Start-up capital is the money required for
when your new business venture is beginning. You should ensure that you have a strong
business plan plus a clear idea of the amount of money you will need and where
it's needed. This money can be obtained from various sources such as:
Banks
You
could apply for a business loan where you would pay back a monthly payment
along with the added interest and any fee’s. The issue with bank loans is you
may not have the credit to obtain the loan in the first place and if you do get
the loan and are then unable to make the repayments then this can also effect
your personal credit rating
Family
& friends
This
is one with the most potential risk as should your business fail then you run
the risk of losing the person who loaned you the money and possibly in a worst
case scenario they could take you to court to get their money back. On a
positive note borrowing from someone you know is a lot easier and faster. You
should be just as prepared in your pitch for the cash from friends and family
as you would if asking the bank and consider having a written agreement drawn
up.
Angel
investors
Angels are individuals who invest their own
personal money into a start-up business or entrepreneurs in return for equity
or convertible debt. Usually an Angel who invests in a company has some form of
business experience within that industry.
Venture Capital
Venture capitalist are professional who
invest in business venture, they look to receive returns of up to 25% and can
invest in the business from anywhere between 3 and 7 years. They usually only
invest in business that have a high growth prospects.
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