Business Sphere

Business Advice, Entrepreneurship, Consulting, Real Estate

Six Ways To Get Capital To Start Your Own Business

“If I have only a capital I would have started my own business a long time ago,” remarked a stay-at-home mother.

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“Starting a business is easy, as long as you have the capital to finance it,” said a newly laid-off office employee.

Well, if there’s a will, there’s a way. If you desire to have your own business and hold that desire long enough, you can always find a way to raise the needed capital for it.

Actually there are many sources of funds, but over the years I have found out that there are sources that are easy to get money from and those that impose a lot of requirements before you can receive it.

Below are the tried and tested sources of capital for your business, which also include not only money but goods/products for sale as well.

1. Personal Savings. This is the best source of capital to finance your business. Why? Because you do not have to worry about principal and interest payments. In the event that your business fails, you lose only the money that you have invested in, and nothing more.

If you borrow money from the bank and your business closes shop, then you will also lose your collateral, usually real estate properties or even your house and lot, since the bank will foreclose it.

2. Personal Loans.  Borrowing from friends and relatives who have excess funds is a good way to finance your business. Usually the loan is interest-free, although some friends charge a very low interest just to cover the opportunity loss of their money, e.g. interest income had they deposited their money in the bank.

Getting personal loans means you can finance your business with the least cost. If your  profit margin is 30% per month and the interest that your relatives or friends are charging you is  the usual 1% per month,  getting a personal loan is a very attractive and viable business proposition.

3. Consignment of Goods. Not all products that your business sells need money to buy those products.  In fact, many businesses are using consignment to keep their inventory moving.

This is how consignment works: You get a company to deliver their products to you. In doing so, you will act as the company’s sales agent.

You will pay the company for those products that are sold, like on a monthly frequency. Not only that you will get the company’s products without paying anything, but you can also use the money from the sale of their products to generate more money before the schedule of payment arrives. It’s a double win on your part.

4. Credit Cards. This is another good way to finance your business, since the interest-rate is rather low, compared to the loan sharks and pawnshops, which I do not recommend as sources of funds.

To get the most of your credit, make your purchases right after the cut off date so that it gets reflected only in your next month’s bill.

5. Investment Liquidation. Selling your assets to raise capital enables you to start your business debt-free. Your assets include your immovable properties like real estate and movables like cars, shares of stocks, jewelries.

Selling these properties to raise capital to finance your business is always preferable to borrowing money and paying interest on it.

6. Bank Loans. Banks seldom lend to a new or small business. Usually you have to prove your worth first before a bank will consider your loan application. These include having real estate as collateral, and your business must be feasible.

So unless you have the collaterals and have a track record in business which can be supported by financial reports and feasibility studies, a bank loan is not an attractive option as source of capital for a start up business.

It always take money to make money, and in raising money to finance your business, the best sources of capital are those that you can generate without paying any interest or by paying the least cost and with minimum credit requirements.

Be creative in fund sourcing. Be innovative and imaginative in raising funds.

This way, your business can survive in the face of competition, its growth is assured, and profit will come as a result.

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  1. Eli, I am always impressed by the information that you present. It is good advice and easily understood. Another excellent post which should really help those seeking to raise capital for their own business.

  2. So sorry I haven’t been around lately, have been busy doing lots of “stuff”. Will be free in a few days and will catch up over coffee and pastries, 🙂 Glenn

  3. Hi good day! Where will you consider partnership and you only invest your talent and your time while your partner will be the financial?

    By the way would you love to be one of my sponsor on my upcoming blogoversary contest?

  4. Your point about asking friends and family members for a loan is a great one. There is usually 1 or 2 members which has the means and desire to help someone to do better. The problem is usually not wanting to ask around to see if someone like that is trusting enough to help. One important note, set a term or have an absolute understanding as to the nature of the loan and what will happen in the event of the money earned or if you lose the investment. Cheers! Dachai C @

  5. jan.26,2011

    hello! have you learned of you a businessman,finance broker,etc?i invite you to visit also my blog and comment on any topic about business and i have been browsing but there’s no one really to give us invited me,they help us raise capital like coop,like the rich,but first we must be taught their seminars.wanna join?

  6. I agree with all of them. #6 is going to be even harder now than ever. I would try all of the others first. I started a business by working 2 jobs for a long time to save up the money. I’m not saying it was easy, but the business doesn’t owe anyone anything and I own it 100%. This means I make all the decisions and all of the money. When you bootstrap you learn how to run a business the right way from the beginning.

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