web analytics

How to Finance a New Business

How to Finance a New Business Photo

©Depositphotos/Yuri_Arcurs

If you’re a business-minded person, perhaps you can never forget that moment when you were managing a lemonade stand in your front, back when you were younger. Not because it was a fun activity, but because it was your very first achievement towards becoming a businessman.

However there’s a big difference from managing a lemonade stand and a bigger business. Back when you were nine years old, you can simply ask for your mom’s lemon in the pantry. But now that you’re a man, do you think your mother will easily lend you what you need, especially in cash? Perhaps not, unless it’s only a dollar or two. To solve your business financing problem, here are some tips worth remembering.

Tips on financing a business

  • Assets – based on various financial studies, about 68-70% of the start-up fund comes directly from the business owner’s pocket. It doesn’t only refer to liquid assets in your savings, checking accounts or your money market account. It also pertains to other assets such as your car, house and even valuable heirlooms. You can sell your antique properties and have your car and house leased. The proceeds can be divided into two: purchasing a smaller home or financing your new business.
  • Investors – if you are willing to share the ownership of your business to an angel investor, then this tip will work well for you. An investor or often called angel investor is a successful businessperson who finances new businesses using their own finances. Though you had a great negotiation with an angel investor, it’s still best to read and double-check the fine print.
  • Family and friends – who else can you easily turn to than your family and friends? When asking for a loan from them, it’s important to make a visual aid that will serve as a presentation. Then, your presentation should contain all the essential information to gain their complete trust, such as how are you going to pay them back, how long will that take, and what is your main business plan. They may be your family and friends, but talking about business, some things change.
  • Bank loans – one of the most common source of start-up cash for small businesses would be a bank loan. Aside from selling your assets, you can also loan from your trusted bank to reach your cash quota. If you’re raising a small amount then this would be easy. However if you’re planning to loan for a bigger amount for a bigger business plan then it may take some time before your loan will be approved.
  • Customers – you read that right. You can now turn your customers into investors without much stress. This is possible, if you had been offering your services to your clients for quite some time now. You can give them a fair proposal of free service (whatever service you’re offering) for a lifetime in exchange for a reasonable amount you could use for your business.