It is a fact that for a business to reach the profit-earning stage, a dependable push is needed right at the start. By push, we mean, reliable financial support. Financing is really the key to creating a successful business, not just in India but across the globe. But finding a steady source of money or fundraising is not a task for the feeble hearted.
While most entrepreneurs look towards banks to find the capital for either a new business venture or to scale up an existing one, there are some alternate options. The goal of this writeup is to talk about three alternative tools for raising money smartly and efficiently.
• Small businesses have the choice to ask lending institutes for financial support. Unlike conventional banks that have strict criteria, these lending institutes are ready to take a risk as long as the business plan is reliable.
• Bootstrapping has been done by start-ups for a long, long time. It is one method that even small and medium-sized business can utilise. This tool to funding requires:
o investing one’s own funds into the business
o getting money from friends and family at low-interest rates
If your loan requirement is not too high, this is the avenue for you.
• The most laborious method to funding is a Venture Capitalist, but once you’ve found one, you are stable for years to come. The good news is that VC’s love to support small business rather than start-ups. All you need is to prove your potential and future scalability. If a venture capitalist is impressed, they provide not only the money but also their invaluable guidance and expertise.
Besides these three options, angel investors and crowdfunding are two more methods of finding investment for a business.