How can a budding entrepreneur arrange funds for his start-up?
Cash flow is an never ending problem in business. One rule that I use that has worked for me is, all new ideas, or start ups have to pay for themselves with a bare minimum of investment. That helps me keep focused, cut costs, and stop chasing wild crazy ideas that lose money.
If you have a really strong desire, and a good idea, lack of money will not stop you, in fact it can help you develop a more sound, profitable strategy.
If it was me, I would first get a mentor in the particular field you have, and run the idea by him/her to get their thoughts. Take them out for lunch or something like that.
If the mentor liked the idea, I would then put together a comprehensive business plan to show what I would be doing and how the business will make money.
You would then have two real choices
1) contact companies in your industry and see if they would be interested in funding the project, or undertaking a joint venture. People in the industry will understand your ideas well and will know if they will work or not. Also mention to them your mentor (if he is well known in the industry this will help)
2) contact someone through "business angels" and see if they want to finacially support the project.
The main parts they will want to know is will it work, and what percentage of money they will get.
As an alternative you could also contact a bank, but if they don't know the business well they may not loan the money.
Keep bank loans to an absolute minimum. Instead, look around your home and sell things you don't need in order to raise cash.
First thing to do is a business plan and through the cash flow you know how much you need as start-up.
The business plan is an essential documents for banks to assess your business idea and consider its feasibility.
Besides this, I wouldn't suggest to get all the start-up funds as a loan. First you must have previous savings before starting your business. Use some of those.
Then ask your parents and closest friend some of the needed funds. Most o the type these yield no interest.
Only in case you need more ask a loan to a bank for the top up.
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