It is never too late to start your entrepreneurial journey. Whether you are a 20 something looking to set up your first business venture or a professional with 20-30 years of experience, choosing to become an entrepreneur, is a courageous step. The desire to become an entrepreneur starts with an idea of doing something differently from the rest.
While an entrepreneur is a visionary in many ways, it is quite often that budding entrepreneurs overlook some of the most basic things needed to run their business e.g. formalities of company formation, identifying your potential customer or even generating sufficient funds to keep the company going. Today, we will talk about the many options available to entrepreneurs like yourself, who is looking to secure some funding for his company.
The best way to fund your startup is to fund it yourself. While many people would disagree on this, we strongly believe that if you are willing to put your own money in it, then your idea really has some potential that can be explored. Having said that, we would not recommend putting your life savings into a single project. Audit yourself and check what you can spare and how much you need to kickstart your business. Can you bootstrap? What impact would it have? Can you overcome this impact? are questions that will help you decide how to go about funding the plan yourself.
Since your business is going to be a small one, you can always seek a commercial loan. Many governments, these days, have made commercial loans available cheaply to encourage entrepreneurs. Institutions that give out such loans often require a personal collateral for the loan. This can be a property or a personal guarantee that the loan will be paid back. This is also a good way to quickly raise money for your venture.
In case you simply cannot get a personal guarantee but have a great idea that you believe in, then you can take the equity funding approach. Here, you need to find a person who is willing to invest in your idea, because he/she has the money to invest and likes your idea. For the risk that they are willing to take, you give away part of your ownership of the company, called equity. Most equity financers have no long term interest in the company but are simple looking for a decent exit, where they can multiply the amount they have invested in. The process can be a little time consuming and variable since each investor can demand a varying stake in the company for the amount he invests.
Alternatively, one can also utilise the funding schemes from the government that are aimed at promoting small businesses. Usually, these are extremely low cost loans aimed at allowing businesses to set up and flourish without having to worry about repayments immediately. Schemes are usually made available at specific times of the year, while limited funds or a cap on the fund may apply. Your business plan will also undergo tough scrutiny and through a time consuming process, before the funds are made available.
As we live in a more connected world today, there are many online avenues that are now open to budding entrepreneurs. Instead of relying on banks and institutions, one can now simply share the idea with others and request for small funds to bring them to reality. Called crowd funding, this approach has worked for many startups around the globe as they have been able to generate their funding goals, often in tens of thousands of dollars in as little as 24-48 hours. This approach is also great because you get access to your initial customers, while your product is still in the conception stage and as early adopters, they can offer you great feedback for your products.
Unlike earlier days, where becoming an entrepreneur was a tough ask, governments these days, are encouraging budding entrepreneurs to set up their own establishments. For a good idea and a good business plan, there is never a dearth for funding, whether from institutions or from the common public. So, what is stopping you from taking the next big step. Jump in, the journey of entrepreneurship is rewarding as well as humbling and we are sure you will enjoy every step of the way.