes to for funding. Working capital loans and funding are the two options of financing for the business. The process of getting a bank loan involves sharing the business plan and valuation details of all sorts.
- Microfinance providers- If bank loan seems like a work you may resort to trusting NBFCs that provide banking service without any legal requirement or definition of a bank.
- Government startups- These are another great option for availing the loan. The awareness that has emerged within the government to help the small business entrepreneurs with much needed monetary support is also a great option to avail.
If you wish to grow your business fast then you will have to look for funding options. Find the one option that works well for your business idea.