Business dreams can only take off when the necessary funds are ready to support the achievement of goals and objectives. It is not easy to establish a continuous source of funds that will be available at least until the business is able to operate profitably by itself. Money or the lack of it remains the biggest obstacle in any business start-up effort.
Prospective business owners will have to be very clear about the estimated amount of funds that will be required to keep the business afloat during its developing stages. There will also be funds required for the business’ regular operation but that should more or less be provided by income derived from operation. None the less, there should be funding set aside for emergency situations that will require more capital infusion.
The most logical source for business capitalization would be the business owner’s own money. This would require planning ahead so that money can be saved for the purpose while gainfully employed. Another way is to come up with initial funding by selling personal assets such as idle property or an extra car.
When self-financing is not possible, other sources that can be looked into include borrowing from family or friends, bank loans, government grants, credit cards, angel investors, and venture capitalists. Borrowing from family or friends can be obtained with less pressure than bank loans because of the relative leniency allowed in payment. Payment of interests may be required as well like in banks but can be negotiated. Government grants are usually reserved for specific business ventures such as those that provide public service although some programs have been made available for small start-up projects as well. Due to the high interest rates imposed by credit cards, this option should only be considered when there is substantial basis to expect that the business will become truly financially viable. Angel investors and venture capitalists can provide the required equity in exchange for a share in the business.
Originally posted on February 18, 2012 @ 4:59 am