Recently I was watching a promo of a badly made Bollywood movie. In that promo the lead actor proclaims, “a big business starts off with a big idea and not with wads of cash”. Dialogue sounded good, and so did the delivery. But there was a problem in the premise itself.
Indeed, you need to have a big idea, or better still a winning idea to make your business big, but the idea is worth nothing, if you do not have the money required to execute it.
In this article, I will concern myself with the “money” part of a successful business, and assume you already have a big idea. So, where will you get money from, for your big idea? This questions bogs us down, doesn’t’ it? You will find the answer below.
3 Ways to fund your small business
Use your family saving
Yes, you have to do it, if you want your dream to become a reality. This is the first source you should rely on. I am not asking you to take out every last single dollar from your bank account. You should keep some cash there to take care of any eventuality, whatsoever.
Borrow from your friends
Should you not have enough personal money to invest in for your business, you can also rope in your friends, relative, and neighbors with whom you have a good rapport. Borrow money from them. There are two benefits of this: (1) you will not have to pay any interest on that, and (2) they will not ask for mortgage to lend you any money. You goodwill will be enough.
Go to bank and ask for loan
Go to the big ugly institution called bank. I hate this thing as much as you do, but if there is no way out then one should go to a bank to ask for some money. They will ask for some mortgage to lend you money, and they will also charge some interest on the money Lent to you.
What they will take as mortgage and how much interest they will be levied on the loan lent to you will depend upon the nature of loan you are applying for. I would suggest you to avoid high interest loans.
Try to get your project financed. Prepare a detailed project report before meeting with the bank manager, or loan office. A project loan will be cheaper, and may not require any mortgage.
The very first step in the process of securing loan should be to research about various loan products offered by different banks in your locality. Find every detail pertaining to the loan you are applying for before signing on the dotted line, or else you will be taken for a ride by bank officials, which they will claim is done in your best interest.
A detailed project blueprint will anyhow be required, but it will help in persuading your friends and neighbors as well.
Did I miss on something?
I am not suggesting here to go to venture capitalist because it is a drag, and they take meat out of your business. They, indeed, add value to your project in more ways than contributing money to your business. They bring the best practices from the different industries to your business. These are the things that they have tried, tested, and perfected in other niches and made them work.
But the question is: do you need this for you to become successful? You may need it in future, but do you need it now? This is the judgment call you have to take, and based on what you think, you can either get your small business funded by a venture capitalist or avoid using it.
That’s it. Now you know where to get the money from. It is time to start sailing into the world of business. And if you do not have much money to start your business with then return in a day or two, I will be posting an article that will teach you how to start a successful online business without investing much. See you around.
By the way, I saw the movie as well and there in the movie, our hero took money from his uncle to make his “big idea into a big business”. After all, it was not just a big idea, was it!